Elliot Philip Lawless v The Secretary of State for Business and Trade & Ors

ICC JUDGE AGNELLO KC : Introduction

1. On 15 July 2024, the Applicant, Mr Lawless issued an application seeking specific disclosure under CPR 31.12 from the Secretary of State for Business and Trade (the SoS) and a non-party disclosure order in relation to the Joint Liquidators of Wolstenholme Square Developments Limited (WSDL) Queensland Place Limited (QPL) and Parliment Place Limited (PPL). The underlying proceedings have been brought against Mr Lawless pursuant to section 6 of the Company Directors Disqualification Act 1986 by the SoS in relation to each of the companies. Those proceedings were issued on 19 January 2024 and served on 26 January 2024, with the acknowledgement of service having been filed by Mr Lawless on 31 January 2024. Mr Lawless has yet to provide his evidence and set out therein his defence to the claim. Mr Lawless seeks disclosure before he provides his evidence asserting that he needs the disclosure for the purposes of being able to file his evidence.

2. According to the terms of the application notice, the Applicant seeks an order that the SoS and/or the Joint Liquidators disclose all correspondence (both hard copy and electronic) relating to investigating the affairs of QPL, PPL and WSDL, unredacted and in native format, passing between the SoS (including his investigators and members of his Legal Services Directorate) and the Joint Liquidators (including their staff, partners or agents). No distinction is made between the SoS in this respect and the Joint Liquidators. Other paragraphs of the application notice are no longer sought. Factual Background

3. The Applicant was the sole director of all three companies set out above, except that in the case of PPL, Steven Mark Worboys was appointed as a director of PPL but he resigned on the same date as his appointment. The principal activity of each of the companies was the development of apartments in developments located in Liverpool. The apartments in each development were marketed ‘off plan’ to investors. Following completion of each development, the companies would enter into long leases of the units with investors. The companies also provided each purchaser with a guaranteed rental return for a three year period following completion of the development. UBL, a property manager, would manage the apartment, collect the rents from tenants and pay the investors the net rent collected after the deduction of service charges and other permitted deductions. Each company was responsible for paying any shortfall between the agreed return and the net rent paid.

4. The companies were unable to meet their obligations to pay the shortfalls between the agreed returns and the net rent and the companies entered into formal insolvency proceedings. WSDL was made the subject of a winding up order on 27 October 2021 by a group of creditors who were owed monies in relation to unpaid agreed rent. QPL and PPL were placed into administration on 21 January 2021 by applications made by an unpaid group of creditors in relation to the agreed rental payments due.

5. In summary, the SoS alleges that the Applicant failed to ensure that each company maintained and/or preserved adequate accounting records. Alternatively, the Applicant failed to deliver up such records as were maintained and/or preserved to the Joint Liquidators and Joint Administrators of the three companies.

6. On behalf of the SoS, Mr Michael Smith has explained in his affidavit, that certain documentation has been provided by the Applicant via his former solicitors, Hill Dickinson, and Cobham Murphy, the companies’ former accountants, albeit not all at the same time and has required several requests as well as a section 236 Insolvency Act 1986 application by the Joint Liquidators. According to the evidence, the Joint Liquidators have stated that the books and records provided to them are not sufficient to establish the financial position of the companies including up to date creditor and debtor positions. The Joint Liquidators also state that they have been unable to determine the correct position in respect of particular transactions.

