Lewison J (summary judgment in the same proceedings)

The court considered whether the defendants had a real prospect of defending the FSA’s claim that they were carrying on the regulated activity of accepting deposits contrary to section 19 of the Financial Services and Markets Act 2000. The court applied the summary judgment principles (the realistic v fanciful test) and relevant authorities including Swain v Hillman and ED & F Man Liquid Products v Patel.

Applying the definitions in the Regulated Activities Order (RAO), in particular article 5 (accepting deposits) and its exclusions, the judge held that monies received by the defendants met the RAO definition of a deposit, and that the articles excluding certain payments (articles 6–9) did not avail them. The defendant operations were found to be carried on "by way of business" and were not excluded by article 2 of the Business Order (the "particular occasions" exclusion).

Accordingly the FSA established that the defendants had carried on or purported to carry on a regulated activity and none had a real prospect of successfully defending the claim. The court made declarations (subject to a qualification about the FSA abandoning earlier start dates) and granted injunctions restraining future unauthorised accepting of deposits. The judge also fixed operative start dates for each defendant for the purposes of the declarations.

The Financial Services Authority sought summary relief (declarations and prohibitory injunctions) that three defendants had been carrying on the regulated activity of accepting deposits without authorisation. The defendants, unrepresented, contended that the monies they received were loans rather than deposits and, alternatively, that if deposits, they were not accepted "by way of business" or were excluded by the Business Order.

• Nature of the application: application for summary judgment under Part 24, seeking a declaration of contravention of FSMA and an injunction to restrain future regulated activity.
• Key issues: (i) whether the monies fell within the RAO definition of "deposit" (article 5); (ii) whether any RAO exclusions (articles 6–9) applied; (iii) whether the activity was carried on "by way of business"; (iv) whether article 2 of the Business Order (the "particular occasions" exclusion) applied; and (v) appropriate relief and start dates for any declaration.

The judge summarised and applied summary judgment principles (Swain v Hillman; ED & F Man v Patel) and considered contemporaneous documents. He accepted that the term "deposit" in the RAO covered unsecured loans paid on terms to be repaid and that guarantees given by defendants merely duplicated contractual obligations and did not change legal character to exclude deposit treatment. The RAO's definition and exclusions were applied against the factual matrix of pooled arrangements, high rates of return, rollovers and the use of business bank accounts.

The Business Order defence (article 2) failed because deposits were accepted on regular recurring dates (principally the 1st and 15th of each month) over substantial periods and the occasions lacked distinguishing characteristics that would make them "particular" or "special". The judge therefore concluded that the activity was carried on by way of business and not excluded.

On start dates the court accepted that the third defendant’s activities began in 2005 (the date he and the FSA used), but adjusted the first defendant’s start date to 1 April 2007 (giving him the benefit of identified close-relative exclusions and a money-lender exception) and fixed the second defendant’s start date as 15 September 2007. The court indicated it would make the declarations sought provided the FSA abandoned any contention that earlier start dates applied; otherwise the trial would proceed on the factual findings already made. Injunctions restraining future unauthorised accepting of deposits were granted without similar qualification.

The judgment also addressed practical and procedural points: the court would proceed despite the defendants being unrepresented and despite their complaints about seized documents, and refused to treat the hearing as a mini-trial but applied the established summary judgment safeguards.

First instance: The court held that the FSA’s claim succeeded on summary judgment. The judge found that the sums received by each defendant fell within the RAO definition of "deposit", that the activities were carried on "by way of business", and that the Business Order article 2 exclusion did not apply. Declarations and prohibitory injunctions were granted; start dates were specified for each defendant (subject to the caveat that the FSA could abandon earlier dates to allow clear declarations). The rationale was that none of the defendants had a realistic prospect of successfully defending the claim and the statutory and documentary framework supported the FSA’s case.