“Land was acquired by ALI-UK and ALI-Panama, and sub-divided into small plots. Members of the public were contacted by telephone and invited to purchase such plots. The evidence obtained by the FSA establishes that, at the time that plots were sold to consumers, salesmen acting for ALI-UK and ALI-Panama represented to consumers that those companies would seek to obtain planning permission in respect of the site as a whole, or otherwise seek to have the site ‘re-zoned’ or ‘re-classified’ for residential building purposes. The evidence also establishes that salesmen informed consumers that ALI-UK and ALI-Panama would facilitate the onward sale of the site as a whole to developers, at which point consumers could expect to see a substantial return on their ‘investments’. Based upon these representations, consumers understood that ALI-UK and ALI-Panama would apply for planning permission for the site as a whole and/or that ALI-UK and ALI-Panama would facilitate the sale of the site as a whole to developers, and that they would thereby derive profits from the scheme as a whole, and on the basis of these representations and understandings they acquired plots of land at the various sites concerned.”
“The FSMA is a portmanteau statute dealing with all kinds of investment activity, not just activities in traditional investments such as securities. The former system of self-regulation in specific areas has been abolished. Instead, the demanding function of regulating the numerous and disparate activities that take place in the financial services industry in the United Kingdom is now vested in the FSA pursuant to FSMA. Under section 2(2) of FSMA, the regulatory objectives of the FSA are market confidence, public awareness, the protection of investors and the reduction of financial crime. In discharging its functions the FSA has to have regard to a number of factors, including the principle that the burden placed on a person should be proportionate to the benefits, considered in general terms, which are expected to result from the imposition of that burden or restriction. To enable the FSA to regulate the many different types of activity in the financial services industry, section 19 of FSMA … imposes a general prohibition on the carrying on of regulated activities (as defined in section 22 of the FSMA, …) without authorisation or exemption. Regulated activities include the operation of … a "CIS". This concept is defined in section 235 of FSMA … . At the heart of the concept … is the requirement for the sharing of profit or income by participants who do not have day-to-day control over the management of the property. A paradigm example of a CIS would be a unit trust, but the definition applies in many more situations than that. The general prohibition in section 19 on unauthorised investment activity is buttressed by a number of other prohibitions, including a prohibition on the promotion of invitations to engage in financial activity unless authorised (section 21 …). Finally, the FSA is empowered to seek injunctions to restrain anticipated breaches of the basic prohibition in section 19, and also orders for the disgorging of profits by persons who have contravened FSMA and the payment by them of compensation to persons who have been adversely affected by their contraventions (sections 380 and 382 of FSMA).”
“…I would go further and announce loud and clear that the standard of proof in finding the facts necessary to establish the threshold under section 31(2) or the welfare considerations in section 1 of the [Children Act, 1989] is the simple balance of probabilities, neither more nor less. Neither the seriousness of the allegation nor the seriousness of the consequences should make any difference to the standard of proof to be applied in determining the facts. The inherent probabilities are simply something to be taken into account, where relevant, in deciding where the truth lies”
“(1) In certain circumstances a court may be entitled to draw adverse inferences from the absence or silence of a witness who might be expected to have material evidence to give on an issue in an action. (2) If a court is willing to draw such inferences they may go to strengthen the evidence adduced on that issue by the other party or to weaken the evidence, if any, adduced by the party who might reasonably have been expected to call the witness. (3) There must, however, have been some evidence, however weak, adduced by the former on the matter in question before the court is entitled to draw the desired inference: in other words, there must be a case to answer on that issue. (4) If the reason for the witness’s absence or silence satisfies the court then no such adverse inference may be drawn. If, on the other hand, there is some credible explanation given, even if it is not wholly satisfactory, the potentially detrimental effect of his/her absence or silence may be reduced or nullified.”
