Taveta Investments Ltd v The Financial Reporting Council
Jurisdiction | England & Wales |
Judge | Mr Justice Nicklin |
Judgment Date | 29 June 2018 |
Neutral Citation | [2018] EWHC 1662 (Admin) |
Court | Queen's Bench Division (Administrative Court) |
Docket Number | Case No: CO/2328/2018 |
Date | 29 June 2018 |
[2018] EWHC 1662 (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 Nicklin
Case No: CO/2328/2018
and
Andrew Green QC and Iain Steele (instructed by Freshfields Bruckhaus Deringer LLP) for the Claimant
Charles Béar QC and James McClelland (instructed by Financial Reporting Council General Counsel) for the Defendants
Julian Randall of Taylor Wessing LLP for the First Interested Party
The Second Interested Party did not attend and was not represented
Hearing date: 21 June 2018
Judgment Approved
These are proceedings for judicial review brought by the Claimant against the Defendants. Permission to bring a judicial review claim has not yet been granted. This judgment deals with a discrete, but important, issue regarding interim relief pending the determination of the application for permission (and, if granted, the claim itself).
The parties
The Financial Reporting Council
The Financial Reporting Council (“FRC”) is an independent regulator with a range of responsibilities. It is responsible for setting the UK Governance and Stewardship Codes and UK standards for accounting and actuarial work and is the UK competent authority for statutory audit, setting audit and ethical standards, and monitoring and enforcing the quality of audit. The FRC is the investigative and disciplinary body for accountants and actuaries in the UK. It carries out these functions under its Accountancy Scheme (“the Scheme”).
The FRC's responsibilities derive from a number of sources. Some are designated by statutory instrument, some delegated by statutory instrument to the FRC or its Conduct Committee by the Secretary of State, some are voluntarily undertaken, and some are based on contractual arrangements. Some of the latter contractual arrangements are underpinned by statutory requirements on other bodies or institutions, such as with the accountancy bodies.
The FRC is overseen by a board comprising non-executive and executive directors. The FRC board is supported by various committees including the Conduct Committee.
Taveta Investments Limited
The Claimant (“Taveta”) together with its subsidiary companies, including Arcadia Group Limited (“Arcadia”), comprise the Taveta Group. Arcadia owns UK high-street brands including Topshop, Topman and Miss Selfridge. A further subsidiary of Taveta, Taveta Investments (No.2) Limited (“Taveta 2”), used to own the BHS group until its sale in 2015.
The FRC Investigation
On 27 June 2016, the FRC announced that it had begun an investigation under the Scheme into alleged misconduct by PricewaterhouseCoopers (“PwC”) and one of its accountants, Stephen Denison, the Interested Parties, in relation to the audit and financial statements of BHS Limited for the year ending 30 August 2014. At that time, BHS Limited was part of the Taveta group.
Following completion of that investigation, and as was widely reported from 12 June 2018, the FRC has imposed sanctions on the Interested Parties. PwC and Mr Denison had admitted misconduct in multiple areas of the BHS audit and accepted the imposition of fines and other sanctions, as follows:
i) PwC was fined £10m, severely reprimanded and was made subject to certain conditions regarding its practice for the next three years;
ii) Mr Denison was fined £500,000, severely reprimanded, banned from performing any audit work for 15 years and undertook to remove his name from the register of statutory auditors for 15 years.
The fines were reduced by 35% (to £6.5m and £325,000 respectively) as a result of ‘early settlement’ (i.e. a discount for an acceptance of responsibility for the misconduct alleged).
The Settlement Agreement and the Particulars of fact and acts of misconduct
To effect this resolution, the FRC and the Interested Parties entered a settlement agreement dated 31 May 2018 (“the Settlement Agreement”). As part of this, particulars of fact and acts of misconduct were agreed by the parties (“the Particulars”). The Particulars were set out in a 38-page document annexed to the Settlement Agreement. They contain the “facts” as agreed between the FRC and the Interested Parties in relation to the investigation. The Settlement Agreement also sets out the nature and seriousness of the misconduct and the basis on which the sanctions had been determined.
The Settlement Agreement was concluded in accordance with provisions in the Scheme governing settlement of proceedings. In summary, where terms of settlement are agreed between parties, the FRC's Executive Counsel (the Third Defendant) is required to deliver the proposed settlement to the FRC's Conduct Committee (the Second Defendant) and the Committee is required to appoint an independent panel member to approve the proposed settlement. Once approved, the Conduct Committee is required, by paragraph 8(6) of the Scheme, to publish the Settlement Agreement “ as soon as practicable” and in such manner as it thinks fit “ unless this would not, in the opinion of the Conduct Committee, be in the public interest”.
The FRC has a Publication Policy (last published in February 2018) (“the Publication Policy”). In summary, the FRC will publish decisions made pursuant to the Scheme in accordance with the relevant publication requirements. The Conduct Committee of the FRC is required to consider whether to publish, amongst other things, settlement agreements. The decision to publish is to be taken on its own merits and on a case-by-case basis. In relation to publication of settlement agreements, the Committee can defer or delay publication if it considers that, at the relevant point in time, other public interest factors outweigh the presumption that publication is in the public interest. Under the heading, “ Timing and Manner of Publication” the Publication Policy provides as follows:
27 The identity of third parties will usually be anonymised in any announcements and/or related documents published under this Publication policy, unless or to the extent that publication of that individual's identity is considered fair and necessary in all the circumstances and is in compliance with any applicable data protection laws.
28 Decisions will normally be published promptly but the Committee retains discretion to delay publishing them, or parts of them, if it considers there are public interest reasons for doing so.
