SWM Ltd v Jersey Financial Services Commission
| Jurisdiction | Jersey |
| Court | Royal Court |
| Judge | Sir Michael Birt,Jurats Crill,Ronge |
| Judgment Date | 04 June 2019 |
| Neutral Citation | [2019] JRC 100 |
| Date | 04 June 2019 |
[2019] JRC 100
Royal Court
(Samedi)
Sir Michael Birt, Commissioner, and Jurats Crill and Ronge
Advocate O. A. Blakeley for the Appellant.
Advocate D. J. Benest for the Respondent.
Francis -v- Jersey Financial Services Commission [2017] JRC 203A.
SWM Limited v Jersey Financial Services Commission and AG [2016] (1) JLR 65.
SWM Ltd v JFSC [2016] JRC 094.
De Smith's Judicial Review 7th Edition.
W -v- Jersey Financial Services Commission [2016] JRC 231A.
Anchor Trust Limited -v- JFSC [2005] JLR 428.
First Financial Advisers Limited -v- FSA (21 June 2012).
Solicitors Regulation Authority -v- Wingate [2018] 1 WLR 3969.
W -v- JFSC [2015] JRC 017.
W v JFSC [2015] JCA 060.
Interface Management Limited -v- JFSC [2003] JLR 524.
Companies — reasons for quashing the Respondent's decision to revoke the Appellant's registration.
This is an appeal by SWM Limited (“SWM”) against a decision of the Respondent (“the Commission”) dated 7 th August 2018 to revoke SWM's registration as an investment business and to issue a public notice to that effect (“the Decision”).
The appeal was heard over 3 days and we were provided with voluminous material comprising some 16 files. We have carefully considered all the material to which we were referred in the course of the written submissions and the hearing but, in the interests of brevity, we shall only refer in this judgment to such material as is necessary to explain our decision.
We think it convenient to outline certain matters of general application before turning to consider the factual background and the grounds of appeal.
Pursuant to Articles 2 and 7 of the Financial Services (Jersey) Law 1998 (“the Law”), a person may not carry on business as an investment adviser in or from within Jersey unless registered. Article 9 confers the power to register upon the Commission and Article 9(3) sets out a number of grounds upon which registration may be refused. These include:—
“(a) having regard to the information before the Commission as to the:—
(i) integrity, competence, financial standing, structure and organisation of the applicant ,
(ii) …
(iii) …
the Commission is not satisfied that the applicant is a fit and proper person to be registered;
…
(f) the Commission has reason to believe that the applicant has at some time contravened a Code of Practice …”
Article 9(4) deals with the revocation of a registration and provides (so far as relevant) as follows:—
“(4) The Commission may revoke a registration under this Law at any time:-
..
(e) on one or more of the grounds set out in paragraph (3)(a), (b), (c), (d), (f) and (g), (where those sub-paragraphs are read as if references in them to the applicant were references to the registered person);
( ea) if it appears to the Commission that it is in the best interests of any of the following persons that the registered person's registration be revoked:—
(i) persons who transacted or may transact financial service business… with the registered person …
…
(eb) if it appears to the Commission that, in order to protect the reputation and integrity of Jersey in financial and commercial matters, the registration should be revoked;
(ec) if it appears to the Commission that it is in the best economic interests of Jersey that the registration be revoked…”
Article 11 of the Law provides that where a person appeals against revocation, the revocation shall not take effect before the date on which the appeal is determined by the Court or withdrawn.
Article 11(3) of the Law provides that a person aggrieved by a revocation may appeal to the Court “on the ground that the decision of the Commission was unreasonable having regard to all the circumstances of the case”.
The approach of the Court on hearing appeals under the Law was considered in depth at paras 75 – 82 of this Court's judgment in Francis -v- Jersey Financial Services Commission [2017] JRC 203A. We adopt and apply the principles there described. In short, the Court may not allow an appeal simply because it has reached a different view of the matter from that of the Commission. It has to go beyond that and find the decision to be unreasonable, in the sense of being beyond the bounds of reasonable justification.
