Neutral Citation Number: [2014] EWCA Civ 435
Case No: A3/2013/1017
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE, CHANCERY DIVISION
MR JUSTICE ANDREW SMITH
HC12D02401
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 10/04/2014
Before :

LORD JUSTICE RIMER
LADY JUSTICE GLOSTER
and
LADY JUSTICE SHARP
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Between :

	(1) ASSET LAND INVESTMENT PLC
(2) DAVID BANNER-EVE	Appellants	
	- and -		
	THE FINANCIAL CONDUCT AUTHORITY
(formerly The Financial Services Authority)	Respondent	
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Mr Philip Coppel QC and Ms Vivienne Tanchel (instructed by Litigaid Law) for the Appellants
Mr Jonathan Crow QC, Mr Tim Penny and Mr Philip Hinks (instructed by The Financial Conduct Authority) for the Respondent

Hearing dates: Wednesday 11th December 2013
  Thursday 12th December 2013
                                             Friday 13th December 2013
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Judgment
Lady Justice Gloster : 
1.	This appeal raises the question as to whether certain sales of land, or arrangements relating to sales of land, at six sites in England were "collective investment schemes" within the meaning of section 235 of the Financial Services and Markets Act 2000 (“FSMA”). 
2.	The appeal is brought by the third defendant, Asset Land Investments Plc (“ALI-UK”), and the fifth defendant, David Banner-Eve (“Mr Banner-Eve”) (together "the Appellants") against the decision of Andrew Smith J (“the judge”) handed down on 8 February 2013, [2013] EWHC 178 (Ch) (“the judgment”).  Permission to bring the appeal was granted on paper by Lewison LJ on 3 May 2013 only in respect of Grounds 2 to 6, and Grounds 8 to 10, of the Appellants’ grounds of appeal.  
3.	The claim was brought by the respondent, The Financial Conduct Authority, formerly The Financial Services Authority ("the FCA"). By its claim, it alleged that certain so-called “land banking” schemes established and operated by the first defendant, Asset Land Investment Inc (“ALI-Panama”) and ALI-UK were unauthorised collective investment schemes within the meaning of section 235 of FSMA and that certain of the defendants had been knowingly involved in such schemes in contravention of various provisions of FSMA.  
4.	In his judgment the judge made the following key findings in respect of a list of issues which had been identified at the PTR:
i)	There were arrangements with respect to property (being the land sites at South Godstone, Liphook, Newbury, Stansted, Lutterworth and Harrogate (together, “the Sites”) or, alternatively, plots of land at the Sites), the purpose of which was to enable persons taking part in the arrangements (being investors in the Sites) to participate in or receive profits arising from their acquisition and disposal of such property, within the meaning of section 235(1) of FSMA (paragraphs 157-167 of the judgment); (that was Issue 1 in the list of issues).
ii)	The arrangements were such that the investors did not have day-to-day control over the management of the property within the meaning of section 235(2) (paragraphs 168-171); (Issue 2).
iii)	The arrangements were such that the property was managed as a whole by or on behalf of the operators of the schemes within the meaning of section 235(3)(b) (paragraphs 172-173) (Issue 3).
iv)	In breach of the general prohibition contained in section 19 of FSMA, ALI-UK established and operated schemes with the characteristics described above at the South Godstone and Liphook sites, and ALI-Panama established and operated schemes with such characteristics at the Newbury, Lutterworth, Harrogate and Stansted sites (paragraph 174) (Issue 4).
v)	In the course of its business, ALI-UK (through its brokers or other representatives) communicated invitations and inducements to participate in its two schemes, and ALI-Panama did so for its four schemes, contrary to section 21 of FSMA (paragraph 175) (Issue 5).
vi)	Mr Banner-Eve and the fourth defendant, Stuart Cohen (“Mr Cohen”) , were each knowingly concerned in ALI-UK and ALI-Panama’s aforementioned contraventions of sections 19 and 21 for the purposes of sections 380 and 382 of FSMA (Issue 6).
5.	Consequent upon those findings, by order dated 22 March 2013 (“the order”) the judge declared that:
i)	In respect of each of the Sites, ALI-UK and ALI-Panama had established and operated collective investment schemes (“CISs”) within the meaning of section 235 of FSMA without being an authorised/exempt person in breach of section 19, and had communicated invitations/inducements to engage in investment activity within the meaning of section 21, without being an authorised person or having those invitations/inducements approved by an authorised person.
ii)	Mr Banner-Eve and Mr Cohen had been knowingly concerned in ALI-UK and ALI-Panama’s contraventions.
6.	The judge also granted injunctions against the Appellants, ALI-Panama and  Mr Cohen,  made orders against them under s 382 of FSMA requiring them to pay to the FCA “such sums as appears to the court to be just having regard to the considerations in section 382 …of FSMA” and ordered an inquiry as to the amounts the Appellants should pay. He ordered that various interim payments be made by the Appellants, ALI-Panama and Mr Cohen, totalling £11,270,000. He refused permission to appeal against any part of the order.
Factual background
7.	An account of the factual background to the proceedings, together with the judge’s findings of fact, is set out at paragraphs 56-110 of the judgment. I summarise the salient points by reference to the parties' skeletons.
The parties
8.	The FCA performs regulatory functions in the financial services industry pursuant to FSMA.
9.	ALI-Panama is a limited company that was incorporated in Panama on or about 13th March 2007. It sold land at four of the six sites (Newbury, Lutterworth, Harrogate and Stansted). It did not participate in the proceedings before Andrew Smith J. 
10.	Mr Cohen is a director, the president, the secretary and the beneficial owner of ALI-Panama. He did not participate in the proceedings before Andrew Smith J. 
11.	Mr Banner-Eve is a director of ALI-UK. He participated in the proceedings before Andrew Smith J. It was the FCA’s case at trial that Mr Banner-Eve was also involved in the management of ALI-Panama and was a shadow director of that company.  Although this was denied by Mr Banner-Eve, the judge found that “although he held no office and had no shares, he was otherwise as fully involved with Ali-Panama as he had been with ALI-UK.”. In relation to his evidence the judge held:
“Mr Banner-Eve was a dishonest witness. He was evasive in his answers and often claimed to know nothing, or to remember nothing, about documents and other matters of which he must, in my judgment, have been aware and recalled. I reject parts of his evidence as deliberately dishonest for reasons that I shall explain, but in particular I reject his claim that he was not involved in establishing and operating ALI-Panama, and his evidence about his and ALI-UK's involvement with buying the Newbury, Lutterworth, Harrogate and Stansted sites.”

12.	The second defendant, Equity Services (London) Limited (“ESL”), is a limited company that was incorporated in England and Wales on 28th April 2008.  ESL’s sole shareholder and director is Susan Siggins, the sixth defendant. From about June 2008, ESL acted as a UK based administrative agent for ALI-Panama in the processing of sales of plots to consumers, for which it received a commission from ALI-Panama.  ESL did not participate in the proceedings before Andrew Smith J. Ms Siggins, who was unrepresented, did occasionally participate in the proceedings before Andrew Smith J. During the course of the hearing she reached a settlement with the Respondent.
13.	ALI-UK is a public limited company that was incorporated in England and Wales on 26 April 2005.  As I have mentioned, Mr Banner-Eve is a director of ALI-UK, and Mr Cohen was a sales manager.  ALI-UK’s registered office was at Caxton House, Old Station Road, Loughton, Essex (being the same address as the registered office of ESL), and it carried on business at Warlies Park House, Horseshoe Hill, Upshire, Essex EN9 3SL (an address that it shared with ESL from July 2008 until early 2009).  A number of the individuals who worked at the Warlies Park address worked for both ALI-UK and ESL.
The Sites
14.	The judge found that the sites were acquired as follows:
i)	ALI-UK acquired two of the three parts of the South Godstone site on 2nd February 2006 for a purchase price of £310,000.  The third part of the site was acquired in or about October 2007.  
ii)	ALI-UK later acquired the Liphook site on 30th April 2008 for a consideration of £105,000.
iii)	ALI-Panama acquired:
a)	the Lutterworth site for £181,500 on 11 August 2008;
b)	the Newbury site for £175,000 on 20 March 2009;
c)	the Harrogate site for £115,000 on 14 May 2010;
d)	the Stansted site in or about June 2011 for a price which was not in evidence.
15.	Soon after its acquisition of the South Godstone site, ALI-UK began to sell plots.  In the early days of its operation, it sold plots at trade exhibitions and through telephone sales.  The judge concluded that it seemed likely that, following the start of an investigation by the FCA into ALI-UK’s operations, ALI-UK began to sell its plots through third party off-shore brokers.  Some of the same brokers were used to sell plots of land owned by ALI-Panama.
16.	The judge made no specific finding as to how much ALI-UK and ALI-Panama (together, “Asset Land”) received from investors as a result of their sale of plots at the sites, save as to comment that:
“except in the case of the Stansted site where few plots had been sold when the proceedings were brought, Asset Land’s receipts undoubtedly far exceeded what they paid for the sites”. (judgment paragraph 60.)
17.	 At the further hearing of the FCA’s claim on 22 March 2013, the FCA put forward the following figures (which were accepted by the judge and relied upon in ordering the Appellants, ALI-Panama and  Mr Cohen to make substantial interim payments to the FCA):
i)	ALI-UK: £5,810,697.  (That figure was based on evidence produced by Mr Banner-Eve over the course of the proceedings.)
ii)	ALI-Panama: £15.1m.  (That figure represented the FCA’s most conservative estimates of sums paid by investors in respect of the ALI-Panama sites.)
The central issue – what is “a collective investment scheme”?
18.	The critical conclusions of the judge which the Appellants challenge on this appeal are his conclusions of law as to what is meant by “a collective investment scheme” under section 235 of FSMA and his conclusion on the facts that the operations of ALI-Panama and ALI-UK in selling plots on the various sites amounted  to CISs.  Thus grounds 2-6 in the Appellant’s Notice turn on the interpretation given by the judge to the term “collective investment scheme” in FSMA.
The relevant statutory provisions 
19.	Section 19 of FSMA provides that:
“(1) No person may carry on a regulated activity in the United Kingdom, or purport to do so, unless he is – 
an authorised person; or
an exempt person.
(2) The prohibition is referred to in this Act as the general prohibition”.

20.	Section 22 provides that:
“(1) An activity is a regulated activity for the purposes of this Act if it is an activity of a specified kind which is carried on by way of business and – 
relates to an investment of a specified kind; or
in the case of an activity of a kind which is also specified for the purposes of this paragraph, is carried on in relation to property of any kind.”

