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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> 7722656 Canada Inc & Anor v The Financial Conduct Authority & Ors [2013] EWCA Civ 1662 (19 December 2013) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2013/1662.html Cite as: [2013] EWCA Civ 1662

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IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE UPPER TRIBUNAL (TAX AND CHANCERY CHAMBER)
HIS HONOUR JUDGE COLIN BISHOPP

		Royal Courts of Justice Strand, London, WC2A 2LL
		19th December 2013

Lord Justice Longmore:

Introduction

1. This is an appeal on points of law arising from a decision of the Upper Tribunal (Tax and Chancery Chamber) by which it upheld the proposed action and finding in a decision notice of the Regulatory Decisions Committee of the Financial Services Authority ("the FSA") which concluded that the first appellant was guilty of market abuse pursuant to section 118 of the Financial Services and Markets Act 2000 ("the 2000 Act") and that the appropriate penalty for such abuse was a penalty of £8 million (reported in [2013] Lloyd's L.R.(F.C). 381ff).
2. The appellant was formed following the amalgamation of Swift Trade Inc and another Canadian company and succeeded to Swift Trade Inc's liabilities incurred during the period of the alleged market abuse. It is therefore convenient to call it "Swift Trade". Its President and Chief Executive Officer was at all material times Mr Peter Beck. Swift Trade referred the decision notice to the Upper Tribunal on 1^st June 2011; Mr Beck, who is the majority shareholder in Swift Trade's holding company, BRMS Holdings Inc., also referred the decision notice to the Upper Tribunal on the basis that he was a party who might be affected by it.
3. The FSA asserted and the Tribunal decided that Swift Trade was in breach of s.118(5) of the 2000 Act because it had systematically and deliberately engaged in a form of manipulative trading activity, known in the trade as "layering", in relation to shares traded on the London Stock Exchange ("the LSE"). Swift Trade's defence was (in broad terms) that it was not engaged in behaviour relating to "qualifying investments" but only engaged in behaviour relating to "contracts for differences" ("CFDs") which, unlike ordinary shares, are not qualifying investments.
4. The Tribunal accepted the FSA's definition of layering in the following terms:-

"layering" consists of the practice of entering relatively large orders on one side of an exchange's (in this case the LSE's) electronic order book ("the order book") without a genuine intention that the orders will be executed: the orders are placed at prices which are (so the person placing them believes) unlikely to attract counterparties, while they nevertheless achieve his objective of moving the price of the relevant share as the market adjusts to the fact that there has been an apparent shift in the balance of supply and demand. The movement is then followed by the execution of a trade on the opposite side of the order book which takes advantage of, and profits from, that movement. This trade is in turn followed by a rapid deletion of the large orders which had been entered for the purpose of causing the movement in price, and by repetition of the behaviour in reverse on the other side of the order book. In other words, a person engaged in layering attempts to move the price up in order to benefit from a sale at a high price, then attempts to move it down in order to buy again, but at a lower price, and typically repeats the process several times."

This is no doubt a useful definition of "layering", although it must be remembered that the question for the Tribunal was not so much whether Swift Trade engaged in layering as such but whether the business in which they were engaged (whatever it might be called) constituted market abuse within section 118 of the 2000 Act.

5. To understand this argument it is necessary to set out the terms of both s. 118 and s. 118A of the 2000 Act but the FSA relied primarily on sub-section (1) and (5) of section 118. If, however, for any reason Swift Trade's behaviour did not fall within sub-section (5), the FSA contended that it fell within sub-section (8):-

"118 Market Abuse

1) For the purposes of this Act, market abuse is behaviour (whether by one person alone or by two or more persons jointly or in concert) which –

a) occurs in relation to –

(i) qualifying investments admitted to trading on a prescribed market,

(ii) qualifying investments in respect of which a request for admission to trading on such a market has been made, or

(iii) in the case of subsection (2) or (3) behaviour, investments which are related investments in relation to such qualifying investments, and

b) falls within any one or more of the types of behaviour set out in subsections (2) and (8).

