Markos Markou v The Financial Conduct Authority
[2023] UKUT 101 (TCC)
The Financial Conduct Authority v Thomas Seiler & Anor
30 July 2024
[2024] EWCA Civ 852
Court of Appeal
The FCA lost a case and had to pay the other side's legal fees. They appealed, saying the judge was unfair. The appeals court disagreed, saying the first judge knew best because they heard all the details and are experts in this kind of case. The appeals court said that the FCA, as a government regulator, must work with the judge, not just fight them like in a normal lawsuit.
Key Facts
- •The Financial Conduct Authority (FCA) appealed a Upper Tribunal (UT) costs decision ordering the FCA to pay a portion of respondents Seiler and Whitestone's costs after the UT dismissed the FCA's case against them.
- •The FCA's Decision Notices sought to prohibit Seiler and Whitestone from performing regulated activities due to alleged reckless conduct and lack of integrity in dealings with the Yukos Group.
- •The UT found the FCA had not proven recklessness or lack of integrity but did find instances of incompetence.
- •The UT awarded costs to Seiler and Whitestone, finding the FCA acted unreasonably in specific aspects of defending the proceedings (failing to call material witnesses, refusing information requests, and persisting with a changed 'Third FX Transaction' allegation).
- •The FCA appealed the UT's costs decision on two grounds: the UT erred in finding unreasonableness regarding witness selection and information requests.
Legal Principles
Costs in Upper Tribunal proceedings are at the discretion of the Tribunal, exercisable only if a party acted unreasonably (Section 29, Tribunals, Courts and Enforcement Act 2007; Rule 10(3)(d) and (e), Tribunal Procedure (Upper Tribunal) Rules 2008).
Tribunals, Courts and Enforcement Act 2007; Tribunal Procedure (Upper Tribunal) Rules 2008
Unreasonableness is a threshold condition for awarding costs; it's a value judgment, not a discretionary exercise.
HMRC v Jackson Grundy [2017] UKUT 180 (TCC)
Appeals from the Upper Tribunal are limited to points of law (Section 13(1), Tribunals, Courts and Enforcement Act 2007). Findings of fact are generally not reviewable.
Tribunals, Courts and Enforcement Act 2007
In assessing unreasonableness, the appellate court should defer to the Upper Tribunal's expertise, particularly in specialized areas like financial regulation.
Obrey and others v Secretary of State for Work and Pensions [2013] EWCA Civ 1584
The FCA, as a regulator, is engaged in a 'common enterprise' with the Upper Tribunal to maintain market integrity. Its conduct is not judged solely by 'ordinary civil litigation' standards.
Financial Conduct Authority v Hobbs [2013] EWCA Civ 918; R (Wilford) v FSA [2013] EWCA Civ 677
Outcomes
The Court of Appeal dismissed the FCA's appeal.
The Court found the Upper Tribunal's conclusions on unreasonableness were factual findings within its expertise and not errors of law. The FCA's actions regarding witness selection and information requests, viewed in the context of its regulatory role and the nature of the proceedings, were reasonably open to the UT to find unreasonable.
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