Jeffery v The Financial Conduct Authority

LORD JUSTICE CHRISTOPHER CLARKE: This is an application for permission to appeal from a decision of the Upper Tribunal (Tax and Chancery Chamber) dated 27 June 2013.

By that decision, the tribunal made a number of findings of misconduct against Mr Jeffery involving breaches of principles 1 and 4 of the Authority's Statement of Principles. It found that he was guilty of a serious lack of integrity and imposed a penalty of £150,000 and made a prohibition order. In so doing, the tribunal upheld a decision notice of the Authority issued by its Regulatory Decision Committee on 13 July 2010. The penalty was specified in the decision of 27 June 2013 but the court then adjourned that part of the proceedings pending any submission by Mr Jeffery of evidence as to his means. Directions were given whereby Mr Jeffery had liberty to serve and file a hardship application supported by a witness statement within 28 days. He did not do so. On 9 August, the penalty was finally determined in the sum of £150,000.

Mr Jeffery has told me this afternoon that he was expecting that the penalty question would not go ahead since he was seeking to appeal. But there was no stay of the proceedings and the tribunal had made the directions which I have referred to.

The tribunal consisted of Judge Roger Berner and two lay members, Ms O'Neill and Mr Abrams.

The allegations against Mr Jeffery were that when the sole operator of an authorised insurance intermediary, Jeffery Flanders (Consulting) Limited, a general broker, and the sole approved person at the firm, he had breached Statement of Principle 1, which required him to act with integrity; and Statement of Principle 4, which required him to deal with the Authority in an open and co-operative way and disclose in an open and co-operative way any information of which the Authority could reasonably expect notice.

The allegations against him were, in essence, firstly, that he had knowingly forged or caused to be forged documentation and correspondence in the names of clients potentially to mislead recipient companies involved in the insurance business, and in circumstances where the clients were not aware and had not consented to this activity. Secondly, it was said that following receipt of payment from clients he recklessly did not effect insurance or failed to inform clients of the identity of their insurers. Thirdly, it was alleged that he had continued to carry on regulated activities and received payment for services provided to clients after 25 January 2009, contrary to the position stated by him in a letter to the Authority of 16 April 2009. Fourthly, it was said that he had failed to deal with the Authority in an appropriate, open and co-operative way in a number of respects. Fifthly, it was said that he had failed to attend an interview at the office of the Authority despite the requirement having been made pursuant to the Authority's statutory powers.

Before the substantive hearing began, Mr Jeffery had objected to any of the judges of the Upper Tribunal, including Judge Berner, hearing the reference on the grounds that there was a real possibility of bias. That application was heard by the tribunal before the substantive hearing began. The basis of Mr Jeffery's objection was that Mr Tim Herrington, who had been chair of the Regulatory Decision Committee when Mr Jeffery's case was heard, had subsequently become a judge of the Upper Tribunal. He shared an office with Judge Berner. The fact that he shared an office with Judge Berner was alleged to give rise to a real possibility of bias and the physical proximity of the other tribunal judges in the same building was said to disqualify them for the same reason.

The tribunal dismissed this application after oral argument, which was followed by a written ruling of 6 December 2012, essentially on the basis that the circumstances would not be regarded by the fair-minded and informed observer as giving rise to any real possibility of bias.

On 15 December 2014, Mr Jeffery gave notice that he sought to appeal. On 18 May 2015, Jackson LJ refused permission to appeal.

There is an immediate problem for Mr Jeffery, in that he never sought permission from the Upper Tribunal to appeal its refusal in December 2012 to recuse itself on the ground of bias, although he did ask for permission to appeal its decision of July 2013, which was refused.

The jurisdiction of the Court of Appeal is contained in section 13 of the Tribunals, Courts and Enforcement Act 2007. The effect of section 13(4) and (5) is that an application may be made to this court only if permission or leave has been refused by the Upper Tribunal. Since the Upper Tribunal was never asked for permission to appeal from the decision in relation to recusal, the court does not have jurisdiction to give permission to appeal in relation to the decision of 6 December 2012.

In those circumstances, it seems to me that it is not open to Mr Jeffery to appeal on the ground that that decision was erroneous in law. If so, that would leave only the question of actual or imputed bias in relation to the conduct of the hearing, subject to this point. If Mr Herrington's presence at the premises of the tribunal was such as to give rise to the possibility of bias and he remained, as indeed he did, after 6 December 2012, it could be said that that which gave rise to the possibility of bias continued to have effect after 6 December and should therefore be considered in determining any question of permission to appeal to this court. In those circumstances, I propose to consider the position in relation to bias generally.

