The Queen (on the Application of Christopher Willford) v Financial Services Authority
| Jurisdiction | England & Wales |
| Judge | Lord Justice Moore-Bick,Lady Justice Black,Lord Justice Pill |
| Judgment Date | 13 June 2013 |
| Neutral Citation | [2013] EWCA Civ 677 |
| Docket Number | Case No: C1/2012/1551 |
| Court | Court of Appeal (Civil Division) |
| Date | 13 June 2013 |
[2013] EWCA Civ 677
Lord Justice Pill
Lord Justice Moore-Bick
And
Lady Justice Black
Case No: C1/2012/1551
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION (ADMINISTRATIVE COURT)
Mr. Justice Silber
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr. Michael Brindle Q.C. and Mr. Rupert Allen (instructed by Financial Services Authority) for the appellant
Miss Dinah Rose Q.C. and Mr. Ben Jaffey (instructed by Herbert Smith Freehills LLP) for the respondent
Hearing dates: 20th & 21st February 2013
Approved Judgment
Background
This is an appeal by the Financial Services Authority ("FSA") against the order of Silber J. quashing a Decision Notice issued against Mr. Christopher Willford, then the Group Finance Director of Bradford & Bingley plc ("the bank"), under the provisions of section 67 of the Financial Services and Markets Act 2000 (" FSMA" or "the Act"). The FSA has recently been re-named the Financial Conduct Authority, but for convenience I shall refer to it in this judgment by its former name. On 25 th May 2012 Silber J. made an order prohibiting the identification of the applicant; he also directed that his judgment was to be private to the parties and published only in a redacted form.
In order to explain the issues to which the appeal gives rise it is necessary to say something about the FSA itself and the procedure by which it exercises its regulatory and disciplinary functions. The FSA was charged by FSMA with a duty to act as the statutory regulator of the financial services industry. Its responsibilities are wide-ranging, but include ensuring that those who carry out important functions in the industry are properly qualified and adhere to appropriate standards. The Act prescribes certain financial activities which may be carried on only by persons who are approved for the purpose by the FSA and by section 64 the FSA is empowered to issue statements of principle with respect to the conduct expected of persons whom it approves to carry on restricted activities. Principle 6 provides:
"An approved person performing a significant influence function must exercise due skill, care and diligence in managing the business of the firm for which he is responsible in his controlled function."
By section 66 of the Act the FSA has power to take action against a person who, in its view, has failed to comply with any of the statements of principle issued under section 64 and may impose penalties, including a financial penalty in whatever amount it considers appropriate, suspension of that person's approval to carry on a restricted activity or the imposition of a restriction or limitation on his performance of the function in respect of which he is approved. It may also publish a statement of his misconduct. Depending on their severity, penalties of that kind may have a profound effect on a person's ability to obtain employment in the financial services industry.
The Act gives the FSA extensive powers to carry out investigations in the performance of its regulatory functions. Investigations are carried out by a group within the FSA known as the 'Enforcement Division' and are conducted on a confidential basis. If the Enforcement Division considers that disciplinary action is appropriate, it sends the person concerned a preliminary investigation report setting out its findings and preliminary conclusions. The person to whom the report is addressed is then allowed a reasonable period in which to comment on the report before the Enforcement Division decides whether to initiate the formal disciplinary process.
The first step in the formal disciplinary process is the issue by the FSA of a Warning Notice setting out the penalty which it proposes to impose and its reasons for doing so. In order to comply with the requirements of section 395(2) of the Act, which requires the FSA to adopt procedures to ensure that neither a Warning Notice nor a Decision Notice (to which I shall come in a moment) is issued by a person directly involved in establishing the evidence on which it is based, the Enforcement Division submits the preliminary investigation report to a committee of the board of the FSA known as the 'Regulatory Decisions Committee' ("RDC") with a recommendation that a Warning Notice be issued. If the RDC decides to issue a Warning Notice, the person to whom it is addressed must then be given a reasonable period (in any event not less than 28 days) in which to make representations to the committee in response.
As part of its decision-making process the RDC considers the preliminary investigation report, further written representations from the Enforcement Division and written representations from the person who is the subject of the investigation. It also conducts an oral hearing at which the person concerned has an opportunity to address the committee and may be asked questions. The RDC then decides in the light of all the material before it whether formally to discontinue the process or take action against the person concerned by issuing a Decision Notice. By virtue of section 388 of the Act a Decision Notice must, among other things, be in writing, state the action which the FSA proposes to take, give the reasons for its decision and indicate whether the matter may be referred to the Tax and Chancery Chamber of the Upper Tribunal under section 67(7) of the Act. The purpose of such a reference is to enable the tribunal to decide what, if any, action it is appropriate for the FSA to take in respect of the matter referred to it. On a reference to the tribunal the FSA may, if it thinks fit, broaden the scope of its allegations (provided they relate to the same matter) and the tribunal has power to direct that a more severe penalty be imposed than that which the FSA had previously proposed.
