Financial Services Authority v Rourke [2001] EWHC 704 (Ch)

EWHC-Ch
Financial Services Authority v Rourke
[2001] EWHC 704 (Ch) · 2001-10-19
MR NICHOLAS VINEALL (instructed by Freshfields Bruckhaus Deringer, 65 Fleet Street, London EC4) appeared on behalf of the Claimant MR DAVID KELLY (instructed by RJ Blackburn, 6A Carr Lane, Slaithwaite, Huddersfield, West Yorkshire) appeared on behalf of the Defendant

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Introduction

The Financial Services Authority ("the FSA") is responsible for enforcing the provisions of the Banking Act 1987. Section 3 of the Act is in these terms:
"(1) [N]o person shall in the United Kingdom accept a deposit in the course of carrying on (...) a business which for the purpose of this Act is a deposit-taking business unless that person is an institution for the time being authorised by the Authority [ie the FSA] ...

(2) Any person who contravenes this section shall be guilty of an..."

Section (3) provides that a deposit taken in contravention of the section "shall not affect any civil liability in respect of the deposit".As Mr Nicholas Vineall, who appears on behalf of the FSA, says, the vice of a person accepting deposits, if he is not authorised, is twofold. First of all, he has not had his credentials approved by the FSA, and therefore a member of the public cannot be confident that he has had his honesty and financial acumen checked by an independent body. Secondly, deposits with an authorised body are protected, in the sense that repayment up to £20,000 is, in effect, guaranteed to the extent of 90%.Section 35 is in these terms:
"(1) Any person who-- (a) makes a statement, promise or forecast which he knows to be misleading, false or deceptive, or dishonestly conceals any material facts; or (b) recklessly makes (dishonestly or otherwise) a statement, promise or forecast which is misleading, false or deceptive,
is guilty of an offence if he makes the statement, promise or forecast or conceals the facts for the purpose of inducing, or is reckless as to whether it may induce, another person ...(i) to make, or refrain from making a deposit...(ii) to enter, or refrain from entering, into an agreement for the purpose of making such a deposit."Subsection (2) providing for certain exceptions, and subsection (3) deals with the appropriate criminal sanctions.Section 42 empowers the FSA to make investigations where it has "reasonable grounds for suspecting that a person is guilty of contravening section 3 or 35."Section 48 in effect gives the court power, on the application of the FSA, where a person has accepted deposits in contravention of section 3, to order repayment to those who have made deposits or to appoint a receiver. Section 49 effectively extends this power of the court in circumstances where profits have been made by the unauthorised person. Subsection (2) of section 48 and section subsection (5) of section 49 state that these powers should be exercised in England by the High Court.Section 93 provides for injunctions. It empower the court, on the application of, among others, the FSA to grant an injunction restraining a person infringing, among other provisions, those of section 3 and section 35.Mr John Rourke, the defendant, is a bookkeeper, who appears to have started an unauthorised deposit business in a small way in 1994; the business become more extensive by about 1998. Pursuant to its powers under section 42, the FSA interviewed Mr Rourke on 14th and 15th March 2001. The FSA decided that he had borrowed and lent money in the way of business, and therefore that he had contravened section 3. The FSA also formed the view that he had breached section 35. Accordingly, on 2nd April the FSA issued proceedings for quite wide-ranging relief. Two days earlier, before proceedings had been served the FSA applied, without notice, to Pumfrey J for an order against the defendant. The order, which was duly granted by the judge, restrained the defendant from accepting any fresh deposits, repaying any existing deposits or interest, or incurring any further liability or meeting any existing liability, save as permitted by the terms of the order. The order also included a freezing and disclosure order against the defendant in substantially the same form. The order was renewed inter partes and was served on 4th April together with the proceedings.The FSA now applies for:(1) an order that the freezing and disclosure orders granted by Pumfrey J be continued;(2) for summary judgment for injunctive relief;(3) summary judgment for declaratory relief;(4) the committal of the defendant for contempt, arising from breaches of Pumfrey J's order. The relief claimed under (1) and (2) is no longer contested by the defendant. The relief sought under (3) is challenged on two separate grounds, one of some general significance. The relief claimed under (4) is not challenged, but the question of the appropriate sanction for contempt is in dispute.