a land-banking arrangement was held to amount to a collective investment scheme within section 235. The company purported to change its practices following intervention by the FCA. The changes were held by the judge insufficient to take it outside section 235. On two sites, the Crewe land and the Winterton land, involving sales respectively of some 56 and 98 individual plots. The company’s option agreements for each site stipulated the terms of any future transfers of individual plots, including a restrictive covenant precluding residential development without the consent of Sky Land. In the first period investors were given the clear understanding that the company would seek to obtain planning permission for each site as a whole, and would bear the full cost of doing so. Its website identified by name its planning consultants and planning solicitors. The judge noted the common expectation (though not formally agreed) that in the meantime the land would remain ‘in the occupation of the original owner and would continue to be farmed’. The FCA intervened and the company agreed to write to investors indicating that the restrictions would be removed, that Sky Land ‘cannot and will not’ play any further role in the development of the site, and that the individual owners would need to make their own arrangements to realise the value of the site as a whole.
Held: The statements had not been fulfilled. The company had continued as before, representing to investors that it would deal with planning and sale, and undertaking activities for that purpose
Richards J said that they fell within section 235: ‘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’ . . Each of these requirements [of section 235(1)] 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.’
and ‘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.’
Judges:
Richards J
Citations:
[2010] EWHC 399 (Ch)
Links:
Statutes:
Financial Services and Markets Act 2000 235
Jurisdiction:
England and Wales
Cited by:
Cited – Asset Land Investment Plc and Another v The Financial Conduct Authority SC 20-Apr-2016
Proceedings were brought against the appellant’s associated parties, alleging that they had carred on regulated activities without authorisation, contrary to section 19 of the2000 Act. They had offered various plots of land for sale, suggesting they . .
Lists of cited by and citing cases may be incomplete.
Insolvency, Financial Services
Updated: 12 September 2022; Ref: scu.439794