21.	Articles 4(2) and 51(1)(a) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (“the RAO”) provide that establishing, operating or winding up a CIS is a specified activity for the purposes of section 22(1)(b).  Accordingly, when carried on by way of business, the establishment/operation of a CIS is a regulated activity if the same is carried on in relation to property of any kind.  Further, by Article 81 of the RAO, units in a collective investment scheme are a specified kind of investment for the purposes of section 22(1)(a).
22.	Section 235 of FSMA provides that:
“(1) In this Part “collective investment scheme” means any arrangements with respect to property of any description, including money, the purpose or effect of which is to enable persons taking part in the arrangements (whether by becoming owners of the property or any part of it or otherwise) to participate in or receive profits or income arising from the acquisition, holding, management or disposal of the property or sums paid out of such profits or income.
(2) The arrangements must be such that the persons who are to participate (“participants”) do not have day-to-day control over the management of the property, whether or not they have the right to be consulted or to give directions.
(3) The arrangements must also have either or both of the following characteristics –
(a) the contributions of the participants and the profits or income out of which payments are to be made to them are pooled;
(b) the property is managed as a whole by or on behalf of the operator of the scheme.
(4) If arrangements provide for such pooling as is mentioned in subsection (3)(a) in relation to separate parts of the property, the arrangements are not to be regarded as constituting a single collective investment scheme unless the participants are entitled to exchange rights in one part for rights in another.
(5) The Treasury may by order provide that arrangements do not amount to a collective investment scheme-
(a) in specified circumstances; or
(b) if the arrangements fall within a specified category of arrangement.”
Summary of the evidence as found by the judge
23.	The following summary of the evidence as found by the judge is taken from the FCA’s skeleton argument on this appeal. (The summary includes certain facts not expressly mentioned by the judge but which were in the evidence before him). I identify at a later stage in this judgment the extent to which the judge’s findings are challenged by the Appellants when I address the individual grounds of appeal.
Asset Land’s operations
24.	Asset Land’s dealings with investors usually commenced with an unsolicited telephone call.  There generally followed several telephone discussions between Asset Land brokers and investors over the course of which investors were given “extravagant expectations” (see paragraph 62 of the judgment) as to the profit they were likely to make over the course of no more than a year or two through their acquisition of plots of land.
25.	Investors who agreed to purchase (or ‘invest in’) a plot were required to pay a deposit of 10% of the purchase price.  Prior to making such payment, investors would have ordinarily received a letter from Asset Land which contained the following small print at its foot (see paragraphs 63 and 68 of the judgment) ("the footers”):
“[ALI-UK or ALI-Panama] is not authorised or regulated by the [FCA] or any other regulatory body. [The company] does not give investment advice or offer regulated investments products to the public. [The company] offers parcels of land for sale. Having sold the land, [the company] does not pursue re-zoning or planning permission and as such, does not carry on any activities under the [FSMA]. Neither [the company] nor any person connected with it will have any role in pursuing re-zoning or planning permission with respect to either individual plots of land or as a site as a whole as a way of increasing the value of the land.”

26.	Payment of the balance of the purchase price was required within a few weeks of payment of the deposit.  It was only after the purchase price had been paid in full that Asset Land sent investors two copies of a contract for the purchase of the plots that they were buying.  The judge made an express finding that it was not Asset Land’s practice for investors to have a copy of the contract before having fully paid for their plots (see paragraph 64 of the judgment). 
27.	The contracts of sale contained the following two clauses on which the Appellants rely:
“The Buyer confirms that there are and have been no representations made by or on behalf of the Seller on the faith of which the Buyer is entering into this Agreement except and to the extent to which such representations are herein expressly set out or form part of written replies by the Solicitors for the Seller to the written Enquiries before Contract raised by the solicitors for the Buyer or the Seller's replies to Property Information Forms.” (“The Representations Clause”)

“For the avoidance of doubt, the Seller is not obliged to and will not apply for planning permission in relation to the Property or in relation to the land as a whole of which the Property forms part, nor will the Seller provide any other services to the Buyer following the purchase of the Property by the Buyer to the extent that the provision of such services would constitute the carrying on by the Seller of regulated activities for the purposes of the [FSMA] unless the Seller is authorised under that Act and permitted by the [FCA] to carry on the relevant regulated activities. Notwithstanding the foregoing, the Seller reserves the right to (but is not obliged to) apply for planning permission in relation to any land owned by the Seller which forms part of the land of which the Property forms part.” (“The Services Clause”)

28.	At the time that investors were sent copies of the contract, they also received a document which was referred to at trial as the ‘check-box form’.  This form required investors to tick various boxes, thereby confirming that they had agreed to the “contractual information” that they had signed and that they had read and understood the “disclaimer written below and agree[d] to its terms and conditions.”  This ‘disclaimer’ was worded in similar terms to the Asset Land footer set out above. 
29.	At paragraph 136 the judge held:
“The statements and the sales were generally made to persons who were not financially experienced or sophisticated, who, as Asset Land’s representatives knew, had no financial, legal or other relevant advice, and who were discouraged from seeking legal advice. Importantly, Asset Land deliberately conducted its business on the basis that the investors should not see the written contract and learn of the representations clause and the services clause until they had paid Asset Land the whole price; and then Asset Land did not transfer the plot, the consideration for what it had been paid, unless and until the investors signed the contracts. The “footers” on Asset Land’s letters to some extent foreshadowed the substance of the services clause, but they were in small print and readily overlooked.”
The investors’ understandings
30.	At trial, the court heard live evidence from 15 individuals who had purchased plots of land at one or more of the Sites.  Prior to the start of the trial, the FCA had served the Appellants with a total of 59 witness statements from investors, together with hearsay notices (pursuant to CPR 33.2(3) and section 2 of the Civil Evidence Act 1995) relating to the contents of questionnaires completed by a further 19 investors.  
31.	At the PTR on 10th October 2012, Leading Counsel for the Appellants informed the court that they intended to cross-examine all of these investors, giving a time estimate for the trial of 27 days.  In order to ensure that the court heard live evidence from a representative number of consumers and in order to maintain the trial listing, the FCA indicated that it proposed to limit the number of investors on whose evidence it relied to 15.
32.	As the judge found, the investors were not all told precisely the same things by Asset Land, and as such they each had different precise understandings about their arrangements with Asset Land.  The judge found, however, that the differences in the statements made to investors (and, consequently, in their respective understandings) “were about relatively minor details” (see paragraph 71 of the judgment). Further, the judge found that the investors who gave evidence at trial (and, he inferred the other investors who dealt with Asset Land) all shared a consistent understanding of the following structure of Asset Land’s schemes (see paragraphs 76 and 71 of the judgment):
“i) That Asset Land would seek to progress planning procedures with a view to the sites being used for housing.
ii) That Asset Land would then procure their sale, probably to developers.
iii) That the investors who sold the plots at the site would be paid a share of the total consideration paid by the purchaser.”
33.	In respect of each of these elements, the judge found that:
i)	Investors were told and understood that Asset Land would take steps either to have the Sites ‘re-zoned’/‘re-designated’ for residential building purposes, or to secure planning approval for the Sites.  Either way, investors were consistently told that they would not need to deal with the planning authorities; that aspect of the schemes would be taken care of by Asset Land (or by third parties, such as a company named Greenwood Bell Limited (“Greenwood Bell”), instructed by Asset Land).
ii)	Investors were told different things about how the sale of their plots was to take place.  Some were told that developers had already approached Asset Land with a view to purchasing the Sites; others were told that the sites would be sold at auction.  Essentially, however, all of the investors understood that Asset Land would arrange the sale of the sites/plots therein to a developer.
iii)	Investors were told that when developers bought the sites, they would receive part of the proceeds of sale.  There were slight variations as to how the investors’ individual entitlements would be calculated.  Some were told that they would receive a ‘proportion’; others were told that they would be paid out according to the size of their plots.
34.	The judge’s findings as to the representations made by brokers acting for Asset Land were not solely based on the investors’ oral accounts of what they had been told.  A number of investors exhibited emails which they had received from Asset Land containing the following typical statements:
“Following the success of our Lutterworth site we have now moved on to our new project in Newbury, West Berkshire.  The Grade 1 Premier land is in prime location and, based on past figures, is expected to increase in value between 3 and 5 times the initial purchase amounts when released for development.”…

“I have attached a list of plots available and prices for your perusal.  We are prudently predicting a minimum return of £32.11 per square foot in or around August of next year.”….