7. As identified by Ms Johnson, acting on behalf of the Applicant, the key issue in the CDDA proceedings is the adequacy of the books and records which the Applicant caused the companies to retain. This is how the SoS sets out his case with the particular transactions being specific examples of the lack of adequacy of the books and records. The Applicant’s position is that he requires the correspondence that has passed between the SoS and the Joint Liquidators so that he has a level playing field and that he is able to prepare his defence. Upon reading his witness statement, it appears, as confirmed by Ms Johnson’s skeleton argument, that the Applicant asserts that the books and records which were delivered up ( in various stages ) were adequate and that he does not accept the case of the SoS. He states in his witness statements that he cannot understand why the SoS asserts that the books and records were inadequate. Legal principles

8. CPR 31.12 provides:- “(1) The court may make an order for specific disclosure or specific inspection. (2) An order for specific disclosure is an order that a party must do one or more of the following things – (a) disclose documents or classes of documents specified in the order; (b) carry out a search to the extent stated in the order; (c) disclose any documents located as a result of that search. (3) An order for specific inspection is an order that a party permit inspection of a document referred to in rule 31.3(2).”

9. In the commentary to the White Book, Ms Johnson refers me to the quote referring to Harrods Ltd v Times Newspaper Ltd [2006] EWCA Civ 294 ; [2006] All E.R. (D) 302 (Feb) which sets out that in deciding whether to make an order for specific disclosure: "The court will need to satisfy itself as to the relevance of the documents sought, and that they are or have been in the party's control, or at least that there is a prima facie case that these requirements will be met. The relevance of documents is analysed by reference to the pleadings, and the factual issues in dispute on the pleadings."

10. She also refers to the documents having to be of such relevance that disclosure is necessary for the fair trial of the proceedings. These principles are essentially agreed by all the parties. She also refers to paragraph 6.4 PD57AD which sets out factors relevant in determining whether extended disclosure is in accordance with the overriding principal. These factors include the likelihood of the documents existing having probative value in supporting or undermining a party’s claim or defence, the number of documents involved, the ease and expense of searching for the retrieval of the documents etc.

11. CPR r 31.17(3) deals with non-party disclosure and specifically that the court may make an order under this rule only where: "(a) the documents of which disclosure is sought are likely to support the case of the applicant or adversely affect the case of one of the other parties to the proceedings; and (b) disclosure is necessary in order to dispose fairly of the claim or to save costs ".

12. CPR r.31.17(4) provides that an order under this rule must (a) specify the documents or the classes of documents which the respondent must disclose; and (b) require the respondent, when making disclosure, to specify any of those documents – (i) which are no longer in his control; or (ii) in respect of which he claims a right or duty to withhold inspection.

13. As to the first limb, the test for relevance is whether the documents are likely to support the case, on the basis that they may well do so rather than being more probable than not. That test must be met in relation to every document sought. The court has a wide discretion and flexibility to make an order, considering all the circumstances of the case, but an order tends to be the exception rather than the rule.

14. The commentary in the White Book to Part 8 states, ( 8.0.7.1 ) “… There is no automatic disclosure in Part 8 claims. Part 8 has its own regime under which the documents relied upon by the parties are exhibited to their witness statements… The court has power to make an order for extended disclosure under PD 57AD in a Part 8 claim. It will adopt such elements of PD 57AD as are appropriate to the case and the scope of disclosure that is sought. The party seeking disclosure must serve and file a List of Issues for Disclosure in relation to which disclosure is sought and the Models that are to be adopted for each issue: PD 57AD para.1.12.”

15. Commentary in connection with the Directors Disqualification Proceedings Practice Direction states under the title ‘Use of Pt 8 Procedure at paragraph 3J-13:- “The use of the Pt 8 procedure (and prior to 1999 the originating summons procedure under the RSC) is in some respects not entirely satisfactory, particularly in cases where a substantial amount of the factual evidence is disputed (a point indirectly alluded to by Sir Donald Nicholls V.-C. in Re Rex Williams Leisure Plc [1994] Ch. 1 , at 9). However, use of the Pt 7 procedure with statements of case would be even less satisfactory, as the claimant’s case (based on his conclusion that it is “expedient in the public interest that a disqualification order should be made”) is not a cause of action which easily lends itself to being pleaded in the orthodox way (though the courts have recognised that the evidence in support of the application “has of necessity something of the character of a pleading”: Laddie J in Re Finelist [2003] EWHC 1780 (Ch) ; [2004] B.C.C 877 at [14]). The intention is that all the evidence deemed relevant by the parties can be put before the court, normally without the need for disclosure, so that (in the case of ss.5 A to 9A of the Act ) the court can decide the question of unfitness. Thus, although applications are occasionally made for an order that disqualification proceedings should proceed by way of statements of case, it is suggested that it will only be in the most exceptional circumstances that the court would consider it appropriate to make such an order.” The Applicant’s case for specific disclosure/ non party disclosure order

