In R (Holmcroft Properties Limited) v KPMG LLP [2018] EWCA Civ 2093, the Court of Appeal dismissed an appeal of the Divisional Court's decision that KPMG is not amenable to judicial review in its role as an independent reviewer in connection with Barclays' past business review exercise.
Key points:
- The Court of Appeal agreed with the Divisional Court that KPMG had not been performing a public function when it performed its role as an independent reviewer in connection with Barclays' past business review exercise.
- To reach this conclusion, the Court considered the wider regulatory and factual context and found that the nature of the past business review was essentially for the pursuit of private rights and was fundamentally a private law matter.
- A number of factors (including the claimant's refusal without reason to agree a standstill agreement for its private law claims) meant that the Court would in any event have used its inherent discretion to refuse the claimant's claim.
The Court of Appeal's decision on amenability
Concluding that the Divisional Court focussed too narrowly on the source of KPMG's powers (which were contractual in nature) when it considered amenability, the Court of Appeal found that the Divisional Court should have taken a "wider view of the regulatory position and factual context" (on the basis that all the circumstances relating to the nature and function of the power are relevant). Conducting such a broader analysis, the Court of Appeal emphasised that:
- the nature of the scheme was "essentially for the pursuit of private rights", with customers' legal rights being unaffected by its operation;
- the FCA did not stipulate that there should be a process for dealing with customer complaints about AFR assessments (and there was nothing to suggest that a challenge on public law grounds was intended), meaning that a challenge on public law grounds was "over and beyond" the FCA's regulatory exercise;
- compensation was to be negotiated on private law principles (with any agreement being enforced through the courts as part of a civil claim); and
- the fact that the engagement of IR was contractual "was all of a piece with the fact that [KPMG] was not performing any public function".
All of these factors led to the Court's conclusion that the dispute was "fundamentally a private law matter", with Holmcroft's complaint against KPMG being "ancillary to pursuing a private law claim".
Comment
Whilst it is notable that the Court of Appeal and Divisional Court took slightly different routes to arrive at the same conclusion that a firm in KPMG's position will not be amenable to judicial review, this definitive judgment will be welcomed by regulators (and private firms engaged by regulators) in the sectors where arrangements such as this are frequently used. This case also illustrates that courts considering claims for judicial review will pay close attention to whether the challenge is in effect a disguised private law challenge, in which case courts will be slow to permit judicial review (and, even if judicial review is technically available, may use their inherent discretion to refuse to grant a remedy).
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