(1) The continuation of the freezing and disclosure orders .It is clear that the defendant has been carrying on an unauthorised banking business contrary to section 3, and that the FSA accordingly has power under section 48 to ask the court in effect to arrange for all or some of his assets to be used in repaying depositors, paying them interest and compensating them. At the moment it appears that about £320,000 worth of deposits have been identified, not, I think, including interest. The defendant suggests that his assets are worth in the region of £350,000. In those circumstances, it seems to me clear, in light of the facts that he has been in breach of section 35, and therefore has shown himself not to be reliable, and that he has been in contempt by breaching Pumfrey J's order, it is clearly appropriate for the protection of the depositors that the freezing order is continued. To his credit, the defendant does not argue otherwise, but I have to be satisfied nonetheless on my own view that it is appropriate to make the order.For substantially the same reasons it seems to me that continuing the disclosure order is justified. It is true that there is room for argument that the disclosure order may have been spent, but the reason that this point is not advanced by Mr David Kelly, who appears on behalf of Mr Rourke, is this. Although Mr Rourke has afforded substantial disclosure, he has failed to disclose certain information and documents that he ought to have disclosed in accordance with Pumfrey J's order, and late disclosure has been made. He does not keep records and I suspect that his papers are in something of a mess. That is not something which is of itself a breach of any order or a breach of any legislation. However, the point is that it justifies, in my view, the continuation of the disclosure order.(2) The injunctions .What the FSA seeks is injunctions which track the wording of section 3 and of section 35, effectively restraining the defendant from breaching either of those two sections. Again, very reasonably, Mr Kelly does not oppose the making of these injunctions. It seems to me that the FSA has made out an unanswerable case on this issue, which can fairly be disposed of under Part 24.Of course the court has to be particularly careful before it grants a remedy which is discretionary and which can have a wide-ranging effect, at a summary stage. However, it seems to me that there is no realistic prospect whatever of Mr Rourke persuading a court that those injunctions should not be granted. He has been in breach of the two sections in a substantial way for a substantial period. He has also been in breach of section 3 and in breach of the order made by Pumfrey J. He is merely being required to obey the law. The public are entitled to expect the courts, at the suit of the FSA, to give them the protection which the Banking Act intends them to have. In this case, I cannot see any reason why injunctions such as those sought should not be granted; indeed, there is every reason why they should be. To his credit Mr Rourke does not challenge that.(3) Declaratory relief .I turn now to the point which is perhaps of some general interest in this case, namely the grant of declaratory relief. The FSA seeks declarations to this effect:
"1. On the 60 occasions set out in the attached schedules, between June 1994 and July 2001, the defendant accepted deposits from at least 21 individuals, totalling £331,925, in contravention of section 3 of the Banking Act 1987.
2. The defendant, for the purpose of inducing persons to make the profits, has made the following statements knowing them to be false:(a) In about March 1998 the defendant stated to Mr Reid Haddow that money deposited would be invested in a scheme run by a firm of solicitors in London that bought repossessed properties from building societies and sold them on the open market.(b) In early July 2000 the defendant stated to Jacqueline Metcalffe that money deposited would be used by a syndicate of solicitors, accountants and other professionals who were buying repossessed properties.(c) In July 2000 the defendant stated to Frederick Vickerman that money deposited would be used by a syndicate that invested in properties which were virtually free sold to housing associations and that his deposit would be safe.(d) In August 2000 the defendant stated to Miss Susan Hartley the money deposited would be used by a group of businessmen who purchased properties and then resold them at a profit and that there was no risk involved.In each case these statements were false. Money deposited with the defendant would be used either to support his bookkeeping business or to discharge the defendant's liabilities to other depositors. In making these statements, the defendant contravened section 35 of the Banking Act 1987."The court's power to grant a declaration is to be found in CPR Part 40.20, which in these terms:
"The court may make binding declarations whether or not any other remedy is claimed."