16. The Applicant asserts that he requires the order for disclosure to be able to defend himself. He needs full sight of the Joint Liquidators’ understanding of the books and records as communicated to the SoS. He submits that there is a clear disconnect as between the SoS and the Applicant in relation to the adequacy of the books and records and the Applicant requires the disclosure to be able to defend himself.

17. The Applicant seeks effectively disclosure of all correspondence (both hard copy and electronic) relating to investigating the affairs of QPL, PPL and WSDL, unredacted and in native format, passing between the SoS (including his investigators and members of his Legal Services Directorate) and the Joint Liquidators (including their staff, partners or agents). The Applicant is content for privileged material to be redacted from any documents disclosed.

18. The Applicant makes no separate case in relation to the non-party disclosure application as against the Joint Liquidators and submits that he seeks an order against the SoS and/or the Joint Liquidators. The Applicant submits that both the Joint Liquidators and the SoS have refused the Applicant’s request for voluntary disclosure.

19. The Applicant submits that the documents he seeks are necessary for the fair disposal of the proceedings. He submits that the documents being sought are highly relevant to the key issues in dispute. The Applicant considers that the only reason why the Joint Liquidators consider that the books and records provided are inadequate is because they have failed to understand them. The Applicant relies on the fact the Joint Liquidators have instructed forensic accountants to review the workings and intercompany debtor transactions to determine the accuracy of the balance of monies owed.

20. The Applicant therefore submits that it is critical for the Applicant to be able to obtain disclosure of the Joint Liquidators’ understanding and the communications with the SoS. He states that he is unable to put forward his defence until he has the full picture what the Joint Liquidators have provided to the SoS and their understanding of the documents.

21. The SoS seeks a disqualification order of up to 15 years being at the top of the most serious bracket. Ms Johnson submits that this places the SoS under a strict duty to present the case against the Applicant fairly and not to omit any significant evidence in favour of the Applicant.

22. As CDDA proceedings are not ordinary adversarial civil proceedings, Ms Johnson also relies upon what she submits are the rights that the Applicant has pursuant to article 6 of the ECHR as if he had been charged with a criminal offence. She submits that all of the results of the investigations carried out against the Applicant must be disclosed and information may only be withheld on public interest grounds and only then its strictly necessary. No such grounds have been raised by the SoS in this case.

23. The Applicant rejects the point made against him by the Joint Liquidators that he has not identified the specific documents which he seeks. The Applicant asserts that pursuant to CPR r 31.12 (2)(a) and 31.17(4)(a), it is possible to specify a class of documents for disclosure rather than specific documents.

24. Whilst there are no standard provisions for disclosure in CDDA proceedings, in so far as a director reasonably requires further disclosure from what is attached to the evidence filed by the SoS, then the SoS should produce that disclosure voluntarily or be made the subject of an order.

25. It is not accepted that the disclosure being sought is necessarily onerous. It has been narrowed to a single class of documents and seeks now all documents passing as between the Joint Liquidators and the SoS relating to the investigations of the companies.

26. The Applicant considers that the Joint Liquidators have admitted that they have not delivered up to the SoS all the information provided to the Joint Liquidators and this causes concern and supports the Applicant’s application for disclosure. The Applicant has no visibility as to how the correspondence which has been exhibited has been selected and is concerned that the selection has been cherry picked. Additionally, the Applicant seeks disclosure recently provided by Cobham Murphy relating to pre-liquidation transactions made by WSDL which according to Ms Johnson does not appear to be in the possession of the Applicant or his advisors. Very little detail is provided by the Applicant about these particular documents. The evidence does demonstrate that there has been continuous demands made by the Joint Liquidators for documents, books and records and provisions of documentation has occurred in a piecemeal fashion.

