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England and Wales High Court (Administrative Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Ford v Financial Services Authority & Anor  EWHC 997 (Admin) (18 April 2012)
Cite as:  EWHC 997 (Admin)
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QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| Stewart Ford
|- and -
|Financial Services Authority
Peter Johnson and Mark Owen
Jonathan Crow QC and Eleanor Holland (instructed by the FSA) for the Defendant
Hearing dates: 21 and 22 February 2012
Crown Copyright ©
The Hon Mr Justice Burnett:
"Keydata Investment Services Limited ("Keydata")
Previous FSA disclosure
We refer to the letter sent by the Financial Services Authority ("FSA") to your organisation dated 16 August 2010 (the "Letter") a copy of which is enclosed. The Letter was provided to you with a CD containing a report, appendices and underlying documents referred to in the report (the "CD Contents").
The Letter and the CD Contents were designated as confidential pursuant to the Financial Services and Markets Act 2000 ("FSMA"). They were disclosed to your organisation in accordance with Regulation 3(1)(a) of FSMA (Disclosure of Confidential Information) Regulations (SI 2001 no. 2188) for the purpose of enabling or assisting the FSA to discharge any of its public functions.
The Letter explained that the CD Contents were to remain confidential in your hands and subject to the restrictions contained in section 348 of FSMA and the exceptions permitted by section 349 of FSMA. Disclosure other than in accordance with these restrictions and exceptions is a criminal offence under English law.
We refer also to the judgment of Mr Justice Burnett of the High Court of Justice, dated 11 October 2011, a copy of which is enclosed. The judgment concludes that two documents, which had been included within the CD Contents, were, in fact, subject to joint interest legal privilege and should not have been used nor, as a consequence, disseminated by the FSA.
As a result of the judgment there will be a hearing to determine relief, following which we will be able to provide you with further clarification on this matter. However, in the meantime, we hereby request that your organisation refrain from relying on, or using, any of the information contained in the Letter and CD Contents. Moreover, we reiterate that the information contained in the Letter and CD Contents should remain confidential and not be relied on, used or disclosed onwards for any purpose.
This letter and attachments are confidential. They comprise information that is confidential for the purposes of section 348 of FSMA is (sic) disclosed to your organisation in accordance with Regulation 3(1)(a) of The Financial Services and Markets Act 2000 (Disclosure of Confidential Information) Regulations (SI 2001 no. 2188) to enable the FSA to discharge its public functions. The information remains "confidential" in your hands and subject to the restrictions contained in section 348 of FSMA and the exceptions permitted by section 349 of FSMA. Disclosure other than in accordance with these restrictions and exceptions is a criminal offence under English law."
The letters to the foreign regulatory authorities referred in the closing sentence to confidentiality governed by international agreements. The letters to Baden & Baden and KPMG Sarl opened in a different way:
"Keydata Investment Services Limited ("Keydata") – Third Party SLS Capital SA
We refer to the letter sent by the Financial Services Authority ("FSA") to your organisation dated 26 October 2010 (the "Letter") a copy of which is enclosed. The Letter was provided to you with Statutory Notices issued by the FSA against Keydata, Mr Steward Ford, Mr Peter Johnson and Mr Mark Owen (the "Warning Notices"). You were provided with these Warning Notices in your capacity as a third party.
These Warning Notices stated the information contained therein was confidential "and should not be disclosed to a third party (except for the purpose of obtaining advice on its contents)". The Warning Notices also referred to section 391 of the Financial Services and Markets Act 2000 ("FSMA") which provides that neither the FSA, nor a person to whom a Warning Notice is given, may publish the notice or any details concerning it."