Accordingly, so far as the CPR are concerned, the power to make declarations appears to be unfettered. As between the parties in the section, it seems to me that the court can grant a declaration as to their rights, or as to the existence of facts, or as to a principle of law, where those rights, facts, or principles have been established to the court's satisfaction. The court should not, however, grant any declarations merely because the rights, facts or principles have been established and one party asks for a declaration. The court has to consider whether, in all the circumstances, it is appropriate to make such an order.In Patten v Burke [1994] 1 WLR 541 Millett LJ stated that, in effect, it was the court's duty "to do the fullest justice to the plaintiff to which he is entitled", and he went on to hold that there was no rule of law which prevented a declaration of fraudulent conduct.In Messier-Dowty v Sabena [2001] 1 All ER 275 the issue was whether a negative injunction should be granted. Lord Woolf said this:
"The deployment of negative declarations should be scrutinised and their use rejected where it would serve no useful purpose. However, where a negative declaration would help to ensure that the aims of justice are achieved, the courts should not be reluctant to grant such declarations. They can and do assist in achieving justice. ...
So in my judgment the development of the use of declaratory relief in relation to commercial disputes should not be constrained by artificial limits wrongly related to jurisdiction. It should instead be kept within proper bounds by the exercise of the courts' discretion."It seems to me that, when considering whether to grant a declaration or not, the court should take into account justice to the claimant, justice to the defendant, whether the declaration would serve a useful purpose and whether there are any other special reasons why or why not the court should grant the declaration.Mr Kelly advances an argument to the effect that the factual basis for the declarations was not made out. In particular, he argues that the defendant may have believed the truth of what he stated to Mr Haddow, Miss Metcalffe, Mr Vickerman and Miss Hartley. He says that even though what the defendant said turned out to be untrue, in the sense that the investments did not come to pass, if he believed that what he said was true at the time he said it, then there was no breach of section 35.At this stage I am, of course, concerned with an application for judgment under Part 24, and it is not sufficient for one to conclude that the defendant's case is very weak or very unlikely to succeed. I have to be satisfied, just as in any other case under Part 24, that the defendant's case has no prospect of success. In considering whether or not that is so, the court has to bear in mind that if the case proceeds to a hearing, there will be disclosure of documents, exchange of witness statements, and (if the matter goes to trial) cross-examination.Even bearing those factors in mind, I am firmly of the view that the factual basis for the declarations sought is made out. It is noteworthy that, in his extensive interviews with the FSA and in his evidence in answer to the present application, the defendant does not begin to suggest that the statements he made to the four individuals were true, or that at the time he made them he honestly or reasonably believed them to be true.It is fair to say that the evidence shows that he may have had some vague hope of investing in property in some way through a person who does not appear to be a solicitor or any other professional in Lancashire and, indeed, that he made some investments with that person. However, the defendant does not say, despite the fact that he was well aware of the nature of the declarations sought in this application, that he believed that the deposits were "safe" or that "there was no risk involved". There is not the slightest suggestion of a syndicate anywhere in the evidence, nor a London firm of solicitors or presales having been made to housing associations.In general, and particularly in a case such as this, it seems to me that a defendant cannot expect to defeat a claim under Part 24 by merely suggesting, through his counsel, that he believed or may have believed his representations to be true and that he had some grounds for believing them to be true.Without putting some evidence before the court, such as what he believed and why he believed it, Mr Rourke is obviously in difficulties. What was in his mind, and what he knew or believed, at the relevant time, are matters which are peculiarly within his own knowledge. It is not as if something relevant is going to turn up on disclosure or in a witness statement: only the defendant can speak to it. It seems to me quite wrong to let him shelter behind Part 24 by suggesting that something might turn up as to what he knew or believed, when there is not a shred of evidence to support it.Quite apart from this, without going into great detail, it seems to me that, looking at the evidence as a whole, even if the defendant had said that he believed all parts of the statements that he had made to Mr Haddow, Miss Metcalf, Mr Vickerman and Miss Hartley, this would have been one of those very exceptional cases where I would have been prepared to hold that is