Judgment summary
This is a decision of the Upper Tribunal (Tax and Chancery Chamber) on an application by BriceAmery Capital Ltd (BCL) for costs of £1,122,067 against the Financial Conduct Authority (the Authority), following the Authority's discontinuance of enforcement action and withdrawal of proceedings before the Tribunal.
The Authority had cancelled BCL's Part 4A permission by a Decision Notice dated 18 November 2025 for non-compliance with a Financial Ombudsman Service (FOS) award made in favour of a person identified as Mr A. BCL maintained throughout that the complainant was in fact a Mr B acting fraudulently. After BCL referred the Decision Notice to the Tribunal, the Authority obtained evidence during a witness preparation process suggesting the complainant may indeed have been Mr B impersonating Mr A, and it issued a Notice of Discontinuance on 14 April 2026 and a Withdrawal Notice on 28 April 2026.
The Tribunal (Deputy Upper Tribunal Judge Anne Redston) held that the Decision Notice was not unreasonable within Rule 10(3)(e), that the Authority had not acted unreasonably in defending or conducting the proceedings within Rule 10(3)(d), that BCL's costs schedule did not comply with Rule 10(5), and that, even had those hurdles been overcome, the Tribunal would not have exercised its discretion to award costs because BCL had concealed material facts from its regulator. The Application was refused [115].
Background
BCL is a small regulated firm with four employees, of whom Mr Nazzim Ishaque, a director, was the only fee-earner [17]. In 2014 a person identifying as Mr A invested £50,000 with BCL, paying a further £5,000 in fees [18]. Following a complaint to FOS, on 27 March 2023 FOS made an award requiring BCL to repay the investment plus interest and compensation [2], [20]. BCL did not comply, asserting the complainant was actually a Mr B acting fraudulently [2], [21].
The Authority engaged with BCL from January 2024, noting non-compliance with the FOS Award and Principle 6/DISP 3.7.12R, and warning of possible referral to Enforcement [22]-[24]. BCL pursued judicial review of the FOS Award, which the High Court refused on 11 February 2025 as 'totally without merit' [27]. The Authority issued a Warning Notice on 8 July 2025 [28] and the Decision Notice cancelling BCL's Part 4A permission on 18 November 2025 [35]. BCL referred the Decision Notice to the Tribunal on 25 November 2025 and brought a second judicial review, also refused as totally without merit [36].
During preparation of a witness statement, the Authority held a video call with the complainant on 11 March 2026, after which it considered the complainant's appearance more closely resembled Mr B than Mr A [4], [39]-[40]. Further enquiries went unanswered [41]-[42]. The Authority issued a Notice of Discontinuance on 14 April 2026 [43] and a Withdrawal Notice on 28 April 2026 [45]. BCL then applied for costs of £1,122,067 on the basis that the Decision Notice was unreasonable and that the Authority had acted unreasonably in defending or conducting the proceedings [1], [6].
Core dispute
The dispute concerned whether the Tribunal should award BCL costs of £1,122,067 under Rule 10(3) of the Tribunal Procedure (Upper Tribunal) Rules 2008, following the Authority's discontinuance of enforcement action.
BCL argued that the Decision Notice was unreasonable because the Authority failed to carry out basic identity checks on the complainant despite BCL repeatedly raising fraud concerns, and that had such checks been done earlier, the enforcement action 'would have collapsed in 32 days rather than 32 months' [57].
BCL further argued the Authority acted unreasonably in conducting the proceedings, citing pre-Reference conduct, alleged failures of disclosure under FSMA s 394, late disclosure, non-disclosure of contacts with the complainant, and delay in issuing the Notice of Discontinuance [70].
The Authority accepted the FOS Award was void ab initio as procured by fraud and that the Decision Notice was therefore wrong, but submitted that being wrong was not the same as being unreasonable [60]. It further submitted that its conduct of the proceedings had not been unreasonable, and separately challenged the compliance and reliability of BCL's costs schedule.
Court findings
The Tribunal held that the Decision Notice was not unreasonable. Although the Authority could have carried out its own identity checks and might thereby have identified the fraud earlier, given its role in relation to FOS, the outcome of the judicial review, the NCA's determinations on the SARs, and the complainant's detailed evidence of having provided ID to Mr Ishaque and Mr Neal, it was not unreasonable for the Authority to refrain from its own checks [62]-[64]. The Tribunal has no supervisory jurisdiction over how the Authority conducted its investigation or the length of time taken [66].
On conduct of the proceedings, the Tribunal rejected each of BCL's grounds. Pre-Reference conduct was not relevant, as proceedings begin only when the reference is made, and Distinctive Care did not support a 'continuous course of unreasonable conduct' argument [71]-[74]. The Authority had not breached FSMA s 394, which requires provision of evidence relied on but not engagement in discussion of specific questions [75]-[79]. The disclosure correspondence relied on by BCL in fact showed compliance, not breach [80]-[86]. Communications between the Authority and the complainant as a prospective witness were protected by litigation privilege and non-disclosure of their existence was not unreasonable [87]-[89]. The period between the video call and the Notice of Discontinuance, including time for a final chaser email and internal procedural steps over the Easter period, was reasonable and not an unreasonable delay [90]-[93].
The Tribunal found the costs Schedule did not comply with Rule 10(5). Mr Ishaque's claimed hourly rate of £386, based on notional turnover figures, was not supported by reliable evidence, and BCL's actual turnover figures for the relevant years contradicted his claimed loss; there was also no evidence the sale of BCL to Mr Neal had collapsed as a result of the Decision Notice [96]-[101]. The claimed hours (2,797.16 in total) were found to be disproportionate and lacking credibility, with specific examples of implausible time entries, including 32.75 hours claimed for a single day and 151 hours claimed over five days [102]-[106]. The Schedule was described as 'so unreliable that it cannot form the basis for assessment' [107].
Finally, the Tribunal found that Mr Ishaque had not told the truth when he repeatedly told the Authority that no ID documentation had been received from the complainant, when in fact a passport image and bank statements had been received in February 2024 [109], [112]. On this basis, even had unreasonable conduct and a compliant schedule been established, the Tribunal would have declined to exercise its discretion to award costs, citing the importance of candour with a regulator [113]-[114].
Outcome
The Tribunal refused the Application for costs in its entirety [115]. It found that the Decision Notice was not unreasonable, that the Authority had not acted unreasonably in defending or conducting the proceedings, that the costs Schedule did not meet the requirements of Rule 10(5), and that, in any event, its discretion would not have been exercised in BCL's favour given BCL's concealment of material facts from the Authority.
Major issues / areas of contention
- Whether the Decision Notice cancelling BCL's Part 4A permission was 'unreasonable' under Rule 10(3)(e) of the Tribunal Procedure (Upper Tribunal) Rules 2008.
- Whether the Authority acted unreasonably in 'defending or conducting the proceedings' under Rule 10(3)(d), including alleged failures of disclosure under FSMA s 394, late disclosure, non-disclosure of contacts with a witness, and delay in discontinuing.
- Whether pre-Reference conduct by the Authority could be taken into account, and the correct interpretation of Distinctive Care v HMRC on this point.
- Whether the Tribunal had jurisdiction to award costs relating to judicial review proceedings and Court of Appeal proceedings.
- Whether BCL's costs schedule complied with Rule 10(5), including the appropriate hourly rate for a litigant in person and the reliability of the hours claimed.
- Whether the Tribunal should exercise its discretion to award costs given BCL's admitted false statements to the Authority about receipt of identity documents from the complainant.