KVB Consultants Ltd & Ors v Jacob Hopkins McKenzie Ltd & Ors [2024] EWCA Civ 765 (09 July 2024)

KVB Consultants Ltd & Ors v Jacob Hopkins McKenzie Ltd & Ors [2024] EWCA Civ 765 (09 July 2024)

KCL accepted responsibility under section 39 FSMA for JHM's activities in promoting and arranging deals in collective investment schemes, as these activities fell within the scope of the 'Relevant Business' defined in the ARA and the permissions granted. The ARA's prohibition on dealing with retail clients was an effective limitation on the scope of KCL's responsibility, as it defined 'what' business JHM could conduct. However, the ARA did not exclude responsibility for the promotion and marketing of collective investment schemes, only for their operation. Therefore, KCL is liable for JHM's breaches in promoting the schemes, but not for operating them or for dealings with retail clients.

Citation
[2024] EWCA Civ 765
Parties
Respondents/claimants: KVB Consultants Limited and Others; Appellant/12th Defendant: Kession Capital Limited; Defendants: Jacob Hopkins McKenzie Limited and Others
Jurisdiction
England and Wales
Judgment Date
09 July 2024
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal From Summary Judgment in the High Court
Outcome
Appeal dismissed
Legal Topics
Appointed Representatives Under FSMA, Collective Investment Schemes, Section 39 FSMA Liability, Summary Judgment, Client Categorisation (retail/professional), Interpretation of Regulatory Contracts
Financial Services Law Contract Law Civil Procedure Appointed Representatives Under FSMA Collective Investment Schemes Section 39 FSMA Liability Summary Judgment Client Categorisation (retail/professional) +1 more

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Parties

KVB Consultants Limited and Others

Respondents/claimants

Kession Capital Limited

Appellant/12th Defendant

Jacob Hopkins McKenzie Limited and Others

Defendants

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeal From Summary Judgment in the High Court

Legal Issues

  1. 1 Whether KCL accepted responsibility under section 39 FSMA for JHM's promotion and operation of collective investment schemes.
  2. 2 Whether the ARA permitted or prohibited JHM from promoting/operating collective investment schemes and/or dealing with retail clients.
  3. 3 Whether limitations in the ARA as to client type (retail/professional) are effective to limit KCL's statutory liability under section 39 FSMA.

Ratio Decidendi

KCL accepted responsibility under section 39 FSMA for JHM's activities in promoting and arranging deals in collective investment schemes, as these activities fell within the scope of the 'Relevant Business' defined in the ARA and the permissions granted. The ARA's prohibition on dealing with retail clients was an effective limitation on the scope of KCL's responsibility, as it defined 'what' business JHM could conduct. However, the ARA did not exclude responsibility for the promotion and marketing of collective investment schemes, only for their operation. Therefore, KCL is liable for JHM's breaches in promoting the schemes, but not for operating them or for dealings with retail clients.

Court Disposition

Appeal dismissed

Orders

  • Summary judgment for the claimants against KCL in respect of schemes 1 to 7 is upheld.
  • No summary judgment in respect of scheme 8; that claim must go to trial.