simply unbelievable on the evidence. Of course if he came up not merely with that statement that he believed it, but some evidence to support that belief, it would be different. As it is, however, I am confident that this is a defence can be rejected at this stage.I turn now to the point of more general interest, namely whether these declarations ought to be granted as a matter of discretion.They are unusual orders, in the sense that they involve declarations, as to what has happened, and they stigmatise the defendant's reputation and name. First of all, I have to look at why they have been asked for. In this connection the FSA has put forward its case in helpful affirmations from Helen Marshall, with a view to justifying the grant of the declaration.It is said that the grant of the declarations may assist members of the public from whom unauthorised deposits have been taken by Mr Rourke. In this connection, the victims of an authorised deposit-taker namely those who deposited money with him, are not likely to be lawyers or even legally represented. There are a number of reasons why the declarations might assist such people.First, it would clarify what can be publicised to help the FSA investigate the extent of the defendant's deposit-taking. A deposit-taker may be reluctant or, as in this very case because of the absence of records, unable, to provide a complete list of depositors, even if ordered to do so by the court. As the evidence suggests in this case also, a deposit-taker may even try to dissuade depositors from speaking to the FSA. In order to give full effect to the beneficial effect of section 48, the FSA need to identify as many depositors as possible.It is helpful that the declarations are clear and are findings which the FSA can publicise. This answers a particular problem arising from the confidentiality regime under the Banking Act and, indeed, under the Financial Services Act (see section 82 of the Banking Act and section 179 of the Financial Services Act). Information gathered by the FSA for the purpose of discharging its functions under those Acts is confidential, subject to certain exceptions. A breach of confidentiality is obviously a serious matter and, indeed, can lead to criminal sanctions. There can be some doubt, even after a case where documents have been looked at in part in court, as in the present case as to what can be referred to and what cannot to the public. It makes the FSA's position easier (and justifiably easier bearing in mind the findings that have been made in cases such as this) is to have declarations so that there can be no doubt as to what can be publicised.Further, it is obviously desirable that publicity is accurate. Once the declaration is made, a court has been satisfied that its contents are true and, therefore, that the publicity will be accurate.It will also help depositors understand in clear terms that breaches of the 1987 Act have been committed. It often happens that many people who are deposit-takers are prepared to take steps to try to play down the effect of any order. If there were no declaration in the present case, but merely the injunctions, it would be easier for Mr Rourke (if he were minded to do so) to laugh off or play down the effect of the court's finding and of any orders. That ties in with another point, namely that it is obviously desirable that depositors understand the seriousness of the breaches. Again, the ay in which the proposed declarations are phrased makes that point. Finally, the making of declarations may help depositors to consider what remedies to pursue.A second group of people who would or might be helped by declarations are potential depositors. As I have seen in other cases, it is sadly not unknown for an unauthorised deposit-taker who has been the subject of court proceedings to continue to take deposits. It is also inevitable that there will be many other deposit-takers against whom no proceedings have been brought. It may well be that publicising declarations of this sort will help the message to get through to members of the public who have so far not appreciated the risks involved in placing deposits with unauthorised deposit-takers. There is, therefore, a wider benefit to the general public. It may help make them more aware in general of the risk of placing deposits with unauthorised people.In some cases (of which this is not one) there is also the fact that information gathered by the FSA showing breaches of the Banking Act and, indeed, the Financial Services Act, may be highly relevant to a variety of different regulators within the United Kingdom, DTI or the Treasury, and indeed overseas. This sort of declarations would assist the FSA in what they are able to notify in clear terms, conclusive facts that have been found.Although the last factor does not apply here, all the other considerations relied on in the evidence do apply. There is evidence not merely of the defendant failing to keep records, but that he often asked depositors to pay other depositors who were seeking repayment directly. He also failed to give full disclosure as he should have done. Further, the FSA's investigations have been publicised in April 2001 and they have received twenty enquiries, twelve of which were from depositors of whom the FSA was unaware, underlying that publicity is of some value.It