In the latest of a series of judgments relating to actions taken by the Director of Corporate Enforcement (the Director) against former National Irish Bank (NIB) directors, in December 2011, the Supreme Court overturned a High Court decision to impose a nine-year disqualification order on Mr Barry Seymour, Executive Director of NIB from April 1994 to July 19962. The Director had sought disqualification of nine former senior officers / directors of NIB under Section 160 of the Companies Act 1990 following allegations of improper practices, including the operation of bogus non-resident accounts.
Deeming disqualification unjustified in this case, the Supreme Court exercised its discretion under Section 160(9A) of the Companies Act 1990 instead to impose the more lenient penalty of a five-year restriction order. The Supreme Court also set aside the High Court order awarding the Director his costs, and instead ordered that the Director should receive just half of his High Court and Supreme Court costs.
In ruling that the Director had not adequately demonstrated Mr Seymour's actions or omissions to be sufficiently negligent or incompetent to justify disqualification, the Supreme Court again demonstrated the substantial burden on the Director in making a case for disqualification. The Supreme Court previously overturned a High Court disqualification order against NIB's former Head of Finance, Mr Patrick Byrne3. In that case, the Supreme Court acknowledged that disqualification is a "far more severe order" than restriction, and held that the conduct necessary to lead to a disqualification must be "manifestly more blameworthy than merely failing to exercise an appropriate degree of responsibility." Moreover, "incompetence, even when occurring with irresponsibility, is not sufficient to ground a Disqualification Order and neither is commercial misjudgement. Rather, the conduct complained of must display a lack of "commercial probity"."
The decision and consequent cost will be of concern to the Director at a time when there is increasing public pressure, as a result of the banking crisis, for senior banking officers to be subject to sanction by the Courts.
Footnotes
2 6 December 2011, Unreported
3 [2009] IESC 57
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