29 Save where urgent publication is desirable to safeguard the public interest, any Member or Member Firm and any other party named in an announcement will be given a copy of its terms a minimum of 3 days before the making of the announcement. Advance notification will also be given to the relevant Scheme Participants and any regulatory body or prosecuting authority with a known interest in the matter in question. Amendments to the wording of press announcements will not generally be accepted, except in relation to matters of factual inaccuracy…
31 Save as otherwise set out in this Publication policy or required by law, publication will usually take the form of:
• a short statement on the FRC's website setting out the brief factual details of the decision or action in question; and
• where considered appropriate in all the circumstances, a link to any related detailed decision(s).
32 In addition, press announcements will usually be published and circulated in a manner determined by the FRC Executive. The press announcement may contain a link to the website statement and any accompanying report or document.
33 In certain circumstances and where not contravening any publication requirements under the Schemes, the FRC may decide to vary the form or procedure in which it publishes an announcement made under this policy.
I would note here that the 3-day notice period stipulated under paragraph 29 is a minimum period.
In accordance with its Publication Policy, the FRC intended to publish a press release announcing the Settlement Agreement and the imposition of sanctions. The Settlement Agreement and the Particulars would then be published and made freely available on the FRC's website.
On Friday 8 June 2018, at 10.28, Kate Davies, Deputy General Counsel emailed Deborah Cooper at Taveta:
“I write to you as representative of the Taveta Group, Arcadia and Sir Philip Green.
Please note, on a strictly confidential basis, that the FRC has settled regulatory action taken against PwC and [Mr Denison] in relation to the statutory audit of the financial statements of BHS. Publication of this outcome by the FRC is intended to take place on Wednesday 13 June at 7am.
In line with our Publication Policy, as the above corporate entities and Sir Philip are identified in the documents intended to be published, I attach an advance copy of our proposed press release which will link to the attached settlement agreement and statement of facts.
Amendments to the wording of the press notice and documents will not generally be accepted, except in relation to matters of factual inaccuracy. Please inform us by 2pm on Tuesday 12 June if there are any accuracy concerns you would like us to take into consideration…” (emphasis in original)
This was the first warning that Taveta got of the impending publication of the press release, Settlement Agreement and the Particulars (collectively “the Sanction Documents”). In terms of the Publication Policy, Taveta was given barely the minimum period of notice allowed under paragraph 29 (see [11] above).
At 15.15 on Saturday 9 June 2018, the...
To continue reading
Request your trial-
R (on the application of the Governing Body of X) v Office for Standards in Education, Children's Services and Skills
...reports prepared by Ofsted (see, for example, the judgment of Nicklin J. in Taveta Investments Ltd. v Financial Reporting Council [2018] EWHC 1662 (Admin), at paragraphs 95 and 96; the judgment of Farbey J. in Remus White Ltd., at paragraph 25; and the judgment of Chamberlain J. in R. (on ......
-
Tariq Siddiqi v John Aidiniantz
...of privacy or confidentiality”: see [81]. As Nicklin J pointed out in Taveta Investments Ltd v The Financial Reporting Council [2018] EWHC 1662 (Admin) [97(ii)], the legal context has since changed. Parliament has all but abolished jury trial in defamation cases: Defamation Act 2013, s 11;......
-
R Barking & Dagenham College v The Office for Students
...to the Claimant. The principles were summarised recently by Nicklin J in Taveta Investments Ltd v Financial Reporting Council [2018] EWHC 1662 (Admin) at [95], as follows: ‘i) there is a significant public interest in publication of reports by public bodies, particularly when they are unde......
-
The King on the application of X Ltd v Chief Inspector of Education, Children's Services and Skills
...institutions under section 125(7) of the Education and Inspections Act 2006. 36 In Taveta Investments v Financial Reporting Council [2018] EWHC 1662, Nicklin J held that the caselaw established the following propositions: i) there is a significant public interest in publication of reports b......
-
High Court Applies High Threshold Test To Injunctions Against Public Bodies
...(3) Executive Counsel of the Financial Reporting Council (Defendants) & (1) PricewaterhouseCoopers LLP (2) Stephen John Denison [2018] EWHC 1662 (Admin). For more information, see our Administrative and public law The content of this article is intended to provide a general guide to the......
-
Misinformation and "Maxwellisation": Taveta Investments Limited v. The Financial Reporting Council
...of third parties who have not taken part in the investigation? In Taveta Investments Limited v. The Financial Reporting Council [2018] EWHC 1662 (Admin) the court considered a challenge to the FRC's decision to publish its detailed findings without first affording the third party a chance t......
-
Misinformation And 'Maxwellisation': Taveta Investments Limited v. The Financial Reporting Council
...of third parties who have not taken part in the investigation? In Taveta Investments Limited v. The Financial Reporting Council [2018] EWHC 1662 (Admin) the court considered a challenge to the FRC's decision to publish its detailed findings without first affording the third party a chance t......
-
Table of cases
...1159 (HL) ........................................... 338 Table of Cases 781 Taveta Investments Ltd v Financial Reporting Council, [2018] EWHC 1662 (Admin) ...................................................................... 113 Taylor v Aramenko (1994), 100 BCLR (2d) 245, 53 BCAC 264, 43......
-
Interlocutory Injunctions: Specific Areas
...But also note the criticism of this high standard in the United Kingdom in Taveta Investments Ltd v Financial Reporting Council , [2018] EWHC 1662 (Admin) at para 95, now that the Human Rights Act 1998 (UK) addresses these issues. 118 Grant v Torstar Corp , 2009 SCC 61. 119 See Canada Metal......