also appears that the defendant has tried to dissuade witnesses from speaking to the FSA, that he has concealed deposits and evidence from the FSA, and that he has asked other parties to pay sums to prevent the FSA knowing where the money has come from that and he has even encouraged witnesses to destroy evidence. It is fair to the defendant to say that he has apologised for this and that he says that his attempts were pretty half-hearted. But nonetheless the very fact that this has happened seems to me to support the reasonableness of the FSA in seeking the declaratory relief.It also appears from the job descriptions of the twenty or so depositors from whom I have statements that, with one or two exceptions, none of them is particularly rich, and they are all non-lawyers and do not appear to have had legal advice. It also seems that the defendant has, on occasions, downplayed the breaches: for instance, Mr Haddow specifically says that the defendant said that the FSA was investigating a minor matter of giving investment advice without having a licence.Further, all the reasons put forward seem to me to be supported by the general duties of the FSA described in section 2(1) and 2(2) of the Financial Services and Markets Act 2000. In particular, the second subsection describes the regulatory objectives of the FSA as being "(a) market confidence, (b) public awareness, (c) the protection of consumers and (d) the reduction of financial crime".In my judgment, therefore, although it would be wrong to say that I expect the publicising of these declarations to have a very substantial effect, I think that they can reasonably be expected to have some effect, and it is hard to see how that effect can be anything other than beneficial. Accordingly, it seems to me that the FSA has made out its case as to why the declarations should be granted, but I ought to consider whether in fact there are reasons for not granting the declarations which outweigh those reasons.What are the reasons for not making the order? The reasons that are put forward are essentially tied up with the fact that this is a civil jurisdiction and that the matters complained of, namely breaches of section 3 and breaches of section 35, and in particular the declaration of the breaches of section 35, are also capable of being met with criminal sanctions. First of all, a point not pressed - in my view by Mr Kelly, it is said to be inappropriate, as a matter of principle, to grant a declaration in civil proceedings in connection with a matter which also has potential criminal aspects. Secondly, there is the main point made by Mr Kelly, namely, that if I permit the making of these declarations no fair criminal trial of the defendant would be possible. A further point that he makes is that it is contrary to the European Convention on Human Rights ("the Convention") if I were to permit the declarations to be made at a summary stage over the objection of Mr Rourke. I shall deal with those three points in turn.The making of a declaration in relation to a criminal matter was considered by the House of Lords in Imperial Tobacco Company v Attorney-General [1981] All ER page 866. In that case the plaintiff sought a declaration that a scheme it was running was not a lottery, with a view, in effect, to pre-empting criminal proceedings which had been brought against it on the basis that the scheme was a lottery. The House of Lords refused to grant a declaration. Viscount Dilhorne said this at 875e-g:
"Such a declaration is no bar to criminal prosecution, no matter the authority of the court which grants it. Such a declaration in a case such as the present one, made after the commencement of the prosecution, and in effect a finding of guilt or innocence on the offence charged, cannot found a plea of autrefois acquit or autrefois convict, though it may well prejudice the criminal proceedings, the result of which will depend on the facts proved and may not depend solely on admissions made by the accused. If a civil court of greater authority declares on admissions made by the accused that no crime has been committed, one can foresee the use that might be made of that in a criminal trial."
Later at 875j he said:
"I think that the administration of justice would become chaotic if after the start of the prosecution, declarations of innocence could be obtained from a civil court."
Lord Lane at 883a, said:
"There is no doubt that there is jurisdiction to grant a declaration in these circumstances. Anyone is on principle entitled to apply to the court for a declarations as to their rights unless statutorily prohibited expressly or by necessary implication ... There was no such prohibition here; but was the learned judge right to exercise the discretion which he did, as the Court of Appeal thought he was?"
Lord Lane went on, at 884b, to say this:
"It would be strange if a defendant to proper criminal proceedings were able to pre-empt those proceedings by application to a judge of the High Court whether sitting in the Commercial Court or elsewhere. What effect in law on the criminal proceedings would any pronouncement from the High Court in these circumstances have? The criminal court would not be bound by the decision. In practical terms it would simply have the inevitable effect of prejudicing the criminal trial one way or the other."
