Tribunal makes limited costs order but criticises FCA and the law

The Upper Tribunal has published its judgment on the application for costs orders from Thomas Seiler and Louise Whitestone in relation to the Decision Notices issued by FCA as part of the action it took against JBI, and the subsequent Tribunal judgment which resulted in FCA withdrawing the decisions against the individuals. The Tribunal decision in respect of the notices was highly critical of many aspects of the way in which FCA had handled the investigation. The applicants applied for costs orders on the basis that:

• it was unreasonable for the FCA to have issued the Decision Notice at all; and
• it was unreasonable for FCA to defend the Tribunal reference

In both cases the applicants argued this was because of the multiple failings the Tribunal had identified with FCA’s conduct.

The Tribunal could not find that it was unreasonable to have issued the notice in almost all respects, despite FCA’s failings, and could find that in only one of the matters raised in the Decision it was unreasonable. As a result, the Tribunal found it had only limited jurisdiction to make a costs order. For the part of the FCA’s case where the Tribunal considered FCA had acted unreasonably in issuing the Decision Notice at all,  and then for contesting it before the Tribunal,  the claimants should be fully reimbursed.  For the other matters, it was hard to show that the failures of the FCA had actually caused the parties to incur specific costs. Given the limited ability of the Tribunal now to award any additional costs, it decided the applicants should each be awarded 5% of the costs in relation to the Tribunal proceedings, as well as their full costs in relation to the one matter which FCA acted unreasonably in bringing.

The Tribunal warned FCA that it should not see this as any kind of victory.  First, it is only the restrictive nature of the costs regime that meant the applicants could not recover their whole costs, which could have been the case in comparable commercial litigation. Second, the FCA had made a “highly inappropriate statement” which referred to its “successful outcome” without including either a link to the Tribunal judgement (which is usually included), did not mention that FCA was going to discontinue its proceedings, and emphasised criticisms the Tribunal had made of the applicants while downplaying the criticism of the FCA.