27. Ms Johnson submits that even though the Applicant is seeking a non-party disclosure order, effectively the Joint Liquidators are not strangers. They are office holders. The position of the SoS

28. The application for disclosure against the SoS is made pursuant to CPR 31.12. The case which the Applicant has to meet is set out in the SoS claim and the affidavit of Michael Smith dated 17 January 2024 which sets out the allegations relied upon by the SoS in relation to the three companies, being that the Applicant failed to ensure that each company maintained and or preserved adequate books and records (or a failure to deliver up).

29. Mr Woodhead, on behalf of the SoS, submits that generally, an application for specific disclosure is made following a disclosure order although he accepts that an order for specific disclosure can be made at any stage of the proceedings. Mr Woodhead submits that as there is no List of Issues in these proceedings and that as the Applicant has failed to state his case, the application is not made pursuant to PD57AD. Requests for specific disclosure, as is set out in the commentary to Part 8 claims, are abnormal and generally only really appropriate once the parties’ positions have been set out under the Part 8 procedure. Even when the parties’ positions have been set out, Mr Woodhead submits that as PD 57AD does not apply, then there is no proper basis for this application which is inconsistent with the Part 8 procedure.

30. In the event that I am against him on his technical jurisdictional grounds, then Mr Woodhead submits that a party seeking specific disclosure should set out the documents or classes of documents for which disclosure is sought. In this application, the classes of documents which are sought are unspecific and wholly disproportionate. No effort has been made to list those documents which can be relevant to the issue in dispute or the perceived issue in dispute. The current application therefore resembles a fishing expedition. As Ms Phillips of the SoS states in her evidence the disclosure application is, “so wide in scope that it is not possible, proportionate or practical to comply with ” .

31. Mr Woodhead relies heavily on the Applicant’s failure to put his case and asserts that the disclosure sought is not relevant to the case which the Applicant has to meet. The facts allege that the Applicant failed to ensure that the companies maintained or preserved adequate accounting records. If the Applicant disagreed with this, then he would seek to establish that he did maintain such records and that these were delivered up. The disclosure which he seeks does not go to this point. The position of the Joint Liquidators

32. Mr Weaver KC reminds me that the application as against the Joint Liquidators is as non-parties pursuant to CPR 31.17. He submits that the application against the Joint Liquidators is misconceived, vague and inadequately explained in circumstances where an identical order for disclosure is being sought in the same application against the SoS who is a party to the CDDA proceedings. CPR 31.17 provides to the court a discretion as to whether to make a non-party disclosure order where the documents sought are likely to support the case of the applicant or adversely affect the case of one of the parties and disclosure is necessary in order to dispose fairly of the claim or save costs.

33. Accordingly, CPR 31.17 is not to be treated as a fishing expedition. Such an order is an exception rather than a rule. The Applicant needs to satisfy the court that each of the documents of which disclosure is sought is likely to satisfy the requirement being to identify the documents which may well support his case or adversely affect another party’s case. Importantly, when exercising its discretion, the court bears in mind whether there is another route to obtain the documents. As set out in Matthews and Malek KC, Disclosure 6 th edition at paragraph 4-64:- “The court also must consider whether the disclosure is needed to dispose fairly of the action or save costs. There may, for example, be another route to obtain the necessary information or documentation, such as where it is in the possession or control of another party to the proceedings. If an applicant has already received disclosure of sufficient documents to enable it to advance its case, this may make disclosure not necessary. The court will decline to order disclosure of documents that appear to provide merely background or material that might be useful in cross-examination.”