That case is therefore authority for the propositions that the court has a very wide power to grant declaration, confirming therefore the conclusion I reached, and that, in circumstances such as those in that case, it would be inappropriate to grant a declaration.In my view, the present case is plainly distinguishable from that case. First, there are no criminal proceedings under way in the present case, and although the FSA may decide to bring criminal proceedings, there is no suggestion that they are about to do so. Secondly, what is sought is not a declaration concerned with criminal activity as such, as in that case (was the scheme a lottery contrary to the criminal law), merely a declaration as to events which have taken place, which events are properly under consideration by the High Court. The Banking Act has he rather unusual, if understandable, twin tracking with the same sections being able to be revised before the criminal court and before the High Court. Thirdly, the declaration, if granted in the present case, would not in any way inhibit any criminal proceedings. It seems to me that the declarations would not even be admissible in criminal proceedings.This is a case where the civil court has to decide on the balance of probabilities whether or not the facts embodied in the prepared declarations have been established. Of course, when considering that question on the balance of probabilities, because dishonesty is involved, the court has to be particularly strongly persuaded of the truth of those facts, before it is satisfied. Nonetheless it judges the question on the "balance of probabilities". In a criminal court, of course, the issue is to be judged by reference to "beyond reasonable doubt".Accordingly, this case is a long way from Imperial Tobacco . In this case the declaration would not even be admissible in the criminal case, if there were one. In Imperial Tobacco the declaration was being sought solely for the purpose of assisting a defendant in criminal proceedings, which has already been brought.Fourthly as Mr Vineall points out, in Imperial Tobacco , the court was being invited to make a declaration as to law as to rights, whereas in this case the court is simply being asked to make a declaration as to facts. Findings of fact by a civil court do not confuse the course of any criminal proceedings, not least because they are inadmissible for the reasons I have given. The potential confusion if the declaration had been granted in Imperial Tobacco, as identified by Viscount Dilhorne and Lord Lane, could simply not arise.The second point advanced on behalf of the defendants, as I have mentioned, is that the declaration would lead to it being impossible for the defendant to have a fair criminal trial. Given that the main purpose of the FSA seeking the declarations is to publicise the facts contained in the declarations, I can see the force of the point that the defendant could not in these circumstances have an untainted jury. Further, Mr Kelly is able to point out that it is the FSA who seek the declarations, and that it is the FSA who would institute the criminal proceedings. In effect, he says, that the court should, in its discretion, put the FSA to an election: either they can have their declarations, in which case they must undertake not to proceed against Mr Rourke, or, if they want to maintain their right to proceed against Mr Rourke in criminal proceedings, they should not be granted the declarations.The point is not without force, but I reject it. It seems to me that, if the declarations are granted and the FSA then decide to bring criminal proceedings, it is at that point that the defendant can raise the issue that he cannot have a fair criminal trial. I cannot sensibly decide now, before the declarations have even been granted, let alone before they have been publicised, whether the publicising of the declaration would result in it being impossible for the defendant to have a fair criminal trial. It would be a far easier thing for that to be decided once the facts are known and the matter can be judged, not on the basis of what may happen, but on the basis of what actually has happened.Further, it seems to me that it is much more sensible for a criminal court, which would be trying the case, to decide whether or not the defendant could have a fair criminal trial at the time that the trial is about to take place, rather than for a civil court to decide that issue, when it does not even know if the criminal trial is to take place, when it is to take place, where it is to take place and what the charges would be. I can see considerable force in the point made by Mr Vineall that the nature of the publication will be such that the publicity would be local, and that even if the fairness of criminal proceedings in the locality in which Mr Rourke lives was tainted, that would not prevent the trial taking place elsewhere.In my judgment, therefore, the correct conclusion on this issue is that it is for the FSA to take the risk, if I think it otherwise right to grant the declarations. . The FSA will be well aware that, if they decide to implement criminal proceedings against the defendant, they may find themselves faced with a contention that he cannot have a fair trial. In my view, therefore, this is not a reason for rejecting the grant of declarations.I turn to the final argument raised on behalf of the defendant. It is based on Article 6.2 and Article 6.3 of the European Convention. The former right is a right to be presumed innocent of a crime until proved guilty according to the law. The second is the right to examine witnesses against him.In my judgment, like all human rights, these rights cannot be regarded as absolute: they have to be regarded in the context of the Convention as a whole and in the context, in particular, of other rights under the Convention.Article 6.2 really falls by the wayside because it is concerned with criminal proceedings. It is true that, if established to the criminal standard of proof in criminal proceedings, the facts contained in the declarations would amount to an offence. However, it seems to me that Mr Rourke is not being declared to be guilty of an offence. All the declarations involve is my finding that, on the balance of probabilities, the facts contained in the declarations are true. No criminal stigma attaches. No punishment provided for in the 1987 Act for breach of the section after a conviction apply. There is this slightly unusual the twin tracking of the civil and criminal proceedings, but these are the civil proceedings, and I do not see that the right under Article 6.2 arises. Even if the right does arise, and one is talking in terms of guilt (which is inappropriate in civil proceedings), that I am satisfied that Mr Rourke has been proved guilty (if those words are appropriate here, which my view is they are not) according to the law. The facts have been established at the Part 24 stage, because there is no realistic possibility of the defendant showing they are wrong.So far as the right to examine witnesses is concerned, that cannot be an absolute right in civil proceedings, or else any summary procedure would be doomed. If it applies to criminal proceedings, then all the comments I have made about Article 6.2 apply here.Accordingly, I see no reason why the Convention prevents me from granting the declarations.I therefore reach the conclusion that the FSA has made out a case as to why it is in public interest, within the confines of the Banking Act 1987, that the declarations should be granted and that the FSA, as protector of the public interest in this connection, is reasonable and justified in asking for the declarations, unusual though they may be in their terms. I am also of the view that, on examination, the defendant's grounds for objecting to the declaration are not well founded. It may be somewhat trite to say that they could benefit him because they may conceivably enable him to avoid a criminal trial on the basis of the publicity. If they do not enable him to do that, it would only be because the court concluded that there was no risk of an unfair trial.

