The Financial Services Authority v Sinaloa Gold Plc (t/a PH Capital Invest Glen & Ors

The Financial Services Authority v Sinaloa Gold Plc (t/a PH Capital Invest Glen & Ors

In law enforcement proceedings brought by public authorities such as the FSA, the court should not require a cross-undertaking in damages in favour of third parties for losses beyond costs of compliance, due to statutory immunity and established practice. The FSA is only required to undertake to pay reasonable costs of compliance, not broader losses.

Parties
Appellant/claimant: Financial Services Authority; Defendant: Sinaloa Gold PLC; Defendant: PH Capital Invest; Defendant: Glen Lawrence Hoover; Respondent/intervenor: Barclays Bank PLC
Jurisdiction
England and Wales
Judgment Date
18 October 2011
Procedural Posture
Civil Appeal / Court of Appeal Judgment
Outcome
appeal allowed
Legal Topics
Freezing Orders, Cross Undertaking in Damages, Statutory Immunity, Law Enforcement Injunctions, Third Party Rights
Financial Regulation Injunctions Public Law Freezing Orders Cross Undertaking in Damages Statutory Immunity Law Enforcement Injunctions Third Party Rights

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Parties

Financial Services Authority

Appellant/claimant

Sinaloa Gold PLC

Defendant

PH Capital Invest

Defendant

Glen Lawrence Hoover

Defendant

Barclays Bank PLC

Respondent/intervenor

Procedural Posture

Civil Appeal / Court of Appeal Judgment

Legal Issues

  1. 1 Should the Financial Services Authority be required to give a cross-undertaking in damages in favour of third parties when obtaining a freezing order in law enforcement proceedings?
  2. 2 Does statutory immunity under paragraph 19 of Schedule 1 to the FSMA preclude such undertakings?
  3. 3 Is there a distinction between costs of compliance and other losses for third parties in law enforcement injunctions?

Ratio Decidendi

In law enforcement proceedings brought by public authorities such as the FSA, the court should not require a cross-undertaking in damages in favour of third parties for losses beyond costs of compliance, due to statutory immunity and established practice. The FSA is only required to undertake to pay reasonable costs of compliance, not broader losses.

Court Disposition

appeal allowed

Orders

  • Set aside the undertaking in paragraph (3) of Schedule B to the judge’s order.
  • Substitute the undertaking in respect of costs as set out in paragraph 10 of Mr Phelan’s first affidavit.