“I conclude that the [Orchards’] rights under section 26 [of FSMA] (which remain subject to possible relief under section 28) are binding on [Ms Dhillon] and that she did not take free of them when she became registered as the proprietor of the Property. Ground 2 of the appeal is therefore allowed. The consequences of this decision will need to be determined at a future hearing.”
“(1) What is the relevance (if any) of the fact that R2BL is not a party to these proceedings (judgment paragraphs 102 & 150)? (2) Can [Ms Dhillon] rely on section 28 of FSMA to uphold the [sale and rent back] transaction (judgment paragraphs 142 and 150)? (3) What counter restitution if any ought the [Orchards] to give, and by what means (judgment paragraph 150)? (4) What is the relevance and consequence (if any) of the fact that the Property was charged by [Ms Dhillon] to a third party (judgment paragraph 150)? (5) Whether the [Orchards] have waived their right to recission as pleaded in paragraph 45(i) of the Defence to Counterclaim? (6) Whether the doctrine of laches applies, as pleaded in paragraph 45(ii) of the Defence to Counterclaim?”
“(1) An agreement made by a person in the course of carrying on a regulated activity in contravention of the general prohibition is unenforceable against the other party. (2) The other party is entitled to recover— (a) any money or other property paid or transferred by him under the agreement; and (b) compensation for any loss sustained by him as a result of having parted with it. (3) ‘Agreement’ means an agreement— (a) made after this section comes into force; and (b) the making or performance of which constitutes, or is part of, the regulated activity in question ….” (a) any money or other property paid or transferred by him under the agreement; and (b) compensation for any loss sustained by him as a result of having parted with it. (a) made after this section comes into force; and (b) the making or performance of which constitutes, or is part of, the regulated activity in question ….”
“The other party is entitled to recover— (a) any money or other property paid or transferred by him under the agreement; and (b) compensation for any loss sustained by him as a result of having parted with it.”
“an arrangement comprised in one or more instruments or agreements, in relation to which the following conditions are met at the time it is entered into— (i) the arrangement is one under which a person (the ‘agreement provider’) buys all or part of the qualifying interest in land (other than timeshare accommodation) in the United Kingdom from an individual or trustees (the ‘agreement seller’); and (ii) the agreement seller (if the agreement seller is an individual) or an individual who is the beneficiary of the trust (if the agreement seller is a trustee), or a related person, is entitled under the arrangement to occupy at least 40% of the land in question as or in connection with a dwelling, and intends to do so” with the proviso that “such an arrangement is not a regulated sale and rent back agreement if it is a regulated home reversion plan”
“23Before the Financial Services Act 1986 , the issue of a policy by an unauthorised insurer was an illegal act and the policy was treated as illegal and hence unenforceable even by the innocent policyholder. It was considered that, in the absence of statutory provision to the contrary, the same would be true of unauthorised investment contracts. Following the recommendation of Professor L C B Gower in his report, Review of Investor Protection (1984) (Cmnd 9125), at para 10.32, theFinancial Services Act 1986 provided in section 5 that an investment agreement made by an unauthorised person in the course of carrying on investment business was unenforceable against the investor. Section 5(6) provided that such an agreement was not illegal or invalid to any greater extent than was provided in section 5, so that the investor could enforce the agreement against the other party. Section 132 made similar provision for contracts of insurance. 24 The effect of these provisions, that contracts made by unauthorised persons were enforceable against, but not by, such persons, was re-enacted as regards all agreements to which FSMA applies, including contracts of insurance, in sections 26(1) and 28(9) of FSMA.”
“Overall I am satisfied that the argument advanced by the [Orchards] on this appeal would not have required further evidence on the matters now advanced or have led to the trial following a different course had counsel for the [Orchards] fully explained the [Orchards’] pleaded case to [Judge Duddridge]. The way the case was argued at the trial had the result that [Judge Duddridge], entirely understandably, did not make findings on some points raised by the pleadings. In my judgment the whole field of factual disputes relevant to ground 2 [i.e. the ground of appeal raising the new point] was raised by the pleadings, albeit if the appeal is allowed on this ground a further hearing will be required to determine the issues which [Judge Duddridge] considered he did not need to address (given the way the case was argued before him).”
“I see no reason to conclude that the right of recovery given by section 26 should automatically be defeated by a transfer of that property by the offending party to a third party. It appears to me that sections 26 and 28 should be read against the background of general principles of law governing title to property (which includes the ability of a party under a contract to seek to set aside the contract and reclaim property passing under it). It appears to me that sections 26 and 28 fall to be read against the background of the law of rescission and they make greater sense (and promote legal coherence) if the right given by section 26(3) is capable of binding third parties (subject to defences of bona fide purchaser etc.). Indeed, that the power of the court under section 28 to determine that transfers of the property should be left undisturbed where this is just and equitable, can be seen to place the third party defence on a statutory footing.”
“For these reasons, I conclude that the [Orchards’] rights under section 26 [of FSMA] (which remain subject to possible relief under section 28) are binding on [Ms Dhillon] and that she did not take free of them when she became registered as the proprietor of the Property. Ground 2 of the appeal is therefore allowed. The consequences of this decision will need to be determined at a further hearing.”
“Pausing at this stage, the Act [i.e. the 1986 Act] therefore gives the individual investor a private right of action to recover money or property transferred under an investment agreement made in consequence of breaches of sections 3, 56 and 57 of the Act and a right of action to recover compensation for any loss suffered by the investor. But there are three points to be noted. First, and most important, the statutory rights of action of the individual investor lie only against the person who contravenes the statutory prohibition: the individual investor is given no cause of action against third parties, such as the solicitors, knowingly concerned in such contravention ….”