Contempt of Court

Mr Rourke, to his credit, has admitted breaching Pumfrey J's order. The contempt applications, on their face, are based on events which took place in June. On two occasions on 6th and 12th June the defendant asked a Mr Sutcliffe to pay a £2,000 cheque to a depositor, Mr Green, who was pressing very heavily (according to the defendant) for repayment. On each occasion the defendant persuaded Mr Sutcliffe to give a cheque, and on each occasion he gave his own cheque to Mr Sutcliffe for a slightly larger amount, but on each occasion his cheque was not honoured. On at least one of the two occasions he told Mr Sutcliffe that he did not want the FSA to be informed. There is further evidence that on 20th July the defendant obtained a cheque from Mr Sutcliffe for £15 on a pretext and then altered it to £3,015 and forwarded the payment to Mr Green. The cheque was not honoured. The defendant also admits having accepted £6,000 from a Mr Hill on 22nd May, £1,000 from another gentleman on 6th June, and paying £6,000 to Mr Weatherill on 22nd May and receiving £500 from him on 1st May. He also organised a £5,000 cheque from a Mr Weatherill to Mr Green on 1st May 2001.It also appears that he made certain payments to the Yorkshire Building Society, which were also breaches. However, they were to prevent the Yorkshire Building Society for taking possession of his house. It appears they were payments by his uncle as a present for that purpose. I put those on one side because, while they were technically breaches given that the money was given to him, and therefore he it them over from his own pocket. However, they were not in connection with the banking business and they were payments of money, which were in a sense someone else's money given to him for the purpose for which they were paid. On their own, they would merely justify an apology and nothing more.Mr Kelly says that I should, as it were, sentence Mr Rourke on the basis of the grounds specifically raised in the contempt application, that is the two cheque arrangements between the defendant, Mr Green and Mr Sutcliffe, that I should take into account in a lesser way the other matters which he has volunteered.It seems to me that I should take into account the other matters because they could otherwise found the basis of a future application for committal for contempt. Realistically and rightly, Mr Kelly says I should take them into account now, but that I should give Mr Rourke credit for having drawn them to the court's attention, rather than having left them in the hope that the FSA would not discover them or would not proceed on them.It is accepted on behalf of the defendant - to my mind quite rightly - that these serious contempts justify a term of imprisonment. Mr Kelly makes two points on the defendant's behalf: first, that the term of imprisonment should be as short as possible; and, secondly, that the court should suspend the sentence of imprisonment.He relies on the following facts. First, there had been no breaches of the order since the defendant was served with the notice of the application. That is an arguable mitigating factor, but I would rather say that, if there had been further breaches, after the present application had been served, that would have been a severely aggravating factor.Secondly, Mr Kelly says that the defendant is aged 61 and was at the time clinically depressed. There is some evidence to show that, by August, the defendant had had a nervous breakdown and I am told (although it is not formally in evidence) that his wife and secretary had both been trying to persuade him to see a doctor for some time before that. There is also a GP's short-form report suggesting that Mr Rourke was not in a good state of mind.First of all, this is not a detailed report on his mental state. Secondly, it does not suggest Mr Rourke is on medication. Thirdly, it is scarcely surprising that, since these proceedings were brought in April, Mr Rourke has been depressed. Nonetheless, I am prepared to accept that his mental state has not been particularly good and that his judgment may not have been as good as it should have been because of that.Thirdly, it is said that he has never sought to deny his debt nor the terms on which the deposits were made. Once the FSA caught up with him, the defendant has given information, but it would be overstating it to say that he has given all the information he could have done when he should have done. He has, on occasions, as I have mentioned, put pressure