The Court described the Commission and the decision making process which it follows when deciding, for example, to revoke a registration at paras 25 – 32 in Francis and for convenience we incorporate those paragraphs in this judgment:—
“25. Although the Commission is one body in law, it divides itself into two parts for many purposes. The Board of Commissioners (“the Board”) consists of the Commissioners appointed by the States (including the Director General who is also a member of the Executive). They have ultimate responsibility for the affairs of the Commission. All other officers and employees of the Commission are referred to as the Executive. They are responsible for the day to day authorisation and supervision of regulated financial services business and for exercising the role within delegated authority from the Board. The Executive will refer matters to the Board for determination where the relevant powers that might be exercised are retained by the Board or where the Executive otherwise considers that the matter under consideration requires consideration by the Board .
26. When considering whether to exercise its statutory powers of sanction against any person, the Commission follows its published Decision Making Process (“DMP”) which is outlined in its published guidance note entitled “Decision Making Process”, the revised edition of which was issued on 5 th August 2011 .
27. Prior to embarking upon a DMP the Executive will have carried out such investigations as are necessary and held a Preliminary Review to decide whether to initiate a DMP or whether the matter can be dealt with in some other manner. If the DMP is initiated, there are four stages:-
Stage 1 – Disclosure and Verification of Information .
Stage 2 – Review Committee
Stage 3 – First Meeting of the Board
Stage 4 – Second Meeting of the Board .
28. The guidance note explains in some detail what is involved at each stage. Stage 1 involves disclosure to the subject of the information which will be the basis of the decision to be taken by the Commission. The guidance note states the objective of this process as being to ensure that the subject is provided with all the information on which the Commission will rely in making its decision and to have that information examined as being reliable and complete. The subject is therefore requested to respond to the Executive with any comments, corrections or additions which he may wish to make. The guidance note states at paragraph 7.3 that, in determining the date by which the response should be provided, the Executive will take account of the nature and volume of information and the extent to which individual items have been previously available to the subject for review and comment. Following consideration of the comments, the document package, amended as necessary in the light of the comments received, is presented to a Review Committee as Stage 2. At the same time the subject is provided with a copy of any new and revised information from that previously provided .
29. Stage 2 involves consideration of the matter by the Review Committee. This is convened on a case by case basis and consists of members of the Executive. The Director General may well chair the Review Committee and it will also usually be attended by the Director, Enforcement and the Director of the relevant sector (e.g. banking, trust company business, etc.) together with one other Director or Deputy Director not directly connected with the case. The Review Committee considers whether further investigations should take place or whether the matter should be discontinued or whether it should be referred to the Board. A written record of the decision is kept and is provided to the subject .
30. Stage 3 consists of the first meeting of the Board if the Review Committee has decided to refer it to the Board. After considering the documents presented by the Review Committee, the Board may request further information or decide that it is ‘minded-to’ take the recommended action or some other action. If the Board is ‘minded-to’ exercise any one or more of its powers, the subject is notified in writing to that effect and provided with a copy of the documents supplied to the Board, including the memorandum prepared by the Executive in order to present the matter to the Board. It is intended therefore that the subject should have all the information placed by the Executive before the Board .
31. The notification to the subject states the date on which the second meeting of the Board will be held and offers the subject an opportunity to make written submissions to the Board within a specified time frame and to attend the second meeting of the Board to make oral submissions. Where written submission is made by the subject, the Executive may prepare comments on that submission. The comments of the Executive will be submitted to the Board and disclosed to the subject prior to the second meeting of the Board .
32. Stage 4 consists of the second meeting of the Board. Prior to that meeting the Board and the subject will be provided with any information or documents that have been added to the package since the first Board meeting, any written submissions made by the subject and any comments of the Executive. At that meeting the subject may make oral submissions and be questioned by the Board. At...
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