Nailesh Manubai Teraiya v The Financial Conduct Authority

A preliminary issue should be directed cautiously and only where it presents a succinct point capable of disposing of a distinct aspect of the case. The issue should normally be a discrete question of law, capable of being determined without substantial evidence or delay. The tribunal must weigh overlap with the substantive hearing, possible appeals, costs, delay, and the prospect of shortening or avoiding the final hearing. The overriding objective of dealing with cases fairly and justly remains decisive.

The applicant faced regulatory proceedings concerning alleged breaches of integrity requirements, a financial penalty and a prohibition order. He also alleged racial discrimination by the Financial Conduct Authority under Part 5 of the Equality Act 2010, contending that the Authority was a qualifications body and that its proposed sanctions fell within section 53(2).

The applicant sought a direction that whether the Authority was a qualifications body should be determined as a preliminary issue. The Authority opposed the direction, principally because the issue might prove unnecessary and could cause delay or increase costs. The central question was whether the proposed issue satisfied the applicable principles for preliminary determination.

1. Direction made. The Tribunal directed that whether the Financial Conduct Authority was a qualifications body for the purposes of the Equality Act 2010 should be heard as a preliminary issue.
2. The applicable principles, summarised in Lord Wrottesley v HM Revenue & Customs [2015] UKUT 0637 (TCC) and applied in the financial-services context in Prodhan v The Financial Conduct Authority [2018] UKUT 0414 (TCC), required caution and sparing use of the power. A preliminary issue should ordinarily be a separate, succinct and potentially dispositive question, preferably one of law. The Tribunal should consider evidence, overlap, delay, possible appeals, costs, the prospect of avoiding a further hearing, and the overriding objective.
3. The proposed issue was a pure question of law, capable of being heard in half a day without evidence or significant delay. It was discrete and would not affect the other issues in the reference.
4. Although the issue might theoretically become unnecessary if the discrimination claim failed on its facts, the Tribunal considered that it would be unlikely to sidestep a short legal issue after full argument. Determining the issue in advance could remove the need for evidence and submissions on discrimination and reduce the substantive hearing from an assumed six days to four days.
5. The possibility of an appeal and existing delay did not outweigh the potential saving in time and costs. The parties could continue preparing the remaining issues while any appeal was pursued. The parties were directed to seek agreement within 14 days on the terms of the preliminary issue and associated hearing directions.

not stated in the judgment.