O'Sullivan, R (on the application of) v Financial Services Authority

A claim that a regulator negligently failed to supervise a particular firm, causing private loss, is not converted into a public-law claim by being framed as judicial review. The claimant must identify a reviewable act or omission, policy or practice. A court cannot require a regulator to assume a firm's debt where that would dress up a private-law claim as public law and circumvent statutory limits on damages. Under paragraph 19 of Schedule 1 of FSMA 2000, supervisory liability required bad faith. Gross negligence was insufficient, and allegations unrelated to the regulation of the relevant firm did not establish bad faith.

The appellant lost £210,000 after Crown Currency Exchange, which operated a forward foreign-currency service, entered administration and liquidation. He alleged that the Financial Services Authority had failed to investigate concerns about the business and should not have registered it as a small payment institution.

HHJ Behrens rejected the claim on paper. HHJ Gosnell later refused permission to bring judicial review proceedings, finding no reviewable decision, no clear remedy, limitation problems and no viable compensation claim. Tomlinson LJ rejected a further paper application. The central issue before Elias LJ was whether the alleged supervisory failures disclosed a public-law claim or were instead a private-law negligence claim barred by the statutory protection for the regulator.

1. Disposition. The renewed application for permission to appeal was refused.
2. Nature of the claim. A challenge to the way in which a regulator supervised a particular company, said to have caused loss to an individual, was in substance a private-law negligence claim. Framing the complaint as a failure to exercise statutory regulatory powers did not make it a public-law claim. Judicial review requires an identifiable act or omission, policy or practice that is properly capable of review. No such matter was identified here.
3. Statutory restriction on damages. Paragraph 19 of Schedule 1 of FSMA 2000 was material because liability for supervisory failures required bad faith. Even gross negligence would not establish bad faith. Allegations that the FSA had misled the court or provided false information to the Treasury and Parliament did not relate to the regulation of Crown Currency Exchange and therefore could not satisfy the relevant threshold.
4. Remedy. The proposed order requiring the FSA, now the FCA, to stand in the company's shoes and assume its debt was impossible. It would also circumvent the statutory rule governing damages by presenting a private-law claim in public-law form.
5. Investigation complaints and limitation. The court recognised that evidence of complaints might arguably have warranted further investigation. However, even that possibility did not transform the specific complaint into a general public-law challenge, and it would not have revealed the particular error relied upon. The court declined at that stage to reject the claim solely as out of time because the claimant said the material letter had only recently come into his possession. Reliance on the dictum in Stovin v Wise [1996] AC 923 did not alter the analysis.

• Court of Appeal (Civil Division): Elias LJ refused the renewed application for permission to appeal: [2015] EWCA Civ 896.
• High Court (Administrative Court): HHJ Gosnell refused permission to bring judicial review proceedings on 17 September 2013.
• HHJ Behrens had rejected the application on paper, and Tomlinson LJ had rejected a further paper application.