ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION (ADMINISTRATIVE COURT)
Mr. Justice Silber
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE MOORE-BICK
LADY JUSTICE BLACK
| THE QUEEN
(on the application of Christopher Willford)
|- and -
|FINANCIAL SERVICES AUTHORITY
WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
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Miss Dinah Rose Q.C. and Mr. Ben Jaffey (instructed by Herbert Smith Freehills LLP) for the respondent
Hearing dates : 20th & 21st February 2013
Crown Copyright ©
Lord Justice Moore-Bick :
"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."
The issues before the RDC
The Decision Notice
(i) that he had failed to ensure that the finance department urgently checked the draft results on 13th May 2008 to see whether they raised any concerns for the proposed rights issue;
(ii) that he had failed to make enquiries of the finance department on 13th May 2008 to confirm that the results were consistent with the interim management statement published on 22nd April;
(iii) that he had failed properly to consider the April financial results pack when it became available and failed to realise that there had been a material change in the bank's trading position;
(iv) that he had failed to realise that mortgage impairment was increasing to a level that had a material adverse effect on the bank's profits;
(v) that he had failed to warn the executive committee or the board before the circular to shareholders was released on 19th May 2008 that the bank's financial position had deteriorated, or ensure that urgent steps were taken to confirm the outlook for future performance;
(vi) that he had verified the statements in the circular without having sufficient evidence to support them and approved the release of the circular despite the fact that they were inaccurate; and
(vii) that he had not supervised the finance department properly and, in particular, had not ensured that it brought material changes in the bank's financial position to his personal attention.
The parties' submissions
The appropriate procedure
"My fourth proposition is that a remedy by way of judicial review is not to be made available where an alternative remedy exists. This is a proposition of great importance. Judicial review is a collateral challenge: it is not an appeal. Where Parliament has provided by statute appeal procedures, as in the taxing statutes, it will only be very rarely that the courts will allow the collateral process of judicial review to be used to attack an appealable decision."
". . . I cannot see any reason why it should be necessary to seek leave to invoke the supervisory jurisdiction of the court when any party aggrieved by the certificate is entitled as of right to invoke the much more ample appellate jurisdiction which the statute confers. It is the very amplitude of the jurisdiction which, to my mind, is all-important. "
"These are very strong dicta, both in this court and in the House of Lords as cited, emphasising that where there is an alternative remedy, and especially where Parliament has provided a statutory appeal procedure, it is only exceptionally that judicial review should be granted. It is therefore necessary, where the exception is invoked, to look carefully at the suitability of the statutory appeal in the context of the particular case."
"As one would expect, therefore, the statutory emphasis is on the safety of the consumer. The provisions aim at withholding goods from the public if there is reasonable suspicion that they are unsafe. Unless they are then cleared of the danger, it is right that the suspension should remain, even if the process by which the enforcement authority reached its decision was flawed. It cannot be right that dangerous goods should continue to be marketed simply because of some procedural impropriety by the enforcement authority in the process of deciding to issue a suspension notice. Common sense dictates that protection of the public must take precedence over fairness to the trader. So, if goods are in fact dangerous, it would be nothing to the point to show that, in deciding to issue a suspension notice, the local authority took into account an irrelevant matter or failed to take account of one which was relevant. Parliament has recognised this by making the sole issue, on a s. 15 appeal, whether there has in fact been a contravention of the safety provision. Protection is given to the trader by providing for compensation if there has been no contravention.
An appeal under s. 15 does not require leave, as judicial review does. It should therefore be capable of being brought on more quickly, which is an important consideration since the notice is only effective for six months. An appeal comes before justices, who can try, as a contested issue of fact on oral evidence, whether the goods are in contravention of a safety provision, whereas judicial review normally proceeds on affidavit evidence. A further appeal on the merits can be made by an aggrieved party to the Crown Court.
Accordingly, in the present case, there was available an appeal specifically provided by Parliament to enable a party aggrieved by a suspension notice to challenge it. The appeal was at least as expeditious, if not more so, than judicial review. It was more suited than judicial review to the resolution of issues of fact. The statutory scheme leant in favour of upholding the notice unless the goods were shown to be safe; but, should they turn out on appeal or otherwise to be safe, any aggrieved party was entitled to compensation."