on people (depositors and former depositors) not to vouchsafe information to the FSA, to destroy documents and so on; even in relation to the matters now complained of, it appears he told Mr Sutcliffe he did not want the FSA to know.Fourthly, it is said that if Mr Rourke is allowed to retain his liberty there is a better prospect that depositors will be paid. He does appear to be a one-man band, although he has a secretary and a wife, as I have mentioned. I am not persuaded that if a relatively short term of imprisonment is given and not suspended, that this is a point which has much weight.Fifthly, he is truly sorry, offering his sincere apologies to the court and the depositors. The cynic in me says that, of course he would say that, it is only too easy to say that. On the other hand, it would be unfair to reject this statement. I am prepared to accept that, one way or another, the seriousness of his activities, both before and after the injunction granted by Pumfrey J, has been brought home to him, and I am prepared to accept that he is sorry and is sincere in his apologies.Sixthly, it is said that the breaches of the order of Pumfrey J have increased his overall liabilities by only a small amount and, indeed in light of the interest payable on the sums of Mr Green, they may actually have reduced his liability. That may be true; but the whole purpose of the order made by Pumfrey J was to prevent further banking activities taking place which might harm people. Mr Green may be better off as a result of the arrangement orchestrated by the defendant between Mr Sutcliffe and Mr Green, but Mr Sutcliffe is worse off. It would be quite wrong to regard the fact that Mr Green was paid as balancing the harm done to Mr Sutcliffe, particularly in light of the injunction granted by Pumfrey J. The same point can be made about the other payments to which Mr Rourke has admitted.Finally, it is said on Mr Rourke's behalf that he has come clean on quite a few matters voluntarily. It is fair to him to say this happened at his interview and thereafter and now. The second day of the interview with the FSA was because Mr Rourke wanted to raise and admit certain other matters. He has, through his solicitors, during the disclosure process admitted that he has failed to produce certain documents and certain information as produced to him. Even in relation to the contempt application, he has produced further information. I think those are factors that do count significantly in his favour. Again the cynical might say that there was a real risk in his mind that the FSA would discover it, so it was better to come clean. Nonetheless many people in his position would have given away as little as possible, and he deserves credit for having come clean.I think I would be failing in my duty, and failing in what the public, and in particular the victims of Mr Rourke's recent transactions, reasonably expect from the court, if I do not send Mr Rourke to prison without suspending the sentence. Equally it seems to me that this is a case where what is sometimes known as the 'clang of the prison gates' is appropriate. A long period of incarceration particularly for a man of 61 not in good mental health would not, to my mind, be justified. A term of imprisonment of itself sends out a message both to Mr Rourke and to the public and to potential infringers of the Banking Act 1987. Obviously if any further offences are committed by Mr Rourke when he comes out of prison, then the short term will not have worked, and a longer term of imprisonment may well, I would have thought, be inevitable. The least period of imprisonment to which I can sentence Mr Rourke is 21 days, and that is the period of imprisonment I propose to impose. For reasons I have given, I do not think the gravity of the breaches, set in the history of this matter, can justify me suspending it.I should explain to him that my understanding of the law, as assisted by Mr Vineall, is that Mr Rourke will in practice serve half that period; and I think I would be obliged to inform him of it and I think he is entitled to that information. I would be grateful if counsel could confirm whether or not that is right. If that is right, I propose to round the 21 days down to 20 days, because halving 21 days seems to me to lead to a certain degree of uncertainty.I therefore grant the relief sought by the FSA, and, subject to further argument, that leaves open simply the question of costs.

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