UT-2024-000019 - [2025] UKUT 00257 (TCC)

The Warning Notice was issued on 16 September 2021. Regulatory action was proposed in relation to four individuals, CW, his wife ("EW"), PW and AP. At that time, the focus of the Case Team's case was on an alleged series of four acts each said, in some way or other, to have involved the extraction of value from DFL.

Shortly before the Panel’s determination meeting a settlement was reached between the Regulator and CW and EW under which they agreed to pay a total of £2m to the Scheme and the Regulator agreed to cease its regulatory action against them. This meant that the process was then concerned with the proposed regulatory actions in relation to PW and AP only. The settlement also meant that the focus of the matter shifted from the alleged series of four acts to the second of the four acts, the sale of shares in DFHL and the related financing arrangements.

At the Determination Meeting the Case Team sought CNs on a sole liability basis against each of PW and AP in the sum of £360,437 plus an adjustment to reflect the passage of time. The Panel determined to issue a CN on a sole liability basis to each of PW and AP in the sum of £180,218.50 (being 50% of £360,437), plus an adjustment to reflect the passage of time since 2016. PW has not referred the Panel’s determination against him to this Tribunal.

One important factor the Panel took into account in reaching its conclusion on the amount to be sought from PW and AP was that, until the regulatory action against CW and EW was stayed, the Case Team's case was that it would be reasonable to impose on each of PW and AP liability of £360,437 (plus a passage of time adjustment) on a joint and several basis with CW. The Panel commented (at [126]) on the consequences of this, saying:

“The effect of such liability of £360,437 being joint and several is that it would be open to the Scheme to choose who to recover from up to the sum of £360,437 (so that, for example, it would be open to the Scheme to recover the full sum from one of the two debtors) and that there would be rights of recovery as between the two debtors (in each case) such that each would (as between them, and subject to the ability in practice to enforce having regard to the financial resources available to the parties) be liable for 50% of the debt.

The financial information supplied by Chris and Elizabeth Wrigley is such that the Case Panel considers it reasonable to suppose that if liability had been imposed on each of Paul Wrigley and Ann Pelgrave for the full sum of £360,437, but in each case on a joint and several basis with Chris Wrigley, they could each have expected ultimately to bear the burden of just 50% of the debt of £360,437. That is to say, they could each expect ultimately to have borne the burden of £180,218.50 (either after recovery themselves from Chris Wrigley or recovery by Chris Wrigley from them).

It follows therefore that until the regulatory action against Chris and Elizabeth Wrigley was stayed, the Case Team's case was to the effect that the reasonable regulatory outcome was one on which Paul Wrigley and Ann Pelgrave each bore (after taking into account prospective contribution claims) an effective regulatory burden of £180,218.50 (always at this stage in the analysis putting to one side the question of a passage of time adjustment).

In circumstances where the Case Team has not sought to suggest that the regulatory outcome previously sought was unreasonably generous to Paul Wrigley and Ann Pelgrave, the Case Panel does not agree with the Case Team's position that it is now (simply because the Case Team has reached a settlement with Chris Wrigley) the reasonable regulatory outcome to impose a debt burden of £360,437 on each of the two remaining targets of regulatory action, on a sole liability basis.

…

In considering the reasonable response to the circumstances as they have developed, the Case Panel has considered it helpful to ask itself, if Chris Wrigley were still involved in this process, but the Case Panel considered it appropriate to impose liability on a sole liability rather than joint and several basis, what would have been the reasonable (sole) liability to impose? On the available information, taking into account that it was Paul Wrigley and Ann Pelgrave who received the sums in question but that it was Chris Wrigley who was the apparent driver and architect of the transaction, the Case Panel considers that it would have been reasonable to impose liability on each of Paul Wrigley and Ann Pelgrave on the basis that they should each share liability referable to the payment received by them 50/50 with Chris Wrigley. It is appreciated that there is a difference between the question "What liability is it reasonable to impose, there having been a settlement with Chris Wrigley?" and "What liability would it have been reasonable to impose on a sole liability basis had the regulatory action against Chris Wrigley still been pursued?" Nonetheless the Case Panel has, on the facts of this case, found it helpful to consider the latter question as part of its considerations when answering the former.”