Real Estate Opportunities Ltd v Aberdeen Asset Managers Jersey Ltd
| Jurisdiction | England & Wales |
| Judge | Lady Justice Arden,Lord Justice Lawrence Collins,Lord Justice Tuckey |
| Judgment Date | 09 March 2007 |
| Neutral Citation | [2007] EWCA Civ 197 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2006/2682 & 2685 |
| Date | 09 March 2007 |
[2007] EWCA Civ 197
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
David Richards J
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Tuckey
Lady Justice Arden and
Lord Justice Lawrence Collins
Case No: A3/2006/2682 & 2685
Mark Howard QC, Simon Salzedo & David Scannell (instructed by Messrs CMS Cameron McKenna LLP) for the 1st and 2nd Appellants
Iain Milligan QC & Adrian Beltrami (instructed by Messrs Mayer, Brown, Rowe & Maw LLP) for the 3rd Appellant
Jonathan Sumption QC, Helen Davies & Simon Birt (instructed by Messrs Lovells) for the Respondent
Hearing dates : 14/15 February 2007
This is an appeal from the order of David Richards J dated 15 December 2006 ordering the inspection of documents. The main question is the effect of sections 348 and 391 of the Financial Services and Markets Act 2000 (“ FSMA”) on the obligations of a defendant to give inspection of documents disclosed in litigation pursuant to CPR 31. The issues on this appeal and my answers in summary to those issues are set out in para. 22 below.
Sections 348 and 391 of FSMA
The appropriate place to start is with a short description of the relevant statutory scheme and the relevant parts of the two sections with which this appeal is concerned.
As is well known, FSMA makes provision for the regulation of financial services and markets. In particular it sets out the functions of the Financial Services Authority (“FSA”) and provides for persons (“authorised persons”) to be given permission to conduct a regulated activity. They may be individuals, bodies corporate, partnerships or unincorporated associations. All of the defendants in this action are authorised persons for the purposes of FSMA and authorisations may also have been granted to certain of the individuals acting on their behalf.
Among its powers, the FSA has power to require an authorised person to provide information or to produce documents (see section 165 of FSMA). The FSA may also appoint competent persons to conduct an investigation into any aspect of the business of an authorised person ( section 168 of FSMA). The persons conducting the investigation may require persons to attend before them and answer questions ( section 173 of FSMA). Certain statements made to investigators in accordance with FSMA are admissible in evidence in any proceedings if the statement also complies with the requirements governing the admissibility of evidence in the circumstances in question ( section 174(1) of FSMA).
Section 348 prohibits the disclosure of confidential information obtained by the FSA in discharge of its functions. The prohibition extends to information obtained by other primary recipients, such as the Secretary of State for Trade and Industry, and to information obtained by persons (“secondary recipients”) from a primary recipient. Section 349 enables the Treasury to prescribe by regulation gateways or exemptions from restrictions on disclosing confidential information. Section 352 imposes a criminal penalty for a breach of section 348. But there is a defence for a person who can show for instance that he took all reasonable precautions and exercised all due diligence to avoid committing the offence.
The material provisions of sections 348, 349 and 352 are as follows:
“348 Restrictions on disclosure of confidential information by Authority etc
(1) Confidential information must not be disclosed by a primary recipient, or by any person obtaining the information directly or indirectly from a primary recipient, without the consent of—
(a) the person from whom the primary recipient obtained the information; and
(b) if different, the person to whom it relates.
(2) In this Part “confidential information” means information which—
(a) relates to the business or other affairs of any person;
(b) was received by the primary recipient for the purposes of, or in the discharge of, any functions of the Authority, the competent authority for the purposes of Part VI or the Secretary of State under any provision made by or under this Act; and
(c) is not prevented from being confidential information by subsection (4).
(3) It is immaterial for the purposes of subsection (2) whether or not the information was received—
(a) by virtue of a requirement to provide it imposed by or under this Act;
(b) for other purposes as well as purposes mentioned in that subsection.
