R (Uberoi and Another) v City of Westminster Magistrates' Court
| Jurisdiction | England & Wales |
| Judge | THE PRESIDENT OF THE QUEEN'S BENCH DIVISION,MR JUSTICE MADDISON,the President of the Queen's Bench Division |
| Judgment Date | 02 December 2008 |
| Neutral Citation | [2008] EWHC 3191 (Admin) |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 02 December 2008 |
| Docket Number | CO/9738/2008 |
[2008] EWHC 3191 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
The Strand
London WC2A 2LL
The President Of The Queen's Bench Division
(Lord Justice May) and
Mr Justice Maddison
CO/9738/2008
Mr Patrick O'Connor QC (instructed by Corker Binning Solicitors London WC2R 3JJ) appeared on behalf of the Claimants
Mr John Kelsey-Fry QC and Miss Sarah Clarke (instructed by the Financial Services Agency) appeared on behalf of the First Interested Party
Mr Sam Grodzinski (instructed by the Treasury Solicitor) appeared on behalf of the Second Interested Party
Tuesday 2 December 2008
The question which these proceedings for judicial review raises is whether, in instituting proceedings for an offence of insider dealing under Part V of the Criminal Justice Act 1993, the Financial Services Authority first need the consent of the Secretary of State or the Director of Public Prosecutions by virtue of section 61(2) of the 1993 Act. The answer turns on the construction of section 402 of the Financial Services and Markets Act 2000 and whether that section should be construed in its statutory context as modifying section 61(2) of the 1993 Act.
In a ruling given on 19 September 2008 in the City of Westminster Magistrates' Court District Judge Purdy ruled that the Financial Services Authority were empowered to institute proceedings for offences under Part V of the 1993 Act without first obtaining the consent of the Secretary of State or the Director of Public Prosecutions. The claimants challenge that ruling. The Financial Services Authority say that the District Judge's ruling was correct. Her Majesty's Treasury, who appear by counsel with the court's permission, support the FSA.
The facts which gave rise to the ruling are not contentious. On 25 May 2008 the FSA laid informations against Neel and Matthew Uberoi upon 17 charges of insider dealing in shares contrary to 52(1) of the Criminal Justice Act 1993. They are respectively father (a semi-retired dentist) and son (a university student), both of good character. They were each summonsed to appear at the magistrates' court on the basis of these informations. The informations involve various share transactions made by Neel Uberoi between 30 May 2006 and 4 August 2006 in three companies. It is alleged that Matthew (his son) acquired relevant inside information while working in the summer as an intern with Hoare Govett, the corporate broking arm of ABN-AMRO Bank in the City of London, and that he communicated this information to his father before the relevant transactions.
Neither defendant contested the sufficiency of the evidence for committal purposes, but the defence challenged the legality of the summonses because the FSA had not, as they accepted, obtained a consent under section 61(2) of the 1993 Act.
The District Judge was asked to rule on a point of law expressed as follows:
“When instituting proceedings for an 'insider dealing' offence contrary to Part V of the Criminal Justice Act 1993, pursuant to its powers under section 402 of the Financial Services and Markets Act 2000, does the requirement for a consent to be obtained under section 61(2) of the Criminal Justice Act 1993 apply to the FSA?”
It was agreed that, if consent is required, any prosecution without the necessary consent would be a nullity and any conviction would have to be quashed on appeal: see R v Pearce 72 Cr App R 295. It was also agreed that the wording of section 61(2) of the 1993 Act prohibits the institution of proceedings for insider dealing offences without consent. Proceedings are “instituted” upon the laying of an information and the issue of a summons: see Price v Humphries [1958] 2 QB 353 and R v Bull 99 Cr App R 193. The present summonses would thus be a nullity if section 61(2) applies.
It is submitted on behalf of the claimants that a requirement for consent can fulfil a purpose to see that there is a proper degree of independent judgment of whether prosecution is in the public interest, having regard in this instance to such matters as the first claimant's health. I am not clear why it is said that the FSA are not properly able to take matters of public interest into account, but that is incidental to what in the end is a pure question of construction.
