Neutral Citation Number: [2010] EWHC 399 (Ch)
Case No: 1322 OF 2009
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MANCHESTER DISTRICT REGISTRY

Date: 03/03/2010

Before :

MR JUSTICE DAVID RICHARDS
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IN THE MATTER OF SKY LAND CONSULTANTS PLC

AND IN THE MATTER OF THE INSOLVENCY ACT 1986

Between :

	THE SECRETARY OF STATE FOR BUSINESS INNOVATION AND SKILLS	Petitioner	
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	SKY LAND CONSULTANTS PLC	Respondent	

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Mr Nigel Bird (instructed by Cobbetts LLP) for the Secretary of State
Mr Andrew McGee (instructed by William Graham Law Limited) for the Respondent

Hearing dates: 18, 19, 20, 25 January 2010
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Judgment

MR JUSTICE DAVID RICHARDS: 
	  Introduction
1.	This is the trial of a petition to wind up Sky Land Consultants plc (the company) presented by the Secretary of State under s.124A of the Insolvency Act 1986.  As a pre-condition to such a petition, it must appear to the Secretary of State to be expedient in the public interest that the company is wound up, and the court may make a winding-up order if it considers it just and equitable to do so.
2.	The principal ground for a winding-up order as set out in the petition is that the company operates and promotes a collective investment scheme, as defined by s.235 of the Financial Services and Markets Act 2000 (FSMA), without being authorised to do so or exempt from the requirement to be authorised.  If this ground is made out, the company has acted in breach of the general prohibition in s.19 of FSMA and therefore has committed an offence under s.23 and is liable to compensate investors under s.26.  
3.	There are other grounds relied on in the petition (failure to maintain adequate accounting records, failure to prepare and file annual accounts and other breaches of the Companies Acts) but the Secretary of State has not pursued these at trial.  Nor has he pursued an allegation that the company mis-represented to investors the prospects of a commercial return.
4.	The central issue therefore is whether the company was operating and marketing a collective investment scheme.  Put very shortly, the company acquired options over two areas of agricultural land, one near Crewe and the other at Winterton in Lincolnshire, both of which appeared to have potential for being granted planning permission for residential development.  Under the terms of the option, the company could not only acquire the land itself but could also require the owner to transfer it to third parties in parcels of 300 square metres.  The company marketed such parcels to the public from about May 2006, on terms which I shall later detail.
5.	In November 2006 the Financial Services Authority commenced an investigation into the company’s activities and concluded that they amounted to a collective investment scheme.  Discussions with the company led to the company’s agreement to change its method of business in certain respects which satisfied the FSA that the company would no longer be operating a collective investment scheme and to send to its existing investors a letter offering them the alternatives of either repayment of their investments and compensation or electing to continue on the new basis.
6.	It is the Secretary of State’s case that, first, the company was operating a collective investment scheme until the FSA’s intervention and, secondly, the substance of the company’s business did not thereafter change as agreed with the FSA, so that it continued to operate a collective investment scheme.  Further, the Secretary of State alleges that the offer to existing investors was sent to only a small number of investors, in breach of the agreement reached with the FSA.
7.	The company does not accept that it was operating a collective investment scheme before the FSA’s involvement.  It says that it agreed to make changes because it was not worthwhile to contest the FSA’s position and it could continue in business with the changes required by the FSA.  It denies that it failed thereafter to conduct its business in accordance with those changes, except in a few isolated instances.  It says that it acted on legal advice as regards the investors to whom the offer was sent.
	  Definition of “collective investment scheme”
8.	Section 235 of FSMA defines collective investment schemes as follows:  
“Collective investment schemes.
(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.”
9.	The structure of this definition is to start from a widely defined base in sub-section (1) and progressively narrow it by the requirements of sub-sections (2) to (4).  Its application is further narrowed by the exceptions made pursuant to the power conferred by sub-section (5) to exclude schemes or types of scheme which, though falling within the definition, are not as a matter of policy to be treated as collective investment schemes.
10.	The essential criteria for a collective investment scheme, before any consideration of exclusions, are as follows.  First, it must constitute an arrangement falling within s.235 (1).  Secondly, the participants must not have day to day control over the management of the property which is the subject of the scheme: s.235 (2).  Thirdly, either or both the tests set out in s.235 (3) must be satisfied, that is, (a) pooling of the contributions of participants and profits or income, and (b) management of the property as a whole.
11.	The essential elements of the definition are unchanged since it was first introduced by s.75 of the Financial Services Act 1986.  The principal change made by FSMA was to remove the exclusions from primary legislation.  Despite a period of nearly 25 years on the statute book and its practical importance in the financial services sector, there is little reported authority on it.  I have been referred to two cases, Financial Services Authority v Fradley [2006] 2 BCLC 616 (CA), and Russell-Cooke Trust Co v Elliott  [2001] All ER (D) 300 (Mar) and 197 (July) (two judgments of Laddie J, of which the second is directly concerned with the statutory definition, as set out in s.75 of the 1986 Act).  There is some commentary in specialist textbooks.
12.	I have also helpfully been referred to a paper entitled “Issue 86 – “Operating” a collective investment scheme”, prepared in July 2008 by Michael Brindle QC and Richard Stones of Lovells LLP on behalf of the Financial Markets Law Committee (the FMLC).  It is, I think, fair to say that since its introduction by the 1986 Act, the definition of collective investment scheme has caused difficulties to practitioners.  The FMLC’s paper was prompted by a number of uncertainties and by concerns as to the effect of the decision in FSA v Fradley, and was produced after consulting experts in the field (para 1.20).
13.	There are some preliminary points which may be made about the section.  First, it is drafted in broad terms.  In FSA v Fradley, Arden LJ commented at para 32 that “it is drafted at a high level of generality and it uses words, such as “arrangements” and “property of any description”, which have a wide meaning”.  I will refer again to the scope of “arrangements”.  Secondly, as Arden LJ again observed, contravention of the general prohibition in s.19 may result in the commission of an offence, so s.235 is not to be interpreted so as to include matters which are not fairly within it.  Thirdly, and importantly, it is not an essential element of a collective investment scheme that the property which is the subject of the scheme is pooled.  The obvious examples of collective investment schemes, such as unit trusts, do involve pooling but as s.235 (3) makes clear pooling may be, but does not have to be, an element.  As the FMLC paper states at para 3.14 the criteria in s.235 (3)(b):
“and the contrast with the alternative of “pooling”, makes it clear that arrangements can (in the absence of an exclusion) amount to a CIS even though each participant is entitled to a distinct part of the property if all such property is “managed as a whole”.”
