Jerrett & Anor v Williams & Co Solicitors (A Firm)

This is my judgment on the defendant’s application for strikeout or summary judgment of certain parts of this claim under the Financial Services and Markets Act 2000 (“FSMA”). I take the background from the helpful case summary, which I have slightly amended.

In about 2016/17, Mr Gavin Lee Woodhouse, through Northern Powerhouse Developments (“NPD”), sought to develop an adventure resort in a 132.5 hectare former forestry plantation in Afan Valley Wales, (“the Project”). He set up two companies to do this, Afan Valley Limited (“AVL”) and Afan Valley Management Limited (“AVML”).

Participants could invest in the Project by purchasing from AVL an individual plot of land where a holiday lodge was to be constructed. AVML would manage the holiday let. Participants would receive a fixed return on their investment for a number of years. In theory, after the fixed number of years, participants would receive a full return on their investment sum and own this holiday let plot in the resort. A standard form suite of documents was produced for the participants’ purchase.

In 2018, Mr Gates and Ms Barrett (“the claimants”) decided to invest in the project. They identified their preferred plot, namely plot AVA053, Afan Valley Lodge, for a purchase price of £240,000 and, on 26 th September 2018, paid a £1,000 reservation fee to an NPD company.

Thereafter, the claimants retained Williams & Co. as conveyancing solicitors to complete their purchase. On 15 th October 2018, the retainer was entered into and, on 19 th October 2018, the suite of documents for the claimants’ individual investment was signed. On or around 28 th October 2018, the claimants transferred £101,000 to the defendant’s client account for onward transfer to AVL.

But the project failed. Between 2019 and 2022, both AVL and AVML were liquidated. The claimants lost their investment and now bring the claim against the defendants for recovery of their £101,000. The claim has two heads:

A professional negligence claim primarily on the basis the defendant did not properly protect the claimants from the risks and losses of the project. I need say no more as to that as that is not relevant to what I am to determine.

An action for breach of statutory duty under the FSMA regulatory regime in that the claimants’ allege:

The project was a collective investment scheme (“CIS”);

CISs are regulated activities;

only authorised or exempt entities can undertake regulated activities;

AVL were neither authorised nor exempt to set up and operate a CIS;

the retainer with the defendant also constituted a regulated activity by bringing about a CIS deal;

the defendant was also not authorised or exempt under FSMA;

the defendant, by contravening the FSMA requirement for only authorised or exempt entities to undertake regulated activities gave rise to a claim against it for the return of the money for the money the claimants paid to AVL.

The claimants were consumers at the time they entered into the contract.

The scheme’s operator, namely NPD, was a trader.

The claimants acquired the right to use overnight accommodation being two full weeks personal stay at Afan Valley.

It was for more than one period of occupation as the accommodation right is available each year

The duration of the contract was for more than one year. The right to overnight accommodation is available ad infinitum for the period from and including the park commencement date and/or for the duration of the sublease of ten years.

The pleaded arrangements did not amount to a CIS because they fell within the exemption for timeshare contracts pursuant to the analysis of the High Court in R (on the applicantion of Shawbrook Bank Limited) v. Financial Ombudsman Service Limited [2023] EWHC 1069 (Admin) (“ the Timeshare Argument.”)

The remedies under s.26 and s.30 of FSMA are not available to the claimants because the defendant was not a counter party to the pleaded arrangements and a conveyancing solicitor does not ordinarily engage in regulated activity under FSMA, pursuant to the analysis of the High Court in Brown & Ors. v. InnovatorOne PLC & Ors. [2012] EWHC 1321 (Comm) (“the Remedies Argument.”)

Mr Dodge, counsel for the claimants, submits there is a third point of law, namely whether the defendants, as the conveyancing solicitors, were carrying on a regulated activity under Art.25 of the FSMA Regulated Activities Order 2001 (“the RAO”) which was added by the defendants in their skeleton in that it does not appear in the evidence of their solicitor, Mr Mellett, in support of the application.