These passages were then followed by two paragraphs relating to the judicial review suitably adapted to reflect the receipt of the Warning Notices only, rather than the SIR and supporting evidence on CD.
i) A quashing of the Warning Notice issued by the RDC dated 26 October 2010, together with those issued to the interested parties;
ii) The destruction of all copies of the two documents identified as attracting LPP and held by the FSA, together with their permanent deletion from databases and email accounts within the FSA;
iii) The destruction of all copies of the SIR and Warning Notices held by the FSA and their permanent deletion from databases and email accounts within the FSA, at least by way of redaction of the offending passages;
iv) The redaction from all hard copy and electronic documents held by the FSA of quotations from or references to the substance of the two LPP documents.
The requirement to remove the LPP Material from its databases etc. would be subject to two caveats. First, the claimant recognises that copies must be available for the purposes of this litigation. Secondly, the claimant recognises that copies of the documents, the SIR and Warning Notice must be kept for audit trail purposes, so long as that is done securely and without any possibility of further use being made of the material;
v) An injunction restraining the further use of the LPP Material;
vi) A order that nobody within the FSA who has read the LPP Material or is aware of its substance may continue to work on the Keydata investigation;
vii) An order that the FSA shall take 'all necessary steps to ensure that third parties do not retain or use the LPP Material', and shall provide a witness statement explaining what has been done;
viii) An order that members of the RDC who issued the Warning Notices (and the protective warning notices) should recuse themselves from further involvement;
ix) The quashing of the protective warning notices.
"2.1.1 that the FSA should not use or disseminate the LPP Material;
2.1.2 that the FSA must therefore redact the LPP Material from –
(i) the Warning Notices and
(ii) any other documents, including the Supplementary Investigation Reports
to the extent that such documents are deployed in any regulatory or other proceedings, and must not use or disseminate any unredacted versions of such documents;
2.1.3 that any future decisions by the Regulatory Decisions Committee in relation to the FSA Investigations should be taken by a panel which has not seen the LPP Material."
The Warning Notice
"That brings me, finally, to the question of whether the judge and the Court of Appeal were right to refuse relief for the one procedural irregularity which they found established ...
It is well settled that "the grant or refusal of the remedy sought by way of judicial review is, in the ultimate analysis, discretionary" (Lord Roskill in Inland Revenue Commissioners of the National Federation of Self-employed and Small Businesses Ltd  AC 617,656) But the discretion must be exercised judicially and in most cases in which a decision has been found to be flawed, it would not be a proper exercise of the discretion to refuse to quash it. So in Berkeley v. Secretary of State for the Environment … it was conceded, and the House decided, that the Court of Appeal had been wrong to refuse to quash a planning permission granted without the impact assessment required by the EIA directive on the ground only that the outcome was bound to have been the same. The relevant domestic legislation provided that in such a case the grant of permission was to be treated as not within the powers of the Town and Country Planning Act 1990. Lord Bingham of Cornhill said (at p. 608) that even in a domestic context, the discretion of the court to do other than quash the relevant order "where such excessive exercise of power is shown" is very narrow. The Treaty obligations to give effect to European law reinforces this conclusion. I made similar observations at p. 616. But I agree with the observation of Carnworth L.J. in Bown v. Secretary of State for Transport, Local Government and the Regions  Env L.R. 509, 526, that these speeches in Berkeley need to be read in context. Both the nature of the flaw in the decision and the ground for exercise of the discretion have to be considered. In Berkeley, the flaw was the complete absence of an EIA and the sole ground for the exercise of the discretion was that the result was bound to be the same."
The LPP Material held by the FSA
(i) to retrieve from its employees all hard copies of the two LPP documents, SIR and Warning Notices and destroy them,
(ii) to search for, identify and delete all electronic copies of the two LPP documents,
(iii) to search for, identify and either delete or redact all electronic copies of the SIR and Warning Notices,
(iv) to require all its employees to destroy or redact any hard copy documents which quote from the two LPP documents or refer to their substance,
(v) to search for, identify and either delete or redact all electronic documents which quote from the two LPP documents or refer to their substance.