14.	The requirement of s.235 (2) is negative: the participants do not have day-to-day control over the management of the property which is the subject of the arrangements.  In the course of argument, Mr McGee accepted that the test that participants do not have day-to-day control over the management of the property looks to the factual position, rather than to any right of control.  This follows in particular from the closing words of sub-section (2), which provide that the test is satisfied whether or not the participants have the right to give directions.  In an Australian case, Enviro Systems Renewable Resources Pty Ltd v ASIC (2001) 36 ACSR 762, cited in Lomnicka & Powell: Encyclopaedia of Financial Services Law at 2A-480 and dealing with the equivalent provision in Australian legislation, it was held that the court should look beyond the documents to how the scheme operated in practice.  Marin J said:
“The purpose or object of the legislation and the regulatory regime 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.”
15.	While s.235(2) provides a negative test, the tests in sub-s.(3) are positive.  It is common ground that sub-s.(3)(a) was not satisfied in the present case and that therefore sub-section (3)(b) must be satisfied before the arrangements operated by the company could constitute a collective investment scheme.  In my judgment, the test is again directed to the way in which the arrangements in fact operate, rather than requiring there to be an enforceable right of management.  Equally, though, it must be a “characteristic” of the arrangements, which suggests that the participants and the operator must share the intention that in practice management of the property will be in the hands of the operator.
16.	I return to the word “arrangements”.  In FSA v Fradley, Arden LJ said at para 33:
“The word ‘arrangements’ has been considered in other statutory contexts.  No formality is required.  In some contexts communications may amount to ‘arrangements’ even if they are not legally binding (see for example Re Duckwari plc (No 2) [1998 2 BCLC 315 at 319, [1999] Ch 253 at 260).   I need not decide whether that is the case in s.235.”
The word “arrangements” is generally considered as having a wider ambit than agreement or contract.  In the context of s.235 where, as the passage from Enviro Systems Renewable Resources Pty Ltd v ASIC cited earlier suggests, the focus is on the intended operation of the scheme in practice, the arrangements in question need not in my judgment be legally binding.  This is of some significance in the present case where the features of the original arrangements relied on by the FSA as showing that they fell within s.235 were binding on the participants but where, following the FSA’s intervention, they ceased to appear in the contracts or as covenants in title transfers.  It is the company’s case that they also ceased in practice.
17.	The principal issues arising under s.235 in the present case are, first, whether there were any arrangements falling within sub-s (1) and, if so, secondly, whether the property to which the arrangements related was managed as a whole by the company.  The second issue was mainly concerned with whether the activities, if any, of the company could constitute management as required by sub-s (3).  These are issues to which I shall return after dealing with the evidence as regards the activities of the company.  In FSA v Fradley, Arden LJ observed at para 32 that “the application of s.235 depends on the specific facts of the case, and in the event of a dispute those facts will have to be determined by a court of law on the evidence before it.”
	  The Facts
18.	For convenience, counsel for the Secretary of State divided the chronology of relevant events into three periods.  The first runs from incorporation of the company in June to November 2006, which is the period up to the FSA’s intervention.  The second was taken as running from November 2006 to September 2007 when the way forward was agreed with the FSA.  The third runs from September 2007 to December 2009.  For the main issues arising on the petition, I would treat the second period as much shorter.  Although the text of a letter to be sent to existing investors was not agreed with the FSA until September/October 2007, the way in which the scheme could lawfully be operated by the company was largely agreed with the FSA in February 2007 and the company immediately started marketing again to new investors.
  	  Period 1: May 2006 - November 2006
19.	The company was incorporated on 30 March 2006 and commenced business in May 2006.  The majority shareholder at all material times has been Mark Philip Maguire.  Other shareholders include or have included his wife and Rodney Gardner, a solicitor.  Mr Maguire was the sole director until Mrs Maguire also became a director in 2008 or 2009.  Mr Gardner was secretary from April 2006 until March 2007 when Mr Maguire was appointed in his place.  The company and its business were at all times controlled by Mr Maguire.
20.	In 2006 the company entered into option agreements with the owners of land at two sites, one at Holly Tree Farm, 152 Broughton Road, Coppenhall, Crewe (the Crewe land) and the other at Grange Farm, Winterton, North Lincolnshire (the Winterton land).  In both cases the land was then designated for agricultural use, but Mr Maguire believed there was potential for development as residential land.  Both were adjacent to residential areas and had good road access.
21.	The option agreement for the Crewe land was made on 15 July 2006 with its registered proprietors, the trustees of a deceased’s estate (the trustees).  The company was granted an option for a period of three years to grant freehold or leasehold interests in parcels of the Crewe land on the same terms set out in a draft transfer annexed to the agreement.  The agreement acknowledged the wish of the trustees to retain 30% of the land for their own commercial interests.  The option agreement contained provisions that:
“Each individual plot sold by the company would be subject to a purchase price of £4,750 per 200 sq/metres, or at a pro rata rate of £23.75 per sq/metre, with such sum to be paid by the company to the Trustees on completion.
Each individual plot will not exceed 200 sq/metres.
In the event of the company selling a 200 sq/metre plot for a sum in excess of £12,000, the Trustees would receive 56.25% of the excess over £12,000.
The trustees agreed to grant an enduring power of attorney to the company, with full power so far as might be necessary, such that the company could act for the trustees in granting each transfer to a sub-purchaser.
The company would use best endeavours to obtain outline planning permission for residential development of the Crewe land.”
22.	The draft transfer of title form (TP1) annexed to the option agreement for use when a plot was sold to a sub-purchaser included stipulations that:
“The property transferred shall not at any time be used for residential development without the consent in writing of the owner or owners for the time being of the retained land and without the consent in writing of Sky Land Consultants Plc.
Without prejudice to the generality of the foregoing clause no buildings or structures shall be erected or placed on any part of the Property without the consent in writing of the owner or owners for the time being of the retained properties and Sky Land Consultants Plc (other than for existing boundaries or structures).”
23.	Although not specified in the option agreement, it was envisaged that the Crewe land would be divided into approximately 365 individual plots.