Section 235 of FSMA states a CIS 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.”

In July 2008, the Financial Markets Law Committee issued a report entitled: “Issue 86 Operating a CIS”. At para.3(6) it comments on that definition and said that:

“The breadth of the definition is clearly intentional: the aim is to cast the regulatory net wide and aim to cut back its scope with exclusions. The difficulty with this approach is that:

it leaves within the net harmless arrangements where the need for an exclusion has not been identified;

more insidiously, the generality of the definition may be expansively interpreted by reference to the exclusions.”

The FSMA CIS Order 2009, (“the Order”) at Article 3 provides: “Arrangements of the kind specified by the schedule to this order do not amount to a CIS”. The schedule at para.13 provides:

under which the consumer, for consideration, acquires the right to use overnight accommodation for more than one period of occupation, and

which has a duration of more than one year, or contains provisions allowing for the contract to be renewed or extended so that it has a duration of more than one year.

The reference to “accommodation” in paragraph (1) includes a reference to accommodation within a pool of accommodation.”

Mrs Justice Collins Rice in Shawbrook reviewed how the fractional ownership timeshare sector is regulated by law in the context of judicial reviews of two decisions by the Financial Ombudsman Service (“FOS”) who chose two lead cases for detailed consideration following hundreds of complaints about the sale of fractional ownership timeshares. The FOS, following detailed consideration and a lengthy inquisitorial procedure, decided each package had been mis-sold and that the contractual arrangements should be unwound.

That was challenged with a focus on the legal and regulatory framework. In para.43, Mrs Justice Collins Rice said:

“Then, the definition of a ‘timeshare contract’ in Reg.7 of the Timeshare Regulations is expressed in terms which are inclusive, not exclusive. On its face, so long as a contract includes the periodic holiday accommodation elements, Reg.7 confirms it is a timeshare contract - whatever else it also includes.”

Then, at para.45:

“However, although the definition of a timeshare contract is inclusive, the timeshare regulatory regime itself is both self-contained and exclusive. A timeshare is not a CIS, even if it would, apart from Reg.7, otherwise qualify as one. It is differently regulated. And it is this tension between an inclusive scope provision and an exclusive regulatory regime which perhaps causes some of the analytical discomfort apparent in the present case. The ‘fractional ownership’ component of the arrangement would be differently regulated – potentially as a CIS – if it were contained in a standalone consumer contract. But its inclusion in a timeshare agreement pulls it in another direction altogether... But Reg.7 is not obviously drafted to be sensitive to consumer motivation. The issue in the present dispute, in these circumstances, is on a proper analysis a limited one: whether a like-for-like exchange of accommodation rights prevents a fractional ownership timeshare contract from falling within Reg.7 when it would otherwise do so.”

Then at para.48:

“Reg.7 is a scope provision and operates by way of a contract descriptor. As such, it is directed to the substance of the legal rights and duties set out in the contract.”

As to the approach to be taken, Mrs Justice Collins Rice in para.51 stated:

“The whole point of the initial classification of the contract is to situate it within the regime identified by statute as the most appropriate for answering that question. Identifying the right regime has to come before the evaluative stage, not afterwards.”

After noting possible artificiality or circumvention and the potential for undue complexity, she ended at para.53 by stating her “conclusion is essentially that as a matter of contextualised statutory interpretation, Reg.7 is a straightforward gateway provision, which simply requires the matching of its words to a contract which is an operative source of the rights described.”

Mr Kirk therefore submits that applying the law to the agreed facts (see para.7 above) means the arrangements in this claim amounted to a timeshare contract and therefore is statutorily excluded from being a CIS.

An agreement made by a person in the course of carrying on a regulated activity in contravention of the general prohibition is unenforceable against the other party.

any money or other property paid or transferred by him under the agreement; and

compensation for any loss sustained by him as a result of having parted with it.

made after this section comes into force; and

the making or performance of which constitutes, or is part of, the regulated activity in question.”

