The Financial Conduct Authority v Thomas Seiler & Anor

On an appeal from the Upper Tribunal under section 13(1) of the Tribunals, Courts and Enforcement Act 2007, the Court of Appeal may intervene only for an error of law. A finding that conduct was unreasonable for costs purposes is ordinarily an evaluative factual judgment, particularly in a specialist financial-services jurisdiction. In non-disciplinary references, the regulator and Upper Tribunal share a statutory public-interest task. The regulator is not an ordinary civil litigant and must properly consider relevant evidence, witnesses and focused requests for clarification. Whether conduct crosses the threshold remains fact-sensitive. Once unreasonableness is established under the Tribunal Procedure (Upper Tribunal) Rules 2008, the costs discretion arises. An unchallenged finding of unreasonableness on one issue can independently sustain the costs order.

The Financial Conduct Authority issued Decision Notices under section 56 of the Financial Services and Markets Act 2000 against Thomas Seiler and Louise Whitestone. Each referred the notice to the Upper Tribunal in non-disciplinary proceedings concerning alleged recklessness and lack of integrity arising from foreign-exchange transactions involving Julius Baer and Yukos-related entities.

In its substantive decision, [2023] UKUT 00133 (TCC), the Upper Tribunal rejected the Authority’s case on recklessness and lack of integrity, remitting the prohibition issue for reconsideration. The Authority later withdrew the Decision Notices. In the Costs Decision, [2023] UKUT 00270 (TCC), the Upper Tribunal found unreasonable conduct in several respects and ordered the Authority to pay specified costs.

The Authority appealed on two permitted grounds, concerning witnesses and responses to requests for clarification. A further ground concerning the Third FX Transaction had been refused permission. The central issues were whether the Upper Tribunal had made an error of law and whether its costs order could stand.

By a majority, Fraser LJ delivered the leading judgment and Lewison LJ agreed. Lady Justice Elisabeth Laing dissented. The appeal was dismissed and the Upper Tribunal’s costs order remained undisturbed.

1. Under section 13(1) of the Tribunals, Courts and Enforcement Act 2007, an appeal from the Upper Tribunal lies only on a point of law. The Court of Appeal was not entitled to rehear or re-evaluate the Upper Tribunal’s factual assessment of unreasonableness. The specialist expertise of the Upper Tribunal required a pragmatic and restrained approach. The approach in Obrey v Secretary of State for Work and Pensions [2013] EWCA Civ 1584 was applied. Various Eateries Trading Ltd v Allianz [2024] EWCA Civ 10 concerned a different appellate jurisdiction and did not assist.
2. Under rule 10(3)(d) and (e) of the Tribunal Procedure (Upper Tribunal) Rules 2008, unreasonableness is a threshold condition. The finding of unreasonableness is an evaluative factual judgment, not itself an exercise of discretion. The discretion to award costs arises only after that threshold is met.
3. Non-disciplinary references are supervisory in character, but are not ordinary civil litigation. The Upper Tribunal may receive fresh evidence and make findings, while its statutory powers remain those of dismissal or remission. The Authority and the Tribunal form part of a common regulatory enterprise directed to maintaining confidence in financial markets. The Authority therefore could not rely on ordinary-litigant tactics to justify failing to address relevant witnesses or investigative matters. This conclusion was supported by Financial Conduct Authority v Hobbs [2013] EWCA Civ 918 and R (Wilford) v FSA [2013] EWCA Civ 677.
4. The findings concerning Mr Campeanu, Mr Narrandes, Ms Thomson Bielmann and Mr Courrier were factual and evaluative. The Upper Tribunal was entitled to consider the Authority’s failure to address the status of a central witness, consider relevant witnesses, disclose its efforts, and make timely and genuine efforts to obtain overseas assistance. Those findings disclosed no error of law.
5. There was no universal rule requiring every request for clarification to be answered. The reasonableness of the Authority’s responses depended on the circumstances. In an integrity case, evidence of how others reacted to the relevant risks could be relevant. The Upper Tribunal was entitled to find that the Authority’s refusal to engage with focused requests was unreasonable. That conclusion did not make the Authority automatically liable for costs in every future case.
6. The unappealed finding that reliance on the Third FX Transaction was unreasonable independently satisfied the threshold in rule 10(3)(d). That finding was sufficient to support the jurisdiction to make a costs order, and the order was within the range properly open to the Upper Tribunal.
7. In dissent, Laing LJ considered that the costs decision remained reviewable for error of principle or perversity. She would have held that the Upper Tribunal treated legally irrelevant evidence as relevant and imposed duties exceeding the ordinary duty of candour. She would have allowed the appeal.

• Court of Appeal (Civil Division): In [2024] EWCA Civ 852, the majority dismissed the Authority’s appeal and left the Upper Tribunal’s costs order in force.
• Upper Tribunal (Tax and Chancery Chamber): In the substantive decision, [2023] UKUT 00133 (TCC), the Tribunal rejected the allegations of recklessness and lack of integrity and remitted the prohibition issue. In the Costs Decision, [2023] UKUT 00270 (TCC), it found unreasonable conduct and made costs orders.