24.	On 4 May 2006 Mr Maguire had written to the trustees to explain his proposal.  He indicated a current value of £160/200,000 for the land on the basis of agricultural use with an allowance for “hope” value.  He stated that he was highly confident of achieving an initial £600,000 (approximately) for 12.5 acres, with the trustees retaining 4.5 acres.  It is clear from the letter that this would be achieved by selling the land in the individual parcels to investors, and was not dependent on first obtaining planning permission.  The letter continued:
“SKY Land Consultants PLC has been formed as a Land Consultancy specialising in Land Investments.  We market the land by dividing it up into smaller plots of approx 3000 sq ft and then marketing it to a variety of land buyers.  This process is commonly referred to as “landbanking”.  As part of our commitment to you and the future land owners we are responsible for obtaining future planning consent.  Essentially we are identifying land across the UK that would offer some future development value over the next 5 – 15 years, we do not guarantee planning permission but are highly confident of future success as we engage the highest quality consultants throughout the whole process….The % retained by yourselves means that should Planning Permission be obtained by ourselves in the future a further uplift in value would be obtained.  SKY Land Consultants PLC will negotiate on behalf of all Land Owners the future sale of the whole site to a developer once permission is obtained.
Under our Proposal you are achieving approx ¾ times the value that would normally be obtained even with future “hope value”.  As we are responsible for the obtaining of Planning permission and the future negotiations and sale of the site to a developer, all the hassle factor has been removed and allows you to concentrate on your day to day activities.  Regular updates are provided directly from myself throughout the whole process, ensuring the personal touch remains.”
25.	Similar, but not identical arrangements were made with the owner of the Winterton land, Alan Maw.  An option agreement was made with Mr Maw and the company on 10 May 2006.  It was for a three year period and entitled the company to grant freehold or leasehold interests over parcels of land on the terms set out in the draft transfer annexed to the agreement.  It acknowledged Mr Maw’s wish to retain 20% of the land.  The individual plots were, in general, to be 300 sq/metres each and the amount payable to Mr Maw for each plot sold would be £1,350 per 300 sq/metres or at a pro rata rate of £4.50 per sq/metre.  Mr Maw agreed to grant an enduring power of attorney to the company, for the purpose of effecting transfers.  The form of transfer annexed to the agreement contained stipulations in identical terms to those in the form annexed to the agreement for the Crewe land.  The one significant difference between the agreements is that the agreement relating to the Winterton land does not contain any obligation on the company as regards obtaining planning permission for the land.
26.	During the period from June 2006 to November 2007, the company made 56 sales of one or more plots on the Crewe land.  In that time a dispute arose between the company and the trustees, the details of which are not in point in the present proceedings.  The trustees issued proceedings against the company which were compromised on terms set out in a consent order made in November 2008.  The effect was to rescind the option agreement, and purchasers of plots on the Crewe land were offered in substitution plots on the Winterton land or a refund of monies paid.  In most cases, legal title to the plots on the Crewe land had not been transferred.
27.	In the period from May 2006 to November 2008, there were approximately 98 sales of one or more plots on the Winterton land, although some were cancelled or did not proceed.  As at 2 December 2008, 74 individual transfers had been registered, including a number in favour of former purchasers of plots on the Crewe land.
28.	The sales process to prospective purchasers of plots was the same in respect of both the Crewe and Winterton land.  The company purchased lists of members of the public who might be appropriate to be approached.  Initial contact was by telephone by agents or employees of the company.  Those interested in knowing more were sent some written material.  The only such material in evidence dates from April 2008, and I will refer to it later.
29.	The company had a website, of which a print-out made on 14 November 2006 is in evidence.  The company describes itself as “Strategic Investment Property Consultants,” specialising in land sales all over England and being “dedicated to our customers’ investment needs”.  There was a question and answers section (“typical questions we get asked about buying a plot and investing in land”), which included the following:
“How do I get planning permission?
You don’t – We apply for Planning Permission on the whole site, and not individual plots.  Prior to marketing any site, we undertake a number of studies on the site to ensure that the area meets our criteria and is a site that can be considered for a planning application.
SKY Land Consultants bear the full cost of Planning Applications, Appeals and the cost of Professional Personnel.
What is the Purchase Option Agreement?
This is an option agreement contract designed to prevent any one individual or consortium from disrupting the sale or working against the best interests of our investors.  Disagreement over rights of way, ransom strips, or people refusing to sell for whatever reason are prime examples of this, and are sometimes found in conjunction with schemes such as plot owners associations and management companies.  We ask our clients to agree to an Option Agreement contract which states that after Planning Permission is granted the client will sell at the best market price.
What happens if planning is approved?
Once outline planning permission has been granted we obtain an open market valuation from three independent sources.  We then seek bids by formal tender, selecting the offer that will most benefit our investors.  Prior to contracts being exchanged with the developer, all plot owners will be required to sell at the future market value in accordance with the option agreement and contract of sale.
From the moment of purchase, you are free to sell your plot at any time.  In fact many of our plot owners re-sell their plots at a profit long before planning is granted.  This provides both a short and mid term solution for people looking to profit from the land they have bought.  We do recommend to all our Plot owners that a period of two years is best, however you are still free to sell at any time if you wish.
SKY Land Consultants provide a plot resale programme which gives you this option.  The only stipulation is that whoever buys your plot must also agree to partake in the Purchase Option Agreement.
What services do SKY Land Consultants offer?
We acquire strategically positioned tracts of land that hold strong prospects for future development.  These sites are reviewed with our planning consultants and then a detailed layout is prepared.  Each plot, depending on its size and type can be purchased from us by our clients.  We then ensure that the ownership of the plot is transferred through our legal representatives to you, the client.
We regularly update all clients by newsletter and by personal contact and appraise them of all relevant progress. ”
30.	The website identified Dunlop Haywards as the company’s planning consultants and Zyda Law as its planning solicitors through whom, a later page states, the company aims to make best efforts to obtain planning permission.
31.	Investors purchasing plots from the company, at least at the Winterton site, were required to enter into a marketing agreement with the company and to execute an enduring power of attorney.  By the marketing agreement the investor appointed the company as “its sole and exclusive Agent for the sale of” the investor’s plot or plots for the whole of the time that the investor owned them (cls.1.1 and 1.4).  By cl.1.3 the investor was free to make sales to purchasers other than those introduced by the company, but commission would still be payable to the company.  By the enduring power of attorney, the investor appointed the company to act on the sale of his plot(s) in accordance with the marketing agreement.