An unauthorised person is likely to have breached the general prohibition in s.19 by engaging in regulated activity without authorisation or exemption which at its highest could result in two years’ imprisonment; that for a defendant solicitor, such as here, would no doubt result in loss of their practicing certificate as well as possibly their personal freedom.

Mr Kirk in that respect cited the decision of Mr Justice Hamblen (as he then was) in Brown. That arose out of failed tax schemes and, amongst other matters, concerned a solicitor, Mr Bailey, instructed by an investment fund found to be an unlawful CIS. His firm, Collyer Bristow’s (“CB”) role was especially wide in that, as set out as para.85, CB stated its retainer was to “to act on your behalf in relation to the formation of the above Partnership, the drafting of all necessary documentation relating to the acquisition of certain technology, the drafting of the Information Memorandum relating to the raising of money for the above, the preparation of Verification Notes and the negotiation of banking documentation with the appropriate lending institution”.

CB had an outward-facing role too in that they received applications with money from those who engaged in the scheme with the monies being deposited in the firm’s client account on behalf of the investment company. Notwithstanding this quite substantial involvement, Mr Justice Hamblen rejected claims against CB under s.26 and/or s.30.

At para.1210, he referred to the submission that the “drafting/witnessing role did not bring about the transactions in any meaningful sense, let alone to sufficiently to fall outside the exception” and at para.1211 the like as to CB’s role in holding subscription monies and distributing them.

Then at para.1212, Mr Justice Hamblen said:

“Mr Bailey, acting in his capacity as solicitor, never did any deals in investments whether on behalf of the Claimants (for whom CB were not acting), or Innovator. Any role CB played in relation to the investments that the Claimants made was an administrative role undertaken as agent for Innovator (or the LLPs): any acts or steps taken were not done by CB on its own account and did not themselves bring about the transaction to which any arrangements related.”

At para.1224 to 1241, Mr Justice Hamblen turned to the liability of various defendants under s.26 and noted in particular in that respect paras.1235, 1236 and 1237 as to the “other party” having to be a contravening contracted counter party that statutory interpretation “suggests that third parties are outside the scope of s.26” and that the right to relief under s.25 “clearly shows that it is the person who made the agreement against whom the remedy may be obtained since he is the person (and the only person) who may seek relief against such a claim. If it were otherwise it would mean that relief could be obtained by the person who made the agreement and was contravening the general prohibition, but not by the third party recipient who made no such agreement and was not so in contravention. That would be an absurdity”.

As to s.30, Mr Justice Hamblen found that, to be recoverable, monies must be paid under the agreement which is unlawful. The solicitor receiving monies into his client account did not hold the monies beneficially and so was not obliged to repay as he was not arranging deals in investments - he was receiving and distributing the money on his client’s instructions (see paras.1238 and 1250).

58B.1 The Defendant promoted the Development by attending sales, road shows, including in Hong Kong with the Developers and/or Introducing Agents, and by informing prospective buyers at such roadshows that the features of the scheme included the appointment of officers, employees or agents of the Defendant as directors of the Angelgate Buyer Co.”

In para.58C, the proposed amendment referred to the solicitors carrying out a regulated activity in the context of Art.37 and 51ZE of the RAO. Then it was pleaded in para.8E, by reason of that and other matters, Oliver & Co. were in breach of the general prohibition in s.19 and their retainment was in agreement in contravention of the general prohibition for the purpose of s.26 or, alternatively, their receipt of pre-completion payments was also in contravention of s.26.

His Honour Judge Hodge QC refused the application to amend stating in para.31:

“I do not consider that, on the facts that are proposed to be pleaded by way of the amended particulars of claim, there is any arguable case, with a real prospect of success, that Oliver & Co were carrying on any regulated activity, either in the sense that they were engaged in establishing or operating a collective investment scheme, or in managing investments in circumstances involving the exercise of a discretion.”

