The Secretary of State for Business and Trade v Sehar Pal (Re 7SPEED Ltd)

1. This is the claim of the Secretary of State seeking a disqualification and compensation order against Ms Sehar Pal pursuant to sections 6 and 15A of the Company Directors Disqualification Act 1986 (‘CDDA’) by virtue of her conduct as sole director of 7Speed Ltd (‘the Company’). The claim is supported by the first and second affirmations of Mr Peter Denis Smith dated 21 May 2024 and 2 August 2024 respectively.

2. The grounds of unfitness relied upon, as summarised at paragraphs 7 and 8 of the first affirmation of Mr Smith, are that the Defendant caused the Company to breach the terms and conditions of the Bounce Back Loan (‘BBL’) Scheme by (i) overstating the Company’s turnover in the application form, leading to the Company receiving a loan of £50,000 more than it was entitled to and (ii) causing the Company to expend £49,997 of the BBL funds for purposes that did not provide economic benefit to the Company.

3. The claim is disputed. The Bounce Back Loan Scheme

4. The BBL Scheme is now a familiar concept, having been the subject of several judgments within this jurisdiction. A helpful overview of the BBL scheme and its background may be found in the judgment of Deputy ICC Judge Parfitt in the recent case of Re St Aimie’s Sports Academy Community Interest Group [2024] EWHC 3137 (Ch) at [17]-[23].

5. In summary, the BBL Scheme was introduced in May 2020 to help businesses affected by the Covid-19 pandemic. Under the BBL Scheme, a company could apply for a government-guaranteed bank loan of whichever was the lower of £50,000 or 25 per cent of the company’s annual turnover for the 2019 calendar year. If, but only if, the business wishing to apply had been established after 1 January 2019, estimated turnover could be used instead. Background

6. The Company was incorporated on 17 May 2018. Its name at incorporation was Organics London Ltd. On 22 January 2020, it changed its name to 7SPEED. The nature of the Company’s business was said to be (i) sale of used cars and light motor vehicles; and (ii) retail trade of motor vehicle parts and accessories.

7. From incorporation on 17 May 2018 to dissolution on 27 July 2021, the Defendant was the sole director of and shareholder in the Company.

8. The Company had one bank account (‘the Account’), held with Santander Bank (‘Santander’). The Account was opened on 26 July 2018 and closed on 7 September 2021.

9. Dormant accounts for the Company were filed with Companies House for the year ended 31 May 2019. These were annotated as approved by the Defendant on 3 January 2020. No other accounting information is available.

10. The Company had nil turnover through the Account (i) from 26 July 2018 to 1 January 2019 and (ii) throughout the 2019 calendar year. No transactions at all took place on the Account until 13 April 2020, when a bank charge of £7.50 was applied. Shortly thereafter, on 9 May 2020, a deposit of £12.50 was made. The next movement on the Account was receipt of the BBL on 12 May 2020, referred to below. Save for the BBL itself, no material sums passed through the Account for the entirety of the 2020 calendar year. The only other cash turnover through the Account in the 2020 calendar year amounted to £164. The cash turnover through the Account for the calendar year 2021 totalled £60. The BBL application

11. On 10 May 2020, the Defendant applied for a BBL on behalf of the Company in the sum of £50,000. A pro-forma of the application form is in evidence, together with a ‘walk through’ explanation of what the online application looked like to a Santander customer.

12. The Claimant adduced in evidence a copy of the information alleged to have been provided by the Defendant in her application on behalf of the Company. This stated (inter alia) as follows: 1.1. Company name: ORGANICS LONDON LTD; 1.2. Company number: 11368944; 1.3. Turnover: £220,000; 1.4. Amount Agreed: £50,000.

13. On 11 May 2020, the Defendant signed a fixed rate loan facility agreement with Santander in the sum of £50,000.

14. On 12 May 2020, the £50,000 BBL was paid into the Account. Following receipt of the money, the Account’s balance was £50,012.00. As previously noted, other than the BBL monies, only a further £164 was paid into the Account during 2020. Payments made from the BBL funds

15. Between 12 May 2020 and 18 June 2020, following receipt of the BBL funds, transfers totalling £49,997 were made from the Account. A table of these payments is set out at paragraph 36 of Mr Smith’s first affirmation. This provides as follows: 12 5 2020 S pal (ref ‘owed’) £15,000 13 5 2020 Sbegum (ref ‘owed’) £10,500 14 5 2020 SP MED Ltd £ 4,295.70 30 5 2020 S Pal (ref ‘owed’) £ 3000 2 6 2020 S Pal (ref ‘owed’) £ 5000 4 6 2020 PSP houseofcb.com £ 330 15 6 2020 S Pal (ref ‘owed’) £ 1,871.80 18 6 2020 R Chowdhury (ref ‘owed’) £10,000 Total: £49,997.50

16. I pause here to note that one of the payees, SP MED Ltd, was a company incorporated on 5 December 2016 which traded in the supply of dental instruments and equipment. At all material times the sole director and shareholder of SP MED Ltd was the Defendant.

17. The starting point for monthly repayments of the BBL was June 2021. No monthly repayment was made in June 2021. The Defendant proffered no explanation in evidence for the Company’s failure to commence repayment of the BBL in June 2021. Dissolution

18. On 27 July 2021, the Company was dissolved. None of the £50,000 BBL was repaid. Santander’s position

19. On 27 May 2022, Santander exercised its rights under the guarantee and was paid £50,843.21. Nevertheless, the outstanding monies remain payable to Santander, because under the guarantee, Santander is required to collect in monies as agent for the Secretary of State. Santander will then account to the Secretary of State for any compensation.

20. On 16 August 2022, Santander lodged a complaint with the Insolvency Service about the Defendant’s conduct in relation to the BBL. Procedural History

21. On 29 November 2022, the Insolvency Service sent an initial enquiry letter to the Defendant by email informing her of its investigations, which were primarily focused on the Company’s application for and use of the BBL. The Defendant was also asked to complete a director’s questionnaire. The questionnaire sought conventional information, such as the name and address of the Company’s accountant, and details of where the Company’s books and records were kept. It also contained a series of bespoke questions regarding the BBL in a section at the end of the questionnaire marked ‘Additional Questions’, under which the following three questions were listed: ‘1. On what basis was the Bounce Back Loan (BBL) obtained on 11 May 2020. Please provide evidence that the company was eligible for the loan.

2. How did the company use the funds?

3. Who decided how the loan was used?’

22. The Defendant was asked to return the questionnaire by 19 December 2022. No response was received.

23. On 5 January 2023, the Insolvency Service spoke to the Defendant by telephone and emailed her a further copy of their letter of 29 November 2022 and the questionnaire enclosed with that letter, asking for a response by 19 January 2023. No response was received.

24. On 21 April 2023, the Insolvency Service wrote to the Defendant summarising the basis of the misconduct alleged and requesting a response by 5 May 2023.

25. On 5 May 2023, the Defendant emailed the Insolvency Service providing the following information: ‘… my accountant at the time had mis-filed my company accounts as a dormant company when in fact I was trading and the turnover was as I had claimed before the Covid 19 period. This error was made by the accountant although I provided accounts in the contrary. I have tried to reach the accountant at the time but failed to do so. You further claim that the funds have not provided economic benefit to 7speed, which I believe is also incorrect as I have proof in the form of transaction trails that clearly show otherwise. In that I withdrew funds in order to facilitate the purchases and selling of vehicles in the UK for which I also have documentation for… If you require any additional documentation regarding the statements I have provided, I am more than willing to provide the necessary documentation….’

26. On 9 May 2023, the Insolvency Service emailed the Defendant asking her to provide documentary evidence to verify 7SPEED’s turnover for the calendar year 2019 and to explain the nature of each payment summarised at [15] above. The email also asked the Defendant to explain how each such payment was for the economic benefit of 7SPEED and to provide documentary evidence in support. The email requested a response by 16 May 2023.