32.	The copies of the marketing agreement and power of attorney in evidence were executed by the investor but not by the company.  Relying on this, Mr Maguire said in cross-examination that they were not intended to be used by the company.  I reject this evidence.  The company would not have gone to the trouble of having them drafted and sent to investors for execution if it did not intend to use them.  Once executed by investors and returned to the company, the company could execute them as and when it decided or needed to do so.  As it has never got to the point of negotiating a sale of the plots, the need for the company to execute them has never arisen.
33.	The position in the first period was therefore that investors purchasing plots did so on the clear understanding that the company would seek to obtain planning permission for the land at Crewe and Winterton and would market the land.  This would no doubt accord with investors’ wishes.  It would be a rare purchaser of a 200 or 300 sq/metre plot forming part of a much larger site who would embark on seeking planning permission and buyers for the site or for the plot.  Few would have the expertise and it would make no financial sense to act alone.  It would almost certainly be more trouble than it was worth to try to organise all the other investors into acting collectively.  As Mr Maguire put it in his letter dated 4 May 2006 to the trustees of the Crewe land, “As we are responsible for the obtaining of Planning permission and the future negotiations and sale of the site to a developer, all the hassle factor has been removed.”
34.	It appears from the evidence that while steps would be taken with a view to the grant of planning permission and in due course to a sale, the land would in the meantime remain in the occupation of the original owner and would continue to be farmed.  There are no formal agreements to this effect in evidence, but it is what in practice has occurred and it appears, and I find, that it is what all parties (the original owner, the company and the investors) expected to occur.
	  Period 2 : intervention by the FSA
35.	The company’s activities came to the attention of the FSA in November 2006.  The FSA came to the view that the arrangements operated by the company constituted a collective investment scheme for the reasons set out in a letter dated 24 November 2006 to the company: 
“
•	The purpose or effect of the arrangements is 	to enable investors, as owners of the plots of land, to receive profits arising from the holding, management or disposal of the land.  The website states that the expected return is between 300 and 500%.
•	The land is managed as a whole by Sky Land Consultants plc by virtue of the fact that Sky Land Consultants plc appear to have control over the planning process of the entire site and the eventual sale of the land.  The website states that you use planning consultants to obtain planning permission for the whole site, and individuals are not free to obtain planning permission for their own property.	
•	The investors do not appear to have day-to-day control over the management of the land which gives rise to profits or income for investors.  The purchase option agreement referred to on the website is ‘designed to prevent any one individual or consortium from disrupting the sale or working against the best interests of our investors.’ This appears to us to demonstrate the collective nature of the scheme.
•	The profits from which payments are to be made to the participants are pooled in the sense that Sky Land Consultants plc appears to arrange the sale of the whole site to a developer and then distributes profits to the investors.  ”
36.	In response to the FSA’s concern, expressed in its letter of 24 November and later letters that the company should voluntarily cease its activities as then carried on pending resolution of the issues which it had raised, the company agreed in a letter from its solicitors dated 21 December 2006 to cease activities for a minimum period of one month.
37.	The company took advice from counsel specialising in financial services law and in a letter dated 19 January 2007 its solicitors informed the FSA that, without making any admissions as to whether its schemes as previously operated constituted collective investment schemes, it had decided to seek the FSA’s agreement to certain changes designed to allay the FSA’s concerns.  In a further letter dated 1 February 2007, the company’s solicitors informed the FSA that it intended to “communicate to those parties with whom arrangements have been concluded” as follows:
“1. We shall inform that in the view of the FSA the scheme is a 	collective investment scheme which is not authorised and 	that purchasers are entitled, either to have their investments 	unwound or put on a basis which clearly gives the investors 	day to day control over the individual properties.
2. Thus, each purchaser has the choice of proceeding with the 	investment, but on terms that are varied in accordance with 	what has been set out previously in correspondence, namely 	a mutual variation of the Deed of Transfer, so as to remove 	the restrictions, and to cancel the Marketing Agreement and 	relinquish the Power of Attorney.
3. We shall also state that, for those purchasers wishing to 	continue to hold their investment, that our client company’s 	wish to fully reassure such parties that the FSA have given 	approval to the amendments or variations to the scheme (we 	shall of course refrain from writing to anyone until you have 	expressed your satisfaction).
4. Our client company accepts that for those purchasers 	wishing to unwind, that this will require a full refund of the 	purchase price paid and that additional payments will also 	be due in respect of “losses”.  These are likely to be limited 	to interest and legal costs in practice.”
38.	On 13 February 2007 the FSA responded by saying that it considered that if the scheme was amended as proposed:
“Sky Land will not be establishing, operating or winding up a collective investment scheme, as defined in s.235 of the Act.  However, as noted in the FSA Handbook at PERG 11.3, it is substance rather than form that counts when assessing whether a scheme may amount to a collective investment scheme, and accordingly we need to satisfy ourselves that the new arrangements proposed by Sky Land would not be presented to potential investors in such a way as to give the impression that planning permission will be sought for the site as a whole on their behalf.”
39.	There followed a lengthy period while the terms of a letter to be sent to investors was considered in correspondence between the FSA and the company’s solicitors.  On 9 October 2007 the FSA agreed that a letter in the form provided to it on 19 September 2007 could be sent to investors.  The draft letter informed investors of the FSA’s view that the scheme previously operated by the company was a collective investment scheme and that, while the company did not agree with this view, it was making changes such that it could not be regarded as a collective investment scheme.  It continued:
“This will be achieved by ensuring that day-to-day control over the management of the plots is undertaken by the investors themselves.  If these changes are not made the FSA will continue to regard the operation as a “collective investment scheme” and you will have no option but a refund and compensation.  I must therefore emphasise that continuing the scheme in its current form is not an option.  You must therefore choose between either undoing your purchase or going forward subject to the terms below.
The changes will mean that you, and all the other owners of plots, will be free to deal with your plots as you wish.  You will be free to apply for planning permission individually or together and you will have to make all decisions concerning your plot yourself.  Sky Land cannot and will not play any further role in the development of the [site name] site.
In our view the greatest potential resale value of your plot will be obtained if you develop it in conjunction with the other plot holders.  If you wish to do this and in the opinion of the FSA, you must make your own arrangements in these respects and we leave matters with you. ”
A draft of a response form was provided, which gave investors a choice between a refund with interest or other compensation and continuing with the scheme on the revised basis.