Having refused at para.34 the proposed amendments as “they do not give rise to any properly arguable case with any real prospect of success”, he went on to say in para.35 that if he was wrong as to that analysis, he accepted Oliver & Co’s submission that the claimants were not entitled to any remedy under s.26 whether by way of recovery of payments or compensation for their losses.

Then in para.37, he said he accepted the submission that

“the claimants cannot claim compensation or restitution under s.26 from Oliver & Co, even if it was a collective investment scheme, and even if Oliver & Co were engaged in regulated activity in relation to it, because the operative agreement was the agreement for sale, in respect of which the relevant counterparty was the developer and not Oliver & Co. I reject Mr McIlroy's submission that the contract of retainer between Oliver & Co and each PMC claimant can be considered as the relevant contract for the purposes of s.26. It is the sale agreement, pursuant to which the PMC claimants' moneys were paid away on exchange of contracts and subsequently, so as to participate in the collective investment scheme, if that is what it was, that is the relevant agreement for present purposes. It is that agreement, and not the contract of retainer with Oliver & Co, which would be rendered unenforceable by reason of any breach of the Financial Services and Markets Act.”

In paras.2 and 3 above, I said that AVL was one of two companies set up by Mr Woodhouse and that it sold individual plots to, amongst others, the claimants. That company, with forty-two others, all in insolvent liquidation by their administrators, brought proceedings against their solicitors for damages for professional negligence.

On 5 th January 2026, the Court of Appeal handed down judgment in Afan Valley Ltd & Ors. v. Lupton Fawcett LLP [2026] EWCA Civ. 2 . The defendant’s solicitors informed me of this so I notified the parties that if they wished to file submissions on the same they should do so by 16 th January 2026. The defendants submit the legal analysis of the claimants’ financial loss is not relevant to their application here, but added at para.11 of the decision the Court of Appeal proceeded on the basis “it is common ground that the effect of s.26 is to give the ‘other party’, here an investor in one of the schemes, an election to choose between enforcing their contractual rights and claiming their entitlement under s.26(2) (see Re Whiteley Insurance Consultancy (a firm) [2008] EWHC 1782 (Ch) at para.25 per David Richards J).”

In other words, s.26 only provides a remedy against the counterparty to the unlawful investment transaction consistent with Brown , so as the defendants here were not counterparties to the investment transaction and, accordingly, no claim is possible under s.26 and that, Mr Kirk submits, is consistent with the approach in Brown . Here the defendant’s solicitors are likewise not counterparties to the concerned investment transaction and therefore there is no basis for a claim against them under s.26 following Whiteley , Brown and Lupton Fawcett .

Mr Dodge takes a different approach in his submissions on the latter decision. First, not only the defendants but also the claimants played different roles in Lupton Fawcett as they established or operated the investment schemes, as opposed to the claimants here who were participants. The establishers or operators as claimants claimed the solicitors failed to give proper advice or warnings to them, as opposed to here where the claimants claim the defendants failed to advise or warn them as investors or participants.

Secondly, Lupton Fawcett provides background guidance as to the structure of such schemes and claims arising and is accordingly limited in that Mr Dodge reiterated this is a developing area of the law with a relative dearth of binding authority.

Mr Dodge submits that for some of the schemes in Lupton Fawcett , such as rooms in care homes and student accommodation, it is likely unarguable that they were timeshare agreements as no question of occupation by the investor would arise and the Court of Appeal made no finding as to whether any of the schemes were a CIS, but proceeded on the assumption they might have been.

Emphasis is placed by Mr Dodge on the Timeshare Agreement which he describes as unmeritorious and raised for the first time in the defence and covering letter of 21 st March 2025, as he submitted in his skeleton argument argument, in oral submissions and in his supplementary submissions at para.17 where he said:

“There is nothing for the court which could permit it to proceed on a factual assumption (still less conclude) that:

It ever occurred to D at the time that what the claimants might be doing was to enter into timeshare agreements.

D never advised or warned the claimants to that effect, (this being the basis of the cross-application to amend).

