R (Davies) v Financial Services Authority
| Jurisdiction | England & Wales |
| Judge | Mr Justice Lightman |
| Judgment Date | 18 December 2002 |
| Neutral Citation | [2002] EWHC 2997 (Admin) |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | Case No: CO/4196/2002 |
| Date | 18 December 2002 |
[2002] EWHC 2997 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
Strand
London, WC2A 2LL
The Honourable Mr Justice Lightman
Case No: CO/4196/2002
The Queen On The Application Of
The Honourable Michael Beloff Qc And Mr Pushpinder Saini (instructed By Denton Wilde Sapte, 5 Chancery Lane, Clifford's Inn, London Ec4a 1bu) For The Claimants
Mr Javan Herberg (instructed By The Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5hs) For The Defendant
INTRODUCTION
This is an application by the Claimants for permission to apply for judicial review of decisions dated the 24 th June 2002 ("the Decisions") of the Defendant the Financial Services Authority ("the FSA") on the grounds that they are ultra vires and an abuse of process. The Decisions were to issue warning notices ("the Notices") under sections 56 and 57 of the Financial Services and Market Act 2000 ("the FSMA"). The Notices are a statutory preliminary before the Regulatory Decisions Committee of the FSA ("the RDC") can resolve to issue a decision notice against the Claimants stating an intention to make a prohibition order under section 56(2) of the FMSA. The FSA contest the application on two grounds. The first is procedural, namely that the challenge to the Decisions should be made to the RDC itself and then any further challenge to decision notices should be made before the Financial Services and Markets Tribunals, rather than to this court in judicial review proceedings. The second is substantive namely that there is no arguable case that the Decisions were ultra vires or an abuse of process. Sir Richard Tucker on the 17 th October 2002 refused permission on the procedural basis that the alternative remedy to judicial review proceedings available under the statutory provisions, namely a challenge made before the RDC, was more appropriate. It was unnecessary for him to express any view on the substance of the challenge. I have however had the advantage of full argument on that issue, and I consider it appropriate in the circumstances in this judgment to decide the substantive issue.
FACTS
Until early 2000 Brandeis (Brokers) Limited ("BBL") was a Ring Dealing Member of the London Metal Exchange ("the LME") and until various dates in 2000 the Claimants were registered executives and employees of BBL. A Mr Black, one of BBL's largest customers who traded very significantly on the LME, made serious complaints against BBL, which BBL reported to the Securities and Futures Authority ("the SFA"). The SFA was a self-regulatory organisation established under the Financial Services Act 1986 ("the 1986 Act"), which was responsible for the regulation of firms operating on the LME. Under Rule 7.23A of its rules the SFA had power to institute disciplinary proceedings if a registered person committed an act of misconduct or ceased to be a fit and proper person. The disciplinary procedure contemplated four stages: (1) a Notice of Investigation, which gave rise to an obligation on authorities companies and registered individuals to cooperate with the investigation by attending interviews or providing documents; (2) a Summary of Material Facts which allowed a prospective respondent to make relevant representations; (3) a Notice of Disciplinary Proceedings instituting disciplinary proceedings; and (4) a Disciplinary Hearing.
The SFA went through the first of the three stages leading to disciplinary proceedings against the Claimants (and certain other persons) in which the SFA on account of the serious charges made sought expulsion from some or all of the SFA's registers and a contribution to costs. It was not however possible to proceed to the fourth stage, the Disciplinary Hearing, before the 1986 Act was superseded by the FSMA and the SFA ceased to have jurisdiction to proceed further with the disciplinary proceedings. The SFA accordingly wrote to the Claimants stating that the disciplinary proceedings brought by the SFA would have to be discontinued but that the FSA would consider what, if any, action to take against the Claimants under the new powers vested in the FSMA.
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