27. On 16 May 2023, the Defendant emailed the Insolvency Service and provided the following information, albeit without any supporting documentation: ‘In regards to the companies Turnover I have made several attempts to contact my accountant at the time since your email and I have yet to receive a reply, I will carry on trying to contact him so I can obtain copies of the companies accounts at the time. Furthermore I have not been able to obtain the bank statements from the business account as it takes up to 8 weeks to get them from the bank archives. Nevertheless I have from memory provided some answers to your questions. The Payments totalling £24,871 made to S Pal was in fact to myself for the monies I spent towards the expenses of the company and buying vehicles in cash to be then sold on for which I made some profits and then made some losses as well. In order to get onto the buying and selling of cars business it required a lot of cash purchases and sales and thus the transfers were for the purposes of the business. Further, I made payments to a S Begum and Mr R Choudhury for the purchases of 2 vehicles at the time totalling £20,500. In terms of the payments to SP MED LTD, I was diversifying the companies portfolio into other areas of business and therefore invested into SP MED and the payments were therefore for that purpose.’

28. On 22 May 2023, the Insolvency Service emailed the Defendant to advise her that on the information and evidence available, they would proceed to make recommendations to the Secretary of State.

29. On 24 May 2023, a s.16 notice was sent to the Defendant. This gave the Defendant notice of the Claimant’s intention to bring both disqualification and compensation proceedings.

30. On 12 August 2023, the Defendant wrote to dispute the allegations. This was largely a repeat of the matters set out in her earlier email of 5 May 2023. The grounds for disputing the allegations set out in the email of 12 August 2023 were that: (1) ‘my accountant at the time had mis-filed my company accounts as a dormant company when in fact I was trading and the turnover was as I had claimed before the Covid 19 period’; and (2) ‘ You further claim that the funds have not provided economic benefit to 7speed, which I believe is also incorrect as I have proof in the form of transaction trails that clearly show otherwise. In that I withdrew funds in order to facilitate the purchases and selling of vehicles in the UK for which I also have documentation for ’.

31. On 18 August 2023 the Insolvency Service replied to the Defendant by email, noting (among other things) that the Defendant had still failed to provide any documentary evidence, including documents evidencing turnover, invoices and receipts relating to the purchase and sale of vehicles, and evidence relating to the purported investment into SP Med. No response was received.

32. A chasing email was sent on 26 September 2023.

33. According to the Defendant, on 31 December 2023, the Company’s accountant died. Whilst the Defendant had not exhibited to her affirmation any documents relating to the death, during the course of trial Mr Rahman was able to produce in electronic form on his mobile phone a death certificate confirming the death of the person said to be the Company’s accountant on 31 December 2023. For present purposes I shall proceed on the basis that the Company’s accountant did die on 31 December 2023.

34. On 31 May 2024, the Claim Form was issued.

35. By email dated 14 June 2024, the Defendant sent the Insolvency Service one invoice, which she maintained was ‘the only piece of evidence [she] could locate after thoroughly searching through [her] office and home’. She blamed the paucity of documentation on the passage of time, the ‘closure of [her] office’ and ‘the unavailability of [her] accountant’. The invoice was dated 11 May 2020 and in the sum of £24,871. It was issued by a Mr Mark Hossen to ‘Sehar Pal 7Speed Ltd Apt 404, Sesame Apartments Holman Road London SW11 3PG’ (a residential property which was also the Company’s registered office address) in respect of a Mercedes Benz CL class. In a section of the invoice marked ‘comments or special instructions’ it was provided that ‘vehicle is sold as seen with all service history and ownership documents’. No service history or ownership documents have been produced by the Defendant however; or indeed any evidence as to what became of the car.

36. On 4 July 2024, the Defendant served her acknowledgment of service in respect of both the disqualification and compensation claims . Prior to the first hearing, the Defendant also served an unsworn witness statement dated 15 July 2024, with no accompanying documents.

37. The Claimant filed and served response evidence in early August 2024.

38. At a directions hearing on 17 September 2024, the court ordered the Defendant to provide sworn affidavit evidence and listed the matter for a further directions hearing or uncontested disposal, as appropriate.

39. On 11 October 2024, the Defendant served an affirmation. Save for the inclusion of the conventional ‘solemnly and sincerely affirm’ wording employed in affirmations, the contents were in the same or substantially the same terms as the previous witness statement. Again, no documents were exhibited to it.

40. The basis of the Defendant’s opposition as set out in her affirmation was in summary as follows: (1) She did not cause the Company to apply for a BBL because the application was in the previous name of the Company. For the same reason, she did not sign an agreement on behalf of the Company; (2) She did not apply for a BBL on behalf of the Company declaring that its turnover for 2019 was £220,000, because the application was in the previous name of the Company; (3) She did not cause the Company to expend £49,997 of the BBL funds for purposes that did not provide economic benefit, because the application and agreement were not made in the name of 7SPEED (they were made in the previous name of the Company); (4) There was no mention of ‘economic benefit’ in the BBL agreement; (5) As to the purposes of the payments: (a) the payments of £24,871 to S Pal were to reimburse the Defendant for cash payments she had made in respect of expenses and purchases on behalf of the Company (b) the payments to S Begum and R Choudhury were for the purchase of 2 vehicles totalling £20,500 (c) the payments to SP MED LTD were diversifying the company’s portfolio into other areas of business by way of investment.

41. On 4 February 2025, a further directions hearing took place and the matter was listed for trial.

42. On 21 February 2025, the court gave notice that the trial was to take place on 21 November 2025. The Claimant served the notice on the Defendant on 25 February 2025. The Trial

43. At trial Ms Walker of counsel appeared for the Claimant. The Defendant appeared in person, accompanied by a friend, Mr Mamunur Rahman. Mr Rahman told the court that English was not the Defendant’s first language and asked if he could speak on her behalf, explaining that he had some familiarity with the court process as he had appeared in a number of court hearings.

44. I explored this request directly with the Defendant. The Defendant confirmed that English was not her first language, explaining that she had been schooled in Germany, with classes conducted in German. (I pause here to note that according to Companies House filings, the Defendant’s nationality is German). She said that she had lived in England for 8 or 9 years and had learned English over that time. From her ready responses to my questioning, I am satisfied that the Defendant was conversationally fluent in English. From her responses when referred to documents during cross-examination, I am also satisfied that the Defendant could read English. Overall, it was clear that the Defendant had more than a sufficient grasp of the English language to be able to participate fully in the proceedings without the need of an interpreter. As the Defendant was plainly anxious at the prospect of representing herself in court, however, at her request and in the exercise of my discretion, I allowed Mr Rahman to assist her in making submissions to the court, in cross-examining Mr Smith and in re-examining the Defendant. By the end of trial, however, the Defendant had gained enough confidence to address me directly during closing submissions, reading out (in English) a statement which she had prepared in advance. The Evidence - Approach

45. The court’s approach to assessment of witness evidence has been the subject of numerous explanations and comments in the authorities. For present purposes, I take into account the principles and caselaw summarised in Reynolds v Stanbury [2021] EWHC 2506 at [10]-[13].

46. I also take into account the guidance given by Arden LJ (as she then was) in Re Mumtaz Properties Ltd [2011] EWCA Civ 610 , where she said: ‘14. In my judgment, contemporaneous written documentation is of the very greatest importance in assessing credibility. Moreover, it can be significant not only where it is present and the oral evidence can then be checked against it. It can also be significant if written documentation is absent. For instance, if the judge is satisfied that certain contemporaneous documentation is likely to have existed were the oral evidence correct, and that the party using oral evidence is responsible for its nonproduction, then the documentation may be conspicuous by its absence and the judge may be able to draw inferences from its absence.’

