Key Facts
- •The Financial Conduct Authority (FCA) applied to stay proceedings against Jonathan Edward Dance (Mr Dance) and WealthTek LLP for 12 months.
- •Mr Dance is a designated member of WealthTek, an authorised person under the Financial Services and Markets Act 2000 (2000 Act).
- •The FCA alleged that WealthTek and Mr Dance had fraudulently concealed client assets and misrepresented information to the FCA and banks.
- •The FCA obtained a worldwide freezing order (WWFO) and a criminal restraint order (CRO) against Mr Dance.
- •The FCA is investigating potential criminal offences committed by Mr Dance.
- •The High Court proceedings involved claims for declaratory, injunctive, and remedial relief, as well as an account of profits.
- •Mr Dance opposed the stay, arguing it would prejudice his ability to defend the allegations.
- •A significant shortfall (£80 million) in WealthTek's client assets was discovered, with approximately £49 million allegedly transferred to Mr Dance.
Legal Principles
The modern approach to staying civil proceedings pending criminal proceedings leaves the matter to the court's discretion, weighing competing considerations.
Jefferson Ltd v Bhetcha [1979] 1 WLR 898
The court has inherent jurisdiction to stay proceedings where it thinks fit, as recognised by s.49(3) of the Senior Courts Act 1981.
Senior Courts Act 1981, s.49(3)
Under its inherent jurisdiction, the court has wide discretion; the test is simply 'what is required by the interests of justice in the particular case'.
Athena Capital Fund SICAV-FIS SCA v Secretariat of State for the Holy See [2022] 1 WLR 4570
Section 58(5) of the Proceeds of Crime Act 2002 allows a court to stay proceedings if a restraint order has been made in respect of the property.
Proceeds of Crime Act 2002, s.58(5)
Section 69(2)(b) of the Proceeds of Crime Act 2002 mandates that the court must exercise its powers with a view to securing there is no diminution in the value of realisable property where a confiscation order has not been made.
Proceeds of Crime Act 2002, s.69(2)(b)
A defendant against whom serious allegations are made is entitled to an expeditious hearing.
Klöckner Holdings GmbH v Klöckner Beteiligungs GmbH [2005] EWHC 1453 (Comm)
Where a stay is sought by a claimant who is also a regulator and criminal investigator, the court should consider the applicant's unique position and statutory functions.
This case
Outcomes
The court granted a 12-month stay of the High Court proceedings.
The court considered that the FCA's prioritization of its criminal investigation was justified given the serious nature of the alleged fraud and the overlap between the civil and criminal proceedings. The court also considered the legislative steer in the Proceeds of Crime Act 2002, s.69(2)(b), to avoid diminution of Mr Dance's realisable assets. The court found no significant prejudice to Mr Dance from the stay.