Joseph Gerald Taylor v Investors Compensation Scheme
| Date | 01 February 1998 |
| DOI | https://doi.org/10.1108/eb024968 |
| Published date | 01 February 1998 |
| Pages | 178-183 |
| Author | Beldam LJ,Potter LJ,J Balcombe |
| Subject Matter | Accounting & finance |
Journal
of Financial Regulation and Compliance Volume 6 Number 2
Court of Appeal rules in favour of claimant
against Investor Compensation Scheme
Joseph Gerald Taylor v Investors
Compensation Scheme
Court of Appeal: Civil Division: Beldam LJ, Potter LJ, Balcombe J
Date of Judgment: 4th December, 1997
Reported at: Times Law Reports, 13th December, 1997
FACTS
This was an appeal from an earlier decision
of the Queens Bench Divisional Court in
R v Investors Compensation Scheme ex parte
Gerald Taylor (judgment date 29th
November, 1996) which has already been
considered in this journal (see 'Timing was
crucial for ICS claim', Vol. 5(2), Journal of
Financial Regulation and Compliance 1997 at
p.
178).
Mr Barrett was authorised to carry on
investment business under the trading
name of Beechcroft by virtue of his mem-
bership of FIMBRA. In March 1986 Mr
Taylor, the applicant in this case, inherited
£5,500 which he wished to invest with
Beechcroft. In April 1986, on Mr Barrett's
advice the applicant handed Mr Barrett a
cheque for £5,500 which Mr Barrett
undertook to invest in such a way so as to
yield 9.5 per cent p.a. for a fixed term of
five years with interest capable of being
withdrawn as and when it accrued. The
applicant's mother then gave Mr Barrett a
total of £11,000 to invest on the same
terms.
She died in 1989 leaving the appli-
cant as her sole heir.
In fact, no investment was ever made
with these monies. Instead Mr Barrett used
it for his own purposes. On 1st April, 1991
the investment, if it had existed, would
have matured. Mr Taylor had taken out
only £800 as 'interest' so there should have
been £24,000. However, by then Beech-
croft was technically insolvent. Mr Taylor
'withdrew' £2,000 in April 1991 and
instructed Mr Barrett to invest the
£22,000 he thought he had left. Mr Bar-
rett promised him 11.24 per cent p.a. on
this sum for a further five years and gave
him a document dated 20th April, 1991
confirming those terms.
There was no such sum and there was no
such further investment made. In mid-1992
Mr Taylor obtained, with some difficulty,
£700 from Mr Barrett and Beechcroft col-
lapsed in November 1992. Mr Taylor
claimed compensation from the Investors
Compensation Scheme. His claim was for
£22,000 plus interest on one basis and for
£37,490 less a discount for early payment
on an alternative basis (this loss reflected
the loss of expectation caused by the fic-
tional 1991 investment). The management
company of the Investors Compensation
Scheme (ICS) rejected his claim since Rule
1.02 of the Scheme Rules which states:
'(3) Nothing in any rules made under
section 54 of the Act is to be interpreted
... as authorising the payment of
compensation on a claim except to the
extent that the claim is a claim in respect
of any description of civil liability
Journal of Financial Regulation
and Compliance, Vol. 6, No. 2,
1998,
pp. 178-183
© Henry Stewart Publications,
1358-1988
Page
178
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