47. I also remind myself of the guidance given by Leggatt J (as he then was) in Blue v Ashley [2017] EWHC 1928 (Comm) at [65]: ‘In the twenty-first century the prevalence of emails, text messages and other forms of electronic communication is such that most agreements or discussions which are of legal significance, even if not embodied in writing, leave some form of electronic footprint.’ Written Evidence

48. For the purposes of this trial, I have read and considered (i) the first and second affirmations of Mr Smith and the exhibits thereto and (ii) the affirmation of the Defendant dated 11 October 2024, together with other documents contained in the trial bundles to which reference will be made where appropriate. Oral Evidence

49. I heard oral evidence from Mr Smith and the Defendant.

50. As the manager of investigations conducted after the event, Mr Smith very properly accepted in cross examination that he had no contemporaneous knowledge of the events forming the subject matter of the claim. His primary purpose was to produce documents and to explain the conclusions drawn from them. In oral testimony he made helpful and accurate reference to the hearing bundles. Overall, in my judgment Mr Smith was plainly a truthful witness, doing his best to assist the court to the best of his knowledge information and belief. I have every confidence in the veracity and reliability of his testimony.

51. The Defendant was more guarded in oral testimony. Whilst I take into account the fact that she was nervous and new to the court process, she was evasive in certain respects, including her reluctance at times in cross-examination to accept that in order to complete the online BBL application form, she must have ticked certain pertinent boxes on given pages (including acknowledgement of material declarations) in order to move on to the next page of the form.

52. When asked to justify the turnover figure of £220,000 included in the BBL application form, given the level of transactions running through the Account, the Defendant said that due to the nature of the business, most transactions were in cash. Even businesses transacting largely in cash, however, will usually have some day to day records of their dealings; such as emails, texts, invoices and cash receipts: none relating to the calendar year 2019 were produced. The Defendant claimed in cross-examination that she had ‘believed’ that the turnover figure was correct, without stating the grounds of her belief.

53. The Defendant next volunteered that the turnover figure was an ‘estimate’; a claim first made in the witness box, notwithstanding the numerous opportunities afforded to her to explain the figure of £220,000 in pre-issue correspondence spanning two years. No documentation was adduced to demonstrate the basis of any such estimate, however, and the Defendant did not proffer any explanation in the witness box as to how she had arrived at it. The rules of the BBL scheme did not permit the use of an estimate in this case in any event.

54. The Defendant’s explanations for having no relevant documents at all, save for one invoice relating to a car purchase in 2020, were painfully thin. Repeated attempts were made to lay the blame on the Company’s accountant, who was said to have become ill and then to have died in late December 2023. Yet the Claimant had first contacted the Defendant by email on 29 November 2022, over a year before the death of the Company’s accountant. Even assuming that the accountant had been ill for a period prior to his death, no adequate or persuasive explanation was put forward by the Defendant for her failure to arrange collection of relevant documents from him at any stage. The Defendant’s suggestion in the witness box that all contact with the accountant had to be made through another member of the Defendant’s family (who was never named and was not called as a witness) raised more questions than it answered and was clearly of itself not a sufficient or plausible explanation for failing to arrange collection of any relevant documents held by the accountant, given that the Defendant knew that she was under investigation, as sole director of the Company, from November 2022 at the latest.

55. The Defendant was also unable to provide any plausible explanation why, if access to the accountant over the material period was problematic in any way, she had not set about reconstructing the Company’s records and/or collating other vouching documentation from third party sources, once put on notice of the Claimant’s investigations in November 2022.

56. When the Defendant was asked why, for example, as sole director of SP Med Ltd, she could not produce any documents from SP Med Ltd to explain the payment made by the Company to SP Med Ltd from BBL funds, she stated (for the first time in the witness box) that SP Med Ltd had used the same accountant as the Company; implying in context that she had encountered a similar difficulty in making contact with that accountant regarding documents relating to SP Med Ltd as that said to have been encountered when seeking documents relating to the Company. In that regard, the same observations apply, mutatis mutandis, as those set out in paragraph [54] above. I would add that according to Companies House filings, accounts for SP Med Ltd for the year ending 31 December 2021, electronically signed by the Defendant, were filed on 14 August 2023; begging the question of how the Defendant was able to sign off such accounts for the year ending 31 December 2021, if all documentation was with the accountant.

57. Again, when the Defendant was asked why she could not even produce her own personal bank statements to support her claims to have paid out personally monies on the Company’s behalf which were later reimbursed from the BBL, her only explanation (again volunteered for the first time in the witness box) was that she had changed bank accounts at some point; without stating when. She did not proffer any persuasive explanation why this of itself would prevent her producing relevant bank statements – or indeed any other personal records of her own expenditure - on the Company’s behalf.

58. Other aspects of the Defendant’s oral testimony simply did not make any sense when considered in context. These will be addressed where appropriate during the course of this judgment.

59. A further troubling feature of the Defendant’s testimony overall was her willingness to sign the affirmation dated 11 October 2024. The affirmation failed properly to engage with the allegations made against the Defendant in these proceedings. It was peppered with patently hopeless excuses and assertions. The Defendant offered no apology for her affirmation in oral testimony and did not seek to explain how she had come to sign the same. This failure to take proper care to confirm the accuracy and completeness of her affirmation before signing it is in my judgment a further factor to take into account when considering the credibility of the Defendant as a witness.

60. On the evidence as a whole, I have come to the conclusion that, save where admitted or supported by context or contemporaneous documentary evidence, the Defendant’s evidence, written and oral, should be approached with caution. Unfitness: Legal Principles

61. Section 6 of CDDA provides that the Court shall make a disqualification order against a person on an application where it is satisfied: (1) that the person is or has been a director of a company; (2) that the company became insolvent or has been dissolved; and (3) that their conduct as a director of that company makes them unfit to be concerned in the management of a company.

62. No issues arise with the first two of these requirements. The Defendant was sole de jure director of the Company, which has been dissolved.

63. On the issue of unfitness, I remind myself of the guidance given in In re Sevenoaks Stationers (Retail) Ltd [1991] Ch. 164 , in which Dillon LJ (at page 176) observed: ‘ The test laid down in section 6 … is whether the person's conduct as a director of the company or companies in question "makes him unfit to be concerned in the management of a company." These are ordinary words of the English language and they should be simple to apply in most cases. It is important to hold to those words in each case .’

64. In Re Structural Concrete Ltd [2001] BCC 578 at 586E-G, Blackburne J held that consideration of the issue of unfitness involved a three-stage process: (1) Do the matters relied upon amount to misconduct? (2) If they do, do they justify a finding of unfitness? (3) If they do, what period of disqualification, being not less than 2 years, should result?

65. As the Defendant’s conduct falls after the transitional date of 1 October 2015, it is to be considered having regard to the amended version of the CDDA .

66. Section 12C(4) of the CDDA states that: ‘In making any such determination in relation to a person, the court or Secretary of State must- (a) in every case, have regard in particular to the matters set out in paragraphs 1 to 4 of Schedule 1; (b) in a case where the person concerned is or has been a director of a company or overseas company, also have regard in particular to the matters set out in paragraphs 5 to 7 of that Schedule.’

67. Schedule 1 contains the following provisions: Paragraph 1 : The extent to which the person was responsible for the causes of any material contravention by a company of any applicable legislative or other requirement. Paragraph 2 : Where applicable, the extent to which the person was responsible for the causes of a company becoming insolvent. Paragraph 3 : The frequency of conduct of the person which falls within paragraph 1 or 2. Paragraph 4 : The nature and extent of any loss or harm caused, or any potential loss or harm which could have been caused, by the person's conduct in relation to a company. Paragraph 5 : Any misfeasance or breach of any fiduciary duty by the director in relation to a company. Paragraph 6 : Any material breach of any legislative or other obligation of the director which applies as a result of being a director of a company. Paragraph 7 : The frequency of conduct of the director which falls within paragraph 5 or 6.