The dispute
On 12 th March 2010 the Enforcement Division issued a preliminary investigation report relating to Mr. Willford in which it set out the grounds on which it considered that he had failed to comply with Principle 6. The report was delivered to Mr. Willford on 15 th March 2010. He was invited to respond to the allegations by 12 th April 2010, but on 19 th March 2010 the Enforcement Division sent the report together with a draft Warning Notice to the RDC with a recommendation that a Warning Notice be issued against him and a financial penalty of £150,000 be imposed on him. The reason for the apparently unseemly haste appears to have been the imminent expiry of the two year period allowed to the FSA under the Act for taking disciplinary action of this kind.
On 14 th May 2010 the RDC issued a formal Warning Notice to Mr. Willford proposing to impose a penalty of £150,000 on him for failing to comply with Principle 6. Solicitors acting on behalf of Mr. Willford made lengthy written submissions to the RDC, which also considered written representations from the Enforcement Division. An oral hearing was held which Mr. Willford attended and at which he made representation and answered questions put to him by the chairman of the committee. In due course on 27 th October 2010 the RDC issued a Decision Notice informing Mr. Willford that the FSA had decided to impose on him a financial penalty of £100,000.
The proceedings
The Decision Notice itself ran to twenty three pages and included a section headed 'Reasons for the Action' containing a summary of the conduct on which the decision was based, a section headed 'Facts and Matters Relied On' running to five pages setting out in more detail the circumstances on which the decision was based, a section running to two and a half pages headed 'Representations' summarising Mr. Willford's submissions, and a section headed 'Conclusions', also running to five pages, setting out in some detail the committee's conclusions. Nonetheless, Mr. Willford maintained that the committee had failed to give adequate reasons for its decision because it had not specifically addressed each of the individual submissions that he had made. He therefore brought a claim for judicial review seeking to have the Decision Notice quashed. The FSA says that the reasons given in the Decision Notice are sufficient to comply with the requirements of section 388 of the Act and that even if they are not, the appropriate course is for Mr. Willford to refer the matter to the Upper Tribunal, which can consider the whole matter afresh. There is, therefore, an alternative remedy available to Mr. Willford and on well established principles this is not a case in which the court should exercise its discretion to entertain a claim for judicial review.
Silber J. gave permission to proceed with the claim for judicial review and in due course tried it. In a judgment delivered on 25 th May 2012 he held that the RDC had failed to give adequate reasons for its decision and that a referral of the matter to the Upper Tribunal did not provide a suitable remedy. He therefore quashed the Decision Notice and remitted the matter to the RDC for reconsideration.
The appeal
Mr. Michael Brindle Q.C. for the FSA accepted that there may be exceptional cases in which it will be appropriate for the court to exercise its discretion in favour of entertaining a claim for judicial review of a Decision Notice, notwithstanding that the person to whom such a notice has been given is entitled to refer the matter to the Upper Tribunal, but submitted that this...
To continue reading
Request your trial
-
Glencore Energy UK Ltd v Revenue and Customs Commissioners
...of the epithet “irrational” adds little if anything. [51] In R (on the application of Willford) v Financial Services Authority [2013] EWCA Civ 677 Moore-Bick LJ at paragraph [37] emphasised, in relation to a complaint of inadequate reasons, that when considering alternative remedies, it was......
-
R (on the application of Khan) v Secretary of State for the Home Department
...Jan since I consider that this better reflects the analysis and guidance of the appellate courts. (g) R (on the application of Christopher Willford) v Financial Service Authority [2013] EWCA Civ 677 68 I turn lastly to a case not concerned with immigration or asylum. During the course of......
-
R Susan Fisher v Durham County Council
...if judicial review were too readily granted despite the existence of such a remedy: R (Willford) v Financial Services Authority [2013] EWCA Civ 677, [50]. However, in this case there are good reasons for me to rule upon the matter 105 The leading decision is R v Falmouth and Truro Port Hea......
-
R Kalluri v Secretary of State for the Home Department
...Mr Malik also referred me to R v Devon County Councilex parte Baker and Another [1995] 1 AER 73, per Dillon LJ 92 F to H: R (Willford) v Financial Services Authority [2013] EWCA Civ 677, per Moore-Bick LJ at 20, and R v Birmingham City Councilex parte Ferrero Limited [1993] 1 AER per Taylor......