Director who gave voluntary undertaking after liquidation disqualified from directorship for 12 years after being found in control of family firm

About this case:

• Citation:
  [2026] SC ABE 19
• Judgment:
  External link
• Court:
  Sheriff Court
• Judge:
  Sheriff Ian Miller

It was averred by the Secretary of State for Business and Trade that defender Kamyar Sadri, who gave a Disqualification Undertaking on 30 November 2017, had knowingly made himself out as director of another company, for which the paper director was his wife and then his stepson, following the making of the undertaking. A disqualification period of 12 years was sought on account of the severity of his conduct and blatant disregard for the sanction imposed on him.

The case was heard by Sheriff Ian Miller at Aberdeen Sheriff Court, with Roxburgh, advocate, appearing for the pursuer and the defender representing himself.

Effectively ran it

The circumstances leading to the undertaking were that, from at least April 2014 to April 2016, the defender allowed a limited company of which he was director, Aberdeen Delivery Services Ltd, to trade to the detriment of HMRC. The company was liquidated on 27 May 2016 as a result of a petition by the Advocate General on behalf of HMRC, which claimed £329,219.14 in respect of VAT liabilities owed. The defender thereafter made an undertaking under the Company Directors Disqualification Act 1986 with a duration of four years from 28 December 2017.

From 28 January 2013 to 22 September 2015, the defender was a director of another company, KPD, along with his wife, who remained a director until December 2017 until her replacement by the defender’s stepson. It was averred by the pursuer that the defender remained a de facto director and had done all of the work in the company’s Aberdeen depot except for the work done by the transport manager. Evidence was given by third parties that none of the de jure directors had taken part in the conduct of the business between 2016 and May 2019 with the limited exception that the defender’s wife was able to sign cheques.

The defender’s defence, which was outlined by an accounting firm rather than a firm of solicitors, was that he had a contract of employment with the company and had acted as the operations manager. He denied holding himself out to MMG, the company’s accountants, as a director and that they reasonably understood that he effectively ran it. However, at the proof he declined to lead evidence.

Counsel for the pursuer submitted that no evidence had been provided that the defender had acted on the instruction of the de jure directors. The impression he had given to the company’s landlords, trade creditors, and third parties was that he was the director. That he had done so with awareness of the conditions of the undertaking demonstrated a disregard for the sanction imposed and constituted a criminal offence under section 13 of the 1986 Act.

Telling and significant feature

In his decision, Sheriff Miller said of the lack of evidence for the defender: “By not giving any evidence in support of his averments that dispute the pursuer’s case the defender has denied to the court the opportunity of taking his disputed averments into account when weighing and assessing the quality of all the evidence that was led which would usually involve the evidence from both sides of the case and from that making such findings in fact, findings in fact and in law and findings in law as flowed from the concluded assessment.”

He continued: “I was satisfied that I could rely upon what each [witness] said about their work with and in respect of the Company and the defender. Each spoke with the requisite degree of authority drawn from his experience gained from the exercise of his profession and demonstrated that he was in command of what was asked of him in evidence. Nothing said either from memory or under reference to contemporaneous documents caused me to question the reliability of any of them on their recollection of events or on what each drew from the documents. No issue of credibility arose from their evidence.”

Assessing whether the evidence supported the pursuer’s contentions, Sheriff Miller said: “A telling and highly significant feature of the present case is the almost total absence of any reference to what those directors de jure did within, for or on behalf of the Company or to further its business. The defender’s wife was credited by the RBS with being the main contact with the bank and also with signing cheques drawn on the Company’s bank account but that is all that was said about her exercise of responsibilities. That gave her at best a nominal involvement in the conduct of the finances of the Company. The defender’s stepson effectively ran the Dundee depot but there is no evidence that he took any part in running the Aberdeen depot which was the main one and which was run and controlled by the defender.”

He went on to say: “The evidence, assessed objectively and in the round, supports the conclusion that from about 2016 and until 24 May 2019 [the defender] exercised control over the business of the Company and its administration and finances and had the opportunity to do that on a daily basis. That meant that he was exercising a function that had him being more than a part of the governance system of the Company. He was the governance system of the Company. I hold that conclusion to be proved.”

Sheriff Miller concluded: “I place weight upon the facts that he conducted himself as director de facto throughout that relevant period of 17 months or so, and did that knowing that the Undertaking prevented him from doing that unless he had secured the prior leave of the court which he had not done. That I assess is a significant aggravating feature. It was a blatant and knowing disregard for the sanction imposed in the Undertaking for his previous misconduct.”

The defender was therefore disqualified from acting as a director for 12 years, as sought by the pursuer.