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When a de novo rehearing is not enough

30 May 2012
A recent judicial review case against the UK Financial Services Authority ("FSA") has emphasised that judicial review will be available even where there is a statutory right of appeal or review, if that statutory mechanism does not provide a suitable and adequate remedy.   Where the complaint is that the decision-maker has not given adequate reasons, a de novo rehearing is not an adequate remedy, and judicial review may be brought.
When a de novo rehearing is not enough

R (C) v FSA [2012] EWHC 1417 concerned a decision by the Regulatory Decisions Committee ("RDC") of the FSA to fine the Claimant £100,000 for alleged breaches of the FSA's Statements of Principle for Approved Persons (the "Statements of Principle").  Despite there being a right to a de novo appeal hearing before the Upper Tribunal (the "UT"), the Claimant brought judicial review proceedings against the FSA challenging the Decision Notice. 

 The Claimant argued that the FSA's Decisions Notice did not contain adequate reasons, which the FSA had a statutory duty to provide, and that as a result of the FSA's failure to give adequate reasons, he had suffered substantial prejudice. 

In particular, had the FSA given adequate reasons, the Claimant would have been able to make a properly informed decision about whether to accept the findings and the penalty imposed by the RDC or to pursue an appeal to the UT.  There was a danger in appealing to the UT as there was a risk that extra charges could be laid before, and increased penalties made by, the UT. 

The FSA argued that an appeal to the UT was a suitable alternative remedy, and that by bringing JR proceedings the Claimant was violating the fundamental principle that JR should be a remedy of last resort.  The Court reaffirmed that principle but held that this case was an exception.  The UT had no jurisdiction to ensure that the FSA complied with its statutory duty to give reasons (for example, the UT could not require the RDC to give adequate reasons), so the UT was not able to remedy this wrong.  Acknowledging the prejudice that the Claimant suffered from not being given adequate reasons, and the impact this had on his ability to make an informed decision about whether to appeal, the Court held that a "claimant can bring a claim for judicial review where inadequate reasons are given, as in the present case, and where, as in the present case, there is prejudice suffered by the claimant as a result of this failing".   

The Court found that the Decision Notice did not adequately explain why the case put forward by the Claimant was rejected, nor deal with any of the detailed representations made by the Claimant.  Accordingly, the Court quashed the Decision Notice against the Claimant and remitted the matter to the RDC for reconsideration.

This case is an important illustration of the role of public law in situations involving a decision by a public body against which there is, on the face of it, a full statutory right of appeal.  Even a de novo hearing may not in reality provide an adequate remedy, as in this case, and more limited appeal rights may often preclude proper consideration of public law grounds.  The extent to which public bodies have complied with their public law duties should be borne in mind early on when making tactical decisions about what remedies to pursue against a regulatory decision. 

For more information on using public law in regulatory challenges, see the Client Note published by Hogan Lovells' UK & EU Public Law and Policy team: Regulating your Regulator.

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