68. The matters referred to in Schedule 1 are not exhaustive; the court can consider any misconduct of a director (pleaded in the claim) in deciding whether he or she is unfit.

69. Disqualification may be warranted where a director’s conduct has fallen below the ordinary standards of commercial morality. Limited liability is a valuable tool in the promotion of trade and business but it must not be misused; an individual who takes advantage of limited liability must conduct their company responsibly, with proper regard to the ordinary standards of commercial morality: Re Swift 736 Ltd [1993] BCC 312 at 315E-F.

70. In the context of BBLs, there have now been a number of reported cases considering director’s disqualification applications on the basis of incorrect and/or inflated BBL applications. In this regard I was referred to the summary of such caselaw set out in the recent case of Secretary of State for Business and Trade v Ahmedivand [2025] EWHC 98 (Ch) at [52]-[56]: ‘52. In Re DEEA Construct Ltd [2023] EWHC 2084 (Ch) , Chief ICC Judge Briggs held that a director had fallen below the standards of probity and competence appropriate for persons fit to be directors of companies where the director had given an inflated turnover when applying for a BBL and the loan obtained under the scheme had not been used for the purpose for which it had been made (at [19]-[21]). Chief ICCJ Briggs observed that the false representation had been made at a time when the government placed trust and confidence in directors of companies for the purpose of honestly representing their financial status in order that they may obtain financial support to allow companies to be maintained and survive government-imposed restrictions.

53. In Re Tundrill Ltd [2023] EWHC 3214 (Ch) , ICCJ Burton concluded (at [62]-[67]) that a director who had caused a company fraudulently to apply for a BBL on the basis of an estimated turnover that he knew or ought to have known the company had no realistic prospect of achieving and had caused the company to use the funds for his personal benefit had fallen below the standards of probity and competence of persons fit to be directors of companies.

54. In the more recent case of Re St Aimie's Sports Academy [2024] EWHC 3137 (Ch) , DICCJ Parfitt concluded that a director's knowing overstatement of the company's turnover on the BBL application form was misconduct, the director having breached the trust placed on him by the government at a time of national emergency (at [67]). The learned deputy further concluded that the particular misstatement of turnover in the case before him crossed the line and demonstrated unfitness to be concerned in the management of companies, in circumstances where it had been done knowingly and the company had received more than it was entitled to as a result, notwithstanding that it was only one instance of misconduct in the context of a now closed scheme so that there was no risk of the misconduct recurring (at [68]-[69]). DICCJ Parfitt held that the misconduct seemed indicative of an attitude to the responsibilities of being a director which was not consistent with commercial morality and was deserving of serious sanction.

55. DICCJ Parfitt also referred to CICCJ Briggs's comments in Re DEEA Construct Ltd, noting (at [62]-[63]) that the reference to trust and confidence was a corollary of the self-certification application process for BBLs, where the whole process was streamlined with fewer checks and with information not being subjected to the usual level of scrutiny, rendering truthful answers the only effective safety mechanism, with government money being staked on those answers.

56. DICCJ Parfitt (at [65]) went on generally to observe that knowingly providing false information as to turnover in a BBL application was likely to be misconduct (potentially serious misconduct depending on the circumstances of the case) and that unfitness was likely to be shown if a director's misconduct involved falsely obtaining a government-backed loan, personally shielded by limited liability, at a time of national emergency, exploiting a lack of scrutiny which was decided to assist those most in need of help . ’

71. On behalf of the Claimant, Ms Walker maintained that a consistent observation across these cases was that directors were placed in a position of trust in the context of a national emergency. This was so that the government could release money quickly and make the financial aid more effective. She argued that directors were not expected to take advantage of the lack of scrutiny to claim more than they were entitled to and that those who are found to have done so are highly likely to be found unfit, particularly when, in breach of the terms of the BBL, the funds obtained were not used to promote the purposes of the Company’s business. Discussion and conclusions

72. On the evidence before me, I am satisfied that the Defendant as sole director of the Company completed and submitted the BBL application form on 10 May 2020 and the next day signed the BBL fixed term agreement, in each case on the Company’s behalf.

73. On the evidence which I have heard and read, I am further satisfied that the pro-forma of the BBL application form in evidence, together with the ‘walk-through’ explanation of what the online application looked like to a Santander customer and the information summary (referred to at [12] above) provided by Santander, accurately represent the BBL application form completed by the Defendant on 10 May 2020 on behalf of the Company and the attendant information supplied with the form.

74. There was some debate at trial as to whether the Defendant herself recorded the Company’s name in the BBL application form as its previous name (Organics London Ltd) or whether the application form was partially pre-filled (to the extent of including the old name) before the Defendant completed the remainder of it. In my judgment little turns on that. The Company’s company number was correctly recorded in the application form and in the BBL agreement. The application was undoubtedly an application made by the Company acting by the Defendant and the BBL agreement was undoubtedly an agreement entered into by the Company acting by the Defendant. I so find.

75. On the evidence I have heard and read, I am further satisfied that: i) before filling in the online application, the landing page stated clearly that the loan amount was up to £50,000 or 25% of the annual turnover if that was lower; ii) before starting the application, the Defendant had to scroll through a list of information: and that, under the heading ‘Things you need to know’, it was again stated: ‘loan amount up to £50,000 or 25% of your annual turnover in 2019 if that is lower’; iii) the information in question also made clear that when making the application the Defendant would need the Company’s actual turnover for 2019; iv) the application form itself asked for ‘2019 company turnover’ and the Defendant recorded £220,000 in the relevant box in response; v) the application form itself asked the Defendant to state how much she wished to borrow and, immediately above the relevant box to be completed in response, stated clearly that the Defendant would be asked to confirm the loan amount was equal or less than 25% of the Company’s annual turnover for 2019. Notwithstanding that and the other clear warnings in the form and accompanying information, the Defendant recorded £50,000 in the relevant box in response; vi) before finalising the application, the Defendant was required by the online form to, and did, tick a box to confirm inter alia the following: a) ‘this loan amount is equal to or less than 25% of annual turnover for 2019’; and b) ‘I undertake to use the credit granted on the basis of this agreement only to provide economic benefit to my business…I also confirm that the Bounce Back Loan will be used wholly for business purposes and not personal purposes’; vii) on 11 May 2020, the Defendant signed the fixed rate loan facility and agreement document relating to the BBL of £50,000 on behalf of the Company; viii) it was an express term of the said loan facility agreement provided that ‘[t]he loan must be used wholly for the purpose of your Business and not for any personal or other non-business purpose ’.

76. I further find that: (1) in January 2020, the Defendant approved dormant accounts for the Company for the year ended 31 May 2019, which were filed at Companies House on 3 January 2020. In oral testimony the Defendant claimed that she had ‘no recollection’ of approving the dormant accounts filed but proffered no plausible explanation as to how such accounts would state on their face that she had approved them if she had not. In this regard I reject the Defendant’s evidence that the Company’s accountant must have filed them in error. On the evidence as a whole I am satisfied on a balance of probabilities that the Defendant did approve the dormant accounts, even if she has, as she now claims, subsequently forgotten having done so; and that (2) in the calendar year 2019, the Company’s only bank account (referred to in this judgment as ‘the Account’) had no cash turnover.

77. I also find that: (1) in the period of approximately one month following payment of the £50,000 BBL into the Account, £49,997 was then transferred out of the Account; (2) of the said sum of £49,997: (i) payments totalling £24,871.80 were made to the Defendant’s personal bank account; (ii) a further payment of £4295.70 was made to SP Med Ltd, a company of which the Defendant was sole director and sole shareholder at the relevant time; (iii) a further payment of £330 was made to a fashion store referred to in the bank statements as ‘PSP houseofcb.com’ for goods for the personal benefit of the Defendant; (iv) two remaining payments of £10,500 and £10,000 were made to S Begum and R Chowdhury on 13 May 2020 and 18 June 2020 respectively.