“The restitutionary and compensatory provisions of section 5 do not in terms identify the person or persons against whom the remedies are available. But it is difficult to see how the section 5 restitutionary remedy could be available against anyone other than the other party to the transaction in question or the party to whom, under the transaction in question, the investor’s money or property had been paid or transferred. Whether the compensatory remedy available ‘together with’ the restitutionary remedy, could be obtained against an accomplice who was neither a party to the transaction nor a person to whom money or property of the investor had been transferred is equally doubtful. These difficulties do not, however, have to be resolved on this appeal.”
“1235. The context of s.26(2) is an agreement made between a person in the course of carrying out a regulated activity and ‘the other party’ (s.26(1)). That agreement is rendered unenforceable against the ‘other party’. It could only ever have been enforced by a party to the agreement and therefore must be referring to a contractual counterparty (and a contravening counterparty). 1236. When s.26(2) then refers to the ‘other party’s right to recover money or property or compensation’ it is naturally to be read as referring to a right to recover it from the counterparty to the agreement referred to in s26(1). This is reinforced by the reference to the right being to recover money paid ‘under the agreement’. It is also reinforced by s.28(8) which provides that if property transferred under an agreement to which s.26 applies has passed to a third party, then references in that section and s. 28 to property are to be read as a reference to its value at the time of its transfer under the agreement: this suggests that third parties are outside the scope of s.26. 1237. Further, under s.28(5) the right to relief from the compensatory or restitutionary remedy depends upon ‘whether the person carrying on the regulated activity concerned reasonably believed that he was not contravening the general prohibition by making the agreement’ (emphasis added). This clearly shows that it is the person who made the agreement against whom the remedy may be obtained since he is the person (and the only person) who may seek relief against such a claim. If it were otherwise it would mean that relief could be obtained by the person who made the agreement and was contravening the general prohibition, but not by the third party recipient who made no such agreement and was not so in contravention. That would be an absurdity. 1238. Yet further, the consequence of the Claimants’ argument is remarkably far reaching. On the Claimants’ case full recovery can be made against a non-counterparty such as CB who never held the monies beneficially and have long since parted with the monies in accordance with lawful instructions given. Recovery can also be made against a third party seller who acted in good faith and provided value for the monies received. The same would apply to a third party purchaser for value of property transferred who acted in good faith. 1239. For all these reasons I reject the Claimants’ case that the monetary claim under s.26 can be made against anyone other than the LLP [i.e. the contractual counterparty].”
“Indeed, in his reply, [counsel for the claimants] made it clear that he accepted what Hamblen J had said at [1235] and [1236] of his judgment about the need for relief to be directed to the contractual counterparty. I accept the correctness of what is said at [1236] that, when s.26(2) is referring to the ‘other party’s right to recover money or property or compensation’, it is naturally to be read as referring to a right to recover it from the counterparty to the agreement referred to in s.26(1). This is reinforced by the reference to the right being to recover money paid ‘under the agreement’. It is also reinforced by s.28(8) which provides that if property transferred under an agreement to which s.26 applies has passed to a third party, then references in that section, and s.28, to property are to be read as a reference to its value at the time of its transfer under the agreement: this suggests that third parties are outside the scope of s.26. Further reasons for that construction, which seem to me to be convincing, were advanced at [1237] and following of Hamblen J’s judgment.”
“15. The following legal principles apply where a party seeks to raise a new point on appeal which was not raised below. 16. First, an appellate court will be cautious about allowing a new point to be raised on appeal that was not raised before the first instance court. 17. Second, an appellate court will not, generally, permit a new point to be raised on appeal if that point is such that either (a) it would necessitate new evidence or (b), had it been run below, it would have resulted in the trial being conducted differently with regards to the evidence at the trial (Mullarkey v Broad[2009] EWCA Civ 2 at [30] and [49]). 18. Third, even where the point might be considered a ‘pure point of law’, the appellate court will only allow it to be raised if three criteria are satisfied: (a) the other party has had adequate time to deal with the point; (b) the other party has not acted to his detriment on the faith of the earlier omission to raise it; and (c) the other party can be adequately protected in costs. (R (on the application of Humphreys) v Parking and Traffic Appeals Service[2017] EWCA Civ 24 ; [2017] R.T.R. 22 at [29]).”
“26 These authorities show that there is no general rule that a case needs to be ‘exceptional’ before a new point will be allowed to be taken on appeal. Whilst an appellate court will always be cautious before allowing a new point to be taken, the decision whether it is just to permit the new point will depend upon an analysis of all the relevant factors. These will include, in particular, the nature of the proceedings which have taken place in the lower court, the nature of the new point, and any prejudice that would be caused to the opposing party if the new point is allowed to be taken. 27 At one end of the spectrum are cases such as [Jones v MBNA International Bank Ltd[2000] EWCA Civ 514 ] in which there has been a full trial involving live evidence and cross-examination in the lower court, and there is an attempt to raise a new point on appeal which, had it been taken at the trial, might have changed the course of the evidence given at trial, and/or which would require further factual inquiry. In such a case, the potential prejudice to the opposing party is likely to be significant, and the policy arguments in favour of finality in litigation carry great weight. As Peter Gibson LJ said in the Jones case (at para 38), it is hard to see how it could be just to permit the new point to be taken on appeal in such circumstances; but as May LJ also observed (at para 52), there might none the less be exceptional cases in which the appeal court could properly exercise its discretion to do so. 28 At the other end of the spectrum are cases where the point sought to be taken on appeal is a pure point of law which can be run on the basis of the facts as found by the judge in the lower court: see e g Preedy v Dunne[2016] EWCA Civ 805 at [43]–[46]. In such a case, it is far more likely that the appeal court will permit the point to be taken, provided that the other party has time to meet the new argument and has not suffered any irremediable prejudice in the meantime.”