2) The first type of behaviour is where an insider deals, or attempts to deal, in a qualifying investment or related investment on the basis of inside information relating to the investment in question.

3) The second is where an insider discloses inside information to another person otherwise than in the proper course of the exercise of his employment, profession or duties.

4) The third is where the behaviour (not falling within subsection (2) or (3)) –

a) is based on information which is not generally available to those using the market but which, if available to a regular user of the market, would be, or would be likely to be, regarded by him as relevant when deciding the terms on which transactions in qualifying investments should be effected, and

b) is likely to be regarded by a regular user of the market as a failure on the part of the person concerned to observe the standard of behaviour reasonably expected of a person in his position in relation to the market.

5) The fourth is where the behaviour consists of effecting transactions or orders to trade (otherwise than for legitimate reasons and in conformity with accepted market practices on the relevant market) which –

a) give, or are likely to give, a false or misleading impression as to the supply of, or demand for, or as to the price of, one or more qualifying investments, or

b) secure the price of one or more such investments at an abnormal or artificial level.

6) The fifth is where the behaviour consists of effecting transactions or orders to trade which employ fictitious devices or any other form of deception or contrivance.

7) The sixth is where the behaviour consists of the dissemination of information by any means which gives, or is likely to give, a false or misleading impression as to a qualifying investment by a person who knew or could reasonably be expected to have known that the information was false or misleading.

8) The seventh is where the behaviour (not falling within subsection (5), (6) or (7)) –

a) is likely to give a regular user of the market a false or misleading impression as to the supply of, demand for or price or value of, qualifying investments, or

b) would be, or would be likely to be, regarded by a regular user of the market as behaviour that would distort, or would be likely to distort, the market in such an investment,

and the behaviour is likely to be regarded by a regular user of the market as a failure on the part of the person concerned to observe the standard of behaviour reasonably expected of a person in his position in relation to the market.

9) Subsections (4) and (8) and the definition of "regular user" in section 130A(3) cease to have effect on 31^st December 2014 and subsection (1)(b) is then to be read as no longer referring to those subsections.

118A Supplementary provision about certain behaviour

1) Behaviour is to be taken into account for the purposes of this part only if it occurs –

a) in the United Kingdom, or

b) in relation to –

(i) qualifying investments which are admitted to trading on a prescribed market situated in, or operating in, the United Kingdom,

(ii) qualifying investments for which a request for admission to trading on such a prescribed market has been made, or

(iii) in the case of section 118(2) and (3), investments which are related investments in relation to such qualifying investments.

2) For the purposes of subsection (1), as it applies in relation to section 118(4) and (8), a prescribed market accessible electronically in the United Kingdom is to be treated as operating in the United Kingdom.

3) For the purposes of section 118(4) and (8), the behaviour that is to be regarded as occurring in relation to qualifying investments includes behaviour which –

a) occurs in relation to anything that is the subject matter, or whose price or value is expressed by reference to the price or value of the qualifying investments, or

b) occurs in relation to investments (whether or not they are qualifying investments) whose subject matter is the qualifying investments.

4) For the purposes of section 118(7), the dissemination of information by a person acting in the capacity of a journalist is to be assessed taking into account the codes governing his profession unless he derives, directly or indirectly, any advantage or profits from the dissemination of the information.

…."

The Facts

6. It was common ground that traders in various countries around the world ("Dealers") placed orders for CFDs using Swift Trade's facilities with the UK subsidiaries of two large American financial institutions, first Merrill Lynch International ("Merrill Lynch") and, later, Penson Financial Services Ltd ("Penson"). Merrill Lynch and Penson acted as direct market access ("DMA") providers to Swift Trade who could not (or at any rate did not) themselves access the LSE directly. The CFDs were placed in relation to shares quoted on the LSE. Once the orders were placed, Merrill Lynch and Penson automatically (by computer and, thus, without any human intervention) hedged those orders by placing orders of their own to buy or sell an equivalent quantity of the shares ordered. The Dealers were then able to see the LSE order book "in real time" and could track the movements in the price of the shares for which Merrill Lynch and Penson were placing orders. Within a short time of the original orders being placed, they were cancelled and the consequent hedging orders were also (automatically) cancelled. But there would meanwhile have been a movement of the shares utilised in the hedge of which the Dealers (or whoever was controlling them) could take advantage.
7. Swift Trade argued that the Dealers initiating the trades were independent of Swift Trade and merely used the secondary DMA platform which Swift Trade provided. It also argued that the trades on the LSE (which were in respect of "qualifying investments") were undertaken not by it but by Merrill Lynch or Penson who were thus the persons doing the layering or engaging in the behaviour prohibited by the 2000 Act. Both these submissions were comprehensively rejected by the Tribunal. In relation to the latter it said (para 41):-