40.	For reasons which are not clear, the letter was not sent to investors until December 2007.  It was even then sent only to nine investors, whose names and responses were provided to the FSA in a letter dated 25 January 2008.  The letter stated that it had been sent to “all purchasers/investors” but there were at least 64 investors who had contracted with the company.  Mr Maguire said in evidence that, on the advice of Mr Gardner, the letter was sent only to those investors who had been registered as proprietors of their plots.  I have not heard any evidence from Mr Gardner, and Mr Maguire was unable to explain the basis of Mr Gardner’s advice.  It appears to me to be obviously wrong, and I am surprised that Mr Maguire did not question whether it could be right.
	  Period 3 : February 2007 – December 2009
41.	While it took until October 2007 to agree the terms of the letter to be sent to investors under the original scheme, agreement was reached with the FSA in February 2007 as to how the scheme should in future operate, as appears from the correspondence to which I have referred.  The FSA provided a final sign-off to the company in a letter dated 20 August 2008, following the provision of draft documents and information.  The factual assumptions derived from the documents and information included that the plots at Winterton were “now sold only as plots of land with no continuing involvement by Sky Land” and “there are no connected arrangements in relation to the plots, in that, Sky Land make no arrangements for planning applications to be submitted by plot holders whether directly or by any third party”.  Based on the documents and information provided, the FSA concluded that the company’s current activities did not amount to a collective investment scheme.  It added that it was fundamental that the company adhered to its description of its activities and that it was not in any way involved in seeking designation of the land for development, or in obtaining planning permission for plot holders, or in the management of the plots owned by the plot holders.    
42.	It appears from a schedule in evidence that four investors had been signed up in January 2007 at a time when the company had undertaken to suspend business.  Mr Maguire’s explanation was that these investors were already in the pipeline by 21 December 2006 when the undertaking was given.
43.	It appears from the same schedule that investors were signed-up on a regular basis from late February 2007.  This is essentially the start of the third period in which, the company asserts, it was operating on the new basis agreed with the FSA.  The critical change was that the company would not be responsible for or involved in seeking planning permission for, or a sale of, the plots sold to investors, and the scheme would be promoted on that basis.  Planning permission and sales were to be left to investors.
44.	It is not in issue that the legal documents were changed to reflect the new basis of operation.  Investors did not execute a marketing agreement or power of attorney in favour of the company.  The standard form of TP1 no longer contained the restrictions quoted above.  There was a period in about September/October 2008 when TP1s in the old form were used, but this was a period when the company was handling the conveyancing itself and it appears that the use of the old form was the result of incompetence, rather than design.  Certainly Mr Richard Byrne who became the company’s solicitor in about April 2008 was clear in his evidence, which I accept, that he did not use TP1s containing the restrictions.
45.	The principal factual issue is whether the scheme was in practice promoted and operated in accordance with the new documents.  The Secretary of State’s case is that investors were signed up, and the scheme continued to operate, on the basis that in fact the company would continue to be responsible for seeking planning permission and buyers for the land including the plots sold to investors.  This is denied by the company.
46.	The Secretary of State relies on a variety of evidence in support of his case.  First, on 26 September 2007, Mr Gardner on behalf of the company wrote to an investor in the following terms:
“Further, it is a little irrelevant which plot you have because, if planning permission is granted, or an offer is made to purchase the whole site at a substantial uplift, you will receive the benefit along with other users and it makes no difference which plot or location within the site that may have been allotted to you.
Finally, it would not be appropriate to fence off as this land will be developed as a whole or not at all and I hope that you understand the position and will return the paperwork.”
Mr Maguire’s evidence was that this letter was written without instructions and that he found it alarming that Mr Gardner should have written it after going through a lengthy process with the FSA.
47.	Secondly, a number of investors gave oral evidence as to what they had been told.  Mr Philip Henderson, a retired chartered surveyor, gave evidence that he received an unsolicited telephone call from a Nick Mason, who was employed by the company, in May 2008.  Mr Mason explained that the company was offering small plots of undeveloped land for which, the company anticipated, planning permission for residential development would in the future be granted.  He said then or later that the company had an option over the entirety of the Winterton land and that the company and/or its professional advisers would be responsible for obtaining planning permission for the entire site, including pursuing any appeals, and organising the sale of the entire site to a developer.  Mr Henderson made clear in his written and oral evidence that it would not be realistic for him or any other investor to seek planning permission for the development of the plots which they purchased.
48.	I accept Mr Henderson’s evidence and it was not suggested for the company in closing that I should not do so.  Mr Maguire said that Mr Mason was not authorised to say anything to the effect that the company would be responsible for seeking planning permission or marketing the site.  Mr Mason was first engaged to act as sales agent for the company in early 2008, some time after the new mode of business was agreed with the FSA.  As he had not worked for the company when it was doing business on the old model, he cannot have inadvertently slipped back into the old way.  Mr Maguire’s only suggestion was that Mr Mason had some previous experience of working for landbank companies and he may have been adopting their practices.
49.	Colin Doran purchased a plot at Winterton in December 2007 for £12,000.  He dealt with a Mike Roberts. Mr Roberts was employed by Environ Re Limited, which was engaged as a sales agent for the company.  Mr Roberts told him that the company was liaising with the local authority regarding the development potential of the land and had instructed legal advisers to consider the prospects of the company obtaining planning permission.  Mr Roberts explained that there were two ways in which Mr Doran could manage the plot.  Either he could hold it for a period and sell it on via the company, or he could allow the company to arrange planning permission and the sale of the plot as part of the whole site.  He said that the company expected permission to be granted by April 2009 and that he could anticipate a 400% increase in the value of his plot.  Mr Doran said that he would never have bought the land for the purpose of applying for planning permission or selling it himself.  There would have been no point and he was relying on the company to deal with these matters.  Like Mr Henderson, he has never visited the land and has no idea as to how it has been used since his purchase.
50.	There was no real challenge to Mr Doran’s evidence, which I accept.  Mr Maguire said that Mr Robert’s statements to Mr Doran were made without authority and that agents were told orally that the company could not apply for planning permission of plots which had been sold.
