R v Rollins and Another
| Jurisdiction | England & Wales |
| Judge | SIR JOHN DYSON SCJ |
| Judgment Date | 28 July 2010 |
| Neutral Citation | [2010] UKSC 39 |
| Date | 28 July 2010 |
| Court | Supreme Court |
[2010] UKSC 39
Lord Saville
Lord Rodger
Lord Brown
Lord Judge
Lord Kerr
Lord Clarke
Sir John Dyson SCJ
Appellant
Charles Miskin QC
Paul Ozin
(Instructed by Clarion Solicitors)
Respondent
David Perry QC
Samuel Grodzinski
(Instructed by Financial Services Authority Legal Department)
SIR JOHN DYSON SCJ (delivering the judgment of the court)
The issue that arises on this appeal is whether the Financial Services Authority ("the FSA") has power to prosecute offences of money laundering contrary to sections 327 and 328 of the Proceeds of Crime Act 2002 (" POCA"). The appellant contends that the FSA's powers to prosecute criminal offences are limited to the offences referred to in sections 401 and 402 of the Financial Services and Markets Act 2000 as amended (" FSMA"), which do not include offences under POCA. The Court of Appeal (Richards LJ, Irwin J and HH Judge Baker QC) held that the FSA's powers were not limited in that way and that it had the power to bring prosecutions in respect of other offences.
The appellant faces charges for (i) offences of insider dealing contrary to section 52 of the Criminal Justice Act 1993 and (ii) offences of money laundering contrary to sections 327 and 328 of POCA. The former offences relate to the sale of shares in a company by which he was employed. The latter relate to the transfer of part of the proceeds of the sale from his bank account to a bank account in his father's name. He does not challenge the FSA's power to prosecute the insider dealing offences, since this is expressly provided for by section 402(1) of FSMA. But he does challenge the FSA's power to prosecute the money laundering offences, since this is not provided for by section 402(1) of FSMA.
The FSA
The FSA is a company limited by guarantee. It was incorporated in June 1985 under the name of The Securities and Investments Board ("the SIB"). Its name was changed to the FSA in October 1997.
The April 2000 version of its memorandum and articles of association, reflecting various amendments since the original incorporation of the company as the SIB, expressed the company's objects and powers in broad terms. For example, by clause 3(A)(i)(a) of the memorandum its objects included "to promote and maintain high standards of integrity and fair dealing in the carrying on of investment business, deposit-taking business, insurance business, business carried on by building societies, friendly societies, industrial and provident societies and credit unions and the provision of other financial services". More specifically, but without prejudice to the generality of paragraph (i), by clause 3(A)(ii)(a) its objects included "to do anything with a view to or arising in connection with the transfer to the Company of all or any of the functions to which section 114 of the Financial Services Act 1986 applies or the vesting in the Company of powers or functions pursuant to any other law or any regulation from time to time having effect in any part of the United Kingdom". As to powers, clause 3(B) provided as follows:
"With respect to the foregoing objects the powers of the Company shall include (but not be limited to) powers to do any of the following where the directors of the Company consider the same to be incidental or conducive to the objects of the Company:
…..
(vi) to institute legal or arbitration proceedings or itself to establish and operate procedures for the settlement of disputes."
In February 2001, following the enactment of FSMA, clause 3 was amended and simplified. In its amended form it reads:
"The Authority's objects are:
(A) to carry out any functions conferred on the Authority by or under any provision of any legislation, as amended from time to time, and to carry out such other functions or exercise such powers as, from time to time, may be carried out or exercisable by the Authority;
(B) to carry out any other function or exercise any other power as may, in the Authority's view, assist or enable it to carry out the functions and powers referred to above or which the Authority considers incidental, desirable or expedient."
The relevant provisions of FSMA (as amended)
So far as material, FSMA (as amended) provides:
" 1. The Financial Services Authority
(1) The body corporate known as the Financial Services Authority ("the Authority") is to have the functions conferred on it by or under this Act.
(2) The Authority must comply with the requirements as to its constitution set out in Schedule 1.