“I can confirm that we have been approached by 3 major developers with a view to buying the Newbury site.  We have advised that they start their bidding at (£60.00 per square foot) to which they have agreed once the land is re-zoned.  We anticipate this happening in or around September 2011.”…
All three emails were in evidence. The third email was referred to in the judgment at paragraph 74.
35.	The judge found that the evidence given by the investors was consistent with that of Roddy Mansfield; (see paragraph 80 of the judgment).  Mr Mansfield was at the relevant time an undercover reporter employed by BSkyB Limited.  In April 2012, he was looking to run a story on land-banking for Sky News.  He obtained contact details for Asset Land and had a number of recorded conversations with Asset Land representatives, including Mr Cohen. Transcripts (the content of which was not disputed by the Appellants) of these conversations were exhibited to his statement. I quote a few examples of what he was told by Asset Land representatives: 
i)	Mr Mansfield was told the following about re-zoning: 
“we get it rezoned for you” and 
“The next process is it goes into what we call redevelopment which is rezoning. […] And then the people who buy it, normally construction companies, come in and buy it and then they put in for the planning and everything.  We don’t do any planning. […] All we want to do is rezone it, get a percentage of the value lifted and then that’s it, we out of it.”
ii)	Mr Mansfield was told the following about the sale of sites to developers: 
“We then sell on to developers under sealed bids, highest sealed bid would win […] the developer would then go on with an architect to design a site and they would get outline planning permission”; and 
“What happens is that we’ll put it out to tender to the developers, the developers who put in the highest bid will ask you to return your title deeds to them and by return of post you will get your profit.”
iii)	Mr Mansfield was told the following about the realisation of profit: 
“The construction company who’s interested in the land come in and they say, ‘Right, we’ve got…we value this [inaudible]’.  We go back to them and say, ‘We think it’s worth a little bit more than that’.  Then when there’s a final figure they have to let…everybody who is on that Land Registry has to know but when they make the offer, the offer comes through, everybody is aware of it. […] everybody has to agree to that price.”
36.	The judge also heard evidence from John Edwards, an associate investigator working for the FCA.  Mr Edwards was specifically cross-examined on the consistency (or otherwise) of the investor evidence that had been obtained by the FCA.  It was his evidence that the investors’ accounts were broadly similar, albeit with differences.  The judge accepted that Mr Edwards’ evidence “shows how Asset Land dealt with investors generally.” (See paragraph 77 of the judgment.)
Asset Land’s dealings with local authorities
37.	The judge heard evidence from two individuals who had been engaged to provide planning services to the sites. The first was Arthur Hedges, a Chartered Town Planner, who acted for Asset Land in seeking to have the Newbury site re-zoned.  On instructions, he wrote to the West Berkshire Council in July 2009 requesting that the site be included in the Strategic Housing Local Area Assessment (“SHLAA”).  The judge found that Mr Hedge’s involvement:
 “reflects that Asset Land sought to enhance the prospects of the site obtaining permission in the future.” (See paragraph 81 of the judgment.)
The second was Paul Brettel, a Development Consultant and director of Greenwood Bell, who assisted Asset Land in the submission of SHLAA applications in respect of the Stansted and Lutterworth Sites. He produced advisory reports in respect of the Lutterworth, Newbury, Harrogate and Stansted sites.
FCA involvement
38.	The FCA first became aware that ALI-UK was selling land to UK investors in early 2007.  At that time, the land was being openly marketed with the express promise that ALI-UK would take care of all aspects of planning permission.  Correspondence was exchanged between the FCA and ALI-UK and/or their solicitors, SJ Berwin, between April 2007 and November 2008.  On the basis of SJ Berwin’s assurances as to ALI-UK’s trading activities, the FCA terminated its investigation into this company following its letter of 15th November 2008.
39.	Complaints and concerns continued to be received from and expressed by consumers after the closure of the FCA’s file on ALI-UK.  That eventually led to the FCA’s appointment of investigators under section 168(3) of FSMA to conduct an investigation into the trade activity of ALI-UK, ALI-Panama and ESL.
The Appellants’ case on appeal
40.	Mr Philip Coppel QC and Miss Vivienne Tanchel, leading and junior counsel on behalf of the Appellants, submitted that the Appellants’ position was that in order for something to constitute a “collective investment scheme” within the meaning of FSMA each of the following six elements had to be present:
	“(1)	There must be “arrangements”;
(2)	Those arrangements must be ones “with respect to property of any description, including money”;
(3)	There must be persons who take part in those arrangements (whether by becoming owners of the property or any part of it or otherwise) (“the participants”);
(4)	The purpose or effect of those arrangements must be to enable the participants to participate in or receive: 
—	profits from the acquisition, holding, management or disposal of the property; or
—	sums paid out of profits or income from the acquisition, holding, management or disposal of the property;
(5)	The arrangements must be such that the participants do not have day-to-day control “over the management of the property”, whether or not they have the right to be consulted or to give directions; and
	(6)	The arrangements must:
(a)	provide: 
(i)	for the contributions of the participants; and 
(ii)	the profits or income out of which payments are to be made to participants
to be pooled; and/or
(b)	provide for the property to be managed as a whole by or on behalf of the operator of the scheme.”
41.	Mr Coppel submitted that required elements (1), (4), (5) and (6) were missing from each of what the FCA claimed, and the judge held, were the six alleged collective investment schemes. The Appellants had always accepted that the term “arrangements” could extend to those which were not enforceable in a court of law and that the term was not restricted to something that was legally binding, but section 235 set bounds to the type of conduct which fell to be regulated by FSMA.  Those bounds were set by the meaning of “collective investment scheme” and, in particular, within that phrase, by the meaning to be given to the word “arrangements.” But, beyond repeatedly submitting that the word “arrangements” was to be given a “very wide” construction, and setting out what the word “arrangements” did not mean and what it could include, the FCA had been unable to spell out what the word “arrangements” actually meant.  The judge had wrongly accepted the FCA’s submissions and had erroneously given section 235 of FSMA the “very wide” meaning that the FCA had urged upon on him.  
42.	In particular Mr Coppel submitted that:
i)	on a proper understanding of the meaning of “arrangements”, the evidence before the judge:
a)	fell short of establishing the necessary arrangements found by the judge at paragraph 71 of his judgment to constitute a CIS;
b)	fell short of demonstrating that the purpose and effect of the arrangements was to enable the participants to participate in or receive profits from the disposal of the sites with the benefit of residential planning permission;
ii)	the judge wrongly construed the meaning of not having day-to-day control; 	the requirement in s 235(2) that the participants do not have day-to-day control over the management of the property was concerned with whether the participants do not have that control and not with whether the participants have it, but do not, or do not intend to, exercise it;
iii)	on a proper understanding of s 235(2) of FSMA, the evidence before the court fell short of demonstrating that the investors did not have day-to-day control over the property;
iv)	the judge should have held that in order to satisfy s 235(3)(b) of FSMA it was necessary to show that one of the characteristics of the arrangements was that the property was — and not just might be or would be at some future point — managed as a whole by or on behalf of the operator of the scheme;
v)	on a proper understanding of the meaning of s 235(3)(b) of FSMA, the evidence fell short of demonstrating that under the arrangements the property was managed as a whole by or on behalf of Asset Land;
vi)	the “representations clause” in the contracts for the sale of land covered the representations that had been made to buyers by or on behalf of Asset Land (through their sales representatives) relating to the planning status and re-sale of the land;
vii)	the “services clause” in the contracts for the sale of land was effective to dispel the existence of the arrangements identified in paragraph 17 of the judgment.
43.	Accordingly, Mr Coppel submitted that, for each of the above reasons, the appeal should be allowed. He also, as a separate ground of appeal, submitted that, in any event, the interim payment order should be discharged.
The FCA’s position on the appeal 
44.	On behalf of the FCA, Mr Jonathan Crow QC, Mr Tim Penny and Mr Philip Hinks, leading and junior counsel, supported the conclusions reached by the judge for the reasons which he gave. In addition they raised certain additional grounds upon which they contended that the judge's decision should be upheld.
The general approach to section 235
45.	In FSA v Fradley [2006] 2 BCLC 616 (CA) (the only occasion on which this provision has so far been considered by the Court of Appeal), Arden LJ at [32] and [33] gave the following general guidance in relation to the approach which the court should adopt to section 235: 
“ 32. First section 235 is drafted in an open-textured way in that it is drafted at a high level of generality and uses wording such as “arrangements” and “property of any description”, which have a wide meaning. Secondly, the application of section 235 depends upon the specific facts of the case and in the event of a dispute those facts will have to be determined by a Court on the evidence before it. … Thirdly, since contravention of the general prohibition in section 19 of FSMA may result in the commission of criminal offences (subject to section 23(3) of FSMA), section 235 must not be interpreted so as to include matters which are not fairly within it.
33. The word "arrangements" has been considered in other statutory contexts. No formality is required. In some contexts communications may amount to "arrangements" even though if they are not legally binding (see for example Re Duckwari  plc [1999] Ch 235, 260). ..”
46.	I agree with those observations.
Discussion and determination of the individual grounds of appeal
 “Ground 2:	The judge gave the wrong meaning to the word “arrangements”.” 
47.	The judge accepted the FCA’s submissions that brokers acting on behalf of Asset Land and investors made “arrangements” within the meaning of section 235(1).  The judge held that the arrangements were made at the time that investors paid deposits in respect of their plots. The arrangements came about by reason of brokers’ representations/statements, and investors’ understandings as to how the schemes were to operate.  The content of the arrangements was such that Asset Land would achieve a sale of the Sites after it had sought to enhance their value (through the re-zoning of the land or the grant of planning permission), and that the proceeds of sale would be shared between the investors; see paragraph 157 of the judgment. 
48.	In relation to this ground of appeal, Mr Coppel submitted as follows:
i)	The judge was unable to identify the essential attributes needed to constitute “arrangements.”  He adopted the reasoning of David Richards J in In re Sky Lands Consulting plc [2010] EWHC 399 (Ch). However, apart from the proposition that “the arrangements need not be legally binding” (which the Appellants had always accepted), neither the judge nor David Richards J in In re Sky Land Consulting plc identified what constituted “arrangements.”
ii)	“Arrangements” were made as a result of interaction between people - they did not simply come into existence.  They necessarily involved more than one person. They only came into existence where the persons involved had mutually planned (whether formally or informally) what each would do as their part in the arrangements.  The content of any “arrangements” were objectively identifiable by all those involved.  Arrangements did not need to be enforceable in a court of law, but for something to amount to “arrangements” there had to be  at least some sort of mutual expectation of adherence to what those involved had planned:  thus aspirations, assumptions, activity and sales talk were not “arrangements.” Here, whatever the investors might have understood as a result of representations made by sales people during telephone sales pitches, the FCA had never alleged that those understandings had been shared by or with Asset Land.  The judge wrongly accepted the FCA’s proposition that “arrangements” could be founded upon one person’s misunderstanding, qualifying it at paragraph 160 of his judgment only to the extent that the person’s misunderstanding had to be “reasonably based” on what he had been told by a representative of the other person.
iii)	That was wrong. Unilateral understandings could not found “arrangements.”  To the extent that the judge’s qualification suggested an unarticulated understanding which Asset Land would have had as a result of its appreciation of what an investor would reasonably have thought as a result of what Asset Land had told that investor, the understanding was, in fact, a shared understanding.  But the FCA’s case was indifferent as to whether Asset Land appreciated the understanding that an investor would reasonably have had as a result of things that the investor had been told. But the judge made no finding as to what Asset Land had understood.  Thus in upholding the FCA’s claim, the judge accepted that unilateral understandings were enough.
iv)	That was an unattractive result and was not one which was mandated by the language of section 235.  It was unattractive because it readily led to “arrangements” emerging unintentionally and unbeknownst to one of the persons said to be a party to the “arrangements”.  The reasonableness of one person’s understanding was no safe basis for ascertaining the existence of an arrangement with another person.
v)	Matters required to constitute “arrangements” took their measure from the nature of the claimed arrangements; where statute required that a certain transaction be attended by particular formalities (e.g. the sale of land) the court should be slow to conclude that arrangements had been made even though there had been no adherence to those formalities; and
vi)	Arrangements which had been made could be displaced by subsequent communications between the parties to those arrangements. Such arrangements would be displaced where those parties had subsequently made a binding contract that was inconsistent with, or contradicted the previous arrangements.
49.	Largely for the reasons advanced by Mr Crow at the hearing of the appeal, I reject these arguments. The judge specifically addressed the Appellants’ assertion as to the requirement of a mutual expectation of adherence at paragraphs 159 to 160 of his judgment. In rejecting this submission, the judge noted that “arrangements” may exist without both parties sharing an intention/expectation as to what was to happen.  He relied on two matters in support of this observation: (i) a person may enter into an agreement without intending to keep his side of the bargain; and (ii) a fraudulent scheme may constitute a CIS notwithstanding the participants’ understanding of its operation is not shared with the fraudulent operator. He said:
“160. I accept that a (mis)understanding or expectation held by only one person involved in a matter does not amount to an “arrangement” about it. But there can be an “arrangement” without both (or all) parties sharing an intention or expectation (just as a person can make a contract without intending to keep it). The FSA’s case, that I have upheld, is not that there would be arrangements if investors simply leapt to their own understanding about their investments or misunderstood what they were being told: it is that the investors’ understanding was based, and reasonably based, on what they were told by Asset Land’s representatives. Thus, arrangements were made even if Asset Land had no intention of acting in accordance with them and even if their representatives knew this when they made the arrangements. Mr Coppel accepted that a fraudulent scheme can be an arrangement, but explained this on the basis that the parties to it have “mutual expectations”, the fraudulent party expecting the innocent party to adhere to it and the innocent party likewise expecting the fraudulent party to do so. I reject that argument; the parties to a fraudulent scheme do not have an arrangement because of such mutual expectations or because of any subjective expectations or intentions, but because of what they have arranged objectively. ”
50.	I agree with the judge's analysis. The authorities demonstrate that, when interpreted together, sections 235(1), (2) and (3) are drafted in such a way as to justify the giving of a very wide meaning to term “arrangements” in section 235(1), which includes understandings and agreements that are not legally binding. For example:
i)	In Andrew Brown v Innovator One [2012] EWHC 1321 (Comm) (“Innovator One”) Hamblen J held at [1170] in connection with the negative day-to-day control test under section 235(2) that it was necessary to look beyond the scheme documentation to the facts relating to “how the scheme was designed to and did operate in practice”.
ii)	In Re Sky Land Consultants PLC [2010] EWHC 399 (Ch) David Richards J made a similar point at [76], that the court must have regard to “the reality of how the arrangements are operated”. Thus at [78-79], he correctly focused upon the reality of the situation as regards the management of the property as a whole rather than on the terms of the scheme documentation. 
51.	I also refer in this context to the helpful paper published by the Financial Markets Law Committee (“FMLC”) dated July 2008 entitled “Issue 86 - “Operating” a Collective Investment Scheme” (“the FMLC Paper”). It makes the following points regarding “arrangements”:
i)	the scope of the definition of “arrangements” is clearly very wide (paragraph 3.5);
ii)	the word “arrangements” is a very broad term, and arrangements may have no clear boundaries (paragraph 3.5(a)); and
iii)	the breadth of the definition is clearly intentional: the aim is to cast the regulatory net wide and then cut back its scope with exclusions (paragraph 3.6).
I agree with those propositions.
52.	I cannot accept Mr Coppel’s submission that in order for an ‘arrangement’ to exist, there has to be “a mutual expectation of adherence” to be represented arrangements. The existence of "arrangements" for the purposes of section 235 cannot depend upon what might be an involved investigation into the subjective intentions and expectations of a representor, whose representations have caused investors to reach certain understandings.  Such an approach would unduly and illogically restrict the ambit and effect of section 235. Indeed, apart from causing uncertainty, it would be likely to frustrate the effectiveness of the section in operating to prevent the precise mischief at which the statute is aimed.  The Appellants rightly accepted that a fraudulent scheme might constitute an “arrangement”. Once that obviously correct concession is made, it must follow that the subjective intentions of the representor as to whether or not he intended to honour the representations become irrelevant. Despite Mr Coppel's submission that, in cases of fraudulent schemes, other remedies would be available under criminal legislation, I see no statutory or contextual need to import his concept of “a mutual expectation of adherence” into the interpretation of the term "arrangements".
53.	I accept Mr Crow's submission that, in the particular circumstances of this case, and as the judge found, “arrangements” came into existence as a result of (i) the representations and statements made by brokers acting for Asset Land as to what the schemes entailed; coupled with (ii) understandings (reasonably) formed by investors (again, as to what the schemes entailed) based on what they had been told.  In other words the question which the court has to ask is whether, looked at objectively, on the basis of what they had been told, reasonable investors participating in the scheme would understand that the scheme involved arrangements of the type described under section 235. Necessarily the approach is an objective one. The judge clearly and rightly rejected the Appellants' argument that what investors were told was mere sales talk from which they made unjustified assumptions and formed aspirations. As the judge pointed out in paragraph 160 of the judgment, it was never the FCA’s case that “arrangements” could be founded upon one person’s subjective misunderstanding as to what he had been told; nor did the judge so decide. He rightly based his conclusion on an objective analysis as to what the reasonable body of investors would have concluded on the basis of what they had been told. There was no need for him to make any finding as to the subjective understandings of those who could be regarded as the directing minds at Asset Land.
54.	Likewise there was no merit in Mr Coppel's submission that the court should be slow to find the existence of arrangements in circumstances where there were statutory requirements in relation to the sale of land. The fact that the individual plots were subject to formal contracts of sale, and subsequently conveyances, was irrelevant to the issue as to whether there were wider “arrangements” relating to what was to happen to the site as a whole, including the individual plots, at some stage after those plots had been transferred to the investors. The “arrangements” which the judge identified as to the intended future enhancement of the land value and the subsequent sale of the sites en bloc did not in any way subvert the legal requirements imposed by statute for a written contract/conveyance to be executed by Asset Land in favour of each investor. 
55.	Mr Coppel's next submission under this head was that the judge was wrong to hold in paragraphs 161 - 164 of the judgment that “arrangements” within section 235(1) could subsist in the face of a binding contract between the participants and the operator, the terms of which were allegedly inconsistent with or contradicted the (pre-existing) arrangements. In this context Mr Coppel relied in particular upon the fact that the Representations Clause purported to confirm that there had been no representations made to the investors and that the Services Clause stated that the seller was not obliged to apply for planning permission either in relation to the plot sold or in relation to the site as a whole nor was obliged to provide any other services to the investor following the purchase of the property. He also relied upon the footers in the pre-contractual correspondence. Mr Coppel submitted that objectively the parties could not be said to have made arrangements, given the fact that the express terms of the contracts entered into precluded any prior contractual representations forming part of the contract, and stipulated that Asset Land would not be providing any services.
56.	Again I disagree. First of all, one has to remember that, as the judge found, Asset Land deliberately ensured that contracts were not provided to investors until after they had made full payment for their individual plots. Second, I agree with the judge's analysis in paragraph 164 of the judgment that it is wrong to regard “arrangements” as inchoate or imperfect contracts that are displaced if the parties subsequently enter into a contract.  “Arrangements” in the context of section 235 may subsist in the face of inconsistent contractual terms. In any particular case it is for the judge to determine on an objective basis what, in reality, are the "arrangements" between the operator of the scheme and the investors, and how the scheme was designed to, and did, operate in practice:  see per Hamblen J in Innovator 1 at paragraph [1170] and David Richards J in Sky Land at [76]. The mere fact that a contract has been concluded between the parties cannot in my judgment result in the “arrangements” necessarily being limited to the terms of the contract.  As the Appellants accepted, the term “arrangements” extends to matters which are not contractually binding and are otherwise of no legal effect; see also in this context Fradley at [33].  And, as Mr Crow submitted, the inquiry as to the existence and content of “arrangements” is a wide one; it is not necessarily to be equated with the existence of an agreement and the content of contractual terms.  Here the judge was clearly entitled to conclude on the evidence that non-contractually-binding arrangements had been made, and that investors’ understandings of the arrangements had not altered once the contracts had been signed, despite the fact that such arrangements were ostensibly at odds with certain terms of the contract, which underlines the fact that the arrangements ran in parallel with the contracts and were unaffected by their terms.
57.	Accordingly I would dismiss this appeal to the extent that it is based on Ground 2.
58.	By paragraph 2 of its Respondent's Notice, the FCA raised the further argument that, even if it were to be supposed that the written contracts displaced inconsistent arrangements that had previously been made, Asset Land had nevertheless contravened FSMA in that it had carried on activities that comprised CISs  at least up until such time as each investor entered into a contract of sale; therefore, since investors paid for their plots in their entirety while such arrangements were subsisting, and prior to entering into the formal contractual documentation, arrangements had been made within section 235 (1). The judge did not consider that the FCA needed to rely on this argument and preferred not to put his decision on that basis; see paragraph 165 of the judgment.
59.	Irrespective of the effect of the express terms of the subsequent contracts of sale, and whether or not they displaced the pre-existing arrangements, I would on the facts of this case also be prepared to hold in favour of the FCA on this additional point.  I accept Mr Crow's submission that the inquiry as to the existence/content of “arrangements” under section 235(1) is not limited to a certain point in time (e.g. after the arrangements have been fully performed).  I agree that it is sufficient if (i) at some point in the parties’ relationship there were objectively identifiable arrangements, and if (ii) the parties acted in reliance on those arrangements.  Both elements are satisfied in the present case since:
i)	“arrangements” within section 235(1) existed between Asset Land and investors at least from the time that the latter orally agreed to take part in the schemes by paying a 10% deposit to Asset Land after having received representations/statements of the sort held by the judge to have been made; those arrangements continued to exist (at least) up until the time that investors signed the contracts of sale; and 
ii)	during the period in which the arrangements subsisted, investors paid the entirety of the purchase price of their plots and Asset Land transferred the individual plots to them. 
In other words, acting on the basis of what is on an objective basis they were reasonably entitled to understand the schemes were about, investors discharged all of their (contractual) obligations by making full payment.  By that stage, they had fully carried out their side of the arrangements. The fact that thereafter Asset Land did not implement the pre-existing arrangements does not in my judgment preclude a finding that it had it had carried on activities that comprised CISs at least up until such time as contracts had been concluded. 
“Ground 3:	The judge could not properly find that investors had a “shared understanding” of the arrangements, when the body of evidence was that they had differing understandings.” 
60.	At paragraphs 71 and 72 of his judgment the judge accepted the FCA’s submission that, although investors were given different understandings by brokers acting for Asset Land, “the differences were about relatively minor things”.  Having extensively analysed the evidence in paragraphs 72 to 76, the judge expressly found that, overall, investors shared a consistent understanding of the structure of the schemes as follows:
i)	Asset Land would seek to progress planning procedures with a view to the Sites being used for housing;
ii)	Asset Land would then procure the sale of the Sites, probably to developers; and
iii)	Investors who sold the plots at the site to the developer would be paid a share of the total consideration paid by the purchaser.
61.	In relation to the issue as to whether section 235(1) required that all participants shared an understanding of what was to happen, the judge concluded that there was nothing in that provision which gave rise to such a requirement.  All that mattered was that each of the investors had entered into arrangements with Asset Land that were covered by section 235(1).  Alternatively, and in any event, the judge held that all of the investors had a shared understanding of the schemes’ essential features as set out above. Thus at paragraph 158 he said:
“....different investors had different understandings about how the schemes would work.   In my judgment, the differences do not matter: first, each entered into arrangements with Asset Land that were covered by section 235(1); nothing in the section requires that all participants share an understanding of what the arrangements were (and I do not take David Richards J’s use of the expression ‘shared understanding’ at para 73 of his judgment [in Sky Land] to indicate that he thought otherwise).   Secondly, in any event the investors all had a shared understanding of the essential features of the schemes that bring them within section 235(1) and that I have stated in paragraph 71 above.”
62.	In relation to this ground Mr Coppel's principal argument was a challenge to the judge’s finding of fact that all of Asset Land’s investors had a shared understanding of the schemes’ essential features. Whilst not apparently challenging any primary findings of fact by the judge, Mr Coppel contended that the judge was wrong to conclude: (i) that the 15 investors who gave evidence at trial shared a consistent understanding in relation to the 3 elements set out at paragraph 60 above; and (ii) that, by way of inference, all of the individuals who invested in the Sites understood that the schemes had these 3 elements.
63.	However he did not appear to quarrel with the judge’s proposition of law that “arrangements” might be made out by reference to (differing) individual understandings as opposed to (identical) commonly held understandings. Thus Mr Crow argued that, in the circumstances, the judge’s first finding that each of the investors (individually) entered into “arrangements” with Asset Land was sufficient to dispose of this ground of appeal.
64.	In support of his contention that the judge's conclusion that the investors had had a single “shared understanding” was irreconcilable with the body of the evidence adduced at the trial, Mr Coppel in summary submitted as follows:
i)	The evidence from the investors revealed widely divergent accounts between them as to what their “understanding” was.  Thus, in reaching his conclusion that there were “arrangements”, the judge was wrong to find that all the investors had a shared understanding of the essential features of the scheme. In fact the body of evidence showed a disparity of investor understanding on the essential features of the scheme, namely:
a)	whether the operator had agreed to secure planning permission for the development of the site;
b)	whether an investor was free to dispose of his or her land other than through the operator;
c)	whether an investor was free to retain his or her land upon planning permission for development being granted;
d)	the anticipated time-frames for securing a grant of planning permission and for securing onward sale; and
e)	what steps if any the operator was to take in having the land “re-zoned”;
ii)	contrary to the judge's conclusion, the evidence of Mr Edwards, an associate investigator of the FCA, provided no support for the FCA's case that, by way of inference, all of the individuals who invested in the Sites understood that the schemes had the critical 3 elements;
iii)	likewise, contrary to the judge's conclusion, the FCA's case was not consistent with, or supported by, Mr Mansfield's evidence; on the contrary the evidence of secret interviews between Mr Mansfield and Mr Cohen was irreconcilable with that “shared understanding.”
65.	I do not consider it is necessary in the circumstances of this case to address the judge's factual finding as set out in paragraph 158 of his judgment that the differences in understanding between the different investors were irrelevant because "each [investor] entered into [individual] arrangements with Asset Land that were covered by section 235(1)", or to deal with Mr Crow's argument that there was no appeal against this factual finding and is accordingly this ground of appeal necessarily fails. The evidential difficulty with this approach on the particular facts of the present case is that the judge necessarily did not have before him evidence relating to the understandings of each investor which would actually have enabled him to reach that conclusion. 
66.	However, it is important that I nonetheless state my agreement with the judge's approach to the construction of the section, as set out in paragraph 158 of the judgment that, in order for the court to be able to find that there were "arrangements", the court does not have to be satisfied that all participants share an understanding of what the arrangements were. There is, in my view, nothing in the section which imposes such a requirement. What has to be established is whether there were indeed "arrangements" with the attributes described in section 235. I agree with the arguments raised by Mr Crow in support of paragraph 3 and 4 of the Respondent's Notice that “arrangements” may be founded upon varied/different understandings which are individually held by participants, and those arrangements are capable of giving rise to a CIS in respect of all of the participants, provided the other requirements of section 235 are made out. If section 235 were subject to the additional requirement that all participants had to hold a shared - i.e. identical - understanding as to how a scheme was to operate, the effectiveness of the provision would be emasculated in relation to schemes involving arrangements which are orally made.  As Mr Crow further pointed out, in cases such as the present, it is almost inevitable that participants will not all be told the same things as to how the scheme is to function by those acting on the operator’s behalf and that, accordingly, their individual understandings will vary.  It would indeed be unfortunate, from the perspective of regulatory control and consumer protection, if schemes of such nature did not involve “arrangements” within section 235(1). Such a restrictive analysis would risk denying protection to those consumers who are arguably the most vulnerable and exposed, namely those who are induced to act on the basis of oral representations made to them over the telephone.
67.	The critical question for the court to determine in a case such as this is whether participants' understandings as to how the scheme is to operate, based on what they are objectively entitled to understand from what they have been told by the operator, amounts to "arrangements" which satisfy the requirements of section 235. If, for example, in a particular case the understanding of the majority of participants was that no such arrangements existed, a court might well conclude that it was not reasonable to infer that any arrangements existed, merely from the mistaken, albeit perhaps reasonably held mistaken understanding of one participant. 
68.	Contrary to Mr Coppel's submissions, in my view the judge was perfectly entitled on the evidence, and despite the different understandings, or shades of understanding, between investors as to what the schemes involved, to reach the conclusion on the evidence before him that the schemes proposed by Asset Land involved the three features set out in paragraph 60 above and that accordingly the presence of "arrangements" was satisfied. That conclusion is supported by the detailed analysis of the relevant evidence set out in the appendix to the FCA' s submissions. There is nothing in Mr Coppel's criticism of the judge's reliance on the evidence of Mr Mansfield and Mr Edwards. The judge was clearly entitled to infer from the evidence of the 15 investors, together with that of Mr Mansfield and Mr Edwards, that all of Asset Land’s investors had been the subject of the same or similar representations, such that they understood that the schemes had the salient features of the “arrangements” set out at paragraph 71 of the judgment.
“Ground 4:	The judge erred in finding that the purpose and effect of the arrangements was to enable the participants to participate in or receive profits from the disposal of the sites with the benefit of a grant of planning permission for residential development”.
69.	 In relation to this ground Mr Coppel submitted as follows:
i)	The judge was wrong to find that the “arrangements” pursuant to which Asset Land “would seek to progress planning procedures with a view to the sites being used for housing” satisfied the purpose/effect requirement of section 235(1) (see paragraph 71(i) of the judgment). A planning gain did not of itself enable a person to participate in or receive profits.
ii)	The FCA did not identify the purpose or effect of the alleged arrangements.  Rather the FCA merely alleged that investors and potential investors:
“....formed an understanding that:
1.	The relevant ALI company from whom they were purchasing their plots of land would be responsible for obtaining planning permission for the whole site including all the sub-plots, and/or
2.	That the relevant ALI company from whom they were purchasing their plots of land would arrange for the sale of the whole of the site, including the sub-plots, to a developer, following which profits from that sale would be distributed to investors.” 
iii)	The first allegation did not satisfy the purpose or effect requirement of s 235(1). Such an “arrangement” would simply have resulted in a planning gain.  A planning gain for the owner of a property did not of itself enable a person “to participate in or receive profits or income arising from the acquisition, holding, management or disposal of the property or sums paid out of such profits or income.” 
iv)	As to the second allegation, that exposed the fundamental flaw in the FCA’s case.  As the FCA put its case, under the “arrangements” each investor acquired an unencumbered, freehold title to his or her plot of land.  There was no conditional contract between Asset Land and any of the investors.  There was no option held by Asset Land.  Even as allegedly presented to investors during the telephone sales pitch, none of Asset Land’s representatives was alleged to have told investors that once a plot of land had been sold to him or her, that Asset Land would retain the right to sell it, whether alone or as part of a group of properties.  The position, both in law and in fact was that once Asset Land had sold a plot of land to an investor, it ceased to be the property of Asset Land.  The companies had nothing to sell.  Without the subsequent consent of the owner, Asset Land could not “arrange” the sale of that owner’s plot, whether singly or as part of a lot.
v)	But despite the variety of intentions and objectives of the investors (at least one of whom simply wanted land on which to self-build their own home), the judge nevertheless erroneously found that the purpose or effect of each of the arrangements was to enable those taking part in each arrangement to participate in or receive profits or income arising from acquiring, holding, managing or disposing of the property; see paragraphs 166-167 of the judgment.
vi)	The judge appeared to have found that the “understanding” shared by all the investors was that they would at some indeterminate date all be given the opportunity to sell their plot at a profit.  In reaching this conclusion, the judge:
a)	determined that this depended “on the nature of the arrangements in which the participants were involved taken as a whole, and not on the intentions of individual participants”;
b)	thereby wrongly gave the word “arrangements” as used in section 235 a different meaning when determining whether arrangements existed (see paragraph 158) from that given to it when determining their purpose or effect (see paragraph 167); and 
c)	thereby erased the significance of certain investors having acquired their property for the purposes of building a home and not for the purpose of participating in or receiving profits or income arising from the acquisition, holding, management or disposal of the property or sums paid out of such profits or income.
70.	I disagree. The arrangements as found by the judge to have the three features set out in paragraphs 71 of the judgment were not limited to obtaining planning permission in respect of the Sites or having the Sites re-zoned/re-designated for development.  Rather, the arrangements included the ultimate sale of the Sites to third parties, at which point the increase in the value of the land brought about by the grant of planning approval and/or its re-zoning or re-designation would be realised and result in a profit to participants.  I agree with the judge's analysis at paragraph 166 of his judgment where he said:
“Mr Coppel submitted that, although the value of the land would have increased if it was re-zoned and increased the more if planning permission was granted, this unrealised increment in value would not constitute profits or income within the meaning of the section. But even if this is so, the purpose of the investors’ arrangements with Asset Land was to enable them to participate in profits from acquiring the land and then disposing of it when its value had been so increased." [My emphasis.]
71.	Given the nature of the "arrangements", it was irrelevant that Asset Land had no power to sell the individual plots without the consent of individual participants, or that it had no option or right to require individual participants to sell their plots.
72.	I also accept Mr Crow's alternative argument (as formulated in paragraph 6 of the Respondent's Notice) that, even if (which was not the case here) the “arrangements” had been limited to the progression of planning procedures (no exit strategy having as yet been determined), this would have nonetheless satisfied the purpose requirement of section 235(1).  I accept the FCA’s contention that “receive profits” ought to be construed so as to include the making of notional balance sheet profits and the receipt of any other economic benefit, irrespective of the actual realisation of such benefits. Thus the unrealised increment in value of the Sites would have constituted “profits” within the meaning of the provision. The words "profits" and "income" have a wide meaning. In my judgment, there is no reason why they should be restricted to realised profits or gains. I agree that in construing their meaning, the court should have regard to the underlying purposes of the CIS provisions in this respect: the protection of consumers and the reduction of financial crime (see also section 2(2) of FSMA).  
73.	Mr Coppel also submitted that taking the step of re-zoning land (i.e. under the local plan or development process) did not amount to a ‘planning gain’. But the evidence before the judge, namely that of Mr Hedges referred to in paragraph 72 of the judgment, was to the contrary. He said that whilst ‘re-zoning’ a site for housing would not guarantee the grant of planning permission, it would nonetheless be a ‘major step in that direction’, and would therefore make the site more attractive to developers and more valuable. Moreover, in any event, this limb of section 235 is satisfied if, irrespective of whether, as a matter of fact, the re-zoning of the Sites would have brought about any increase in their value, "the purpose" of the arrangements is to do so. That clearly was the purpose of the arrangements in the present case since Asset Land’s brokers told investors that such steps would result in an increase in the value of the land; accordingly the “purpose” of the “arrangements” was to enable investors to profit from the purchase/sale of plots.  Whether or not the “arrangements” would have satisfied the alternative requirement of the limb, namely that the "effect" of such arrangements was to do so, is irrelevant.  
74.	Nor was there any merit in Mr Coppel's criticisms that the judge: "wrongly gave the word “arrangements” as used in section 235 a different meaning when determining whether arrangements existed (see paragraph 158) from that given to it when determining their purpose or effect (see paragraph 167)"; and wrongly disregarded the significance of certain investors having acquired their property for the purposes of building a home. The judge dealt with this argument at paragraph 167:
“Of course a few investors such as Ms de Montes and her partner did not plan to sell their plots and realise profits from them, but they still participated in arrangements that fall within section 235(1): this depends on the nature of the arrangements in which the participants were involved taken as a whole, and not on the intentions of individual participants. The purpose of the schemes, as presented by Asset Land, was to enable all investors (including any such as Ms de Montes) to receive profits from their acquisitions when they sold them, and that means that the arrangements are within section 235(1): the investors' own plans are irrelevant.”