The scheme in which the claimants participated was never promoted to investors on the basis that they were, or even might be, entering into a timeshare agreement.”

Further, he submits there was nothing in the judgments in Lupton Fawcet at first instance with NCN [2024] EWHC 909 KB, a decision of Mr Justice Sheldon, or in the Court of Appeal that indicates any of the 23 schemes amounted to a timeshare or that question was considered or that they were promoted as such, but in the absence of a pleaded defence, that is an unknown. In particular, in the first instance judgment at paras.21 to 30, reference is made to the advice of various counsel, but the Timeshare Argument was not suggested as the basis for the schemes not being a CIS.

Accordingly, he submits the decision provides limited factual background as to how the schemes including the one here were first perceived by establishers/operators and their legal advisers and secondly promoted to participants. Mr Dodge submits the obvious explanation for the possibility of some being timeshare agreements not being raised was because they plainly were not. At best, the decision provides limited support for the independent timeshare argument which he submits is “an outlier and unmeritorious ex post facto attempt to re-categorise the arrangements as something different from what they actually were promoted as and understood to be at the time.”

Neither limb of the Remedy Argument, Mr Dodge submits, was considered in Lupton Fawcett for the reason that, contrary to the position here, the claimants or the establishers/ operators did not allege Lupton Fawcett had in the course of their instructions carried on any regulated activity.

Further, the question before the Court of Appeal was whether those claims could show recoverable loss, as opposed to a claim under s.26. That is very different to the position here where the claimants have to show first a regulated activity carried on by the defendant, namely arranging deals and investments, and, secondly, a contract to which that defendant was a counterparty. I accept that submission as to the difference.

Mr Dodge notes that the practical consequences of the defendant’s application are, first, that if the Remedy Argument succeeds but not the Timeshare Argument, notwithstanding the end of the statutory remedy, the claimants will still be able to argue that the promotion of the scheme by the defendant was unlawful under FSMA and that the defendant’s performance of its common law obligations and duties should have reflected that.

Secondly, if the defendants succeed on both the Remedy and the Timeshare Arguments then the promotion of the arrangements are not necessarily lawful and it is not the defendants pleaded case that there has been compliance by them with the Timeshare, Holiday Products, Resale and Exchange Contract Regulations 2010; they are prima facie unlawful. Accordingly, as the defendants say, if the claimants wish to rely on the legality under the timeshare regulations as opposed to FSMA, they must amend and the defendants have consented to the claimant’s application to so amend.

Thirdly, Mr Dodge submits the defendants will still, even if they failed on both those arguments, be able to argue the arrangements did not amount to a CIS for the purpose of the general test in s.235 - as pleaded in the defence at paras.23 to 28 - concluding that the contract is an investment which would be classified as a timeshare contract for the purpose of para.13 of the schedule to the CIS Order.

As to the timeshare argument, he submits that it is that that prevents the arrangements being a CIS. Consequently, s.235 should not be looked at in isolation but in its wider context. Then the timeshare exemption at para.13 and the definition in Regulation 7 must be considered.

Mr Dodge cited the judgment of Lord Justice Christopher Clarke in Financial Conduct Authority v. Capital Alternatives Limited [2015] BLR 767 at para.99 as to the conclusion on pooling or how income profit is to be shared and the speech of Lord Sumption in Financial Conduct Authority v. Asset LI Inc [2016] UKSC 17 at paras.90 to 102 as to s.235 and its subsections.

As I have mentioned above, para.28 of the Defence submits that the claimant’s investment is the timeshare contract for the purposes of para.13 of the schedule to the order exempting such contracts as being CIS. In their Reply, the claimants plead at para.10 that “In reality, the arrangements were not such as to result in the participants acquiring the right to use overnight accommodation, either for more than one period of occupation or at all, if and insofar as clause 10 of the agreement purported to grant the right to use overnight accommodation” and then followed by four reasons. The first two Mr Dodge submits are fact sensitive namely first expressly conditional upon the park becoming operational and secondly that such a right requires the accommodation to exist. Neither happened in that the park was not operational when the claimants entered into the agreement and it has not become so since. Therefore, he submits, the claimants did not acquire a right to use overnight accommodation, plus such a right required the accommodation to exist which it did not.