34. Accordingly, Mr Weaver submits that the test for a non-party disclosure order is simply not established and in any event, in the exercise of discretion, no such order should be made because the documents sought can be obtained, if so ordered, from the SoS, a party to the proceedings. There is no evidence that the SoS cannot disclose the documents, being the correspondence as between the SoS and the Joint Liquidators. In so far as the concern is that information which has been provided to the Joint Liquidators has not been passed over to the SoS, then this is something which can easily be seen by the Applicant by a disclosure order against the SoS ( in so far as such a disclosure order is made ).

35. The category of documents sought is unnecessarily wide and would require the Joint Liquidators to identify relevant disclosable documents within that class which is neither appropriate nor in accordance with a CPR 31.17 application. The reference to investigations in the draft order produced by Ms Johnson shortly before the hearing does not assist because investigation is not defined. The concerns which the Applicant has in relation to the content of correspondence passing between the Joint Liquidators and the SoS appears to be a fishing exercise. Such concerns do not establish evidence that the documents being sought are either likely to assist the defence of the Applicant or be adverse to the position of the SoS.

36. As pointed out by Mr Weaver, the key issue in the proceedings is whether the Applicant maintained and delivered up adequate books and records. All that can be relevant to this issue is what books and records were delivered up and maintained. What the Joint Liquidators said to the SoS or vice versa is irrelevant to that issue and cannot be shown to assist the Applicant in his defence or be adverse to the case of the SoS.

37. Evidence of what books and records were maintained and delivered up is an issue for the Applicant and his advisors. The disclosure of communications will not assist because it is simply not relevant as to what was maintained and delivered up. The Applicant has not explained why he has no access to the information which was sent to the Joint Liquidators on his behalf from his advisor or in some way he has no record of what was provided. His witness statement actually provides a breakdown of what was provided by Cobham Murphy to the Joint Liquidators. Discussion

38. The starting point is to consider what is the case of the SoS and what does the Applicant as defendant have to meet. In my judgment, the allegations made by the SoS are set out clearly at paragraphs 10 to 13 of the affidavit of Mr Smith. Paragraphs 10 and 11 sets out the allegations in relation to WSDL which are then mirrored in relation to the general allegation in relation to the other two companies, followed by specific allegations relating to specific transactions peculiar to each company. For current purposes, it is sufficient to set out the allegations in relation to WSDL. “10. With regard to the affairs of WSDL, QPL and PPL, the following are the matters by reference to which Mr Lawless is, in the opinion of the Secretary of State, unfit to be concerned in the management of a limited company:-

11. Between 28 June 2019 and 27 October 2021, Mr Lawless failed to ensure that WSDL maintained and/or preserved adequate accounting records, or in the alternative he failed to deliver up such records as were maintained and/or preserved to the Joint Liquidators, in that : a. the records provided to the Joint Liquidators have not been sufficient for the Joint Liquidators to verify the movement and final position of intercompany loans, director loan, debtors, and creditors at the date of Liquidation; b. A Land Registry search shows that on 3 July 2020, the freehold property at Wolstenholme Square, Liverpool was transferred to an associate company for purported consideration of £1,645,000. Mr Lawless stated that the equitable interest was transferred prior to this date, in November 2017. It has not been possible to evidence that the purported payment of monies to WDSL was monies paid in consideration for the transfer of the freehold property to an associated property; c. A third party had been in negotiation to purchase the freehold property at Wolstenholme Square, Liverpool, in or around 2019 for a proposed purchase price of £4,606,000. On or around 30 July 2019 a notice was sent pursuant to section 5 of the Landlord and Tenants Act 1987 which gave Wolstenholme Square, Liverpool a value of £4,606,000. It would therefore appear, without supporting documents or other evidence, that the purported value of the transfer to an associated company for £1,645,000 was below true market value.”