75.	Again I agree with this analysis. The fact that one or two individual participants may have had different intentions as to the future use of their individual plots does not prevent the purpose of the scheme, as described by representatives of Asset Land, from satisfying the purpose/effect requirements of section 235(1). What is necessary, in order to determine whether this limb is satisfied, is an objective assessment of the purpose of the arrangements. Here the arrangements which were presented to all investors by Asset Land’s brokers were the acquisition of land for investment purposes.  The fact that a limited number of investors may have signed up to the plan for reasons other than investment does not prevent “arrangements” within section 235(1) from arising.  
76.	Mr Crow also submitted, by reference to paragraph 5 of the Respondent's Notice, even if the purpose of arrangements relating to investors such as Ms de Montes was not within section 235(1), the effect requirement of the provision was nonetheless satisfied. It is not necessary to decide this point and I am reluctant to do so since it involves a determination of the question whether the word "effect” in sections 235(1) should be construed as including an "intended effect".
77.	In summary, I dismiss the appeal under Ground 4 for the following reasons:
i)	The judge was entitled to find that the purpose of the “arrangements” was to enable investors to receive profits from their acquisition and disposal of plots in the Sites.
ii)	Even if the “arrangements” had been limited to the progression of planning procedures (which was not the case here), the unrealised increment in value of the plots/Sites thereby achieved would have amounted to “profits” and would therefore satisfy the “purpose” requirement of section 235(1).
iii)	Whether or not the re-zoning of the Sites would have increased their value was irrelevant; it was sufficient that, under the “arrangements”, the purpose of this procedure was to increase the value of the Sites.
iv)	The fact that a small number of Asset Land’s investors participated in the “arrangements” for individual personal reasons other than investment was irrelevant.  The schemes, as presented by Asset Land, involved the purchase of plots by way of investment, and all of the investors participated in these schemes.
 “Ground 5:	The judge erred in finding that the participants did not have day-to-day control over the management of the property”. 
78.	The judge accepted the FCA’s submission that, for the purposes of section 235(2), the arrangements were such that investors did not have day-to-day control over the management of the property; see paragraphs 168 to 171 of the judgment.  His primary finding was that this was so if “the property” comprised the Sites, on the basis that none of the investors had any control over the site as a whole. However he went on to hold that, even if he were wrong about that and the relevant property in the case of each investor was his own individual plot, nonetheless "section 235(2) does not prevent the arrangements that Asset Land made being CISs." He said:
“169. Whether the “property” be each site or each plot, the arrangements depended on the sale of land: that is where the investors’ profit was to come from. The key features of management of an investment of this kind are those to do with enhancing the value of development status of the land before sale, deciding on when, how, to whom and at what price it should be sold and distributing the proceeds between investors. The arrangements were that Asset Land was to manage these matters. Of course, as Mr Coppel submitted, once an investor owned a plot, (s)he had the right to deal with it by way of selling it, leasing it, mortgaging it, occupying it and so on. Equally investors were entitled to apply for planning permission or to approach the planning authorities for the plot or the site to be re-zoned for development: nobody needs property rights to do so. But section 235(2) is not about what legal rights investors had over their plots. First, as Hamblen J said in the Innovator One case (loc cit at para 1170), it is not sufficient that investors were in a position to decide what to do with their plots: while section 235(2) refers to participants not “hav[ing] day-to-day control”, the subsection is directed to having actual control, and requires that the investors “must actually exercise that control sufficiently to be regarded as being in effective control”. Secondly, as David Richards J emphasised in the Re Sky Land Consultants case (loc cit at para 76) section 235(2) is about what the arrangements were and “the reality of how [they] are operated”. In reality the arrangements described by Asset Land’s representatives and therefore contemplated by the investors could not work if investors in fact exercised the rights to which Mr Coppel referred.
170. Again, it is no answer that some investors in the position of Ms de Montes planned to build on their sites and so have day-to-day control of them, even if their arrangements with Asset Land reflected this. Sub-section 235(2) is satisfied only if all the participants have day-to-day control over the management of the property, and it does not matter that one or some of them do: see Russell-Cooke Trust Co v Elliott and ors (16 July 2001, unreported, Ch D) at para 26, cited with approval in FSA v Fradley and anor, [2005] EWCA Civ 1183 at para 46. Unless the arrangements are such that all participants have such control, the condition in section 235(2) is met even as regards those who do."
79.	In relation to this ground of appeal Mr Coppel submitted as follows:
i)	Section 235(2) was not concerned with whether participants did not exercise day-to-day control over the management of the property: rather it was concerned with their not having day-to-day control over the management of the property. The section demanded a proper identification of what was involved in the “management” of the property under the “arrangements.” The judge wrongly equated having day-to-day control with exercising day-to-day control over the property (paragraphs 169-170);
ii)	None of three elements of the “arrangements” which the judge had held existed in paragraph 71 of the judgment, on proper analysis, demonstrated “day-to-day control”, whether by the investors or anyone else.  Thus, of the constituent elements of the “arrangements,” which the judge had identified:
a)	The making of an application for planning permission was not a facet of the “management” of the property on which the development would be carried out.  The term “management” pointed to the management of the property being something over which control (i.e. exclusive or near-exclusive dominion) could be exercised, as well as anticipating a certain regularity in the conduct concerned.  An application for planning permission was not something normally done on a day-to-day basis.
b)	A person did not, by procuring the sale of a property, exercise “control over the management of the property.”	
iii)	In any event, the requirement in section 235(2) looked to disablement of the participant and, implicitly, that instead someone other than the participants had day-to-day control over the management of the property.  Not only were none of the participants so disabled, but in relation to the constituent elements of the “arrangements,” which the judge had identified at paragraph 71, the participants had as much control as the Asset Land companies. Any person could have made an application in relation to "progress [ing] planning procedures with a view to the site being used for housing". Both the judge and the FCA misunderstood the local plan and development planned processes which existed at the relevant time. Once an investor became the owner of a plot that investor had day to day control over the management of the plot of land, regardless of whether or not that investor exercised it or allowed someone else to exercise it. The judge wrongly held that the investors had no power to make an application for planning permission, whether for their own plot or the site within which it was located, or to participate in the local plan process (paragraph 168). 
iv)	Finally, the judge was wrong in concluding that “Sub-section 235(2) is satisfied only if all the participants have day-to-day control over the management of the property, and it does not matter that one or some of them do". There was nothing in section 235 to support that proposition. 
80.	Again I reject these submissions. The grounds of appeal did not include a challenge to the judge’s conclusion that the relevant property in question was the site rather than the individual plots purchased by investors. I agree with the judge’s analysis that, for the purposes of section 235, the "property" in question here was clearly the site rather than the individual plots. The individual plots were simply "part" of the property. However, like the judge, my conclusions would not be any different even if it were correct to regard the individual plots as the "property" in question.
81.	What constitutes "management" in any particular case must, as David Richards J said in Re Sky Land at [77], be dictated or informed by the nature of the property in question.  In the present case, plots in the Sites were specifically sold to investors as investments, with a view to the sites being "progressed" from a planning perspective, and the plots being sold as a composite part of an enhanced-value development site. Accordingly, the management in question in the present case consisted of the acts that were proposed to be taken with a view to increasing and ultimately selling the sites and realising the value of the plots as investments.
82.	On this basis and, as was the case in Re Sky Land, there was no aspect of the “management” of the Sites (or, indeed, the plots contained therein) over which the investors had any control.  Under the arrangements, all steps with a view to having the Sites re-zoned, obtaining planning permission and selling to developers were to be the responsibility of Asset Land.  Under the arrangements, Asset Land alone was in exclusive control of all of these matters. The fact, as Mr Coppel submitted, investors were legally entitled to seek planning approval and/or sell their plots of land to developers, or indeed to seek planning permission or re-zoning in relation to their individual plots or the whole site, is wholly irrelevant. That was not what, in reality, was going to happen under the arrangements as presented by Asset Land's brokers. Nor was there any evidence to the effect, either in relations of the site or in relation to their individual plots, that investors were doing anything that could be characterised as "exercising day-to-day control over the management of the property". 
83.	I agree with the judge's observation at paragraph 169 that section 235(2) is not about what legal rights investors had. I also agree with the comments of Hamblen J in Innovator One at [1170] that the fact that theoretically investors may have legal rights under contractual documents to exercise control over the management of their individual properties at any moment is not sufficient. As Hamblen J said:
“However, I agree with the Claimants that more is required and that they [investors] must actually exercise that control sufficiently to be regarded as being in effective control. It is necessary to look beyond documents which may provide for "day-to-day control" by investors and to consider how the scheme was designed to and did operate in practice.”
I would also endorse the statement of Martin J in Enviro Systems Renewable Resources Pty Ltd v Australian Securities and Investments Commission [2001] SASC 1, at [37], cited by Hamblen J in relation to the similar "day-to-day control" test under the Australian definition of the equivalent to a CIS:
“In my opinion, the purpose or object of the legislation and the regulatory regimes created pursuant to the legislation would be easily defeated if the court felt obliged to rely solely upon a strict view of the legal rights and duties created by the documentation and was required to ignore the realities of the scheme as it is designed to operate in practice.”
84.	Nor was there any substance in Mr Coppel's submissions: that it could not be said that Asset Land had day-to-day control over the management of the property, since the term anticipated "a certain regularity in the conduct concerned"; that an application for planning permission was not something normally done on a day-to-day basis; and that a person did not, by procuring the sale of a property, exercise “control over the management of the property.” All these matters were clearly aspects of the management of the sites. Furthermore, whilst schemes involving the acquisition and subsequent disposal of property may involve very little management on a regular or ongoing basis, that does not prevent the schemes from being CISs.  Moreover, as Mr Crow submitted, if the schemes operated by Asset Land had been implemented in accordance with the arrangements presented to investors, the schemes plainly would have involved a degree of regular management and day-to-day control in relation to the steps which Asset Land was supposed to take to progress planning procedures, viz. obtaining advice from planning specialists; submitting relevant applications; liaising with local authorities; marketing and selling the Sites to third party developers, and thereafter distributing the proceeds to investors.  
85.	I also reject the Appellants' argument that the judge was wrong to hold that section 235(2) is only satisfied “if all the participants have day-to-day control over the management of the property, and it does not matter that one or some of them do.”  The basis for this submission was the evidence relating to Ms de Montes, and the Appellants’ contention that, since she and her partner intended to build a home on their plots at the Harrogate site, she had day-to-day control over the management of those plots. In my judgment the evidence relating to her intention did not in any way demonstrate that she was exercising the relevant control over the management of the Harrogate site. This submission was arguably only pertinent if the judge was wrong to find that “the property” was the Sites, rather than individual plots. As I have already said, in my view he was correct so to hold.
86.	In any event, even if it could be said that Ms de Montes was exercising the relevant control over the management of an individual plot, it is clear that a scheme may satisfy section 235(2) notwithstanding that one or some of the participants retain(s) day-to-day control. In coming to this conclusion, the judge followed the decision of Laddie J in Russell-Cooke at [26]: 
“If one asks the question “do those persons have day to day control over the management?”, the answer must be in the negative. The fact that one or some of them do have day to day control is not sufficient. All the persons who are participants must have day to day control.”  
87.	The approach of Laddie J in Russell-Cooke was endorsed and followed by the Court of Appeal in Fradley at [46]:
“As to whether the scheme operated by Mr Fradley and 147 was a CIS in the first and second periods, the critical question is whether, vis-à-vis the operators of the CIS, the participants retained day-to-day control over the management of their funds for the purposes of section 235(2). If they retained such control, it would not matter if they appointed their own agent to exercise that control, but that agent could not be an operator of the scheme for this or otherwise section 235(2) would apply. As to the first period, it is clear that some participants at least appointed 147 as their agent for the purpose of deciding which bets to place. As Laddie J held in The Russell — Cooke Trust Company v Elliott, a scheme will be a CIS even if not all the participants in it have transferred day-to-day control of the management of their monies to the operators of the scheme. This is because the fact that some of them have relinquished day-to-day control to the operators of the scheme means that section 235(2) is satisfied as regards them. That is sufficient for the purposes of this case: it does not matter that the scheme was not a CIS as regards any participant who retained day-to-day control of the management of his monies.”