"… Swift Trade's argument that it was Merrill Lynch or, later, Penson which placed the orders is unsustainable. As we have said, pedantically speaking they did do so, but only by way of an automated reaction to Swift Trade's orders. The reality is that it was Swift Trade, or the Dealers, which caused the orders to be placed, while Merrill Lynch and Penson performed a purely mechanical function."

8. The Tribunal's reaction to the first submission was equally forthright. Having considered the evidence, particularly the e-mail communications which took place with the Dealers it said (para 126):-

"There is in our view nothing to support Swift Trade's contention that it was acting as no more than a subsidiary DMA provider. As we have already said, we saw no evidence of arm's length agreements between it and the Dealers and, of course, had no oral evidence on the topic. By contrast, the email exchanges, particularly but not only that to which we refer at para 112 above, represent, we are satisfied, a compelling indication that, whether the Dealers were Swift Trade's employees or in some other relationship with it, they were acting as part of Swift Trade's overall organisation, and in accordance with a strategy of which Swift Trade was not only well aware but which it devised and encouraged."

9. The Tribunal's overall conclusion was that Swift Trade's trading was "deliberate, manipulative, designed to deceive other marker users, successful in that aim and undertaken for motives of profit". It further held (para 128) that there was no evidence from which it could conclude that Swift Trade had any grounds (or could reasonably have thought it had any grounds) for believing that its conduct was not abusive:-

"on the contrary, the evidence points very much to the conclusion that its officers and managers knew very well that its conduct was not legitimate and that, far from taking steps to prevent such conduct, they actively encouraged it."

Swift Trade could not therefore avail itself of the statutory defence under section 123 of the 2000 Act.

10. It is in this context that Swift Trade's appeal against the Tribunal's conclusion that its behaviour was within section 118 of the 2000 Act has to be considered.

The Grounds of Appeal

11. There are two substantive grounds of appeal. The first is that since Swift Trade on 2^nd December 2010 amalgamated with another company and that amalgamated company became a fresh Canadian company called 7722656 Canada Inc (the appellant in these proceedings) and since that company was itself dissolved on 13^th December 2010, that company did not exist when the decision notice was issued on 6^th May 2011. It is one of the curiosities of this argument that this apparently non-existent company by the trustee of its remaining assets, BRMS Holdings Inc., referred the decision notice to the Upper Tribunal and instructed solicitors and counsel to contest the decision notice in the Upper Tribunal. Even more curiously, this apparently non-existent company has, in the same way, sought and obtained permission to appeal and continued to instruct solicitors and counsel in this court. We were informed that Mr Beck is behind the appeal and that the determination of the Upper Tribunal applied as much to Mr Beck's own reference as to the company's. Be that as it may, the question of the company's existence was before the Upper Tribunal and the FSA's stance on the matter was that the company does still exist and that the proceedings can continue against it. The Upper Tribunal accepted that submission and held that the relevant Canadian legislation "preserves the otherwise dissolved company".
12. The second ground of appeal is that the Upper Tribunal erred in law in concluding that the company's behaviour occurred in relation to qualifying investments within section 118(1) of the 2000 Act and in concluding that its behaviour consisted of effecting transactions or orders to trade in qualifying investments within section 118(5) because CFDs were not such investments.

The First Ground: Did the company exist?