The statutory provisions at the heart of the issue are section 52 of the 1993 Act, which defines the offence of insider dealing, and section 61(2) of the 1993 Act which provides:
“Proceedings for offences under this Part shall not be instituted in England and Wales except by or with the consent of —
(a)the Secretary of State; or
(b)the Director of Public Prosecutions.”
Section 402 of the 2000 Act, which is headed “Power of the Authority to institute proceedings for certain other offences” provides:
“(1) Except in Scotland, the Authority may institute proceedings for an offence under —
(a)Part V of the Criminal Justice Act 1993 (insider dealing); or
(b)prescribed regulations relating to money laundering.
(2) In exercising its powers to institute proceedings for any such offence, the Authority must comply with any conditions or restrictions imposed in writing by the Treasury.
(3) Conditions or restrictions may be imposed under subsection (2) in relation to —
(a)proceedings generally; or
(b)such proceedings, or categories of proceedings, as the Treasury may direct.”
Section 402 has to be read with section 401 which provides for proceedings for offences under the 2000 Act itself or subordinate legislation made under it. Section 401(2) provides:
“Proceedings for an offence may be instituted in England and Wales only —
(a) by the Authority or the Secretary of State; or
(b)by or with the consent of the Director of Public Prosecutions.”
The Authority in this statute is the FSA. Thus the FSA is empowered to bring proceedings for offences under the 2000 Act itself without obtaining the consent of the Secretary of State or the DPP.
The District Judge summarised the parties' submissions in some detail, which were substantially the same as those advanced before this court. He concluded that it was plain that the aim of Parliament was to place the FSA to the forefront in general regulation of fiscal markets, including, where necessary, criminal proceedings dealing with fiscal markets and their regulation. He found it impossible to accept that this was not intended to give the FSA the same unfettered powers in this area as those enjoyed by the Secretary of State, the DPP, and, he was persuaded, the Director of the Serious Fraud Office. The District Judge referred to the decision of the Divisional Court presided over by Maurice Kay LJ in R(Securiplan Plc, Phillip Ullmann, Sabrewatch Ltd, Luke Lucas v Security Industry Authority [2008] EWHC 1762 (Admin) as a comparable case. He referred to short passages in textbooks. He was not persuaded by the position that if that was what Parliament intended, the language of section 402 did not achieve it. He appears to have been persuaded to discern what Parliament intended in part by a plainly illegitimate reference to what Hansard records the Chief Secretary of the Treasury as saying in Parliament on 6 May 1998 as to what his intention then was for a Bill which had yet to be placed before Parliament.
Mr O'Connor QC is right to draw our attention to the opinion or Lord Nicholls of Birkenhead in Queen v Secretary of State for the Environment, Transport and the Regions and Another, ex Parte Spath Holme Limited [2001] 2 AC 349, 396F, where he said:
“Statutory interpretation is an exercise which requires the court to identify the meaning borne by the words in question in the particular context. The task of the court is often said to be to ascertain the intention of Parliament expressed in the language under consideration. This is correct and may be helpful, so long as it is remembered that the 'Intention of Parliament' is an objective concept, not subjective. The phrase is a shorthand reference to the intention which the court reasonably imputes to Parliament in respect of the language used. It is not the subjective intention of the minister or other persons who promoted the legislation. Nor is it the subjective intention of the draftsman, or of individual members or even of a majority of individual members of either House. These individuals will often have widely varying intentions. Their understanding of the legislation and the words used may be impressively complete or woefully inadequate. Thus, when courts say that such-and-such a meaning 'cannot be what Parliament intended', they are saying only that the words under consideration cannot reasonably be taken as used by Parliament with that meaning. As Lord Reid said in Black-Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg AG [1975] AC 591, 613:
'We often say that we are looking for the intention of Parliament, but that is not quite accurate. We are seeking the meaning of the words which Parliament used'.”
Insider dealing was first made specifically unlawful by section 68 of the Companies Act 1980. Section 72 of that Act provided for criminal penalties on conviction. Section 72(2) provided that proceedings for an offence under that section should not be instituted in England and Wales except by the Secretary of State or by, or with the consent of, the Director of Public Prosecutions. This was replicated in section 8(2) of the Company...
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