The Financial Conduct Authority v Neville Registrars Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Morgan |
| Judgment Date | 21 June 2019 |
| Neutral Citation | [2019] EWHC 1611 (Ch) |
| Court | Chancery Division |
| Date | 21 June 2019 |
| Docket Number | Case No: BL-2019-000466 |
[2019] EWHC 1611 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
BUSINESS LIST (CHANCERY DIVISION)
Royal Courts of Justice
Rolls Building, Fetter Lane, London, EC4A 1NL
Mr Justice Morgan
Case No: BL-2019-000466
On a written application without a hearing
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
These proceedings were brought by the Financial Conduct Authority (“the FCA”) against Neville Registrars Limited (“Neville”) pursuant to section 177 of the Financial Services and Markets Act 2000 (“ FSMA”). Hereafter, all references in this judgment to sections of an Act of Parliament are to sections of FSMA.
The only matter now outstanding is the application by the FCA for an order that Neville pays the FCA's costs of the proceedings.
So far as now relevant, the facts are as follows:
i) the FCA is an “investigating authority” for the purposes of section 168;
ii) pursuant to section 168, the FCA appointed a number of persons to conduct an investigation on its behalf;
iii) the persons so appointed included a Mr Craddock and a Mr Cawser;
iv) the investigation was not into the affairs of Neville;
v) on 18 April 2018, Mr Craddock acting as a duly appointed investigator required Neville pursuant to section 173(2)(b) and section 173(3) to provide to Mr Craddock specified information;
vi) on 18 October 2018, Mr Cawser acting as a duly appointed investigator required Neville pursuant to section 173 to provide to Mr Cawser specified information and, pursuant to section 173(4), to provide certain assistance;
vii) Mr Cawser's requirement of 18 October 2018 was stated to replace all previous requirements including, therefore, Mr Craddock's requirement of 18 April 2018.
On 5 March 2019, the FCA certified, or purported to certify, pursuant to section 177(1) and CPR 81.15 that Neville had failed to comply with a requirement imposed on it under Part XI of FSMA. The certificate made it clear that the body giving the certificate was the FCA. The certificate was signed on behalf of the FCA by a Mr Coulthard who is in the FCA's Enforcement Legal Department. Mr Coulthard stated in the certificate that he believed that the facts stated in the certificate were true.
The certificate set out further details of the allegations made by the FCA. These details included statements that the requirements made on 18 April 2018 and 18 October 2018, as to the provision of information, were made by the FCA. The details also stated that section 177 permitted the FCA to certify that a person had failed to comply with an information requirement under Part XI of FSMA. It was further stated that the FCA believed that Neville had failed to comply with information requirements because of the matters stated in an affidavit (in fact it was an affirmation) of Mr Cawser.
Mr Cawser's affirmation contained a detailed account of the dealings with Neville. He stated that he was making his affirmation on behalf of the FCA. According to Mr Cawser, the FCA had issued the information requests of 18 April 2018 and 18 October 2018. He also stated that the FCA could issue a certificate under section 177. At paragraph 54 of his affirmation, he stated that the FCA considered that Neville had failed to comply with the information requirements. At paragraph 55 of his affirmation, he stated that the FCA invited the court to take certain action in relation to Neville.
There is no statement in Mr Cawser's affirmation which amounts to a statement by him that he believed that Neville had failed to comply with Mr Cawser's information requirements. The furthest he went was to make a statement on behalf of the FCA that the FCA believed that that Neville had so failed.
The underlying differences in relation to Neville have been resolved and the FCA and Neville have agreed that apart from the issue as to costs, the court should make no order in these proceedings.
The FCA has asked the court to order Neville to pay the costs of the FCA in the sum of £1,840. Neville does not ask for its costs but submits that the court should make no order as to costs.
Neville's position in relation to costs is set out in two emails, on 26 April 2019 and 1 May 2019. The FCA replied to the first of these emails on 29 April 2019. The FCA did not reply to the second of these emails although it was invited by the court to do so.
The principal point made by Neville was that the certificate to be given under section 177 should have been given by Mr Cawser and not by the FCA. The FCA's response to this point was to rely on the fact that Mr Cawser made an affirmation in support of the certificate made by the FCA.
Section 177(1) provides:
“If a person other than the investigator (“the defaulter”) fails to comply with a requirement imposed on him under this Part the person imposing the requirement may certify that fact in writing to the court.”
The principal point raised by Neville relies on the phrase in section 177(1): “the person imposing the requirement”. Neville's argument is that the person imposing the requirement of 18 October 2018 was Mr Cawser and so the subsection required Mr Cawser to certify the fact that Neville had not complied with the requirement. The same point would arise in relation to the requirement of 18 April 2018 where the investigator was Mr Craddock. I need not consider separately the requirement of 18 April 2018 as the same point arises in relation to that requirement and, in any case, the requirement of 18 October 2018 stated that it replaced the earlier requirement.
Although the FCA has not put its case in these terms, it would seem that it proceeds on the basis that it was the FCA which imposed the requirement of 18 October 2018 and therefore it was open to the FCA to certify non-compliance for the purposes of section 177(1).
It can be seen that Neville's point raises a question as to the correct interpretation of an important section of FSMA. The point is one which requires proper consideration. I would have thought that the FCA would have been concerned to assist the court in construing this important section and would have made detailed submissions on the point. However, the FCA offered no assistance of any kind and the court has been left to conduct its own researches which have been time consuming.
In order to determine which of the rival arguments should prevail, it is necessary to...
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