English v Business Secretary: third excepted case does not extend to sole traders

The Administrative Court has held that the third excepted case in rule 22.7 of the Insolvency (England and Wales) Rules 2016 cannot be construed to apply to unincorporated businesses, dismissing an appeal by case stated from Poole Magistrates' Court.

In Brian English v Secretary of State for Business and Trade [2026] EWHC 1711 (Admin), handed down remotely on 9 July 2026, Fordham J answered the referred question in the negative, agreeing with District Judge Orla Austin below. Edward Hollingsworth appeared for the appellant, instructed by Rawlins Davy Reeves. Dominic Hockley appeared for the respondent, instructed by the Insolvency Service.

Background

Insignia Blind Co Ltd was incorporated in August 2000 with the appellant as a director, and went into insolvent liquidation on 22 January 2020. The appellant had traded as a sole trader under the name Insignia Shade and Shutter Company continuously since 1997. The name and its associated logo belonged to him personally and were never transferred to the company.

He continued trading after the liquidation under that name, and under the similar names Insignia Blind Services and Insignia. The Insolvency Service warned him he was in breach of section 216(3)(c) of the Insolvency Act 1986. He was charged in October 2022, convicted in November 2024, and received a two year conditional discharge alongside a three year directorship disqualification.

The interpretation question

Section 216(3) prohibits a former director of a liquidating company, for five years, from involvement with a prohibited name in three prescribed ways. Limbs (a) and (b) concern involvement with another company. Limb (c) extends the prohibition to a business carried on otherwise than by a company.

Rule 22.7 disapplies the prohibition where "the company there referred to" has been known by the prohibited name throughout the twelve months preceding liquidation and has not been dormant within the meaning of section 1169 of the Companies Act 2006.

Mr Hollingsworth invited the court to read in the words "or business", together with an alternative limb applying to a business established and trading throughout the relevant period. Without that reading, he submitted, the scheme was incoherent and irrational, and the rule arguably ultra vires. Prohibition and exception ought to operate back to back with symmetry. Where an unincorporated business was established and active under the name before liquidation, no phoenix mischief arose and nobody required protection. He relied on the formulation in Penrose v Official Receiver [1996] 1 WLR 482, endorsed in ESS Production Ltd v Sully [2005] EWCA Civ 554, that the criterion is whether the entity has been established and trading under the name for at least twelve months.

The reasoning

Fordham J rejected the invitation. The words of rule 22.7 fall to be given their natural and ordinary meaning, and there was no legitimate basis for rewriting them. Parliament conferred a broad and uncircumscribed power on the Lord Chancellor to prescribe disapplying circumstances. The rule had not been shown to be ultra vires or unreasonable, still less to warrant judicial expansion. What was proposed would be judicial rule making.

The distinction drawn in the legislation was express and deliberate. Limb (c) unmistakably adds non-corporate business to the prohibition, and the prohibited name itself derives from pre-liquidation corporate use under section 216(2)(a). In designing the exception, the rule maker focused on parallel pre-liquidation use by a parallel corporate entity, anchoring it to the dormancy provisions and the accounting records duty in section 386 of the 2006 Act. Those provisions make sense precisely because the entity is a company.

The appellant's reading would substitute a far less concrete test, engaging no statutory provisions for verification, and would apply that unspecific criterion to businesses while denying it to companies. The judgement emphasised the release valve Parliament provided: a former director may apply for leave of the court under section 216(3), with suspensive effect if made promptly under rule 22.6, where the facts of an established and active business can be advanced and the Secretary of State and official receiver heard.

The scheme, Fordham J concluded, is neither incoherent nor irrational. It penalises through provisions that are clear rather than doubtful, uses readily ascertainable boundaries, and preserves a right of prospective access to a court. The appeal was dismissed with costs.

The judgement carries a procedural coda. Fordham J observed that no party had supplied the court with the relevant legislation, which arrived only when requested and then piecemeal, and commended the practice of ensuring statutory schemes are fully visible from primary sources, particularly where the issue is one of statutory interpretation.