The essence of Mr Jeffery's complaint is, firstly, that Judge Herrington, as a chair of the RDC when the RDC considered his case, should not have been employed by the tribunal until every case that had been dealt with by the RDC when he was chair had progressed through every possible court process, because there was a real prospect that he might influence the other tribunal judges, creating either actual bias or at least the real possibility of it. This was especially so, it was submitted, as he was said to have signed off the £150,000 penalty imposed on Mr Jeffery by the RDC and thereby increased it from the £75,000 figure which had originally been sought by the enforcement division. In fact, I am given to understand that the original proposal was £85,000 and that the £150,000 was not in fact signed off by Mr Herrington.

Mr Jeffery relied on the fact that Judge Herrington shared an office with Judge Berner prior to and during the hearing. He referred to the fact that in a previous tribunal case a previous chairman of the RDC had, so he says, been found to have sought improperly to influence the chair of the tribunal panel. I do not know the full facts of that case but apparently the position is that the two lived in the same street and met when one of them was walking his dog.

That seems to me to be a completely different set of circumstances, amounting to direct contact between a member of a tribunal sitting on a particular case and the current representative of a party in that case.

In addition, Mr Jeffery alleges that bias on the part of Judge Berner is demonstrated by a number of matters. He submits that Judge Berner's dismissal of the recusal application prior to the substantive hearing caused him to be biased towards him during the substantive hearing, or at least to appear so to be, and that that was clear from the actual findings made against him by the tribunal.

In addition, he claims that the lay panel members must have discussed the panel's findings, although the decision is only signed by Judge Berner, and that, he suggests, means that Judge Berner's bias has been endorsed by them.

There is considerable case law on the subject of bias, much of which has been helpfully quoted in Ms Clarke for the Authority's skeleton argument. In essence, the question, in a case short of actual bias, is whether the fair-minded and informed observer, having considered all the facts, would conclude that there was a real possibility that the tribunal was biased. Such an observer will adopt a balanced approach, neither complacent nor unduly sensitive or suspicious.

Mr Jeffery has this afternoon referred me orally to the names of certain other cases and the propositions which he seeks to rely on from them. It does not seem to me that any of the cases to which he refers take the matter further than the summary of the law which I have just set out.

I have read and re-read the careful decision of the tribunal, released in December 2012, in relation to the recusal application. In that decision, the tribunal correctly set out the law and reached a decision that the fair-minded observer would not think that there was a real possibility that the tribunal was biased. It does not seem to me that there is any realistic prospect of Mr Jeffery persuading the full court that the tribunal ought to have recused itself on the grounds that there was a real possibility of bias either on 6 December or later during the substantive hearing, or that the fair-minded observer would think that there was reason to apprehend that the tribunal judges would not bring an impartial mind to bear on that which they had to determine.

The fact that Judge Herrington was appointed as a tribunal judge when he had previously been chair of the RDC would not, in my judgment, cause the fair-minded observer to conclude that any tribunal hearing a case where the decision impugned was made during his chairmanship was not independent or impartial. A judge's previous experience, whether as poacher or gamekeeper, will not generally operate as a disqualification from his acting as a judge in relation to matters that fall within the general sphere of his former activities, whether they were as an employee, or a member of the public or of a governmental body, or a public official, although recusal is likely to be necessary where the judge in question has had some personal involvement, directly or indirectly, in or in relation to the case in question. But the fact that in some cases an individual judge may be precluded from sitting does not mean that every other judge of the court or tribunal in question cannot sit either. The fair-minded observer would not think that there was a real possibility of bias on the part of a tribunal which did not include a particular judge, that judge being ruled out as a judge in relation to the particular case, simply because the judge in question was a member of the same tribunal or court.

In the present case, the informed observer would also take into account the fact that safeguards were put in place by the Upper Tribunal, in that Judge Herrington was precluded from any involvement in cases in which he had been involved when chair of the RDC or where the decision was made during that tenure. He would also learn that Judge Herrington did not in fact conduct the RDC warning or decision notice meeting in Mr Jeffery's case; the meeting was chaired by Mr Andrew Long, the then deputy chair. The warning and decision notices of May and July 2010 were both signed off by Mr Long, although I am told that there were draft notices in Mr Herrington's name. The penalty of £85,000 recommended by the enforcement section was increased at the warning notice meeting chaired by Mr Long. Judge Herrington's only real involvement with the case appears to be that he signed the first supervisory notice on 23 October 2009.

