Ian Gray & Associates Ltd v Investments Ltd

The pensions exemption in the Financial Services and Markets Act 2000 (Collective Investment Schemes) Order 2001 may cover pooling and investment undertaken as part of a personal pension scheme. The question is whether the investment arrangements form part of that pension scheme, not whether a pension scheme has invested in a separate collective investment vehicle. The common accounts exemption depends on whether pooled money is applied for participants individually or for them collectively. A striking-out application may determine a short point of law where the parties have had a proper opportunity to argue it, but facts are assumed in favour of the claimant and an issue should not be determined without necessary evidence.

Investment arrangements operated through a bespoke self-invested personal pension scheme. Client funds were pooled and transferred for derivative investment on instructions given by or on behalf of the claimant. After the defendant contended that the arrangements were not a collective investment scheme, the claimant amended its claim to plead alternative cases.

The defendant applied under CPR rule 3.4(2)(a) to strike out the branch of the claim based on the arrangements being a collective investment scheme. The application depended on the pensions exemption and, alternatively, the common accounts exemption in the Financial Services and Markets Act 2000 (Collective Investment Schemes) Order 2001.

1. Application entertained. A striking-out application may determine a short issue of law or construction where the parties have had an adequate opportunity to address it. The fact that a trial will remain, or that an appeal is possible, does not alone make the application inappropriate. The court must assume facts in favour of the claimant and should not decide an issue without the necessary evidence.
2. Pensions exemption. A personal pension scheme is exempt under article 3 and paragraph 20(2) of the Schedule to the Financial Services and Markets Act 2000 (Collective Investment Schemes) Order 2001. The exemption covers pooling and investment forming part of the personal pension scheme. It is irrelevant that the investment decisions were given by the claimant rather than by the pension operator or trustee. The investment arrangements therefore formed part of the bespoke self-invested pension scheme and did not amount to, or form part of, a collective investment scheme.
3. The rejection in Russell-Cooke v Elliott and Brown v InnovatorOne plc of a two-stage approach to identifying a collective investment scheme concerned the statutory “purpose or effect” wording in section 235. It did not determine the distinct question of the scope of an exemption.
4. Common accounts exemption. The relevant question was whether the pooled fund was used to enter into derivative contracts for the participants as a whole or for individual participants. The documents suggested individual acquisitions, but the evidence did not establish the underlying facts sufficiently. The common accounts ground alone would therefore not have justified striking out the claim.
5. The pensions exemption was sufficient. The specified paragraphs of the amended particulars were struck out. Permission to appeal was granted because different views could reasonably be taken on the construction of the pensions exemption.

First-instance decision. The judgment records no prior appellate decision in the same litigation.