Burns v The Financial Conduct Authority, Court of Appeal - Civil Division, December 21, 2017, [2017] EWCA Civ 2140

Resolution Date:December 21, 2017
Issuing Organization:Civil Division
Actores:Burns v The Financial Conduct Authority
 
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Neutral Citation Number: [2017] EWCA Civ 2140

Case No: A3/2015/0320

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE UPPER TRIBUNAL

(TAX AND CHANCERY CHAMBER)

[2014] UKUT 0509 (TCC) and [2015] UKUT 0601 (TCC)

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 21/12/2017

Before:

LORD JUSTICE KITCHIN

LORD JUSTICE DAVID RICHARDS

and

LORD JUSTICE HENDERSON

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Between:

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The Appellant appeared in person

Mr Nicholas Vineall QC (instructed by the Legal Group of the Enforcement and Market Oversight Division of the FCA) for the Respondent

Hearing dates: 5 and 6 July 2017

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Judgment ApprovedLord Justice Kitchin

Introduction

  1. This is the judgment of the court, to which each of us has made a substantial contribution.

  2. The appellant, Ms Angela Burns, is an experienced investment professional. Her appeal concerns events which took place in 2009 and 2010, when she was appointed (at different times) as a non-executive director of two United Kingdom mutual societies, Marine and General Mutual Life Assurance Society (``MGM'') and Teachers Provident Society Limited (``Teachers'', which traded under the name Teachers Assurance). Ms Burns also chaired the investment committees of both MGM and Teachers.

  3. By a decision notice dated 28 November 2012 (``the Decision Notice''), the Financial Services Authority (as it was then called) imposed a financial penalty of £154,800 on Ms Burns pursuant to section 66 of the Financial Services and Markets Act 2000 (``FSMA''), and made an order pursuant to section 56 of FSMA prohibiting her from performing any function in relation to any regulated activity carried on by any authorised person, exempt person or exempt professional firm.

  4. On 1 April 2013, the Financial Services Authority became the Financial Conduct Authority. In this judgment we will refer to it, whether before or after that date, as either ``the Authority'' or ``the FCA''.

  5. These sanctions were imposed on Ms Burns because, following a detailed investigation, the Authority found that she had recklessly, and in breach of her fiduciary position as a non-executive director of MGM and Teachers, failed to disclose conflicts of interest and had used her positions to further her own commercial interests, thereby breaching Statement of Principle 1 of the Statements of Principle for Approved Persons (``APER'') and showing herself to lack fitness and propriety under the ``Fit and Proper'' test for approved persons.

  6. Ms Burns denied the Authority's allegations, and exercised her right to refer the matter to the Tax and Chancery Chamber of the Upper Tribunal under section 208(4) of FSMA. Upon such a reference, the Tribunal must by virtue of section 133(5) ``determine what (if any) is the appropriate action for the decision-maker to take in relation to the matter referred ... to it''. In performing this function, the Tribunal ``may consider any evidence relating to the subject-matter of the reference ..., whether or not it was available to the decision-maker at the material time'': see section 133(4). It is clear, therefore, that the reference operates as a re-hearing and not as an appeal. When it has determined the reference, the Tribunal must remit the matter to the Authority with such directions (if any) as it considers appropriate for giving effect to its determination, and the Authority must then act in accordance with the Tribunal's determination and directions: see section 133(6) and (7).

  7. The hearing before the Upper Tribunal (Judge Andrew Bartlett QC, sitting with Catherine Farquharson and Mark White) took place over four days between 29 September and 2 October 2014. Ms Burns was represented by leading counsel (Guy Philipps QC), instructed by Norton Rose Fulbright LLP, while Andrew Hunter QC appeared for the FCA. By its decision released on 15 December 2014 (``the Main Decision''), the Upper Tribunal upheld four of the allegations of reckless breach of Statement of Principle 1 alleged by the FCA in its amended statement of case, but found that seven other alleged breaches had not been established on the facts. The Upper Tribunal also found that Ms Burns had failed to act with integrity in relation to the established breaches, and that she was not a fit and proper person to perform Controlled Function 2 (``CF 2''), i.e. to act as a non-executive director. The neutral citation reference of the Main Decision is [2014] UKUT 0509 (TCC).

  8. By the date of release of the Main Decision, and indeed from before the date when the Upper Tribunal had circulated its decision as a confidential draft to the parties on 17 November 2014, Ms Burns was no longer legally represented. She has at all times since acted as a litigant in person.