Continuing involvement of FSA staff and legal advisers to the RDC who have read or are aware of the content of the LPP Material
"In helpful submissions, the interveners ... suggest a number of factors to be considered in determining whether solicitors should be removed: (i) how the documents came into the possession of the plaintiff or its counsel; (ii) what the plaintiff and its counsel did upon recognition that the documents were potentially subject to solicitor-client privilege; (iii) the extent of review made of the privileged material; (iv) the contents of the solicitor-client communications and the degree to which they are prejudicial; (v) the stage of the litigation; (vi) the potential effectiveness of a firewall or other precautionary steps to avoid mischief. Other factors may, of course, present themselves in different cases, but I agree that the foregoing list of factors is appropriate and seems to be sufficient to dispose of the present appeal."
Canadian law places a burden upon the lawyers concerned to show that a reasonably informed person would be satisfied that no use of confidential information would occur (see paragraph ). Subject to that, the list of matters referred to suggests that the Canadian approach weighs a number of features: the conduct of those who have wrongly seen the LPP Material, the extent to which their knowledge of the content prejudices the person entitled to LPP, the practical impact of removing lawyers from acting and precautions which can be put in place to mitigate any prejudice.
"... each case must depend upon its own facts. But I think there is a danger inherent in the intensity of the adversarial process of courts being persuaded that a risk exists when, if one stands back a little, that risk is no more than fanciful or theoretical. I advocate a robust view with this in mind so as to ensure that the line is sensibly drawn." (paragraph )
The additional question that Beatson J identified as being relevant to the issue whether, in a case not involving a previous relationship, the solicitors should be prohibited from acting, was whether such an order would be proportionate and necessary.
Disclosure and the steps the FSA should take to prevent further dissemination or use of the LPP Material
"In the minority of judicial review applications in which the precise facts are significant, procedures exist … for the disclosure of specific documents to be sought and ordered. Such applications are likely to increase in frequency, since human rights decisions under the Convention tend to be very fact specific … But even in these cases, orders for disclosure should not be automatic. The test will always be whether, in the given case, disclosure appears to be necessary in order to resolve the matter fairly and justly."
"In order that Mr Ford can be assured that [his] LPP has been protected, has not been further undermined and will not be in the future, in respect of each of the Third Parties it is important that the following information is obtained:
(1) The purpose for which the LPP material was provided to the Third Parties and what they were told at the time as regards the use to which they could put the information and/or restrictions (this will become apparent from the covering letters that the FSA sent to the Third Parties);
(2) What use has in fact been made of the material;
(3) Whether the third party has provided the LPP material or disclosed it to anyone else;
(4) Whether the Third Party has retained copies of the LPP material, and whether it has been incorporated or referred to in another document;
(5) Confirmation that they will not longer use the LPP material;
(6) Destruction of any copies of the LPP material and any other document which contains or makes reference to the same;
(7) What response, if any, there has been to the FSA putting them on notice of the Court's judgment."
(i) All the bodies to which the CD containing the SIR and supporting documents was sent should be asked by letter (a) to return the CD (with, if the FSA considers it appropriate, an offer to replace it with a CD absent the LPP documents and the SIR suitably redacted); (b) for reassurance that the LPP Material will not be used in any way, nor disseminated; (c) to destroy/delete any paper or electronic copies of the LPP Material, together with copies of the SIR which refers to it; and (d) that if the LPP Material has been provided to advisers, as permitted by the terms of its confidentiality, they have been required to take similar steps.
(ii) All those who received the Warning Notices should be asked by letter (a) to destroy them (with, if the FSA considers it appropriate, an offer to replace them with redacted versions); (b) to ensure that all copies are destroyed or deleted; (c) for reassurance that the LPP Material will not be used in any way, or disseminated; and (d) that if the LPP Material has been provided to advisers, as permitted by the terms of its confidentiality, they have been required to take similar steps.
The letter should enclose a copy of this remedies judgment and require a response within 21 days.
The protective warning notice