Day 3 at the High Court in London following action taken by the Financial Conduct Authority against London Property Investments & Others.
Jessica Bird of ‘Mortgage Introducer’ wrote an excellent summary of the claims back in July 2020 which I don’t intend to replicate. It is well worth a read.
I covered day 1, and posted the claimants written submissions in an article entitled: “London Property Investments Trial begins as FCA take action“
Day 2 was covered by Law360: “Investment Co. Accused Of Misleading Customers At FCA Trial“
Day 3 is below, and taken from my contemporaneous reporting on twitter.
This 5-day trial before Judge Richard Smith, sitting as a High Court Judge, is being heard at the Rolls Building. The FCA are represented by Mr Mark Fell QC.
Day 3
I’m back in Court 4 at the Rolls Building for day 3 of this 5-day-trial. FCA v London Property Investments (UK) Limited
Mr Mark Fell QC reps the FCA. The defs are debarred from these proceedings.
The court is hearing submissions on the admissibility of Witness Statements.
Mr Fell QC takes us to CPR 32.12
We’re told “We don’t really know if they have been put in evidence at a hearing in public” as Mr Fell explains he is seeking declaratory relief.
“If the court found it useful the court might consider it in the interests of justice to admit it.”
Judge Richard Smith is told it’s “Not necessary for your lordship to rule on it right now”
“We see real issues with the Richardson one. It will make it difficult for us to make the point against ourselves if you see what I mean”
Judge asks “Have you canvassed the defendants?” No is the answer.
2nd Q: “have you asked the makers of the statements?”
“There’s one we’ve been able to knock out by consent” Mr Fell will take instructions and revert after lunch
Judge concludes – “I’ll have a think about it and we’ll return to it tomorrow morning”
Mr Fell QC tells court “Excuse the pun but we’ve been rather plagued by coronavirus”
Mr Fell QC says he will “Start with financial promotions.” and will “Remind ourselves of the legal principles to be applied”
We hear the legal test to be applied: “We’re looking for a communication which has an element of persuasion about it” vis Financial Promotions
“The authority doesn’t have detailed internal evidence about how the website was fashioned and put together but we would invite the court to admit the plausible inference that … it could be said the company caused the communications that are found on the website”
Mr Fell QC cites the ‘common vector’ of Daniel Stevens who it’s said owned the website and ran the company
The court has been taken to a snapshot of the website which has been found on the ‘wayback machine’.
“One has to keep in mind how the website might be experienced by a consumer.” We told statements on the site include “promotional content”:
“Are you facing repossession?”
“You can keep your home”
“We never fail. 100% last minute evictions stopped”
“No credit checks”
“Lots of promotional material seem to relate to property loans. Not entirely clear what the nature of the service is.”
Website shows “a series of boxes with orange headings” including “We’ll raise immediate funding to secure your property”
“Under a heading ‘fast property loans’”
Mr Fell says “Very ambiguous whether they are the funder of the loan or the arranger of the loan”
We’re now taken to a FCA letter of 9th Oct 2017 to Mr Daniel Stevens of LPI at their registered address
Letter explains “The authority was worried there was consumer credit loans offered by this company”.
Mouseinthecourt note: The FCA took action three years after the date of this letter
After this FCA letter the defs took legal advice
We’ve been taken to a version of the website dated Nov 16th 2017
We’re told it still has the ref to ‘you can keep your home’, references to speed and that there is no credit checks
“The previous ambiguity about who is providing the loans has been removed. What is clear is that it is arranging services provided by brokers.”
We’re told there is “No suggestion that the content of this website has been approved by an authorised promotion”. If so it would fall into an exception
“What’s the commercial heart of the activities undertaken by LPI. Ultimate point is to secure a commercial return in the form of fees or other renumeration principally to be found from the equity to be found in properties.”
Counsel: “The answer to your lordships question is yes”
J: “I can’t remember what my question was”
We’re now moving onto submissions on arranging and advising on regulated mortgage contracts
Mr Fell QC explains “One of the challenges of this case is one starts reading the evidence and it feels like one is suffering from cognitive indigestion”
“In some cases the authority has a witness statement, in others the authority has an attendance note. In those cases we have served a hearsay notice. That was complicated by the fact the defendants were debarred. In a normal case you have a bundle and the bundle would be agreed”
We’re going to start “with quite a detailed treatment of the first consumer” and “then as we work our way down we won’t need to look” at all the evidence.
J: Having interrupted you am I allowed a break?
Court adjourns until midday
We’ve been hearing submissions on Regulated Mortgage Contracts (as fun as it sounds).
“The other slightly fiddly aspect of the [Regulated Activities Order] is the various partially over lapping exclusions”
The court adjourns for lunch. We’ll resume with Article 67 at 2pm
https://www.legislation.gov.uk/uksi/2001/544/article/67
And we’re back.
Mr Fell QC poses the question – “What’s the real commercial purpose…The core activity is the arranging”
We move on to look a defence served in another set of proceedings. We’re told “there was rather a falling out between [their former sols] Edward Marshall and the defendants”
Mr Fell QC says the statement is a “fairly clear description of what sounds like arranging”.
We now go onto a ‘table’. We’re going to go through individual by individual and hear evidence for each one
First up is Harrington Thomas. This was a RMC was arranged with Foresight.
“Was Mr HT acting in the purpose of a business and did he intend to reside their? Your Lordship heard live witness evidence and he was trying to save his home.”
[Slight pause while the page numbering system is explained]
The court is being shown the ‘Business purpose declaration in the loan agreement’
“It’s not a declaration that generates the statuary exemption”
It’s the wrong language not superfluous language we’re told
“Someone signing a document saying they are carrying on a business should carry some weight but on the basis of the overall evidence it’s difficult to see what business he might have been carrying on.”
We’ve been through the various ingredients and now we will “skip back to the general findings at paragraph 4. See how that fits in with Mr Thomas’s case.”
Fairly tricky to follow without access to the underlying documents
“I would draw to your lordships attention the consistency across the witnesses… For all of those of different witnesses to not be telling the truth seems difficult to come to terms with”
The court has heard about an “exception to an exception” leading counsel to conclude “that’s a bit of a word sandwich”
We were told on day 1:
“Your lordship may have felt after this morning that the law of regulation of mortgages is crying out for reform and modification”
We’re working our way down a table. The latest property still has a restriction registered against it.
It is said that the defendants were charging up to 35% of the property price to have that restriction removed
Phew table done. Mr Fell QC says “I’m extremely grateful to your lordship for labouring through that table with me”
We’re now looking at the different sale and rent back arrangements (“SRA”)
“That completes my tour of the evidence in relation to RMC and SRA.”
Tomorrow we are expected to hear “submissions over knowing concern and remedy”
/End
Case Details
Claim No Bl-2020-001003
In The High Court Of Justice
Business And Property Courts Of England And Wales
Business List, Financial Services And Regulatory Sub-list (Chd)
Between:
The Financial Conduct Authority
(A Company Limited By Guarantee)
Claimant
-and-
(1) London Property Investments (U.K) Limited (Trading As LPI Emergency Property Finance)
(2) NPI Holdings Limited
(3) Anthony Kafetzis (Also Known As Anthony Stevens, Tony Stevens, George Stasis, Anthony Stephens, Anthonio Georgiou And Andreas Georgiou)
(4) Daniel Stevens
Defendants
Mouse in the Court 
What was the outcome of this trial? FCA vs LPI
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I expect Judgment was ‘reserved’ and a decision could be handed down anytime from 4-weeks to 9-months away
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