  9. In a subsequent decision, determined on the basis of written submissions and released on 14 May 2015 (``the Penalty Decision''), the Upper Tribunal decided that the appropriate action for the FCA to take, in light of the conclusions reached in the Main Decision, was to prohibit Ms Burns from carrying out a CF 2 function in relation to any regulated activity, and to impose a financial penalty of £20,000. The neutral reference of the Penalty Decision is [2015] UKUT 0252 (TCC).

  10. In a third decision, also determined on the basis of written submissions and released on 3 November 2015 (``the Costs Decision''), the Upper Tribunal made an award of costs in favour of Ms Burns in the sum of £100,000 plus VAT. The basis of this award, stated shortly, was that in the view of the Upper Tribunal the FCA had acted unreasonably by pursuing against Ms Burns the very serious allegation that she had made a demand for corrupt payments in November 2010. The Tribunal made this award pursuant to rule 10(3)(d) of the Tribunal Procedure (Upper Tribunal) Rules 2008 (SI 2008 No. 2698), which permits the Upper Tribunal to make an order in respect of costs if it ``considers that a party or its representative has acted unreasonably in bringing, defending or conducting the proceedings''. The Upper Tribunal considered it appropriate to make the order, notwithstanding that it recognised that Ms Burns was overall the loser in the proceedings. The neutral citation of the Costs Decision is [2015] UKUT 0601 (TCC).

  11. Ms Burns now appeals to this court, with permission granted by the Upper Tribunal (Judge Bartlett QC) on 13 January 2015 in relation to two only of the seven grounds which she wished to pursue. No renewed application was made by Ms Burns to this court in relation to the other five grounds. The two grounds for which Ms Burns has permission are grounds (c) and (g). In broad terms, the former ground asserts that the Upper Tribunal wrongly took into account various unpleaded matters, while Judge Bartlett identified the real point under the latter ground as being whether the Tribunal had applied the correct standard of conduct in finding that the four allegations which it upheld were made out to its satisfaction.

  12. There is no cross-appeal by the FCA in relation to the Main Decision. The FCA does, however, appeal against the Costs Decision, with permission granted by Gloster LJ at an oral renewal hearing on 24 November 2016.

  13. Finally, we have before us various applications made by Ms Burns seeking permission to adduce and rely upon new evidence. We said at the start of the hearing, and Ms Burns agreed, that we would not rule on these applications collectively as a preliminary issue, but would instead deal with the admissibility of any documents which Ms Burns sought to introduce by way of fresh evidence as and when it became relevant to do so in the course of her submissions.

  14. Although unrepresented, Ms Burns presented her oral submissions to us with clarity and courtesy.

  15. With this introduction, we will now state the relevant background facts, and refer to the relevant parts of the Main Decision, before turning to the two grounds of appeal which Ms Burns has permission to pursue and the FCA's cross-appeal on costs.

    Background facts

  16. The account which follows is based on the full and helpful findings of fact set out in the Main Decision at paragraphs [7] to [69].

  17. Ms Burns graduated from the London School of Economics in 1984 with a first class degree in economics. The Upper Tribunal described her as ``able and knowledgeable''. For many years, she has provided a range of services in the financial sector in a number of roles, including as an employee, as a non-executive director, as a trustee, and as a consultant through her investment consulting company Aktiva Limited (``Aktiva''). Her skills include investment analysis, fund management, and risk control. The central focus of her work in recent years before 2014 had been advising non-UK clients on UK market entry opportunities, regulatory requirements and product development for the UK market. The Upper Tribunal found that:

    ``Her business model involves her in generating and maintaining relationships with individuals and organisations, and finding ways of keeping herself at the forefront of their minds when opportunities arise. This involves constant networking by sending regular e-mails and setting up meetings.''

  18. In 2006 Ms Burns, through Aktiva, was engaged to draft a report for Vanguard Asset Management Limited (``Vanguard''), a very large US asset manager which was considering the feasibility of its proposed entry into the UK investment market. Having completed her report, for a fee of £30,000, in July 2006, Ms Burns e-mailed Vanguard and asked for the opportunity to turn her proposal into a successful business in the UK. Vanguard replied that, depending on the direction it decided to take, it would be happy to discuss future steps with her. A year later, Ms Burns met James Norris, the managing director of Vanguard's international operations, in London. Mr Norris said that Vanguard planned to enter the UK market in 2008, and Ms Burns expressed interest in possible consultancy...

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