78. Whilst the Defendant has provided a brief narrative explanation of the use of the payments out, save for one invoice pre-dating receipt of the BBL, she has provided no documentation to back up that explanation, notwithstanding having previously indicated in correspondence that she could provide such documentation (see [25] and [30] above).

79. The reasons put forward by the Defendant in her written evidence for contesting the disqualification claim are for the most part misconceived. Paragraphs 2, 3 and 6 of the Defendant’s 7-paragraph affirmation flatly deny that the Defendant applied for a BBL/declared turnover of £220,000/entered into the BBL facility agreement on behalf of the Company , on the basis that in the application form and facility agreement the Company’s old name, rather than current name, is used. As rightly noted by Ms Walker on behalf of the Claimant, the fact that the Company’s previous name was used in the application form and facility agreement takes matters nowhere. The correct company number was used. Section 81 of the Companies Act 2006 provides that a change of name ‘does not affect any rights or obligations of the company’. Moreover, there is no suggestion in the Defendant’s written evidence that in making the application and signing the facility agreement she was acting as a director of a different company. This was a hopeless line of defence which, unsurprisingly, the Defendant did not seek to maintain in oral testimony; in oral testimony the Defendant accepted that she made the BBL application on behalf of the Company.

80. The Defendant adduced no documentary evidence in support of the contention that the Company’s turnover in 2019 was £220,000. The turnover declared in the BBL application form did not sit at all well with the Company’s bank records or with the dormant accounts filed for the Company. Even if the Company did conduct some transactions in cash, the Defendant failed to proffer any explanation as to how she came to calculate (or even estimate) the annual turnover of the Company for 2019 as £220,000. No cash book, invoices, receipts, emails, texts or ‘WhatsApp’ messages vouching, or even lending mild support to, the claimed 2019 turnover of £220,000 were produced in evidence. In this regard I remind myself of the guidance given in Re Mumtaz and Blue v Ashley referred to at [46] and [47] above. In my judgment this is a case in which material documentation is ‘conspicuous by its absence’.

81. Similarly hopeless was the Defendant’s claim that the BBL application form and facility agreement did not make clear that the BBL funds should only be used to provide economic benefit to the business of the Company and for the purposes of the Company’s business: see by way of example [75(vi)(b) and (viii)] above.

82. The Defendant’s written testimony, set out in one paragraph of her affirmation, as to the use to which the BBL funds were put, was also woefully inadequate. Paragraph 5 of her affirmation provided as follows: ‘The Payments totalling £24,871 made to S Pal was in fact to myself for the monies I spent towards the expenses of the company and buying vehicles in cash to be then sold on for which I made some profits and then made some losses as well. In order to get onto the buying and selling of cars business it required a lot of cash purchases and sales and thus the transfers were for the purposes of the business. Further I made payments to S Begum and Mr R Choudhury for the purchases of 2 vehicles at the time totalling £20,500. In terms of the payments to SP MED LTD, I was diversifying the company’s portfolio into other areas of business and therefore invested into SP MED and the payments were therefore for that purpose.’

83. The only documentary evidence referred to by the Defendant in relation to the use to which the BBL monies were allegedly put comprised the invoice dated 11 May 2020 in the sum of £24,871 relating to the purchase of a Mercedes Benz CL class, an invoice pre-dating receipt of the BBL on 12 May 2020. This was not exhibited to the Defendant’s affirmation but had been produced by her in correspondence with the Claimant and was adduced in evidence by the Claimant in his evidence in reply. The Defendant maintained in oral testimony that she had paid this invoice from her own personal funds and had then reimbursed herself from the Account following the Company’s receipt of the BBL.

84. There were a number of difficulties with this explanation however.

85. The first was that the explanation for these payments given in oral testimony did not accord with the Defendant’s written evidence, which stated (with emphasis added) that the payments totalling £24,871 made to her from the BBL funds were by way reimbursement for funds expended by the Defendant personally ‘towards the expenses of the company and buying vehicle s in cash’. If the payments were in respect of the standalone purchase of one car, it would have been very easy for the Defendant to have said so in her affirmation.

86. The second difficulty – a point connected with the first - is the Defendant’s failure to explain why, following the Company’s receipt of the BBL, she then made a series of payments to herself (which happened to total £24,871), rather than one payment of £24,871.

87. The third is the Defendant’s failure to explain why the purchase was so time -critical that it could not wait for one day (or, assuming that she did not know exactly when the BBL would land in the Account, a few days), to await receipt of the BBL.

88. The fourth was the Defendant’s failure to adduce any documentary evidence whatsoever of payment of the purchase price from her own personal funds; be it personal bank statements showing a large cash withdrawal shortly ahead of the purchase or otherwise. The Defendant had no persuasive explanation for this. In this regard I reject the Defendant’s somewhat opportunistic attempts in the witness box to explain away her failure to adduce in evidence her own personal bank statements on the basis that she had at some unspecified point changed bank accounts. This had not been mentioned in pre-issue correspondence, despite many opportunities to do so. It also did not of itself explain why she had been unable to adduce any other documentary evidence supporting her claims to have paid for the car on the Company’s behalf from personal funds.

89. The fifth was the Defendant’s failure to explain (still less adduce any documentary evidence to show) what became of the Mercedes CL class vehicle purchased and whether it ever provided economic benefit to the Company. The Company’s bank statements do not show any receipts from a subsequent sale of the vehicle and the Company was dissolved on 27 July 2021 with no assets.

90. For all these reasons, I reject the Defendant’s evidence as to the purpose of the payments totalling £24,871 made to her from the BBL funds.

91. The Defendant was in similar difficulty in relation to the remaining payments made from the BBL. Her claim that the payment of £4,295.70 to her other company, SP MED Ltd, was for the purpose of ‘diversifying’ the Company’s portfolio, simply did not hold water. No documentary evidence was adduced in support of this contention and I have no hesitation in rejecting it. Even if the payment had been shown by documentary evidence to represent consideration for the purchase by the Company of shares in SP MED Ltd, I was taken to no persuasive evidence to demonstrate that such purchase was for the purposes of the business of the Company or otherwise for its economic benefit, rather than for the benefit of SP Med Ltd.

92. I also reject the Defendant’s evidence as to the purpose of the payments to S Begum and R Choudhury. The Defendant adduced no documentary evidence whatsoever in support of her contention that the payments to S Begum and R Choudhury were for the purchase by the Company of two vehicles (a Mercedes A class and a Prius) totalling £20,500. In this regard I reject the Defendant’s attempts to blame the Company’s accountant for the lack of documentary evidence of the purchases. Not all documentation relating to the purchase of a car by a company would go to its accountant. In this regard I again remind myself of the guidance given in Re Mumtaz and Blue v Ashley referred to at [46] and [47] above. In my judgment this is again an example of documentation ‘conspicuous by its absence’. Moreover even if the Company’s accountant had held some of the documentation relating to these alleged purchases, that would not of itself prevent the Defendant from seeking evidence of such purchases from other sources, including affirmations from the payees, S Begum and R Choudhary, confirming their sales of vehicles to the Company, the timing of the sales and the purchase price paid.

93. A further difficulty for the Defendant was her failure to explain (still less adduce any documentary evidence to show) what became of the Mercedes A class and Prius said to have been purchased by the Company using BBL funds. The Company’s bank statements do not show any receipts from subsequent sales of the vehicles and, as previously observed, the Company was dissolved on 27 July 2021 with no assets.

