Oppressive questioning of directors

Shierson and another v Rastogi and another (CA TLR 20 November)

The court has a discretion to refuse to make an order for the examination by the liquidator of a company of the past or present officers of the company. The fact that the proposed examinee was or had been a director obliged under s235 of the Act to give information reasonably required would be likely to be a powerful factor in favour of making the order, however where proceedings had been brought against a director, the oppression in ordering his examination weighs in the scales the other way. To require defendants accused in civil proceedings of serious wrong-doing to give answers to questions from those bringing the proceedings which went to issues in the proceedings was oppressive. The existence or fear of civil proceedings and the oppression of a director who is a party to such proceedings were major factors in the exercise of discretion. However, in the present case, on conducting the balancing exercise, the Court had no doubt that the scales came down in favour of making the order. The legitimate requirements of the liquidators to obtain speedy information from those who had run the company and other considerations outweighed the oppression of the directors in being required to submit to a private examination. The need for making the order was overwhelming.