County Fermanagh directors disqualified by the court

Stephen Thomas Harron (43) of Skea, Arney, Enniskillen was disqualified for seven years on 31 May 2007, in the High Court, Belfast, in respect of his conduct as a director of S Harron Contracts Limited.

Russell Robert Harron (36) of Skea, Arney, Enniskillen was disqualified for six years on the 31 May 2007, in the High Court, Belfast, in respect of his conduct as a director of the same company.

S Harron Contracts Limited carried on the business of providing waste disposal services from Skea, Arney, Enniskillen and went into liquidation on 11 March 2004 with assets of £243,528; liabilities of £485,971 and an estimated deficiency as regards creditors of £242,443. After taking into account the losses incurred by members (shareholders, including the directors) of the company, the total deficiency was £242,543.

The matters of unfit conduct, alleged by the Department of Enterprise, Trade and Investment (the Department) in relation to Stephen Thomas Harron and Russell Robert Harron in respect of their conduct as directors of S Harron Contracts Limited were:

• Causing and permitting the Company to be financed by retention of £258,955.53 of monies properly payable to the Crown in respect of PAYE, NIC, Corporation Tax and VAT;
• Failing to ensure that the Company submitted returns to HM Customs & Excise from November 2001 to Liquidation;
• Failing to render returns to the Inland Revenue in respect of Class 1A National Insurance Contributions payable by the employer on the provision of benefits in kind to employees from the 1996/97 tax year to Liquidation totalling £16,379.75;
• Failing to co-operate with the office holder in that they failed to complete and return questionnaires;
• Failing to prepare and file the Company’s annual accounts for the years ended 28 February 2002 and 28 February 2003 within the prescribed time period with the Registrar of Companies.

The following are additional matters of unfit conduct, alleged by the Department in relation to Stephen Thomas Harron only in respect of his conduct as a director of S Harron Contracts Limited:

• Failing to co-operate with the office holder in that he failed to forward payment for a Mitsubishi L200 motor vehicle estimated to realise £2,678, to forward copy share certificates for investments estimated to realise £10,000 and to forward documentation to enable the liquidator to pursue the realisation of debts alleged to be due to the company and estimated to realise £20,000;
• Failing to ensure the Company’s accounting records and statutory records were preserved or, if they were preserved, failing to deliver them up.

The Court regarded these as serious matters and viewed Stephen Thomas Harron's culpability as being greater than that of Russell Robert Harron.

The Court took the view that failure to pay Crown debts in this case was not as a result of some single instance of commercial misfortune but was a deliberate course of action set upon by the directors of this company in order to finance the continued trading of the company and must therefore be regarded as very serious.

The Court also took the view that the directors failure to co-operate with the liquidator was equally serious. The failure to account for monies received, verges, in the view of the Court, on dishonesty and where dishonesty can be shown in a case it clearly moves the case into the middle bracket of disqualifications.

The Department has accepted 12 Disqualification Undertakings and the Court has made nine Disqualification Orders in the financial year commencing 1 April 2007.

Notes to Editors:

1. Insolvency Practitioners acting as voluntary liquidators, administrative receivers and administrators have a duty to report unfit conduct to the Insolvency Service within the Department of Enterprise, Trade and Investment.
2. The aim of the Department is to bring disqualification proceedings against those directors of failed companies who have abused the privilege of limited liability status through negligence, incompetence or lack of commercial probity. The legislation contained in the Company Directors Disqualification (Northern Ireland) Order 2002 (“the 2002 Order”) is for the protection of the public and trading community but its operation should not inhibit genuine enterprise.
3. Article 9 of the 2002 Order provides that where a director is found to be unfit he must be disqualified for a minimum period of two years, up to a maximum of fifteen years. The Courts have decided that the level of seriousness of unfit conduct can fall into three brackets with the top bracket of periods over ten years reserved for particularly serious cases, six to ten years reserved for cases which do not merit the top bracket and two to five years for cases where, although disqualification is mandatory, the case is less serious.
4. The 2002 Order also allows directors, with the agreement of the Department, to avoid the need for a court hearing by offering an acceptable disqualification undertaking. This has exactly the same legal effect as a disqualification order made by the court, and will usually include a schedule identifying the director’s unfit conduct. The consequences of breaching a disqualification undertaking are the same as those for breaching a disqualification order.
5. If anybody contravenes a disqualification order or breaches their disqualification undertaking they may be committing a criminal offence and could go to prison for up to 2 years or face a fine or both. Any person with information to suggest that a disqualified person has acted in contravention of this provision should contact The Insolvency Service’s Directors Disqualification Unit on 028 90 548516.
6. The period of disqualification commences at the end of 21 days beginning with the day the Order was made by the Court.
7. For media enquiries contact DETI Press Office on 028 90529604.
8. Outside office hours, please contact the Duty Press Officer via pager number 07699 715 440 and your call will be returned.