Directors: No Rights of Audience
A recent case on the rights of audience of company directors in Court has cemented the position that a director cannot appear in Court on behalf of a company (HM Secretary of State of Business Enterprise and Regulatory Reform v UK Bankruptcy Limited, [2009] CSOH 50).
In this case, a director sought the right to appear before the Court in the context of the proposed winding up of his company, UK Bankruptcy Limited. The director tried various lines of argument in order to persuade the court to hear him, including on human rights grounds. However, the Court rubber-stamped the existing practice and confirmed that a director cannot appear on behalf of a company. The Court did confirm though that the position differs where the party seeking to address the Court is a shareholder of the company, and luckily, the director here was also a shareholder.
Specifically in relation to the human rights argument, Lord Hodge considered that there may be exceptional circumstances in which the court may authorise a person who is not legally qualified to represent a company or corporation. This issue was reported to the Inner House for consideration. While we must await those results for conclusive guidance, Lord Hodge suggested that, for such exceptional circumstances to apply,
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the company should expressly authorise the line of defence which the representative is to adopt;
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the company should demonstrate that it does not have sufficient funds to pay for legal representation;
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the court must be satisfied that the director or representative was in a position to present the company's case; and
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the court must be satisfied that there was a bona fide and relevant dispute of fact or relevant legal issue to be determined.
For now, though, the general rule continues to apply, such that a director – unless also a shareholder – cannot represent a company in Court.
For further information please contact: Fiona Carlin
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