Subparagraph (3) of the Reply pleads that: “On completion of the agreement, the accommodation concerned under the relevant sublease vested not in AVL but AVML. The effect of that for the CIS is the right to use overnight accommodation will not be acquired as against the owner, AVML”.

Subparagraph (4) of the Reply pleads: “Any categorisation of the agreement as a timeshare contract will mean that para.13 of the schedule to the CIS order or regulation 7 of the timeshare regulations would be artificial in the extreme. For the purposes of s.235, this (inaudible) property of the scheme as that set out in para.26, none of which is capable at any material time of being used as overnight accommodation for the purposes of clause 10. “

Mr Kirk submits the argument that this is not a timeshare argument because no overnight accommodation arose as it was never built is a weak one. First, the definition rests upon contractual rights which exist whether or not the party fulfils them; secondly, it is contrary to the purpose of the provision which is to protect consumers sold a timeshare before physical completion, as the standard information form for timeshare contracts specifically refer to schedule 1 in part 1 and 2: “The date on which the consumer may start to exercise the contractual rights: if the contract concerns a specific property under construction, the date with accommodation and services facilities will be available.”

Further, part 3 of that schedule at para.1 provides: “Information about the rights acquired: Conditions governing the exercise of the right which is the subject of the contract and information on whether those conditions have been fulfilled or, if they have not, what conditions remain to be fulfilled”.

Paragraph 3 provides: “Additional requirements for accommodation under construction: Where applicable, the state of completion of accommodation or the services rendered in the accommodation fully operational and any facilities to which the consumer will have access. The deadline for completion of the accommodation or the services rendered are fully operational and a reasonable estimate of the deadline for the completion of any facilities to which the consumer will have access”.

In his oral submissions, Mr Kirk emphasised that if the reasons advanced by Mr Dodge were effective requirements, namely that the buyer had to acquire the land or that the accommodation had to be built before the agreement was entered into, this would be set out especially as the purpose of this legislation is consumer protection. Further, any reasonable construction of the provisions in part 1 and part 3 show it was meant to apply to arrangements where property had not been constructed and rights acquired which could not be exercised.

Mr Dodge submits that Baltic House is of no assistance here and is not binding on me as the amendments I have set out above concern the position of solicitors involved in differently regulated activities, namely Art.37 and Art.51(z)(e) of the RAO.

Likewise, he submits Shawbrook concerns substantially different financial arrangements as para.4 states as to the fractional ownership timeshare “As well as the standard sort of timeshare accommodation arrangements, it involves consumers buying, for their lump sum outlay a ‘share’ in the ‘ownership’ of a single identified property in an accommodation portfolio. It does not confer any rights to stay in that particular property. But it holds out the prospect that the property will be sold at the end of the timeshare period with net proceeds distributed pro rata among the fractional owners”. Mr Dodge submits that is an add-on to the timeshare and that it is s.235 which is the gateway provision which is agreed as satisfied here.

Mr Dodge in seeking to not only differentiate the position here from Shawbrook and Baltic House emphasises that the facts overall here are quite extraordinary as, not until the claimant’s letter including the defence on 21 st March 2035, it appears anyone at any stage suggested the arrangements may amount to a timeshare. In particular, it is not alleged in the Defence that the claimants were advised this is a timeshare agreement.

His key submission here is that it is unlawful to market a timeshare as an investment, but, if so, why did the defendants here not advise the claimants that this is unlawful? This is because in this instance the promoter acquired land, recruited investors and sold the arrangements as an investment which included a pooling element leading to a fixed return. Here it is, I note, 10 per cent per annum. That return is based upon any lodge, it is not personal.