88.	So far as this issue is concerned, there is nothing in the specific facts to distinguish the decision in Fradley CA and accordingly it is binding on this court. 
89.	Accordingly, in summary I would dismiss the appeal under Ground 5  for the following reasons:
i)	Under the “arrangements”, the investors did not have day-to-day control of the management of the Sites (or, if relevant, the individual plots), since all aspects of the investment were to be dealt with by Asset Land.
ii)	Section 235(2) does not require “management” to be exercised with any degree of regularity; schemes involving little or no regular/ongoing management may still be CISs.
iii)	The phrase “management of the property” in section 235(2) includes management of the sale of the property in question.
iv)	A scheme may satisfy section 235(2) where a small number of participants retain day-to-day control, provided other participants have relinquished control (under the “arrangements”) to the operator.
“Ground 6:	The judge erred in finding that each of the arrangements provided for the property to be managed as a whole by or on behalf of the Asset Land companies”. 
90.	The judge held that the requirements for a CIS set out in section 235(3) were satisfied on the grounds that it was a characteristic of the arrangements that the property was managed as a whole by, or on behalf of, Asset Land. He concluded at [172-173]: 
“172. The third issue is whether the arrangements were such that the property was managed as a whole by or on behalf of the operator of the scheme, within section 235(3)(b) of FSMA. Like section 235(2), section 235(3) is about the arrangements and is directed to whether they had the “characteristics” specified in section 235(3)(a) or 235(3)(b): FSA relies only on section 235(3)(b). As I have said, the essential nature of the schemes was that plots were investments, and the plan was that they were to be sold as part of the sites after their value had been enhanced through planning permission or the prospect of development after re-zoning. The “management of the property” relevant for identifying the “characteristics” of the arrangements is therefore, as I see it, management directed to what David Richards J called in the Sky Land Consultants case at para 78, the “long term goals”. The arrangements were that Asset Land would deal with those management matters and the whole structure of the schemes made it obvious that only Asset Land would do so and realistically investors could not do so. (This is so whether the “property” be the sites or the individual plots.) 
173. I therefore conclude that the condition in section 235(3) was satisfied in relation to Asset Land’s schemes. It follows that in my judgment the schemes were CISs.”
91.	In relation to this ground Mr Coppel submitted as follows: 
i)	The judge erred in finding that section 235(3)(b) was satisfied as there was no evidence that Asset Land managed the property as a whole. On the contrary, the evidence was that once an Asset Land company sold a plot it did nothing with it, for it or about it.  
ii)	The Second Appellant gave evidence to this effect, stating that the Appellants’ understanding and approach was that, once a plot was sold, Asset Land could not deal with the land without the investors’ express permission.  The Second Appellant was not cross-examined on this, and accordingly his evidence stood unchallenged.  None of the arrangements had the required characteristic.
iii)	The requirement in section 235(3) was that the arrangements had to have the characteristic that the property — here, each of the six sites — was managed as a whole by the operator of the scheme.  The control retained by those purchasers who, like one witness, had the intention to build on her plot, was fatal to this requirement.  Asset Land did not manage the property “as a whole.”
iv)	Accordingly, the judge was wrong to hold that, under each of the arrangements, the property was managed as a whole by or on behalf of the operator of the scheme.  
92.	Again, in my judgment this argument fails.  Section 235(3)(b) is not merely directed as to what, as a matter of fact, happened in relation to the property. What was relevant in the circumstances of this case was what was proposed to happen under the “arrangements” which the operator represented to investors – not what actually happened in practice.  Under the “arrangements” as presented to investors, Asset Land was charged with managing the features set out by the judge at paragraph 71 of his judgment, which clearly satisfied the requirements of  section 235(3)(b).
93.	The fact that some investors (such as Ms de Montes) intended to build on their own plots was irrelevant. Their personal plans did not detract from the management that Asset Land was to exercise under the arrangements in relation to the various sites. 
94.	Accordingly I would dismiss the appeal in relation to Ground 6.  