13. This has been rightly assumed to go to the Upper Tribunal's jurisdiction to entertain any appeal from the decision notice. If the ground succeeds the decision of the Upper Tribunal and (perhaps) the decision notice will have to be set aside. This depends on whether the company existed at the time the judgment of the Upper Tribunal was promulgated or (perhaps) the time when the decision notice was issued. It is agreed that it is for Canadian law as the law of the country of incorporation to say whether the company existed at that date. That depends on the true construction of the relevant sections of the Canada Business Corporations Act 1985 ("the Canadian Act") and any relevant expert evidence of Canadian law. The Tribunal had the benefit of both written and oral evidence from a Mr Mark Connelly who practises in Canada.
14. It is axiomatic that appeals to this court from the Upper Tribunal are only on points of law and foreign law is a question of fact. Mr Vineall QC for the company submits, however, that the conclusion of the Tribunal, purportedly on the basis of Mr Connelly's evidence that the effect of the Canadian statutory provisions was to "preserve the otherwise dissolved company" was not in truth based on Mr Connelly's evidence and was not based on any evidence at all. It is an error of law to come to a conclusion for which there is no evidence and it is therefore necessary to examine the evidence given and the statutory background.
15. The relevant provisions of the Canadian Act are as follows:-

"S 210

Dissolution before commencing business

210 (1) A corporation that has not issued any shares may be dissolved at any time by resolution of all the directors.

Dissolution if no property

(2) A corporation that has no property and no liabilities may be dissolved by special resolution of the shareholders or, where it has issued more than one class of shares, by special resolutions of the holders of each class whether or not they are otherwise entitled to vote.

Dissolution where property disposed of

(3) A corporation that has property or liabilities or both may be dissolved by special resolution of the shareholders or, where it has issued more than one class of shares, by special resolutions of the holders of each class whether or not they are otherwise entitled to vote, if

a) by the special resolution or resolutions the shareholders authorize the directors to cause the corporation to distribute any property and discharge any liabilities; and

b) the corporation has distributed any property and discharged any liabilities before it sends articles of dissolution to the Director pursuant to subsection (4).

Articles of dissolution

(4) Articles of dissolution in the form that the Director fixes shall be sent to the Director.

Certificate of dissolution

(5) On receipt of articles of dissolution, the Director shall issue a certificate of dissolution in accordance with section 262.

Effect of certificate

(6) The corporation ceases to exist on the date shown in the certificate of dissolution."

16. Section 209 has provisions for the restoration of the corporation to the register which are similar to the provisions to that effect in the United Kingdom.
17. There are then provisions relating to the continuation of actions:-

"S 226

Definition of "shareholder"

(1) In this section, "shareholder" includes the heirs and personal representatives of a shareholder.

Continuation

(2) Notwithstanding the dissolution of a body corporate under this Act,

(a) a civil, criminal or administrative action or proceeding commenced by or against the body corporate before its dissolution may be continued as if the body corporate had not been dissolved;

(b) a civil, criminal or administrative action or proceeding may be brought against the body corporate within two years after its dissolution as if the body corporate had not been dissolved; and

(c) any property that would have been available to satisfy any judgment or order if the body corporate had not been dissolved remains available for such purpose."

Mr Connelly's Opinion

18. The FSA served an expert opinion of Mr Connelly dated 17^th April 2012. Swift Trade and Mr Beck elected not to serve any expert opinion of their own. The argument in this court (though not before the Upper Tribunal) has been somewhat bedevilled by the fact that on one view Mr Connelly was not asked the right question by the FSA. Mr Connelly put the matter as follows:-

"The question I have been asked to consider is whether the Decision Notice, and the proceedings that have followed the Decision Notice, are invalid by reason of the fact that, prior to the date of the Decision Notice, 7722656 Canada Inc. (together with its predecessor corporations, "Swift Trade") had been dissolved under the Canada Business Corporations Act ("CBCA").

It is my opinion that the FSA Proceedings, as defined below, were at the date of the Decision Notice and remain at the date hereof valid as against Swift Trade under Canadian law, notwithstanding Swift Trade's amalgamation and subsequent dissolution under the CBCA prior to the date of the Decision Notice."