(4) Information is not confidential information if—
(a) it has been made available to the public by virtue of being disclosed in any circumstances in which, or for any purposes for which, disclosure is not precluded by this section; or
(b) it is in the form of a summary or collection of information so framed that it is not possible to ascertain from it information relating to any particular person.
(5) Each of the following is a primary recipient for the purposes of this Part—
(a) the Authority;
(b) any person exercising functions conferred by Part VI on the competent authority;
(c) the Secretary of State;…
349 Exceptions from section 348
(1) Section 348 does not prevent a disclosure of confidential information which is—
(a) made for the purpose of facilitating the carrying out of a public function; and
(b) permitted by regulations made by the Treasury under this section.
(2) The regulations may, in particular, make provision permitting the disclosure of confidential information or of confidential information of a prescribed kind—
(a) by prescribed recipients, or recipients of a prescribed description, to any person for the purpose of enabling or assisting the recipient to discharge prescribed public functions;
(b) by prescribed recipients, or recipients of a prescribed description, to prescribed persons, or persons of prescribed descriptions, for the purpose of enabling or assisting those persons to discharge prescribed public functions;
(c) by the Authority to the Treasury or the Secretary of State for any purpose;
(d) by any recipient if the disclosure is with a view to or in connection with prescribed proceedings…
(5) “Public functions” includes—
(a) functions conferred by or in accordance with any provision contained in any enactment or subordinate legislation…
352 Offences
(1) A person who discloses information in contravention of section 348 or 350(5) is guilty of an offence…
(6) In proceedings for an offence under this section it is a defence for the accused to prove—
(a) that he did not know and had no reason to suspect that the information was confidential information or that it had been disclosed in accordance with section 350;
(b) that he took all reasonable precautions and exercised all due diligence to avoid committing the offence.”
The powers of the FSA also include power to require a person to make monetary restitution to the appropriate persons where it is satisfied that an authorised person has contravened a requirement imposed by or under FSMA as a result of which that person has received profits or another person has suffered loss (section 384). However, before it exercises this power the FSA must give the authorised person a “warning notice” specifying the amount which the FSA proposes to require the person concerned to pay or distribute to the appropriate persons (section 386). Furthermore, if the FSA decides to exercise the power to order restitution it must give a “decision notice” to the person in relation to whom the power is to be exercised (section 386). There are various requirements concerning the contents of a decision notice. The person to whom a decision notice is given may refer the matter to the Financial Services and Markets Tribunal (section 386(3)). Section 391 imposes restrictions on the dissemination of warning notices and decision notices. Section 391 prohibits either the FSA or the recipient of a warning or decision notice, including a third party to whom such a notice is copied, from publishing details of any such notice. Section 391 provides in material part as follows:
“(1) Neither the Authority nor a person to whom a warning notice or decision notice is given or copied may publish the notice or any details concerning it….”
There is no statutory penalty for a breach of section 391.
Background to this litigation
The claimant, Real Estate Opportunities Ltd (“REO”) is a split capital investment trust, that is, an investment trust company whose share capital is divided into different classes of shares carrying different rights, risks and rewards. It was incorporated in Jersey on 30 March 2001. On 4 May 2001 it issued listing particulars relating to a placing of up to 300 million ordinary shares, 75 million zero dividend preference shares and up to £125 million of convertible unsecured loan stock. The securities were later issued on the London, Irish and Channel Islands stock exchanges.
The defendants are UBS Ltd (“UBS”), formerly UBS Warburg Ltd, and Aberdeen Asset Managers Jersey Ltd and Aberdeen Asset Managers Ltd (collectively “Aberdeen”). UBS and Aberdeen acted as advisers to REO in connection with the listing and certain related transactions. Aberdeen thereafter managed the portfolio of REO.
In June 2005, REO commenced proceedings against UBS and Aberdeen. It alleges that at all material times after its incorporation Aberdeen and UBS owed it tortious duties of care to provide it with...
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