In emphasising the need to look at the entirety of the arrangements, Mr Dodge submits there is literally nothing in the marketing or advice which led the claimants as investors to believe they were buying anything other than an investment; a timeshare was not mentioned. The documentation to facilitate the scheme is a lease back with a schedule of returns leading to a lodge and sum of money from the fixed return element.

Accordingly, that is very different to Shawbrook , albeit Mr Dodge submits that judgment means he cannot run a dominant purpose argument and unlike Shawbrook the arrangements here look like an investment and are marketed as if it is one. Upon analysis of the para.13 exemption for timeshares, it is, Mr Dodge submits, important that the totality of the rights are reviewed to determine whether they are rights under the timeshare contract.

In regulation 7(1)(a), Mr Dodge submits the reference to acquiring the right must be a real substantive right, not an illusory one. Further, the reference in 7(1)(b) of a duration of more than one year is not necessarily what was proposed here namely an agreement for a lease. In addition, the contract is by clause 1.3 of the conditions of sale conditional upon acquisition of the land - which could mean a right conditional upon something which may never happen. In that respect, clause 5.4 sets out the consequences of the non-satisfaction of the conditions.

That, Mr Dodge submits, means there never was a right that was acquired as the contract is conditional upon conditions which have not been fulfilled. Further support for this appears in clause 10, personal usage, wherein the personal stay is conditional “from the date the park becomes operational”. The sum of those matters is that, as a matter of statutory construction, whatever right is granted is so nebulous so as not to amount to an acquisition of the right to use.

In response to the defendant’s case on the remedy argument, Mr Dodge submits that Brown is a complex claim with a multiplicity of contracts and defendants. He cited the decision of Mr Justice Miles in Dhillon v. Orchard [2025] EWHC 834 (Ch) wherein the ratio of Brown was summarised at para.111. Then, at para.112, Hamblen J decided that s.26 did not allow a claim against persons other than the original parties to the agreements covered by the provision. He decided that “as a matter of statutory construction, s.26 did not allow a claimant to claim against a third party recipient of money paid under such a contract”.

Then, at para.121: “The judgment suggests that the argument turned on whether the relevant defence could be brought within the ambit of s.26. In any event, while I consider that Hamblen J was correct in analysing the personal claims available to parties under s.26 of FSMA, I am unable to conclude that s.28 means the mere transfer of relevant property to a third party extinguishes the statutory right of a claimant under s.26 to (inaudible) recovery. If that is what Brown decided, I consider it is wrong and I decline to follow it for all the reasons given above.”

Mr Dodge submits that the defendants here as conveyancing solicitors are not third parties and that the contract is their retainer as it is pursuant to that the activity that is carried on. In Brown , CB were acting for the schemes, not the investors so the position is substantially different on the facts and accordingly can be distinguished.

Mr Dodge submits the question as to whether an investor would have a statutory remedy against their solicitors depends on the factual matrix including, first, whether the solicitor carried on a regulated activity and, if so, which one; and secondly, can an agreement be identified for the purposes of s.26(3)(b). Here, as pleaded in para.55 of the particulars of claim, the arrangements were buying or subscribing under Article 25.1 and 2 of the RAO. Mr Dodge submits no guidance can be drawn from any case wherein the solicitor has carried out a different regulated activity. I would not necessarily put it as high as that, but I accept that in technical areas such as this one must proceed with substantial caution.

I accept Mr Dodge’s submission that identification of the relevant agreement is crucial and that there is an argument that the performance of a retainer may constitute activity on the transaction which could itself be a regulated activity fulfilling s.26(3)(b). That differentiates the defendant from being a third party recipient in that the defendant was a party to the retainer by which it did something unlawful.

Mr Justice Miles stated in para.115 that:

“FSMA is to be construed in a way which enhances consumer protection. In my view, this supports the conclusion that the right to recover property under section 26 is capable in principle of binding third parties. The contrary view, that recovery can only be claimed against the original counterparty/transferee, would dilute the protection given to consumers.”