94. The Defendant’s oral evidence on the payment of £330 made from the Account to a fashion store was also telling. In cross examination, when it was put to her that the payee was a fashion store, the Defendant admitted that the purchases were for her own benefit rather than that of the Company, but went on to claim, for the first time in the witness box, that she had paid for these purchases from the Company’s bank account in error and had later, at some unspecified date, reimbursed the Company in cash to correct the mistake. I reject the Defendant’s claim to have reimbursed this sum in cash at a later date. Leaving aside the fact that the Defendant had not put forward this somewhat convenient explanation at any time in pre-issue correspondence with the Claimant, despite many opportunities to do so, the Defendant did not proffer any explanation of why she would reimburse the Company in cash when, on her own case, the Company still owed her £1871.80, which she arranged to be paid to her from the Company’s account less than two weeks after the store purchase (see list of payments from the Account summarised at [15] above). Conclusions on the Claimant’s factual case

95. The Defendant had been sole director of the Company since its incorporation in 2018. There is therefore no doubt that when completing the BBL application form, she knew how long the Company had been in existence and when it had started trading.

96. On the evidence as a whole, I am satisfied that when completing the BBL application form, the Defendant (i) did understand the question that she was being asked about the Company’s turnover for 2019, (ii) did understand the need to provide the actual rather than an estimated turnover figure for that year and (iii) did understand the significance of the turnover figure in determining the amount of the BBL. Turnover is a simple concept and one which, on the evidence as a whole, I am satisfied that the Defendant understood. Anyone reading the form would appreciate that there was a correlation between the amount of the loan and the amount to be included in the turnover box. Whilst English is not the Defendant’s first language, I am satisfied that the Defendant is and was at all material times sufficiently fluent in written and oral English for these purposes.

97. I am further satisfied that, given (i) the Defendant’s knowledge of the date on which the Company was incorporated and the date on which it started trading and (ii) the clarity of the language used in the application form, the Defendant must have known when completing the BBL application form that the Company was only entitled to a BBL of a maximum of 25 per cent of its actual turnover for the 2019 calendar year. I so find.

98. On the evidence before me, I find on a balance of probabilities that the Company’s actual turnover for 2019 was nil or close to zero. In so finding I take into account the evidence as a whole, including in particular the evidence of the Company’s banking transactions for 2019 and the dormant accounts approved by the Defendant and filed at Companies House. I also take into account the wholesale lack of any documentary evidence to support an actual turnover of £220,000 (or any other sum) for the year 2019.

99. In reaching these conclusions I confirm that I reject the Defendant’s oral testimony to the effect that the Company’s 2019 turnover really was £220,000. She has adduced no documentary evidence whatsoever in support of her contentions in this regard and for reasons previously explored I reject her attempts to lay the blame for this upon the Company’s accountant.

100. On the evidence which I have heard and read, I find that when completing the BBL application form on behalf of the Company, the Defendant falsely stated the Company’s turnover in the sum of £220,000, a sum which bore no resemblance to its actual turnover for 2019. On the evidence before me, I am satisfied that the Defendant must have done so knowing that statement to be false, or at the very least reckless as to the truth of her statement. I so find.

101. On the evidence which I have heard and read, I am further satisfied that the Defendant then used £49,997 of the BBL for purposes other than the Company’s business and not for its economic benefit. I so find. Misconduct

102. In light of my findings summarised at [100] and [101] of this judgment, the Claimant’s factual case has been made out on the evidence. Following the three-stage process summarised by Blackburne J in Re Structural Concrete Ltd [2001] BCC 578 at 586E-G, I turn next to consider whether the conduct found proven amounts to misconduct.

103. In my judgment, the Defendant’s conduct as found proven does amount to misconduct. In (i) knowingly or recklessly overstating the Company’s turnover in the BBL application, at a time when the government placed trust in directors accurately to self-certify as part of a streamlined process designed to enable speedy payments to be made to companies in distress at a time of national crisis; and in (ii) using £49,997 of the BBL for purposes other than the Company’s business (and not for its economic benefit), the Defendant abused the privileges of limited liability and failed to conduct the Company ‘with due regard to the ordinary standards of commercial morality’: Re Swift 736 Ltd [1993] BCC 312 at 315. Unfitness

104. I turn next to unfitness. In my judgment the Defendant’s knowing or reckless inflation of the Company’s turnover for the purposes of the BBL application, coupled with use of £49,997 of the BBL for purposes other than the Company’s business and not for its economic benefit, warrants a finding of unfitness.

105. In oral testimony the Defendant gave evidence that, following dissolution of the Company, she contacted Santander directly and offered to repay the BBL, but was told that it was too late as the Account had been closed and the Company dissolved. In my judgment, such conduct does not detract from my finding of unfitness.

106. Similarly, the Defendant’s attempts in closing submissions to rely upon various conditional offers to pay the Claimant the full amount of the BBL do not detract from my finding of unfitness.

107. In determining unfitness, the court must decide whether the conduct complained of and found proven renders the defendant unfit. If the answer is yes, a period of disqualification is a mandatory requirement. Evidence of given conduct after the event , such as attempts to repay Santander in this case, may, if such evidence is accepted, in principle be taken into account when determining the appropriate period of disqualification. It is not, however, relevant to the issue of unfitness.

108. I take into account that only two instances of misconduct are relied upon by the Claimant during the course of the Defendant’s time as a director of the Company. I also take into account the fact that as the BBL scheme has now closed, there is no risk of this particular type of misconduct recurring. Nonetheless, in my judgment the misconduct found proven demonstrates, to adopt with gratitude a phrase employed by DICCJ Parfitt in Re St Aimie’s at [69], ‘an attitude to the responsibilities of being a director which is not consistent with commercial morality’. In my judgment the Defendant’s conduct fell below the standards of probity and competence required of a director and warrants a finding of unfitness.

109. For the purposes of the second stage of the Structural Concrete test, therefore, I am satisfied that the Defendant’s conduct justifies a finding of unfitness. Period of disqualification

110. In light of the finding of unfitness, I am obliged by statute to make a disqualification order against the Defendant. Where the Court makes a disqualification order pursuant to s.6 CDDA, the minimum period of disqualification is 2 years and the maximum period is 15 years.

111. In Re Sevenoaks Stationers (Retail) Ltd, Dillon LJ (with whom Butler-Sloss and Slaughton LJJ agreed) gave the following guidance: ‘ I would for my part endorse the division of the potential 15-year disqualification period into three brackets … (i) the top bracket of disqualification for periods over 10 years should be reserved for particularly serious cases. These may include cases where a director who has already had one period of disqualification imposed on him falls to be disqualified yet again. (ii) The minimum bracket of two to five years' disqualification should be applied where, though disqualification is mandatory, the case is, relatively, not very serious. (iii) The middle bracket of disqualification for from six to 10 years should apply for serious cases which do not merit the top bracket’

112. In the present case, the Claimant seeks a disqualification of 12 years, which is at the lower end of the top bracket, relying in particular upon (i) the Defendant’s knowing, or at the very least reckless, misstatement of the Company’s turnover and (ii) the fact that the monies were not used for the purposes of the Company’s business and/or for its benefit.

113. During the course of submissions, I was helpfully reminded of the periods of disqualification ordered in a number of recent cases involving abuse of the BBL Scheme.

114. In Re DEEA Construct Ltd [2023] EWHC 2084 (Ch) , a director of a company with negligible turnover applied for the maximum BBL of £50,000, based on a falsely inflated turnover of £200,000. The unfit conduct included a finding that the director had taken the money for himself. The court in Re DEEA considered the case to be very serious and made a disqualification order of 13 years.

115. The case of In Re Tundrill Ltd [2023] EWHC 3241 (Ch) concerned a fraudulent overstatement of turnover and a BBL which was transferred to the director personally on receipt. The BBL obtained was a lesser sum than in Re DEEA, being £15,000. In that case a disqualification order of 11 years was made.