(3) Schedule 1 also makes provision about the status of the Authority and the exercise of certain of its functions.
(4) Section 249 of the Banking Act 2009 provides for references to functions of the Authority (whether generally or under this Act) to include references to functions conferred on the Authority by that Act (subject to any order under that section).
2. The Authority's general duties
(1) In discharging its general functions the Authority must, so far as is reasonably possible, act in a way –
(a) which is compatible with the regulatory objectives; and
(b) which the Authority considers most appropriate for the purpose of meeting those objectives.
(2) The regulatory objectives are –
(a) market confidence;
(ab) financial stability;
(b) public awareness;
(c) the protection of consumers; and
(d) the reduction of financial crime.
……………….
401. Proceedings for offences
(1) In this section 'offence' means an offence under this Act or subordinate legislation made under this Act.
(2) 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.
(3) Proceedings for an offence may be instituted in Northern Ireland only –
(a) by the Authority or the Secretary of State; or
(b) by or with the consent of the Director of Public Prosecutions for Northern Ireland.
(4) Except in Scotland, proceedings for an offence under section 203 may also be instituted by the Office of Fair Trading.
(5) In exercising its power to institute proceedings for an offence, the Authority must comply with any conditions or restrictions imposed in writing by the Treasury.
(6) Conditions or restrictions may be imposed under subsection (5) in relation to –
(a) proceedings generally; or
(b) such proceedings, or categories of proceedings, as the Treasury may direct.
402. Power of the Authority to institute proceedings for certain other offences
(1) Except in Scotland, the Authority may institute proceedings for an offence under –
(a) Part V of the Criminal Justice Act 1993 (insider dealing);
(b) prescribed regulations relating to money laundering; or
(c) Schedule 7 to the Counter-Terrorism Act 2008 (terrorist financing or money laundering).
(2) In exercising its power 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."
The FSA's powers to prosecute before the enactment of FSMA
The central submission of Mr Miskin QC is that sections 1(1), 401 and 402 of FSMA provide a complete code within which the FSA must operate and that its only powers to prosecute are those referred to in sections 401 and 402. As we shall explain, before the enactment of FSMA the FSA could initiate criminal proceedings for any offence which fell within its objects as defined by its memorandum and articles of association, subject to any restriction or condition that was imposed by the statute which created the offence.
Every person has the right to bring a private prosecution: see, for example Gouriet v Union of Post Office Workers [1978] AC 435, 497H per Lord Diplock. The right to bring private prosecutions has been expressly preserved by section 6 of the Prosecution of Offences Act 1985 which provides:
"(1) Subject to subsection (2) below, nothing in this Part shall preclude any person from instituting any criminal proceedings or conducting any criminal proceedings to which the Director's duty to take over the conduct of proceedings does not apply."
Nothing in section 6(1) excludes bodies corporate from the definition of "any person". A corporation may therefore bring a prosecution provided that it is permitted to do so by the instrument that gives it the power to act. As Lord Mance noted in Jones v Whalley [2007] 1 AC 67 at para 38, private prosecutions "may be initiated by private bodies such as high street stores, by charities such as NSPCC and RSPCA, or by private individuals…". In Broadmoor Special Health Authority v Robinson [2000] QB 775 at para 25, Lord Woolf MR said:
"The statutes only rarely provide expressly that a particular public body may institute proceedings in protection of specific public interests. It is usually a matter of implication. If a public body is given responsibility for performing public functions in a particular area of activity, then usually it will be implicit that it is entitled to bring proceedings seeking the assistance of the courts in protecting its special interests in the performance of those functions."
In R (Hunt) v Criminal Cases Review Commission [2001] QB 1108 at para 20, Lord Woolf CJ said in relation to the common law power of the Inland Revenue Commissioners to bring prosecutions:
"Great importance has always been attached to the ability of an ordinary member of the public to prosecute in respect of breaches of the criminal law. If an ordinary member of the public can bring proceedings for breaches of the criminal law, it would be surprising if the Inland Revenue...
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