He is thus asked if the proceedings are invalid by reason of the company's dissolution and answers by saying that the proceedings against the company are valid under Canadian law. The question to which the Tribunal (and this court) needs an answer is whether, as a matter of Canadian law, the company had an existence. The question whether the English proceedings are valid is a matter of English law which, however, can only be answered by discovering whether in Canadian law the company existed at the time of the reference to the Upper Tribunal and the decision notice.

19. The fact that Mr Connelly may have been asked and answered the wrong question does not necessarily mean, however, that there was no evidence about the answer to the right question because it might be relevant to know, even in answer to the wrong question, whether the company had an existence in Canadian law.
20. This is shown by Mr Connelly's approach in his written evidence because he has a heading "Canadian Law Relevant to the Status of Swift Trade" in which he concludes:-

"… notwithstanding that termination of the existence of Swift Trade following issuance of the Warning Notice involved various steps, it did not relieve the entity dissolved from any of the liabilities of Swift Trade."

21. He then went on to discuss the issue whether the decision notice and the reference to the Upper Tribunal constituted administrative proceedings within section 226(2)(a) of the Canadian Act and referred in a footnote to Enron Canada Cpn v Husky Oil Operations Ltd (2007) ABCA 27, (2007) 401 Alta. Rep. 291 (a decision of the Court of Appeal of the province of Alberta) as support for the proposition that Canadian courts "have found that proceedings against a dissolved corporation permitted by provisions like section 226(2) … can be defended and appealed on behalf of the dissolved corporation".
22. For the benefit of the Tribunal Mr Otty QC for the FSA had attempted in his written opening submissions to summarise the evidence of Mr Connelly by saying that he had concluded:-

"that the proceedings commenced by the warning notice issued by the Authority were valid at the date of the decision notice and thereafter have remained valid. The legal status of Swift Trade has, as a matter of Canadian law, continued to be at all relevant times that of a party capable of being a defendant or respondent in any action or proceedings begun prior to its dissolution."

When Mr Connelly was asked at the beginning of his oral evidence to the Tribunal whether that was a fair summary of his evidence, Mr Connelly replied that it was. He was not cross-examined to the effect that it was not. It seems to me that this is at least some evidence that as a matter of Canadian law, the company had an existence, even if that existence could perhaps be aptly described as somewhat shadowy.

23. The matter does not rest on this part of Mr Connelly's evidence alone because the judgment of the Court of Appeal of Alberta in the Enron case, cited by Mr Connelly, contains some remarks about the existence of a dissolved company under the Alberta legislation which is in the same terms as the Canadian legislation save that the section about the continuation of proceedings is section 227 rather than section 226. The issue was whether a shareholder, sued pursuant to the section, could avail itself of defences available to the dissolved company. Not surprisingly the Court of Appeal held that it could, particularly because there was no provision requiring a judgment to be first obtained against the dissolved company before a shareholder who had received company assets could be held liable. In the course of coming to this conclusion Conrad J.A. (with whom his colleagues concurred) said:-

"27. Finally, the peculiar nature of the dissolved corporation's existence suggests the shareholder is entitled to defend on the merits of the underlying action. Although section 227 contemplates two actions – one against the dissolved corporation and one against the shareholder – the dissolved corporation is gone and its assets have been distributed. There are no officers or directors to express the dissolved corporate will, and funds left behind to defend existing or contemplated lawsuits. The dissolved corporation is a bare shell – a legally deemed fiction for the purpose of facilitating claims against the shareholders under section 227(4).

28. In simple terms, therefore, section 227 is really an action against a shareholder. The shareholder is the party at risk. The sole purpose of the section is to allow a claimant to pursue the shareholder, otherwise a judgment against the dissolved corporation would be fruitless. As a result, the shareholder should have an effective means of protecting his or her interests by pleading defences relating to the dissolved corporation's liability."

