R (Heather Moor & Edgecomb Ltd) v Financial Ombudsman Service
| Jurisdiction | England & Wales |
| Judge | Lord Justice Rimer,Lord Justice Tuckey,Lord Justice Stanley Burnton,Lord Justice Rix,Justice Laws,Lord Justice Laws,Lord,Lord Justice Aikens |
| Judgment Date | 25 March 2010 |
| Neutral Citation | [2008] EWCA Civ 642,[2008] EWCA Civ 1351,[2008] EWCA Civ 643,[2010] EWCA Civ 401 |
| Docket Number | Case No: B2/2008/0591,Case No: C1/2007/2321 CO/2007/2321,Case No: C1/2009/2074,Case No: C3/2008/1617 |
| Court | Court of Appeal (Civil Division) |
| Date | 25 March 2010 |
[2008] EWCA Civ 1351
Lord Justice Tuckey and
Lord Justice Rimer
Case No: C3/2008/1617
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE FINANCIAL SERVICES AND MARKETS TRIBUNAL
(CHAIRMAN, SIR STEPHEN OLIVER QC)
Royal Courts of Justice
Strand,
London, WC2A 2LL
Mr and Mrs Pickering appeared in person on behalf of the Applicant
Mr D Thornton (instructed by the Financial Services Authority) appeared on behalf of the Respondent
(Draft for Approval)
This is a renewed application for permission to appeal by Heather, Moor and Edgecomb Limited (“HME”), a firm of independent financial advisers which, since December 2001, has been authorised by the Financial Services Authority (“the FSA”) to carry on investment business. Mummery LJ refused permission to appeal on the papers on 12 August 2008 on the basis that he perceived the proposed appeal as having no real prospect of success.
The background is that Mr and Mrs Crofts made a complaint that HME had mis-sold them a product. Their complaint came before the Financial Ombudsman Service (“the FOS”), which operates under the provisions of Part XVI of the Financial Services and Markets Act 2000. The FOS made a final decision on 13 October 2003 ordering HME to pay compensation to Mr and Mrs Crofts. The Crofts notified the FOS of their acceptance of the determination shortly afterwards —I think on 15 October 2003 —whereupon the effect of section 228(5) of the 2000 Act was that the award became final and binding on the Crofts and on HME. HME did not choose, as might have been open to them, to challenge the determination by the FOS by way of an application for judicial review, and the papers record that they confirmed that they were not doing so by a letter of 6 January 2004. There was then an issue as to how much compensation had to be paid to the Crofts, and the outcome of that was a further determination by the FOS that HME must pay the Crofts £5,352.84 by 11 November 2004.
The dispute resolution rules relating to determinations by the FOS require prompt compliance with them (see DISP 3.9.14(1) R). HME did not comply with the payment direction, and on 7 December 2004 the FOS wrote requiring payment to be made forthwith. HME still did not pay and then started raising questions about the quantum of the award in letters to the FOS in December 2004 and January 2005, raising challenges to the validity of the award on public law grounds and threatening to apply for judicial review of it.
The FSA —which is the relevant regulator —took the view that the compliance required by the rules meant payment of the Crofts' award by 11 November 2004 at the latest. On 2 October 2007 the FSA issued a decision notice that, because of HME's failure to comply with the award, its permission under Part IV of the 2000 Act to carry on its regulated activities was to be cancelled. In the FSA's view, HME's failure to pay the award promptly (or indeed at all) meant that the FSA could not be satisfied that it was a fit and proper person having regard to all the circumstances, and that it was failing and likely to fail to satisfy Threshold Condition 5 (“Suitability”) set out in Schedule 6 to the 2000 Act.
HME challenged that decision of the FSA before the Financial Services and Markets Tribunal. By a decision of 5 June 2008 the Tribunal, chaired by Sir Stephen Oliver QC, made a direction that the FSA should cancel HME's Part IV permission unless, within 28 days of the release of its decision, or if an application were to be made for permission to appeal the final disposal of any appeal from it, HME were to pay the Crofts £6,449.61, that being the amount of the FOS's original award plus interest. In substance, therefore, the Tribunal upheld the FSA's decision.
