De Facto Director, Company Records, Fictitious Character And A 4pm Lunch

The judgment of The Official Receiver v Duckett [2020] EWHC 3016 (Ch) is replete with the word “implausible“. This gives you a clue as to matters of the reliability of some of the witnesses as far as the Court was concerned.

The end result was a 10 year ban for the person found by the Court to have been a de facto Director, the Defendant.

Disqualification proceedings were brought against Mr Duckett it seems because of the state of the company’s records.

The case appeared to involve Mr Duckett, who was involved in a company with Richard Cooke as a front-man. Even the incurious could not overlook the persistent reference to a Mr Deere (or Deer).

However, the Official Receiver thought Mr Deere was a fiction and so it seems did the Court:

If Mr Deere is fictitious, the result is that this picture is substantially correct save for the identity of the éminence grise: he can only be Mr Duckett. That this is so, I find as a fact.

There were some suspicions about VAT fraud in the case and therefore the matter of the company records assumed considerable importance:

On the basis of the OR’s evidence, I am satisfied, in accordance with the primary case advanced, that Mr Duckett failed to ensure that the Company maintained and preserved adequate accounting records. The alternative case, that if adequate records were kept he failed to produce them, need not be considered, as it is not suggested that other documents exist but have been withheld.

Witness Reliability

I cannot accept Ms Rowles as a reliable witness. I consider that the details concerning Mr Deere in her witness statement were provided to her subsequently: whether by the inclusion in her witness statement of extraneous details from a different source so as to create a coherent case (such things are not unknown and I cannot discount this possibility) or by the imparting of further information by someone else. This also places a question against the reliability of the original letter, which must have been provided at Mr Duckett’s request. My conclusion as to Ms Rowles is that she is suggestible and not a good historian.

4PM Lunch

The exchanges between Mr Duckett and the accountant were noted by the Court to have had jocular characteristics. Perhaps notable was the following email exchange and the winking emoji:

On Friday 7 October 2016 there were further email exchanges with Miss Sadler.
(1) At 8.59 a.m. Miss Sadler wrote to Mr Duckett at his personal email address:

“Hi Mr Duckett [with a winking emoji]
Just a little reminder that I need the Vat paperwork for Focus 15 by lunchtime today.
You will get a fine if it is not filed today.”
(2) At 9.14 a.m. Mr Duckett replied from his personal email address:

“Here we go, nag nag nag!!!
I was a little tied up yesterday—figuratively speaking! Thank you for your reminder—much appreciated, I will get them to you by lunchtime which, for me, is about 4pm!!!!
Howard”.

Fictional Character

2) Mr Duckett’s case is that the person who was in truth running the Company and conducting its business was Mr Deere, who “acted in the capacity of a director, took all the day-to-day decisions in relation to the management of F15, and effectively operated the company alone” (Mr Watkinson’s skeleton argument, paragraph 4) and used Mr Cooke as “a stooge” (ibid. para 5). If Mr Deere is fictitious, the result is that this picture is substantially correct save for the identity of the éminence grise: he can only be Mr Duckett. That this is so, I find as a fact.

De Facto Director

4) Accordingly, there is no force in the contention that Mr Duckett did nothing that could only be done by a director. If his involvement in the Company had been as he alleges, the point made on his behalf would be a fair one. As his involvement was not so limited, and as he was fulfilling the role that he attributes to Mr Deere, it was necessarily he himself who was “act[ing] in the capacity of a director”. There are very many individual pieces of evidence that go to show that Mr Duckett was where the governance of the Company lay: he dealt with the incorporation; he identified the Company’s bankers; he engaged and instructed the accountants and the solicitors; he received the bank statements and the correspondence with HMRC; he used the Company Email Address—not by itself a major point, but important in view of his insistence that only Mr Deere had access to it; in communications with third parties he implied his own close connection with the Company (“our”), in terms that belie his claim to have been providing merely ad hoc assistance; he alone received payments from the Company—payments, moreover, for which he gives no persuasive explanation; he was the person whom Mr Cooke had to consult before providing information, he was the person who first responded on behalf of the Company to the Insolvency Service, and he both completed much of the PIQC and accompanied Mr Cooke to interview. However, the central point is the one made above: if Mr Cooke was not running the Company, and if Mr Duckett’s evidence about Mr Deere is false, only Mr Duckett can have been running the Company.

False Evidence

I also take into account the nature of Mr Duckett’s defence in these proceedings, which I have already mentioned. As a full and frank admission of failures might be a mitigating factor, so I regard it as an aggravating factor that Mr Duckett lied on oath so egregiously in these proceedings. While the period of disqualification must be fixed by reference to the range appropriate for the specific matters pleaded and proved, and therefore Mr Duckett’s false evidence does not seem to me to justify moving the case into the top bracket, it is properly to be taken into account when deciding where in the appropriate range the case falls.