Fleurose v Securities & Futures Authority Ltd. & Anor

Professional disciplinary proceedings do not become criminal proceedings under European Convention on Human Rights article 6 merely because they may seriously affect a person’s livelihood or permit an unlimited fine. Classification depends principally on the nature of the offence and the severity of the possible penalty.

Where disciplinary proceedings determine civil rights, fairness must be assessed in the round and in the context of the particular case. Broadly expressed professional standards cause no unfairness where detailed allegations give adequate notice of the conduct and state of mind alleged. A lack of legal representation or the admission of investigative answers does not itself establish unfairness. The court must examine any resulting practical prejudice, the presence or absence of compulsion and objection, and the proceedings as a whole.

A securities trader was found guilty by the Securities and Futures Authority’s Disciplinary Tribunal of knowingly participating in transactions intended to depress the FTSE 100 Index. He was suspended from acting as a registered person for two years and ordered to contribute £175,000 towards the Authority’s costs. Its Disciplinary Appeal Tribunal dismissed his appeal.

Morison J dismissed his application for judicial review. The trader appealed on grounds concerning the European Convention on Human Rights. The Court of Appeal assumed, without deciding, that the Convention applied to the events despite their occurrence before the Human Rights Act 1998 came into force.

The issues were whether the disciplinary proceedings determined a criminal charge and, if they instead determined civil rights, whether the proceedings were unfair because of vague charges, lack of legal representation before the Appeal Tribunal, or the admission of answers allegedly obtained under compulsion.

1. The appeal was dismissed unanimously. Schiemann LJ delivered the judgment of the Court, with Clarke LJ and Wall J. The Court assumed, without deciding, that the Convention applied to the relevant events.

2. The disciplinary proceedings did not determine a criminal charge. Applying Han and Yau v Commissioners of Customs and Excise [2001] EWCA Civ 1048, domestic classification was only a starting point. The important further criteria were the nature of the offence and the nature and severity of the possible penalty. The regulatory rules applied to a restricted occupational group and served the protection of the investing public. Neither the possible loss of a livelihood nor the availability of an unlimited fine converted the proceedings into criminal proceedings.

3. The proceedings nevertheless determined civil rights and therefore had to be fair under article 6(1) of the European Convention on Human Rights. Fairness was contextual. Its requirements depended on such matters as the gravity and complexity of the allegations and defence. The Authority bore the burden of proving its case and had to provide timely notice, adequate facilities for preparation, and a proper opportunity to give and challenge evidence.

4. The general regulatory principles were broadly expressed, but the detailed Summary of Facts identified both the acts and the state of mind alleged. The trader knew the case he had to meet and accepted that the alleged acts, if performed knowingly, constituted misconduct. The formulation of the principles therefore caused no unfairness.

5. The absence of representation before the Appeal Tribunal caused no demonstrated inequality of arms. The tribunal was presided over by a former Law Lord who took points on the trader’s behalf. The suggested additional defence was inconsistent with the case advanced at first instance, was unsuitable for introduction on appeal without new evidence, and was not too subtle for the trader to raise himself. The Court accordingly did not decide whether free representation might ever be required in this class of case.

6. The admission of answers given during the London Stock Exchange investigation and disciplinary questioning did not make the hearing unfair. These were civil disciplinary proceedings, admissibility was discretionary, and no timely objection had been made. The answers were not given under legal compulsion and formed only part of the evidence. Applying the approach in Official Receiver v Stern [2001] 1 WLR 2230, the proceedings were fair when considered in the round.

1. Court of Appeal (Civil Division): The appeal was dismissed. The Court upheld Morison J’s dismissal of the application for judicial review. Permission to appeal to the House of Lords was refused.
2. High Court: Morison J dismissed the application for judicial review of the Disciplinary Appeal Tribunal’s decision.
3. Securities and Futures Authority Disciplinary Appeal Tribunal: The trader’s appeal against findings of misconduct was dismissed. The Authority’s separate appeal against the finding that he remained fit to be registered was also dismissed.
4. Securities and Futures Authority Disciplinary Tribunal: The trader was found guilty of two charges of improper conduct, suspended from acting as a registered person for two years, and ordered to contribute £175,000 towards the Authority’s costs.