HME took various points before the Tribunal, but the only one with which we are concerned arises out of county court proceedings that the Crofts brought against HME in December 2005 to compel payment of the FOS award. HME had warned the Crofts in advance that, if they did bring such a claim, HME would defend it and would raise defences based on public law challenges to the validity of the FOS award, including a complaint that it had been made in circumstances amounting to, or said to amount to, a breach of their rights under Article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms. HME did raise such defences in their defence, but in the event the Crofts' claim never came to trial. The outcome of the proceedings was the making of a consent order on 5 June 2006, by which their claim was dismissed without costs. The reason for that order was because, understandably, the Crofts were concerned about the costs risk of pursuing a contested claim to recover a prize of less than £6,000. They proposed to HME that the claim should be disposed of on the basis that in due course it was, to which HME agreed.
HME's argument before the Tribunal was that this outcome of the county court claim changed the face of the FOS award. It was submitted to the Tribunal that the consent order amounted, in effect, to a recognition of the correctness of HME's challenge to the FOS award, following which it became wrong in principle for the FSA to make its cancellation decision in 200The FSA ought, it was said, to have respected the consent order as having had that effect, and was in fundamental error in not doing so. The argument was apparently that the consequence of the consent order was effectively to prevent the FSA from regarding the original award as remaining in any sense in force.
It is no surprise that the Tribunal rejected HME's argument, which was obviously wrong. Neither the FOS, nor the FSA for that matter, was a party to the county court proceedings; and even though at least the FSA was aware of them before they were disposed of, nor was it appropriate for it to seek to become a party. The proceedings were domestic enforcement proceedings brought by the Crofts against HME for payment of the award. True it is that HME raised in its defence various public law and other challenges to the validity of the award, but their correctness was never determined because the claim was terminated by the consent order. That order did not amount to a determination that the grounds of challenge to the award were well founded. It did not even amount to an admission that the Crofts accepted that they were well founded. It merely reflected that the Crofts did not want to remain involved in the contested proceedings, and I have explained the reason why they did not. The consent order did not decide or establish anything except that the Crofts could not press on with their claim for payment or subsequently start another one.
It follows in my view that the consent order could fairly be, and was, regarded as quite irrelevant as far as the FSA was and is concerned. It had no impact at all on the validity of the FOS's determinations. Both its determinations had become binding on HME. They had not been set aside, nor had they been complied with and their validity was not undermined by the consent order. In those circumstances I can see no reason why, in principle, the FSA should not have made the decision that it did in October 2007, based as it was on HME's studied determination to flout the FOS award. There was, as I understand it, no attempt before the Tribunal to challenge the justice of that decision except on the basis of the all or nothing ground I have outlined, one which, with respect, I regard as mistaken. There was also a challenge on another ground but that has been expressly abandoned before us.
The ground based on the county court order is the only ground of appeal raised in the appellant's notice. By her written address to us in support of this application, Mrs Pickering —a director of HME who has presented its case to us, assisted by her husband, her co-director —also advanced a complaint that the Tribunal was in error in not inviting arguments as to the lawfulness of the FOS award. She points out, correctly it seems to me, that counsel for the FSA made a concession in the course of his final address that it would have been open to HME to challenge the validity of the award. Whether that concession was right or not —a matter on which I express no view —the fact, however, is that HME, which was represented by leading counsel before the tribunal, made no such challenge, a matter expressly recorded in paragraph 18 of the Tribunal's decision. It is no surprise that counsel did not do so, he having advanced a positive assertion in paragraph 59 of HME's Reply before the Tribunal (which he had drafted) that the Tribunal had no standing to rule on the public law challenges to the FOS award. There was no duty on the Tribunal to invite argument on that point. It was for each party to make the case it wanted to make before the Tribunal, and HME had expressly abstained from making the case that Mrs Pickering now complains was not made. There was, therefore, no error of law on the part of the Tribunal in not exploring that question, and so in my view there is nothing in this head of complaint either.
I regard this as a plain case. Mummery LJ disposed of it very summarily when dealing with it on the papers. His view was that the appeal has no real prospect of success. I would say that it has no prospect of success. I would refuse permission to appeal.
So would I.
Order: Application refused
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