“no evidence relating to the statement may be adduced … by the prosecution…”
“... From [your letter dated8 October 2008 ] and previous correspondence we note that ALI has contacted all existing plot holders and: (a) offered them a choice to either exchange their current plot for ‘enhanced plot’ or sell their existing plot back to ALI for the price paid plus interest; (b) advised all existing plot holders that ALI was unable to apply for redesignation on their plot; and (c) restructured its activities in an attempt to take its activities outside the definition of a collective investment scheme. On the basis of your explanation of the current activities of ALI and the information currently in the FSA’s possession on this matter, we accept that ALI may be unlikely to have breached the general prohibition in section 19 or the financial promotion restriction of section 21 of the Act. For these reasons, and based solely on the information currently in our possession, we do not propose to seek any further information from you in this matter. In order to continue not to be in breach of sections 19 and 21 of the Act it is fundamental that ALI adheres to the description of its activities which you have provided us and that no expectation is given to any of the plot holders that ALI will in any way have any involvement in: (a) seeking designation of the land for development; or (b) obtaining planning permission by plot holders, either individually or collectively; or (c) the management of the plots of land owned by the other plot holders. In writing to you in this manner, the FSA reserves the right to make further enquiries should new information come to our attention suggesting that ALI may have acted, or be acting, in breach of the Act…”
“As for the second question which you raise and wish to decide as a preliminary issue, we do not consider this point to be in dispute. The purpose of referring to the arrangements entered into by Asset Land Investments prior to November 2008 was to provide relevant background to the FSA’s case that the Defendants were knowingly concerned in each others’ activities following the FSA’s intervention in 2008. This information was not included so that the FSA may hold your clients liable for transactions which took place prior to that date.”
“… is the FSA alleging some or all of ALI-UK’s conduct prior to15 November 2008 forms part of the “contravening activities” upon which it relies in this claim? If “yes”, which upon [sic] pre-15 November 2008 conduct does the FSA rely and upon which does it not rely?”
“There is one further matter that ought to be addressed at this stage regarding ALI-UK. In their Part 18 Request, ALI-UK and Mr Banner-Eve ask for details as to the date from which the FSA contends that the contravening activity commenced. In correspondence, the FSA has indicated that the relevant date is15th November 2008 (being the date of the letter sent by the FSA closing its initial investigation into ALI-UK). By way of clarification, it is the FSA’s position that CISs were being operated with respect to the South Godstone and Liphook Sites from early 2007, and it is as a result of such contraventions that the FSA first wrote to ALI-UK on3rd April 2007 . In spite of the warnings given by the FSA, and the assurances provided by S J Berwin on ALI-UK’s behalf, it is the FSA’s case ALI-UK continued to operate CISs at those Sites (in breach of both sections 19 and 21 of FSMA). Notwithstanding the foregoing, the FSA does not seek any financial relief within this claim for contraventions made by ALI-UK in the period preceding1st January 2008 .”
“It is the [represented] Defendants’ case that, in respect of the plots at South Godstone sold prior to15 November 2008 , it is not open to the FSA to resile from its representations to SJ Berwin during 2008. It was as a result of the FSA’s encouragement that the [AIL-UK] offered alternative plots and refunds of purchase price. It did so to its financial detriment and in the expectation that a line would be drawn under those transactions. Regardless of what happened after15 November 2008 , what took place up until then cannot be relied upon by the FSA as part of the “arrangements” to make up a claim under s 235 of FSMA. This has been recognised by the FSA, who wrote on19 September 2012 … [and they cited from the letter set out above]. In relation to the limited number of plots at the South Godstone site that it sold after15 November 2008 , [ALI-UK] adhered to the requirements of the FSA. Again, it is not open to the FSA to resile from its representations to SJ Berwin during 2008. [ALI-UK] was entitled to rely on those representations.”
“[ALI-UK or ALI-Panama] is not authorised or regulated by the [FSA] or any other regulatory body. [The company] does not give investment advice or offer regulated investments products to the public. [The company] offers parcels of land for sale. Having sold the land, [the company] does not pursue re-zoning or planning permission and as such, does not carry on any activities under the [FSMA]. Neither [the company] nor any person connected with it will have any role in pursuing re-zoning or planning permission with respect to either individual plots of land or as a site as a whole as a way of increasing the value of the land.”
“[The company] gives no guarantee that land will in the future by re-zoned for development purposes or that planning permission will be granted. The value of land and any income from it may go down as well as up, and you may not get back the original amount invested. Past performance is not a guide to the future. …”
“Any verbal warranties or written implications that do not form part of the documentation received herewith will not be included as part of the contract whether expressly specified or other.”
“The Buyer confirms that there are and have been no representations made by or on behalf of the Seller on the faith of which the Buyer is entering into this Agreement except and to the extent to which such representations are herein expressly set out or form part of written replies by the Solicitors for the Seller to the written Enquiries before Contract raised by the solicitors for the Buyer or the Seller’s replies to Property Information Forms.” ii) What I shall call the “services clause” (clause 16 of one form of contract and clause 13of the other) provided that: “For the avoidance of doubt, the Seller is not obliged to and will not apply for planning permission in relation to the Property or in relation to the land as a whole of which the Property forms part, nor will the Seller provide any other services to the Buyer following the purchase of the Property by the Buyer to the extent that the provision of such services would constitute the carrying on by the Seller of regulated activities for the purposes of the FSMA] unless the Seller is authorised under that Act and permitted by the [FSA] to carry on the relevant regulated activities. Notwithstanding the foregoing, the Seller reserves the right to (but is not obliged to) apply for planning permission in relation to any land owned by the Seller which forms part of the land of which the Property forms part.”