39. What the Applicant is seeking is effectively communications as between the SoS and the Joint Liquidators. In my judgment, those communications are not relevant to the case which the Applicant has to meet. Although the Applicant has not set out his defence by filing evidence, his position is that there were adequate books and records maintained and delivered up. The SoS has the burden of establishing that the books and records were inadequate. Such a burden is not, in my judgment, discharged by the SoS asserting that the view or opinion of the Joint Liquidators is that the books and records were inadequate. It is the SoS who has to establish that they were inadequate. Accordingly, it is no part of the case which the Applicant has to meet to be able to ascertain why the Joint Liquidators have taken the view that they have, what was communicated between the SoS and the Joint Liquidators or even which documents were or were not passed over to the SoS. If, as asserted by the Applicant, the SoS is incorrect in his case as to adequacy, then that is what he seeks to establish in his defence. The burden remains on the SoS. It is the issue as to the adequacy of the books and records which the Court will need to determine at the trial of the CDDA claim. This is simply not affected by the content of correspondence or communications passing between the SoS and the Joint Liquidators. I reject the Applicant’s case that these documents are necessary for him to be able to meet the case or to have a fair trial.

40. In my judgment, the Applicant fails in his application on the grounds of relevancy. This is not assisted by his reliance on the quasi criminal nature of the proceedings because he has failed to establish that the documents he seeks are relevant to what the SoS needs to establish before the court at the hearing. Equally they are not relevant to the Applicant’s defence. In so far as it can be ascertained, the Applicant’s defence is that the books and records were adequate. That is his defence. In my judgment, the contents of the communications or the documents he is seeking are not likely to be adverse to the case of the SoS or be favourable to the Applicant because their contents are not relevant as to whether the books and records were or were not adequate or have been delivered up. Either the books and records maintained and/or delivered up were adequate or they were not. That is the case.

41. Accordingly, I do not need to consider the issues relating to whether the application was too widely drafted or lacked reference to specific documents. The Applicant fails before consideration of these issue arises as not being relevant. As to the timing of this application and the technical jurisdictional points raised by Mr Woodhead, I am not persuaded that they are necessarily correct. In the overriding interests of justice, I have dealt with the case before me by considering the defence of the Applicant as it appeared from his evidence even if not set out in a precise document. The Applicant is clearly entitled to bring an application for specific disclosure even before he has set out his defence in a witness statement, but the burden will be on him to establish his case and relevancy. CDDA proceedings do not fit easily into normal Part 8 proceedings. Having considered the Applicant’s evidence, even without a more detailed witness statement, I have been able to ascertain what the Applicant’s defence is, namely that the books and records maintained or delivered up were adequate. Whilst the lack of detail of how he says they were adequate is of course missing, I have been able to deal with his application.

42. I agree with Mr Weaver’s submissions in relation to the lack of merit for a non-party disclosure order. There is, as he has submitted, no explanation as to why the application against the Joint Liquidators was made bearing in mind the application against the SoS covered the same documents. As I have held that the Applicant is not entitled to an order then I do not need to analyse any further his non-party disclosure application. He fails on both. The redacted email dated 24 October 2023

43. In the course of submissions before me, an issue arose in relation to whether the Applicant is entitled to an unredacted copy of an email dated 24 October 2023 from Ms Moore of the Joint Liquidators to Ms Phillips of the Insolvency Service. This issue was not in the application notice itself but I asked the parties to deal with it by way of separate written submissions. Ms Johnson submits that as the SoS does not assert legal advice privilege over the document, then the Applicant is entitled to an unredacted copy. However as explained in a letter dated 7 November 2025 from solicitors acting on behalf of the Joint Liquidators, by the witness statement of Mr Fallows dated 6 March 2025, he explains that some of the correspondence as between the Joint Liquidators and the SoS contains privileged information. That was the same position taken by Mr Weaver before me. The letter confirms that the Joint Liquidators do assert legal professional privilege in respect of the redacted part of the email. In my judgment, that disposes of this issue. No order is made for the production of an unredacted copy of the email will be made.

44. I dismiss the Application.