As to the position of Judge Berner, there is, in my view, no basis for any assertion that Judge Herrington either did or sought adversely to influence him or that he might do so. Both of those judges had taken judicial oaths of independence and impartiality. Their adherence to those oaths is to be assumed in the absence of clear evidence pointing to the contrary. The fair-minded observer would not, in my view, in the absence of any specific evidence, assume or suspect that Judge Herrington or Judge Berner would be mindless of their judicial obligations and seek in the case of Judge Herrington to influence or in the case of Judge Berner to allow himself to be influenced in favour of the Authority in any case and particularly in relation to a case where Judge Herrington was precluded from acting. The same applies, in my view, but with greater force, in relation to the other members of the tribunal.

The fact that Judge Berner refused Mr Jeffery's application for recusal does not, in my judgment, begin to show actual bias or the possibility thereof. Judges are often called upon to reach decisions about individuals in circumstances in which they have previously made adverse decisions about those individuals. There is no good reason, absent special circumstances, to suppose that a judge who had declined to recuse himself would be biased in relation to the subsequent decision on the merits. If that were so as a general rule, a litigant seeking recusal would be almost bound to succeed either by the judge recusing himself when the application was made or by the judge being compelled to recuse himself after he had initially decided not to do so. A failed application would thus catch with its surcease success. There seems to be nothing about the conduct of the substantive proceedings which would cause a fair-minded observer to think that there was or might be bias. The cases in which conduct of the proceedings gives rise to a suspicion of bias are rare.

In the present case, the tribunal took great care. Their decision followed a long hearing. It runs to over a hundred pages. It involves a careful consideration of the evidence for and against Mr Jeffery and the submissions made by him. It is not deficient either in logic or reason. The case depended largely on the facts found and an evaluation of evidence from a large number of witnesses who were cross-examined at length by Mr Jeffery, and a consideration of a substantial quantity of documentary evidence. The panel was in its decision not without criticism of the Authority.

Mr Jeffery particularly complains, firstly, of the finding that he was carrying on business after the spring of 2009 and relies upon the fact that a particular bank statement shows, apart from standing orders, no incoming commercial activity.

This question was considered by the tribunal in its decision in December 2012, in which it recited that the issue (which it dealt with at paragraphs 238 to 282 of its decision) was based on examination of the evidence of witnesses, to whom it refers, and of the evidence given and submissions made by Mr Jeffery, and recorded at paragraph 25 that there had in fact been no specific issue raised by Mr Jeffery as to the significance of the bank statements in question but that even if the point had been specifically raised, it was, in their view, not arguable that this could have resulted in the tribunal reaching a different conclusion because it considered actual evidence of such activity and the fact that a particular bank statement might not have shown money banked could not have compelled any different conclusion.

The second matter of which complaint is made is that Mr Jeffery had been, as he put it, stonewalled and unable to obtain evidence which would establish his case.

The tribunal deal with that in their substantive decision at paragraphs 36 and 37. They recorded Mr Jeffery's complaint, they rejected the submission and they said that there was no evidence of any coordinated or deliberate plan to deprive Mr Jeffery of access to relevant evidence and that they were entirely satisfied that Mr Jeffery had had a fair and just hearing.

Lastly, Mr Jeffery complains of the financial penalty imposed and suspects that it reflected some form of tariff of the Authority which he has not been able to obtain.

The tribunal dealt with that in its decision of December 2012, pointing out, as is the case, that the decision on penalty was the decision of the tribunal. It was not a question of determining whether or not the proposal of the Authority was reasonable, and in its substantive judgment it made plain that, in its view, having regard to the matters that it set out at paragraphs 418 to 421, the figure of £150,000 was amply justified on the basis of their findings about the integrity of Mr Jeffery.

I see nothing in the matters that have been raised that begins to show that the tribunal was actually biased or that a well-informed member of the public with the characteristics of the reasonable observer would think that there was a possibility that that was so.

The fact that the tribunal has found against Mr Jeffery is no basis for an assertion of bias, particularly where no application has been made to this court for permission to appeal the content of the decision on any basis other than bias. An error of law or fact, if such there was, is not the same as bias.

For all those reasons, I propose to refuse permission to appeal.