“Where the differences arose in terms of planning was that in some instances the investors were clear that planning permission itself had been mentioned, whereas others talked about re-zoning rather than planning permission, that [there] was the distinction in the two. With regard to development, onward sale if you like, most of them were pretty clear, or in fact I can’t think of one that wasn’t off-hand, that a developer would be brought in and that developers were either lined up or certainly that was the plan”
“There were some differences there. From recollection, some of the investors were clear that they had, shall we say, the right to sell the plots, they’d been told it was their plot, registered in their name, and they could sell it at any time. Others had been told that they couldn’t sell at any time”
“We buy a site of land, it has to match a strict criteria, so no flooding, no marshland and no contamination. Lots of sort of tick boxes for us. We get what’s called a right to build on it and that means that it’s almost … it’s a certification, it’s an agreement, that the land is safe for developers to use. The sites tend to have gas, water and electricity all plugged in so that a developer can get on there and build quickly to maximise his profit margins and get out again. So it’s a streamlined process. So the right to build, we then sell on to developers under sealed bids, highest sealed bid would win. They are able to buy the land and that’s where you get your profit. If you own a proportion of that land on that site, you know, you’re going to get … you pay X, you’re going to get Y as a return. Just so … to finish it off so that there’s some closure, the developer would then go on with an architect to design a site and they would get outline planning permission. So we are nothing to do with planning permission since we’re not involved in construction.”
“This is because if ALI[-UK] were to apply for planning permission or seek to have the South Godstone site redesignated as suitable for development or brought within the local development plan, this may be regarded as ALI[-UK] operating a [CIS], which it is not authorised to do”
“You are purchasing 2 x 1,000 sq ft plots at Lutterworth … Payment for these plots will be by cheque which should be made payable to Asset L I Inc and sent to me at 64 Knightsbridge … Also you are purchasing 1 x 9.0 sq ft plot at South Godstone … Payment for this plot will be by cheque which should be made payable to Asset Land Investment Plc and also sent to me at 64 Knightsbridge.”
“A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.”
“(1) Without prejudice to regulation 12, the unfairness of a contractual term shall be assessed, taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent. (2) In so far as it is in plain intelligible language, the assessment of fairness of a term shall not relate- (a) to the definition of the main subject matter of the contract, or (b) to the adequacy of the price or remuneration, as against the goods or services supplied in exchange. ” (a) to the definition of the main subject matter of the contract, or (b) to the adequacy of the price or remuneration, as against the goods or services supplied in exchange. ”
“The Seller shall sell and the Buyer shall buy the property …. for the price…”
“If a contract contains a term which would exclude or restrict- (a) any liability to which a party to a contract may be subject by reason of any misrepresentation made by him before the contract was made; or (b) any remedy available to another party to the contract by reason of such a misrepresentation, that term shall be of no effect except in so far as it satisfies the requirement of reasonableness as stated insection 11(1) of the Unfair Contracts Terms Act 1977 ; and it is for those claiming that the term satisfies that requirement to show that it does.”
“In a normal conveyancing transaction in a commercial context with both parties represented by experienced solicitors the usual course of dealing is to ensure that all agreed terms are put into the contract and conveyance, transfer or lease. Accordingly those who assert a collateral contract in relation to a term not so contained must show that it was intended to have contractual effect separate from the normal conveyancing documents. Otherwise it will be invalidated bys.2 Law of Property (Miscellaneous Provisions) Act 1989 even if evidence as to its existence is admitted.”
“I am satisfied on the evidence that following agreement with the FSA the company in fact continued as it had before, representing to investors that it would deal with planning and sale of the Winterton land, including their plots, and undertaking activities with a view to both obtaining planning permission for the entire site and selling the entire site.”
“It is necessary to look beyond documents which may provide for “day to day control” by investors and to consider how the scheme was designed to and did operate in practice”
“73. In my judgment, the arrangements fall within the wide net cast by s235(1). A scheme whereby investors purchase individual plots within a site on the shared understanding that the company will seek planning permission and market the site including the plots are clearly capable of being “arrangements”