Ground 8:	The judge misinterpreted the “representations clause” in the contracts for the sale of land
Ground 9: The judge misinterpreted the “services clause” in the contracts for the sale of land
95.	At trial, the Appellants sought to rely on the Representations Clause and the Services Clause (contained in the written contracts for the sale of the individual plots) to support the defence that investors were not entitled to rely on any representations conveyed, or understandings arrived at, as a result of what the Asset Land representatives told them; and that, accordingly, the relevant “arrangements” for the purposes of section 235 could not take into account any oral representations or any suggested services that were inconsistent with the provisions of the two clauses. 
96.	The judge conducted a detailed legal analysis of both clauses and concluded that they were of no assistance in determining the content of the arrangements which Asset Land had made with investors. In doing so, he held as follows:
in relation to the Representations Clause:
i)	that, as a matter of construction, the Representations Clause was directed to representations by way of statements of fact, and not to statements about what Asset Land was to do in the future; since the statements made by Asset Land to investors on which the FCA relied were “promises as to how the scheme was to operate”, they were outside of the scope of the clause; see paragraphs 118 - 119 of the judgment;
ii)	the Representations Clause was subject to the requirement of fairness contained in regulation 5(1) of the Unfair Terms in Consumer Contracts Regulations 1999 ("the 1999 Regulations"), and was unfair since, contrary to the requirement of good faith, it caused a significant imbalance in the parties’ rights/obligations under the contracts of sale; accordingly, the Representations Clause was not binding on the investors (regulation 8(1)); see paragraphs 127 - 137 of the judgment;
iii)	the Representations Clause was also subject to the requirement of reasonableness contained in section 11(1) of the Unfair Contract Terms Act 1977 (“UCTA”) by reason of section 3 of the Misrepresentation Act 1967; for the same reasons given in relation to the fairness inquiry under the 1999 Regulations, the clause did not satisfy the test of reasonableness and was accordingly of no effect; see paragraphs 139 – 140 of the judgment; 
in relation to the Services Clause:
iv)	the clause was not drafted in plain, intelligible English for the purposes of regulation 6(2) of the 1999 Regulations; the (relevant) latter part of the clause simply made reference to “any other services” without clarifying what those services were;
v)	the clause did not relate to “the definition of the main subject matter of the contract” for the purposes of regulation 6(2)(a), since the contracts were for the sale/purchase of plots of land, and that was plainly their main subject matter;
vi)	the clause did not relate to “the adequacy of the price or remuneration, as against the goods or services supplied in exchange” within regulation 6(2)(b), since the contracts expressly stated that the prices paid for the plots of land;
vii)	the Services Clause did not satisfy the requirement of fairness contained in regulation 5(1), largely for the same reasons as those relied upon in support of his conclusions as to the unfairness of the Representations Clause.  
97.	On appeal, the Appellants made detailed submissions as to why they contended that the judge was wrong to reach these conclusions.
98.	In my judgment, in the circumstances of this particular case (and accepting that the situation may be different in another case), there was no need for the court to be satisfied that it could "strike down" the Representations and Services Clauses under the provisions of the 1999 Regulations or UCTA in order to find what the arrangements comprised for the purposes of section 235. As stated earlier in this judgment, in the context of a determination of the relevant "arrangements" for the purposes of section 235, the court is not obliged to rely solely upon a strict view of the legal rights and duties of the parties as presented in the legal documentation. The court has to look at the overall realities of the scheme as it is designed to operate in practice and as it is presented to investors. The judge was perfectly entitled on the facts of this case to find that, in reality, the essential features of the "arrangements" were those represented in the oral sales pitch to investors, and not the artificial and misleading picture that Asset Land sought to present in the footers to certain of its brochures and its contractual documentation. That was particularly so in circumstances where (i) it was only after an investor had paid the purchase price for his plot in full that he received a contract containing the relevant clauses; and (ii) any investor who did query the effect of the relevant clauses, or otherwise raised the issue of the terms of the written contracts with Asset Land representatives, was told not to worry about the provisions, that they were merely legal requirements or that the correct position had been as represented during earlier telephone calls.
99.	For this reason, it is not necessary in my view for this court to address either the Appellants' or the FCA's detailed submissions in relation to the Representation Clause or the Services Clause. In broad overview, however, if it were necessary to do so, I would support the conclusions of the judge in relation to these issues.
Ground 10:  The judge erred in principle in making the interim payment order
100.	The judge delivered his judgment on 8 February 2013.  A draft version had been provided to the parties on the usual basis a few days earlier, with a request that the parties attend on 8 February 2013 in order to determine the procedure to be followed for the purposes of relief. On that day, the judge directed that there be a further hearing to set out the procedure for the inquiry under s 382 of FSMA ("the Inquiry").  The parties were informed on 27 February that the hearing was going to take place on 22 March 2013.
101.	So far as relevant, CPR 25.1 provides:
“(1)	The court may grant the following interim remedies—
	…..                                  
(k)	an order (referred to as an order for interim payment) under rule 25.6 for payment by a defendant on account of any damages, debt or other sum (except costs) which the court may hold the defendant liable to pay.....”