51.	Andrew McCreath paid a deposit of £500 in respect of two plots at Winterton in September 2008, which he had decided to purchase for £40,000.  Following the investigation by the Companies Investigation Branch, he has not proceeded with the purchase.  The initial approach in relation to the Winterton land was made to him by a Mr Enzo di Piazza of Land Property Exchange Limited, a third party sales agent from whom he had previously purchased land.  He was told that the company was offering for sale plots within a larger site, which was currently used for agriculture but which, it was proposed, would ultimately be used for residential and/or employment development.  He was shown a letter dated 4 April 2008 from Zyda Law, to which I shall later refer, to support the view that planning permission was likely to be granted.  The letter, addressed to Mr Maguire at the company, refers to “your aspirations to secure a grant of planning permission for residential use on the land in North Lincolnshire”.  Mr McCreath spoke twice to Mr Maguire.  He was provided with a piece of paper setting out estimates of value of the Winterton land with and without planning permission on different bases.  He was clear in his evidence that it was provided by the company or Mr Byrne’s firm, not Land Property Exchange Limited.
52.	Mr McCreath’s understanding was that the company would negotiate with developers to obtain planning permission and, once obtained, would sell the entire site.  He had bought two plots of land elsewhere where this was the case and while he cannot recall being told by Mr Maguire or Mr di Piazza that this was the case with the Winterton land, he assumed that it would be.  He felt that the general tenor of what he was told was that the company would be responsible for obtaining planning permission and the sale of the site.  Mr Maguire pointed to the high score attributed to the land in the local development framework, as indicating that the land was likely to get planning permission in a relatively short timescale.  He was certainly not told that he and other plot purchasers would themselves be responsible for these matters.  He understood it to be a totally hands-off investment.
53.	I accept Mr McCreath’s evidence.
54.	Ms Lena Pagonis purchased two plots of land at Winterton for a total of £30,000, which was completed on or about 11 November 2008.  In the sales process she was told by the company that the Winterton land was classed as “grade 4 farmland” and currently used for agriculture but was suitable for housing development.  Her written and oral evidence was that she understood from what she was told by the company that the company would deal with the plots she purchased, and that she would not be involved in the planning or sales process.  She understood that the company would put the land forward to interested builders who would apply for planning permission and that the land would be sold before permission was granted.
55.	In paragraph 6 of her witness statement, Ms Pagonis stated that on 11 May 2009 she received a call from “Mark” at the company, asking her if she was interested in buying any more plots at Winterton.  Because on 6 May 2009 an injunction had been granted in these proceedings restraining the company from exchanging contracts on any sale of land, this was a particularly sensitive matter for the company, although the conversation with Ms Pagonis would not of itself involve a breach of the injunction.  While giving evidence, Ms Pagonis volunteered that she had some contemporaneous notes, which she produced.  These short handwritten notes record, first, that on 11 May 2009 “Tim” called to say that “Nick/James will call back with update” and, secondly, that Ms Pagonis received a call on 12 May 2009.  The note of the second call does not refer to any suggestion about buying further plots and, while I accept Ms Pagonis’ evidence that such a conversation took place at some time, I find that it occurred at an earlier date.
56.	The note of the call on 12 May 2009 does, however, bear out paragraph 7 of Ms Pagonis’ witness statements that she was told that a developer, Southdale Homes, were making a planning application for the site.  I accept this evidence.  Despite some confusion as regards the conversation in May 2009, I accept her evidence as to her understanding from what she was told by or on behalf of the company as to the intended handling of planning permission for the site and its sale.
57.	A draft statement of William Coolican was put in evidence by the Secretary of State.  Because of age and the state of his health, he felt unable to attend court but he has confirmed the truth of his statement to the Secretary of State’s solicitor.  In November 2007 Mr Coolican agreed to purchase a plot at Winterton for £8,000, of which he has paid £6,125.  He states that he was told by the company that it was a worthwhile investment as the land had good potential for future development and he was given the impression that the company expected to achieve planning permission for housing within a fairly short timescale.  He was shown documents confirming the land’s “score” in the local development framework.  He says that he understood that the company would be responsible for taking the Winterton land through the planning process and, once planning permission had been obtained, the company would either arrange development on the land or the sale of the land to a developer.
58.	The Secretary of State relies on further evidence to show that in fact the company was operating the scheme much as it had before the FSA’s intervention.  I have referred earlier to Zyda Law’s letter dated 4 April 2008 to Mr Maguire at the company, referring to “your aspirations” to receive planning permission for the Winterton land.  This letter was sent to prospective investors, including Mr Henderson and Mr McCreath.  Mr Maguire’s evidence was that Zyda Law were referring only to that part of the Winterton land which the company would retain for itself and not to plots sold to investors.  There is no indication in Zyda Law’s letter to support this and no reason why prospective investors would have thought that it referred to anything but the whole site.
59.	On 1 August 2008 an independent professional valuation of two plots on the Winterton land was undertaken for the purposes of an investor’s proposed transfer of the plots into his self-invested pension plan.  The description of the property was in the following terms:
“The property comprises two parcels of land, each being 300 sq.m. in size and forming part of a large farmer’s field directly abutting the northern built-up edge of the village of Winterton.  In total the whole site is believed to comprise approximately 38 acres of what is a broadly level field that is currently planted with crops.  We understand that it is proposed to apply for Planning Permission in the near future to construct a large scale, mixed use development comprising both residential and commercial property.”
60.	The valuation report stated that the information was provided by the company, which was described as the client.  Mr Maguire accepted that he had seen and read the report before it was sent out. He denied that the company had provided the information contained in it, but he had no suggestion for the source of it.  He did not seek to correct the description of the property or to comment on it, because he took the report, including specifically the description, to be an expression of professional opinion.
61.	In the third period Mr Maguire was in discussions with a house-building company, Southdale Homes, in connection with the development of the site.  On 29 August 2008 he emailed Southdale Homes, asking for “a summary of the project brief in connection with Winterton concerning parties involved and actions etc (English Partnerships/Housing Corporation)”.  He was told in an email on 8 September 2008 from Southdale Homes that they had “managed to contact [English Partnerships] Luke McDonald who is interested to see the site and look at how he can help take the project forward”.  Other potentially interested parties had been contacted and the email continued, “If you can just give me another couple of weeks I will call to try and pull together an all parties meeting to take forward.  Is it o.k.?”  Mr Maguire accepted that “the project” concerned development at the site, but denied that it was concerned with areas sold to investors.  It was of course Southdale Homes’ plans which were briefly reported to Ms Pagonis on 12 May 2009.  
