Timbrell v Colonial Mutual Group (UK Holdings) Ltd

An appointed representative may be an exempted person for the purposes of financial-services indebtedness rules even where it is regulated by a different self-regulatory organisation from the prospective employer. The exemption concerns the person’s status and investment business, not the identity of the regulator. A debt owed to an appointed representative of an IMRO-authorised company could therefore fall within LAUTRO rule 3.5A(5). Permission to appeal was refused because the legal conclusion below was correct and there was no realistic prospect of success.

The claimant had worked as a trainee for the defendant financial institution. The defendant failed to provide contracted training, and the claimant resigned. After obtaining employment with Sun Alliance, he was dismissed when Sun Alliance received the defendant’s reference, which referred to restructuring and outstanding debts owed to the defendant.

The High Court held that the debts fell within the LAUTRO indebtedness rule. The claimant applied in person for permission to appeal, challenging the conclusion that the defendant was an exempted person. The central issue was whether an appointed representative of an IMRO-authorised company could be an exempted person for the purposes of a LAUTRO member’s obligations.

1. Application refused. Lord Justice Sedley held that the claimant did not challenge the High Court’s factual findings, which were therefore unappealable. The proposed legal challenge also disclosed no realistic prospect of success on a full appeal.
2. Rule 3.5A(5) of the LAUTRO rule book required a member not to appoint a company representative unless satisfied on reasonable grounds that the person was not indebted to, among others, an exempted person. The rule was directed to preventing employment in financial services of a person who owed money to a previous employer in that industry.
3. Section 44(1) of the Financial Services Act 1986 provided that an appointed representative was an exempted person in respect of investment business carried on as such a representative. The claimant accepted that the defendant was an appointed representative of Colonial First State Fund Managers (UK) Ltd, an IMRO-authorised company.
4. The statutory exemption was from financial regulation generally, rather than only from regulation by LAUTRO. The fact that the defendant was IMRO-regulated, and not a LAUTRO member, therefore did not prevent it being an exempted person. The defendant’s debt was accordingly a debt to an exempted person within rule 3.5A(5).
5. The court noted the serious costs consequences that could follow from granting permission where the appeal had no realistic prospect of success. Permission was refused, and the judgment was directed to be transcribed and supplied to the claimant at public expense.

• Court of Appeal (Civil Division): Permission to appeal from the High Court was refused. A copy of the judgment was directed to be supplied to the applicant at public expense.
• High Court, Chancery Division (Mercantile): Her Honour Judge Alton, sitting as a High Court judge, found that the defendant had fundamentally breached the training contract, that the claimant was entitled to resign, and that the relevant debts fell within the LAUTRO indebtedness rule.