So far as relevant, CPR 25.6 provides:
“(3)	A copy of an application notice for an order for an interim payment must—
(a)	be served at least 14 days before the hearing of the application; and
(b)	be supported by evidence.
(4)	If the respondent to an     application for an order for an interim payment wishes to rely                                                                                                                                           on written evidence at the hearing, he must—
(a)	file the written evidence; and
(b)	serve copies on every party to the application,
at least 7 days before the hearing of the application.
(5)	If the applicant wishes to rely on written evidence in reply, he must—
(a)	file the written evidence; and
(b)	serve a copy of the respondent,
at least 3 days before the hearing of the application.”
102.	In breach of CPR 25 the FCA did not issue an Application Notice seeking an interim payment. However it had made it clear in its opening submissions that it would be inviting the court at the end of the trial to make such an order and further notice that the FCA would be seeking the IPO was given in the FCA's closing submissions dated 10 December 2012 (over four months before the IPO was made). Its intention to do so at the forthcoming hearing on 22 March 2013 was made clear in witness statements (including an expert opinion report) served on the Appellants on 15 March and 18 March 2013 again in breach of the time requirements of CPR 25 .	
103.	After having reviewed the evidence filed by the FCA (no evidence having been served by the Appellants), and after having heard submissions by counsel for both sides, the judge ordered ALI-Panama, ALI-UK and Mr Banner-Eve to make interim payments on account of their liability under section 382 of FSMA (pursuant to section 32 of the Senior Courts Act 1981 and CPR r.25.7) of £10,337,000, £1,270,000 and £10,000,000 (jointly and severally with Mr Cohen) respectively.
104.	Mr Coppel made the following points in support of the Appellants' submission that the judge erred in making the interim payment order (“the IPO”):
i)	The making of the IPO was procedurally unfair, since the requirements as to the issuing of an application notice and the service of evidence set out in CPR Part 25 had not been complied with.
ii)	This was not a proper case for the court to exercise its discretion in favour of making an IPO; investors had not shown any sense of urgency in getting the (relatively) substantial sums they spent on the plots back; no evidence had been provided by the FCA to show how the money was to be used; and the IPO would prevent the Appellants from participating in the inquiry as to quantum (“the Inquiry”) and otherwise securing further legal assistance.
iii)	In making the IPO of the judge did not take sufficient account of the harm that the IPO would cause, the existence of the Inquiry or the Appellants’ desire to appeal.
iv)	The IPO was predicated upon none of the Sites having any hope of securing planning permission for residential development, thereby pre-empting the outcome of the Inquiry.
v)	The IPO was based on the wrong measure of loss.
105.	I am not persuaded that, in making the IPO, the judge exercised his discretion improperly, either in relation to the making of such an order or as to the amount.  
106.	As to the procedural points raised by Mr Coppel, the judge clearly took into account the fact that the FCA was in breach of the requirements of CPR 25, that no application notice had been formally issued and served, and that evidence was being served by the FCA up until the day before the actual hearing (see paragraphs 6 and 7 of his judgment dated 22 March 2013). However, as the judge correctly pointed out, the application cannot have taken the relevant defendants by surprise. Not only did the Appellants not file any evidence challenging the FCA's evidence, but nor did they make any application for an adjournment in order to be able to do so. If, as Mr Coppel now contends, there was indeed genuine procedural unfairness in the manner in which the application for interim payment had been made, and the Appellants were prejudiced, it is inconceivable that Mr Coppel would not have sought an adjournment at the hearing in order to give the Appellants an opportunity to serve evidence in reply. It is clear from the transcript of the hearing however that no such adjournment was sought.
107.	As Mr Penny submitted, guidance as to the test to be applied in determining whether or not the court should make an order for an interim payment was recently given by the Court of Appeal in HMRC v The GKN Group [2012] EWCA Civ 57 at [32-43]  per Aikens LJ. At [36] the court stated:
“of what does the claimant have to satisfy the court? To which the answer is: that if the claim went to trial, the claimant would obtain judgment for a substantial amount of money from this defendant. Considering the wording without reference to any authority, it seems to me that the first thing the judge considering the interim payment application under paragraph (c) has to do is to put himself in the hypothetical position of being the trial judge and then pose the question: would I be satisfied (to the civil standard) on the material before me that this claimant would obtain judgment for a substantial amount of money from this defendant?”