62.	Mr Maguire, accompanied by Mr Byrne, attended a meeting with the Homes and Communities Agency on 12 February 2009.  Mr Byrne prepared a note of the meeting, which starts:
“MM [Mark Maguire] briefly outlined the Winterton situation and that he has started the “single conversation process” with North Lincs Council.  MM explained that it was a 38 acre site with approximately 18 acres of developable area.  He stated that he had spoken to Guinness, Northern Counties and Longhurst Housing Associations and also that he believed the site was ideal for social housing and from the conversations he had had with North Lincs Council, they were receptive to this.”
A later part of the note records:
“We enquired as to the most appropriate way of progressing matters for Winterton with themselves.  NP responded that for them to be involved it would have to effectively be driven by the local authority in the sense that the local authority would need to establish with them if it had a need for this housing.  Otherwise the applications for planning etc should be made in the normal way and SLC would be well advised to start preparing a planning brief now if they wished to be in with any chance for the balance of funding available for 2008 – 2011.”
63.	Mr Maguire confirmed that the HCA was an agency which provided funding for the development of land.  He said that the planning brief referred to in the note would relate only to the 18 acres of the site which the company would retain for itself.  However, Mr Byrne gave evidence that, during this meeting and generally so far as he knew, Mr Maguire made no distinction between plots sold to investors and land retained by the company.
64.	On 22 January 2009 Mr Maguire, on behalf of the company as he accepts, attended a meeting with the North Lincolnshire local authority to discuss development at the Winterton site, at which an early planning application was invited.    He had subsequent discussions with both the HCA and Southdale Homes.
65.	On 17 September 2009, over four months after the presentation of the present position, Mr Maguire sent an email to all the investors in the following terms:
“We have important news for you from SKY Land Consultants PLC.  Following several developments over recent months all Clients will now be handled by Aston Broomhall on [number given].  You can email them directly on [email address given].  This move has no impact on the land that you have bought via SKY Land.
We are aware that some of you may have been subject to calls from competitor Companies, we urge you not to listen to their sales patter.  You will still be able to speak with Mark Maguire on the above number.
Aston Broomhall/Mark Maguire are in talks presently with a Developer and North Lincolnshire Council concerning a development on the Land at Winterton.  As soon as we have more information we will be in contact on behalf of the developer.
Please accept our apologies for any inconvenience caused by this changeover.  We remain committed to our Clients.”
66.	Mr Maguire’s explanation in evidence for this email was that he was concerned that, following the injunction first made on 6 May 2009, investors no longer had any way of contacting the company.  When he wrote “all Clients will now be handled by Aston Broomhall” he meant that telephone calls or messages could be taken on the number given.  He did not know what sort of queries investors might have, but it could be something like an investor had died and what should be done with his plot.  The second paragraph related to concerns arising from the present proceedings, with competitors suggesting that the company had lost its land.  It did not reflect a concern or desire that he wished to retain the investors as clients.  As regards the third paragraph, he said that it was a speculative email and does not say precisely which land is referred to.  In answer to a question from me, he clarified that he meant land at Winterton owned by Mr Maw, including part of the land which had been subject to the option agreement.  “We remain committed to our Clients” was a marketing term.  There was, he said, no commitment at all.  He denied that the purpose of the email was to enable investors to keep in touch with progress with the development and marketing of the Winterton land.  He denied that the third paragraph contained exactly the sort of information which investors expected to be given.  He denied that it showed that he and Aston Broomhall had stepped into the shoes of the company.  The only purpose of the email was to provide a new telephone number, but he now felt that it was very badly worded.
67.	Mr Maguire’s evidence was that once the new regime was agreed with the FSA, the company did no more with investors than market and sell plots of land to them.  It did not suggest to investors that it would have any involvement in seeking to obtain planning permission for the plots, whether as part of the whole site or otherwise, or in marketing the plots to developers.  All its activities in relation to planning matters and discussions with developers were thereafter directed to those parts of the Winterton land which the company would purchase for itself or which Mr Maw would retain.  The investors’ plots were excluded from this activity.  Mr Maguire repeatedly said that the company had not undertaken any such activity as regards the investors’ plots because, following the agreement of the FSA, it was not allowed to do so.
68.	Mr Maguire disclosed a document headed  Client Exit Strategy which, he said, was prepared towards the end of 2007 and was made available to the sales team in the company’s offices.  After a move to new offices in about January 2008 it was, he said, taped down on every disk.  Below the heading it states:
“Note: This is not to be sent out to clients, but should be offered verbally freely if client asks.  Remember always be truthful with answers – if in doubt consult Mark Maguire.”
The document contained statements which distanced the company from any planning or marketing activity as regards plots purchased by investors.  Timothy Crossley, who was engaged by the company as a manager in November 2008 after the Companies Investigation Branch had commenced its enquiries into the company’s activities, gave evidence for the company.  He gave evidence that the only script which he saw was a very short one, which was no more than a few introductory sentences.  He gave no evidence that he had seen this document, whether taped down on desks or otherwise.
69.	To show that the company carried on the business in the third period on the basis agreed with the FSA, telephone interviews were conducted by Mr Crossley with some clients in August 2009. These interviews were followed up with a short questionnaire which the clients were invited to complete and return.  Nine of these have been put in evidence.  In my judgment, they are of little value in establishing the company’s case.  There were only two questions which could be said to be concerned with the way in which the arrangements operated.  They were “Do you understand that the land is yours to do with as you wish and that you are free to apply for Planning Permission at any time” and “Do you understand that the role of Sky Land was to promote their own interests on the retained land and that the any [sic] developer interest in your land would be as a result of Sky Land’s own interests?”  Neither question clearly and directly addresses the part which the investors expected the company to play in obtaining planning permission and in marketing the site including the plots owned by investors.  In consequence, the completed questionnaires give no clear picture as to how investors understood the arrangements would operate in practice.  They do not begin to rebut the evidence given orally by the investors called by the Secretary of State.  One of the investors who answered the questionnaire dealt with the company in January 2007 and was, according to Mr Maguire’s evidence, one of the group of investors who were in the pipeline from the first period.  Mr Maguire accepted that his investment was made on the basis that the company would organise planning permission and a sale, with no involvement by the investor.  This confirms that these questionnaires cannot be relied on to establish that the company did not market or operate the arrangements on this basis.  Further, although Mr Crossley was called by the company to give evidence, he gave no evidence as to how he conducted the interviews.