I turn briefly to the law on the strike out and summary judgment. The claim can be struck out where there are “no grounds for bringing it” (CPR 24(2)(a)). CPR 24(3) provides “summary judgment may be entered there there is no real prospect of success”. I have in mind in the notes to CPR 24 and, in particular, Easyair Limited v. Opal Telecom [2009] EWHC 329 (Ch) at para.15.

The submissions for the defendants on both the timeshare and remedies arguments have substantial initial attraction starting with what appears to be a simple set of facts. When the law is applied to those facts, there appears to be a logical flow which looks hard to dam or disrupt. On the face of both arguments are short points of law which the court should grasp and determine.

The Timeshare Argument

I accept that the decision in Shawbrook can be distinguished as Mr Dodge submits, as I mention further below. As a result, the flowing logic of the defendants’ submissions ground upon points of not just substantial difference but uncertainty as to the effect of the statutory and regulatory provisions upon the arrangements which obtain here.

Those arrangements on their face appear to satisfy s.235(1) of FSMA. Whether those arrangements fall within the timeshare exemption is, in my judgment, insufficiently clear as would need to be for judgment in the defendant’s favour. A fuller investigation of the facts and circumstances is necessary. I say that particularly because it appears that the question of whether these arrangements amounted to a timeshare agreement was never raised by anyone at any time prior to service of the defence.

Further, clause 10 is in my judgment conditional on the park becoming operational which did not occur. In addition, the lodges were not built and the development collapsed ending the prospect of the condition being met. Finally, as the defendant accepts, title had not been acquired before the collapse of the scheme. I accept Mr Dodge’s submission that it is a bold argument that consumer protection can be avoided by the development purporting to grant the right to use as overnight accommodation property which had never existed and never came into existence on land it had never and did not own.

Shawbrook is distinguishable as there was no conditionality as the arrangements were in place. Therefore, again, the claimants had not acquired the right required under Regulation 7(1)(a).

Further, I do not consider “grasping the nettle” to be appropriate here given Mr Dodge’s submissions as to the findings of fact and the proper construction of clause 10, which I accept. These questions should in my judgment be explored at trial. This is not a “something may turn up” situation, but one which requires close analysis of the discrete facts which apply in these arrangements to determine the correct application of the law (see Easyair at para.15(6)).

The facts with which the court is concerned should include whether it occurred to the defendants that they were advising on a timeshare arrangement, if they advised or warned the claimants of this and were these arrangements promoted to the public on the basis that they were or might be a timeshare agreement. I consider I should have those facts before me in all the circumstances before proceeding to grant summary judgment or strike out.

The Remedies Argument

There is a fundamental difference between the position of the solicitors in Brown and here in that in Brown they set up and administered the schemes concerned, whereas here the solicitors acted for the investors. That was not the position of Baltic House in that the solicitors there acted as conveyancing solicitors. As I have set out above, His Honour Judge Hodge KC found the operative agreement was the agreement for sale, so the relevant counterparty was the developer and not the conveyancing solicitor. However, the basis of that decision concerned Art.37 and Art.51(z)(e) of the RAO which is not the position here. Baltic House is accordingly premised on a different regulatory regime and is therefore distinguishable on its facts.

Further, if I found for the defendants, as I say, at para.80 above, I would be extending the boundaries of Brown and Baltic House in circumstances which I would not on a summary or strike out basis.

Paragraph 55 of the particulars of claim refers to Art.35 of the RAO and pleads how the defendant made arrangements. In my judgment, on the essential facts before me that it gives the amount to the regulated activity of making arrangements (see Brown at paras.1204 and 1205).

I further rely on the reasons in para.79 above, which I repeat here, in that they likewise apply to the Remedies Argument.

Overall, the purpose of these regulations is protection of the consumer. In that respect, I have very much in mind Dhillon at para.115. Accordingly, I am reluctant on a summary judgment or strike out basis to deny that consumer protection where I have found that the authorities the defendants rely upon can be distinguished on their facts. This is an additional reason for refusing summary judgment or strike out in respect of the Timeshare Argument.