108.	It was clear that in the present case Andrew Smith J was indeed satisfied that a substantial sum would be awarded in the claimant’s favour, upon the taking of the Inquiry, which on the same date he had ordered. Contrary to Mr Coppel's submissions, there was no sufficient reason why the judge should not have made an interim order and, in those circumstances, he was right to do so; see GKN at [47].
109.	The judge clearly took into account the Appellants’ assertions that an IPO would prevent them from pursuing an appeal, or participating in the Inquiry as to quantum or otherwise securing further legal assistance. As he rightly pointed out, if permission to appeal were granted, the Appellants might well be granted a stay by this court - which indeed they were. So far as the Inquiry was concerned, the judge recognised that there was a risk that an IPO might prevent full participation by the Appellants in the process, but he concluded that that was another reason for him to be cautious at every stage in considering the application, but did not amount to reason as to why he should not make an order. In my judgment, that was a conclusion which the judge in the exercise of his discretion was clearly entitled to reach. 
110.	The Appellants' further assertions (that investors had not shown any sense of urgency in seeking repayment and that there was an absence of evidence as to how the distribution was to be effected by the FCA) were simply not relevant to the discretionary exercise which the judge had to conduct under CPR Part 25.  As Neill LJ pointed out in Schott Kem Ltd v Bentley [1991] 1 Q.B. 61 at 74C-D, in circumstances such as the present the court is not concerned with issues such as the claimant’s need for an interim payment, or the prejudice that may be suffered were one not ordered.
111.	As to the remaining points raised by the Appellants, the evidence put forward by the FCA (on which the judge relied) as to the total sums paid by investors to Asset Land was based on the most conservative estimates available.  Although it was the FCA’s primary position that no allowance ought to be given for the value of plots held by investors in calculating their loss for the purposes of section 382, in making the IPO the judge expressly took into account the FCA’s evidence as to the current market value of the Sites. As the judge said in paragraph 20 of his judgment dated 22 of March 2013, he was clearly satisfied that:
“despite the deficiencies in the evidence resulting from the procedural history, that those are robust figures, even on the most cautious view the interim payments, and that if I do not order those payments, the result would be that the pot to which investors are likely to be entitled would be eaten away…".
112.	Accordingly I would dismiss the appeal in relation to ground 10 on the grounds that the judge acted well within the ambit of his discretion in making the IPO. I would also hold that, on the evidence before him, he was entitled to make an IPO in the sums which he did. 
Disposition
113.	For the above reasons I would dismiss this appeal.

Lady Justice Sharp:
114.	I agree.

Lord Justice Rimer:
115.	I also agree.