"With respect to the learned judge, he did not, in my view, ask himself the right questions. He asked whether, on a s. 15 appeal, Ferrero could have aired their various complaints about the Wednesbury reasonableness of the council's decision lack of consultation and refusal to accept an undertaking in lieu of the notice (see Associated Provincial Picture Houses Ltd v Wednesbury Corp  2 All ER 680,  1 KB 223). Having concluded they could not, he held they were entitled to proceed by judicial review. He should have asked himself what, in the context of the statutory provisions, was the real issue to be determined and whether a s. 15 appeal was suitable to determine it. The real issue was whether the goods contravened a safety provision and the s. 15 appeal was geared exactly to deciding that issue. If the goods did contravene the safety provision and were dangerous to children then, surely, procedural impropriety or unfairness in the decision-making process should not persuade a court to quash the order. The determining factors are the paramount need to safeguard consumers and the emergency nature of the s. 14 powers."
"The lesson to be learnt is, I suggest, this. The critical decision in an alternative remedy case, certainly one which requires a stay, is that taken at the grant of permission stage. If the applicant has a statutory right of appeal, permission should only exceptionally be given; rarer still will permission be appropriate in a case concerning public safety. The judge should, however, have regard to all relevant circumstances which typically will include, besides any public health consideration, the comparative speed, expense and finality of the alternative processes, the need and scope for fact finding, the desirability of an authoritative ruling on any point of law arising, and (perhaps) the apparent strength of the applicant's substantive challenge."
"Given the public health context and the provision of a statutory remedy, I question whether matters of convenience and expedition should be allowed to permit proceedings by way of judicial review, the effect of which is to circumvent or, as Mr Gordon puts it, subvert a detailed statutory procedure. If the statutory intention is to provide that any appeal is to be to the magistrates' court, the aim must be to make that remedy effective rather than to surmise that it is so ineffective that judicial review is permitted. . . .
The emphasis should in my judgment be upon making the statutory procedures effective rather than assuming ineffectiveness and treating judicial review as a default procedure. There is, in my view, a very high burden on a party claiming, in the context of public health, that the statutory remedy will be ineffective before he can expect permission to apply to be granted. The grant has the effect of deferring the resolution of factual issues and, in this case, rendering ineffective by passage of time the operation of a notice which the statutory scheme contemplates should, subject to the powers of the magistrates' court, be effective."
Failure to give reasons
"36. The reasons for a decision must be intelligible and they must be adequate. They must enable the reader to understand why the matter was decided as it was and what conclusions were reached on the "principal important controversial issues", disclosing how any issue of law or fact was resolved. Reasons can be briefly stated, the degree of particularity required depending entirely on the nature of the issues falling for decision. The reasoning must not give rise to a substantial doubt as to whether the decision-maker erred in law, for example by misunderstanding some relevant policy or some other important matter or by failing to reach a rational decision on relevant grounds. But such adverse inference will not readily be drawn. The reasons need refer only to the main issues in the dispute, not to every material consideration. . . . Decision letters must be read in a straightforward manner, recognising that they are addressed to parties well aware of the issues involved and the arguments advanced. A reasons challenge will only succeed if the party aggrieved can satisfy the court that he has genuinely been substantially prejudiced by the failure to provide an adequately reasoned decision." (Emphasis added.)
Lady Justice Black :
Lord Justice Pill :
"The legislative purpose evident from the detailed statutory scheme was that those aggrieved by the decisions and actions of the Authority should have recourse to the special procedures and to the specialist Tribunal rather than to the general jurisdiction of the Administrative Court. Only in the most exceptional cases should the Administrative Court entertain applications for judicial review of the actions and decisions of the Authority, which are amenable to the procedures for making representations to the Authority, for referring matters to the Tribunal and for appealing direct from the Tribunal to the Court of Appeal."
Another factor to be considered is the underlying purpose of the statute. In R v Birmingham City Council ex parte Ferrero Ltd  1 All ER 530; it was the "safety of the consumer" and the "protection of the public" (per Taylor LJ, at page 537). It was the alternative statutory appeal that was geared to deciding whether the goods in question contravened a safety provision.
"First, there will be substantial prejudice to a developer whose application for permission has been refused or to an opponent of development when permission has been granted where the reasons for the decision are so inadequately or obscurely expressed as to raise a substantial doubt whether the decision was taken within the powers of the Act. Secondly, a developer whose application for permission is refused may be substantially prejudiced where the planning considerations on which the decision is based are not explained sufficiently clearly to enable him reasonably to assess the prospects of succeeding in an application for some alternative form of development."
"A requirement to give reasons concentrates the mind; if it is fulfilled, the resulting decision is much more likely to be soundly based on the evidence than if it is not."
"To take a necessarily pro-active approach to your responsibilities and thus fail to adequately deal with the emerging information throughout the relevant period. In doing so you failed to recognise the changes in the financial information which indicated a material change in the figures."
That reason appeared in the decision notice and was, as the judge recognised at paragraph 76, a substantive change from the reasons in the warning notice. (Miss Rose rightly submitted that most of the decision notice is a regurgitation of the contents of the warning notice).