116. In Re St Aimie’s [2024] EWHC 3137 (Ch) , the director was found knowingly, but not dishonestly (see Re St Aimie’s at [75]), to have misrepresented the company’s turnover as £100,000, obtaining a BBL on that basis of £25,000, when in fact the company’s turnover was £41,830 (less than half the stated turnover), causing the company to receive £14,543 more than its entitlement. The claimant had not alleged personal benefit as part of her case, but the fact that the director had in fact benefited personally meant that the director could not employ absence of benefit in mitigation (see [79]). The court took into account as mitigating factors (inter alia) that the director was new to business, had no prior history of misconduct, and had paid £3540 into the liquidation already notwithstanding that he was of very limited means. The court also took into account the relatively small quantum of detriment when compared both to other cases where creditors have suffered detriment and compared to the maximum loss that might have been caused by an improper BBL application. Ultimately the court made a disqualification order of 8 years.

117. I am grateful to Counsel for her researches on the foregoing BBL cases. Whilst such cases are helpful illustrations, however, I remind myself that in each case of disqualification, the appropriate period of disqualification must be determined by careful consideration of all relevant factors in the case itself.

118. In the present case, the period of disqualification must be assessed by reference to the grounds of misconduct which have been found proven and to give rise to a finding of unfitness. The period must also take into account any legitimate mitigating factors.

119. The mitigating factors put forward in closing submissions by the Defendant (partly through Mr Rahman on her behalf and partly in person) were in summary as follows: (1) The Defendant had come to the UK from Germany in order to support her parents. She had always tried to do the right thing; (2) The Defendant used a family friend as an accountant. The dormant accounts produced by the accountant were not the reality. The accountant had mixed dementia and diabetes before he died in December 2023; (3) The Defendant had never intended to avoid repaying the BBL. She had tried to run a business and when it failed she tried to pay. The Defendant offered full payment to Santander after discovering that the Company had been dissolved but was told that she could not repay the BBL directly as the Account had been closed and the Company had been dissolved; (4) The Defendant offered full payment to the Claimant, initially conditionally upon no disqualification order being made and latterly conditionally upon only a 2 year disqualification order or undertaking ( I pause here to note that these offers were made shortly before trial, on 5 and 7 November 2025 respectively); (5) The Defendant had no employment experience in the UK. In Germany she had previously worked in real estate on a self-employed basis. A 12 year disqualification would mean that the Defendant could not run any other company. The Defendant hoped to rebuild in the future. She was now studying health and social care. The Defendant would ensure that all future business activities were properly documented; (6) The Defendant was presently reliant on Universal Credit. The Defendant could not repay the BBL from Universal Credit. A 12 year disqualification order would not help the government recover funds.

120. As noted at [105] above, the Defendant’s offer to pay Santander direct on discovering that the Company had been dissolved, and Santander’s response, were addressed by the Defendant in oral testimony.

121. By close of play, the Defendant’s offers to the Claimant to pay the BBL (initially on condition of no disqualification, and latterly on condition of a minimum 2 year disqualification period) were common ground, as was the timing of these offers, being 5 and 7 November 2025 respectively, shortly before trial. Discussion and conclusions on period of disqualification

122. In my judgment the misconduct found proven is undoubtedly serious in this case. The proven misconduct involved (i) a knowing, or at the very least reckless, significant overstatement of the Company’s turnover, in breach of the trust placed in company directors by the government at a time of national crisis; and (ii) use of £49,997 of the BBL for purposes other than the Company’s business (and not for its economic benefit). I take both such factors into account.

123. In determining the period of disqualification I also take into account the fact that turnover was so grossly inflated in this case as to result in the Company obtaining a BBL in the maximum sum of £50,000, when in reality, on its actual turnover for 2019 as found, the Company was not entitled to a BBL at all .

124. I also take into account that the Defendant was at all material times sole director of the Company.

125. In determining the period of disqualification, I do not take into account the application of any part of the £49,997 for the Defendant’s personal benefit. This was not included as an express ground of unfitness and it would not be legitimate to take it into account. That said, given the evidence of payments to or for the apparent benefit of the Defendant from the BBL funds for which she has failed properly to account, in my judgment it is not open to the Defendant to rely on an absence of personal benefit in mitigation: Re St Aimee’s at [74].

126. Whilst I have rejected the Defendant’s evidence in certain respects, in my judgment the inaccuracies found in the Defendant’s evidence do not fall into the category of aggravating factors warranting an increased period of disqualification, as occurred in Secretary of Trade and Industry v Reynard [2002] BCC 813 .

127. With regard to the mitigating factors put forward by or on behalf of the Defendant, as summarised at [119] above, whilst not formally addressed in evidence, I am content to proceed on the footing that the Defendant came from Germany to the UK in order to support her parents and was previously of good character. I was taken to no evidence to suggest the contrary and in the absence of any such evidence shall proceed for present purposes on that basis.

128. I am also prepared to proceed on the basis that the Defendant used a family friend as the Company’s accountant. When determining the period of disqualification, however, I leave out of account the Defendant’s attempts to blame the accountant for the matters which have led or contributed to the findings of unfitness in this case. I have already found against the Defendant in these respects, including responsibility for the dormant accounts.

129. I accept the Defendant’s evidence that she offered full payment to Santander shortly after discovering that the Company had been dissolved in 2021 but was told that she could not repay the BBL directly as the Account had been closed and the Company had been dissolved. This does in my judgment show a degree of contrition and demonstrates a timeous attempt to put things right. It does not negate the seriousness of what occurred but is, in my judgment, a matter which it is legitimate for me to take into account as a mitigating factor.

130. In contrast, when determining the appropriate period of disqualification, I do not take into account the Defendant’s conditional offers, made very shortly before trial, to pay a sum equivalent to the BBL plus interest to the Claimant in return for no disqualification or a 2 year period of disqualification. These were plainly self-interested offers and were rightly rejected by the Claimant. The Claimant must act in the public interest and must act fairly. For the reasons addressed in this judgment, the conduct alleged and found proven is serious in this case. Defendants facing BBL disqualification claims of this nature cannot expect to be able to ‘horse-trade’ their way out of a lengthy disqualification simply by offering to repay the BBL to the Claimant at the eleventh hour.

131. I also leave out of account the detrimental effect which disqualification might have on the Defendant. As rightly observed by DICCJ Parfitt in Re St Aimee’s, the court has a discretion in appropriate cases to relieve the harsh consequences of a disqualification order by granting leave to a disqualified director to act as a director under section 17 of the CDDA. It is also customary for the period of disqualification not to begin until 21 days after judgment is handed down, to allow time for such an application to be made if thought appropriate.

132. I also leave out of account the Defendant’s claimed impecuniosity. This was not supported by evidence and is in any event of itself of questionable relevance when determining the appropriate period of disqualification. In this regard the matters addressed in [131] are repeated.

133. Overall, having considered the findings of misconduct and having weighed the foregoing factors and all relevant circumstances of this case with some care, in my judgment the appropriate period of disqualification is 11 years. I shall so order.

134. I turn finally to the issue of compensation. Compensation Orders: The Law

135. The court may make a compensation order if satisfied that the conditions set out in s.15 A(3) of the Act are met. Those conditions are that: i) The person is subject to a disqualification order or disqualification undertaking under the Act , and ii) Conduct for which the person is subject to the order or undertaking has caused loss to one or more creditors of an insolvent company or a company which has been dissolved without becoming insolvent, of which the person has at any time been a director.

136. If the court considers that it is appropriate to make a compensation order, s.15 B(3) of the Act sets out three factors which it must in particular have regard to: i) The amount of loss caused; ii) The nature of the conduct mentioned in s.15 A(3)(b); iii) Whether the person has made any other contribution in recompense for the conduct (whether under a statutory provision or otherwise).