70.	I am satisfied on the evidence that following agreement with the FSA the company in fact continued as it had before, representing to investors that it would deal with planning and sale of the Winterton land, including their plots, and undertaking activities with a view to both obtaining planning permission for the entire site and selling the entire site.
71.	I reject Mr Maguire’s evidence, which I found to be very unsatisfactory.  I found his explanations of important documents, such as the email of September 2009 and the note of the meeting with the HCA on 12 February 2009, to be incredible and, I have to say, deliberately untruthful.  Likewise, his denial that the company had provided the information for the valuation dated 1 August 2008 carries no conviction and his suggested reason for not correcting it will not bear scrutiny.  I reject his evidence concerning the note for the sales team, supposedly taped down to every desk in the office.  I find that it was prepared just after the start of CIB’s investigations in November 2008 for the purpose of providing it to the investigating official.  I am satisfied that the accumulation of evidence of statements being made by salesmen and the company’s solicitor cannot be explained as isolated instances of employees or agents speaking without authority.  The company did not call any of these individuals as witnesses nor did it call any investors as witnesses.
	  Did the company promote and operate a collective investment scheme?
72.	The issue is therefore whether, as a matter of law, the arrangements marketed and operated by the company both before and after the agreement with the FSA constituted a collective investment scheme within s.235 of FSMA.
73.	In my judgment, the arrangements fall within the wide net cast by s.235(1).  A scheme whereby investors purchase individual plots within a site on the shared understanding that the company will seek planning permission and market the site including the plots are clearly capable of being “arrangements”.  The arrangements must (i) be with respect to property of any description, (ii) enable the participants to participate in or receive profits or income by becoming owners of the property or any part of it or otherwise, and (iii) have as their purpose or effect the participation in or receipt of profits or income “arising from the acquisition, holding, management or disposal of the property”.  Each of these requirements appears to be satisfied: i) the arrangements concern land sold off in small plots to investors, (ii) the investors become owners of the individual plots and (iii) the purpose of the arrangements is to receive profits arising from the sale of the individual plots as parts of the larger site.
74.	Mr McGee for the company focussed on “the property” for the purposes of questioning whether s.235(1) applied to the arrangements operated by the company.  It was, he submitted, either the site as a whole or the individual plots.  The scheme does not have as its purpose or effect that participants will receive profits from the acquisition and sale of the whole site.  Their profits will come exclusively from the acquisition and sale of their individual plots, and indeed an investor was entitled under the new arrangements to sell his plot on its own.  Equally, though, if “the property” means the individual plot, there cannot be a collective investment scheme involving one plot owner and the company or a series of such schemes.
75.	In my view, this submission proceeds on a false analysis of “the property”.  I consider “the property” to be the land comprising the individual plots sold to investors.  It is that land, very probably as part of a larger site which includes areas retained by the original owner and areas acquired by the company, for which planning permission and a buyer would be sought by the company.  The investors participate by each becoming an owner of part of the property.  While it is legally possible for an investor to sell his plot on its own, that is not what is intended or likely to happen.  The purpose is to obtain planning permission, for, and to sell, the property as a whole.
76.	Section 235(2) requires that the arrangements must be such that the participants do not have day-to-day control over the management of the property.  As earlier observed, this is a question of the reality of how the arrangements are operated.  In my judgment, there is no real issue on it in this case.  There was no aspect of the management of the property over which the investors had day-to-day (or any other) control.  Steps with a view to obtaining planning permission and with a view to developing or selling the property were in the hands of the company.  The physical management of the land continued, as it had before, to be under the control of those farming the land.  In his closing speech, Mr McGee accepted that it was difficult to sustain the argument that investors had day-to-day control over their individual plots and he did not suggest that they had collective control over the site comprising their individual plots.
77.	As regards s.235(3), arrangements will constitute a collective investment scheme if they satisfy at least one of paragraphs (a) or (b).  The Secretary of State relies on paragraph (b), that the property was managed as a whole by or on behalf of the operator of the scheme.  If there is a scheme, its operator was the company.  The question here is what is meant by “managed”.  What constitutes management is dictated by the property.  Some property, short-dated deposits for example, require active and constant management.  The management of property of long-term nature may involve only intermittent activity.
78.	As regards the land in question, management could be said to involve (i) long-term goals, such as planning permission, development and sale, and (ii) the short-term physical stewardship of the land.  The latter was of no real concern to the investors.  This was not intended to be an investment in agricultural land.  In any event, it seems clear that the arrangements envisaged that the original owner would continue to use the land as part of his agricultural business until possession was needed for development or sale.  It was the company which in practice had a relationship with the owner and the reasonable inference from the evidence is that investors were content to leave it to the company to agree the use of the land pending development or sale.
79.	The purpose was to make a profit from an actual or prospective change from agricultural to residential or other use.  The management of the property, so far as relevant to the investors, was taking steps with a view to obtaining planning permission and developing or selling the land.  Such activities fall naturally within the ambit of management of land.  The respondent’s submission that individual participants were left to deal with their own plots as they see fit has no basis in the evidence.
80.	I conclude therefore that the arrangements promoted and operated by the company were at all times a collective investment scheme.  The company gave the appearance of changing the scheme to comply with the FSA’s requirements, by altering the contractual and other documents, but in fact continued to promote and operate the scheme it as it had always done.
	  Winding-up order
81.	In these circumstances, I am clear that the court’s discretion under s.124A of the Insolvency Act 1986 should be exercised in favour of making an order to wind up the company.  Its only business is unlawful and it deliberately continued its activities, despite being given the opportunity to change and despite amending the documents to give the appearance that it had changed.
82.	The company has been seeking to agree with the FSA a further letter, in which investors will be offered a refund and appropriate compensation or the opportunity to retain their plots.  In the drafts of the letter put in evidence, the company takes issue with the Secretary of State’s case that it has continued to operate a collective investment scheme.  The company submits that the opportunity to agree and send this letter to investors is a factor against making a winding-up order.  In my judgment, it carries no weight.  The company had the opportunity to carry on its business lawfully and did not take it.  It is too late to seek to salvage the situation in this way and, after earlier experience; there can be no confidence in a second attempt to address the issues through a letter to investors.
83.	I will therefore order the company to be wound up.