137. The power to make a compensation order under section 15 A of the Act is a new cause of action. Its purpose is twofold: i) First, to enable creditors to receive financial compensation from a director where the conduct for which the director was disqualified has caused identifiable loss to such creditors not adequately compensated through the insolvency process – thereby helping to protect victims of wrongdoing; and ii) Second, to help ‘remove the perception that wrongdoers are not held to account and [to] improve confidence in the insolvency regime’: Re Pure Zanzibar Limited [2023] EWHC 2284 (Ch) at [25].

138. In light of my findings, the first threshold requirement of s15 A(3), that the person is subject to a disqualification order, is clearly met.

139. In my judgment, on the evidence before me and on the findings which I have made, the second threshold requirement of s15 A(3) is also met. In my judgment conduct for which the Defendant is subject to the disqualification order has plainly caused loss to a creditor of the Company; in this case Santander. Whilst other cases may pose complex factual circumstances which require a more nuanced approach to causation, in this case there is a clear causal link between the misconduct alleged and found proven and the loss caused. There was a direct causal link between the loan improperly obtained and the loss suffered in the sum of the unpaid loan. I was referred to no evidence suggesting an intervening event or circumstance of relevance. In the absence of any such evidence I consider it legitimate to conclude that there is no intervening event or circumstance to be taken into account in this case. The second jurisdictional threshold requirement of s15 A(3) is thus met.

140. Even where the threshold jurisdictional requirements of s15 A(3) are met, the court retains a discretion as to whether to make a compensation order. In exercising that discretion, however, the court must have regard to the policy objectives underlying s15 A.

141. The Defendant invited the court in the exercise of its discretion to dismiss the compensation application on grounds of her impecuniosity. I reject that invitation.

142. The Defendant has adduced no written evidence of her financial position. It is also of note that, a matter of weeks before the trial of this matter, the Defendant was offering to pay the Claimant a sum equivalent to the BBL in return for no disqualification or a short period of disqualification.

143. Even if one were to put to one side the lack of evidence of impecuniosity in this case, in my judgment the mere fact that a disqualified director facing a compensation claim may be impecunious does not lead inexorably to the conclusion that the compensation claim should be denied. In this regard I was referred to the guidance given in Re Pure Zanzibar Ltd [2023] EWHC 2284 (Ch) , including that at [25], [26] and [79].

144. Naturally I am mindful of the observations of Deputy ICC Judge Parfitt in the case of Re St. Aimie’s. In that case, the director was disqualified for having provided false information in the BBL application by applying for a £25,000 BBL when he knew or ought to have known that the Company was only eligible for a BBL of £10,457, thereby receiving £14,543 more than it was entitled to. The £25,000 BBL remained outstanding at the date of liquidation and the claimant sought a compensation order in the sum of £14,543. In declining to make a compensation order, Deputy ICC Judge Parfitt commented at [109] that ‘It seems to me that the lack of funds generally militates against making a compensation order’. This comment, however, must be considered in context. At an earlier stage of his judgment, Judge Parfitt (at [100]) had expressly agreed with the observations of the judge in Pure Zanzibar at [82] and [83] that (i) ‘mere impecuniosity (without more) will very rarely weigh heavily in the balance’ and (ii) that ‘the discretion must be exercised judicially with due regard to the policy objectives underlying section 15 A.’ He also acknowledged (at [100]) that ‘a liability under a compensation order is a provable bankruptcy debt (by section 15 B(5) CDDA), which shows that Parliament contemplated that orders could be made which directors would be unable to pay.’ Viewed in that context, and reading the judgment as a whole, it is in my judgment clear that Deputy ICC Judge Parfitt’s comment at [109] should be treated as focussed on the particular combination of facts before him. Other factors which appear to have weighed with the judge in St Aimee’s in reaching his conclusion to reject the compensation claim include the fact that the director had already contributed to the liquidation a sum representing, in the judge’s words, a ‘ not … insignificant proportion of the compensation order sought against him ’ and had borrowed monies from his sister in order to do so. A further factor taken into account was the lack of any ground of unfitness alleging a misapplication of the BBL funds. Overall, the case of St Aimee’s simply serves to demonstrate that any exercise of discretion within the context of the s15 A jurisdiction will require a multifactorial analysis in each case. In my judgment the case of St Aimee’s should not be treated as supporting the proposition that mere impecuniosity, without more, will ordinarily suffice to see off a s15 A compensation claim.

145. Whilst not a case cited to me, I am fortified in these conclusions by the helpful observations of ICC Judge Greenwood in Re BG Travel Ltd: Secretary of State for Business and Trade v Genov [2025] EWHC 2012 (Ch) at [75], [79] and [80], where he said of the court’s jurisdiction under s15 A: ‘75. First, the jurisdiction is self-standing: although it requires, as a pre-condition, that a disqualification order has been made, or an undertaking given, it fulfils an essentially different purpose and serves a different function. 75.1. Disqualification is for the protection of the public, by means of prevention, and deterrence - both of the particular person and more generally, to deter misconduct by others; disqualification is concerned with setting and raising standards of managerial conduct. 75.2. A compensation order on the other hand is concerned with compensating creditors who have suffered discernible financial loss caused by established misconduct; the power under section 15 A is a separate power that exists in parallel to disqualification, but only incidentally, if at all, serves the purposes of disqualification; it can be exercised on a separate application made apart from that which resulted in disqualification, and in the period of two years following disqualification. 75.3. It is important, in my view, to hold in mind these distinct purposes, in particular in deciding what is relevant to any exercise of the court’s discretion. …

79. …. the jurisdiction [under s15 A] is discretionary – it is one that “may” be exercised by the court, as for example, as a matter of language, are the powers under sections 212 , 213 and 214 of the IA 1986 . However, that is not to say that the discretion under section 15 A might be exercised in some unprincipled fashion: the matters relevant to the exercise of the court’s discretion (and to its scope) are determined according to the purpose of the power, which is, fundamentally, as I have said, to compensate creditors for loss caused by established misconduct. As made explicit by section 15 B(3)(c), the court must have regard to any recompense already given: there cannot be double recovery.

80. For my own part, I would not think …. that the impecuniosity of the defendant would have any obvious bearing on the court’s discretion, any more so than in cases under, for example, sections 213 and 214. In that respect I note that an order under section 15 is provable as a debt in bankruptcy; the Act therefore specifically contemplates an order being made against or at least being enforceable against an insolvent person or his estate.’

146. Taking all such matters into account, I reject the Defendant’s submission that the court should decline to grant a compensation order in this case on grounds of impecuniosity.

147. I turn next to address the issue of whether there are any other factors to be taken into account in the exercise of my discretion. In my judgment, when considering whether or not to exercise my discretion in favour of making a compensation order, I should take into account the serious nature of the misconduct found proven against the Defendant as sole director of the Company, as summarised at [122] to [124] of this judgment. I also take into account the fact that the Defendant has made no contribution in recompense for her conduct and that there is no other prospect of repayment.

148. In light of my findings in this matter and taking into account in particular the factors which I have identified, I conclude that it is appropriate in this case for me to exercise my discretion in favour of making a compensation order.

149. In determining the amount, I have regard in particular to the three factors outlined in s15 B(3). On the evidence before me I am satisfied that the amount of the loss caused is £50,000 plus interest at a rate of 2.5% from 21 June 2021. I take into account the nature of the misconduct found proven, as summarised at [122] to [124] of this judgment. I also take into account the fact that the Defendant has made no other contribution in recompense for the conduct found proven.

150. In light of my findings and having taken into account in particular the factors identified in s15 B(3), I conclude that the compensation order to be made against the Defendant should be made in the sum sought by the Claimant, on behalf of Santander, of £50,000 plus interest at a rate of 2.5% from 21 June 2021. The way forward

151. I will hear submissions on costs and any consequential relief sought on the handing down of this judgment. ICC Judge Barber