He summarised his conclusions at paragraph 37:-

"In summary, I find that the following factors favour the view that a shareholder sued under section 227(4) of the Act is entitled to defend against the dissolved corporation's underlying liability:-

a) a shareholder's liability under section 227(4) is contingent upon the existence of a valid claim against the dissolved corporation, and the dissolved corporation's liability is integral to the lawsuit against the shareholder;

b) the language of the statute, and the fact that the limitation periods dealing with a new action against a dissolved corporation and an action against the shareholder, are identical (two years) indicate the shareholder can be sued before judgment is obtained against the dissolved corporation;

c) the dissolved corporation has no real existence and the shareholder is the real party at risk; and

d) there is an absence of limiting language."

Dr Peglow (then representing the company and Mr Beck rather than, as now, the interveners) cross-examined Mr Connelly on paragraphs 28 and 37 of this judgment but not on paragraph 27 which might be thought to be the more significant paragraph for present purposes. That is because it seems to accept that the company has an existence, albeit an existence of a "peculiar nature" as "a bare shell – a legally deemed fiction". The fact that in paragraph 37 Conrad J.A. says that the dissolved company "has no real existence" cannot be intended to contradict (but rather to emphasise) what he said in paragraph 27 shortly before.

24. The tribunal rehearsed the parties' arguments and came to its conclusion in paragraphs 21 and 24:-

"21. We found Mr Connelly's evidence on Canadian law persuasive, and are satisfied that it does provide that Swift Trade has a continuing, even if limited, existence sufficient to validate proceedings against it in Canada. That is not the same as saying that it remains in existence for the purposes of English law, as Dr von Pommern-Peglow rightly said, but Mr Connelly's evidence was not that s 226 is confined to Canadian proceedings, but that it is of more general application, validating (within the confines of the section) proceedings against the company, irrespective of the forum. In other words, it is not a purely Canadian procedural provision, but a provision which (for reasons we shall develop shortly) preserves the otherwise dissolved company for certain purposes. We observe too that, although it plainly does have some procedural characteristics, we detect nothing in the section consistent with an intention that its effects are to be confined exclusively to Canadian proceedings. …

24. The logical consequences of Dr von Pommern-Peglow's argument, as we see it, is that proceedings may be taken or continued against a dissolved company but the company cannot participate (since s 226(2) makes no express provision for it to do so) and that the outcome of the proceedings, even if they are Canadian, and whatever it might be, is of no more than academic interest since the company cannot be affected by it. That, if we may say so, is a nonsense. It is in our view plain that, alien though the concept may be to English law, the Canadian law which determines Swift Trade's existence provides that it continues to exist, notwithstanding its dissolution, for limited purposes which include proceedings of the kind with which we are concerned."

25. These are, in my view, conclusions to which the Tribunal was entitled to come. Although they record Mr Connelly's view that section 226 validated proceedings against the company, irrespective of the forum, they also attribute to him the view that Swift Trade has "a continuing, even if limited existence" and that section 226 is a provision which for reasons they will develop "preserves the otherwise dissolved company for certain purposes". The developed reason is shortly expressed as being that Canadian law is the relevant law to determine whether Swift Trade exists and that that law:-

"provides that it continues to exist, notwithstanding its dissolution, for limited purposes which include proceedings of the kind with which we are concerned."

26. Mr Vineall submitted that section 226(2) was a purely procedural provision and could not be relevant for an English court which must apply its own procedure. As a matter of English procedure there is no jurisdiction to sue or give judgment against a dissolved company. I do not see that the relevant question can be resolved in such stark terms. The fact that section 226(2) is procedural in the sense that it allows a dissolved company to be sued in Canada does not mean that it is irrelevant (as a matter of English law) for a Canadian lawyer to have regard to it when he is considering whether a dissolved company can be said, as a matter of Canadian law, to have an existence. If that consideration assists a Canadian lawyer to conclude that the company has a "peculiar existence" even as a "bare shell", that, as it seems to me, entitles that lawyer to say that the company does exist and the Upper Tribunal was entitled to so find.
27. Lewison LJ thinks that the Tribunal came to a conclusion which was not only wrong but a conclusion that was not open to it, so that the principles of Edwards v Bairstow [1956] AC 14 apply. This is, of course, a view which I respect but for the reasons I have endeavoured to give, it is not a view with which I can agree. I do not regard the "critical question" as being whether English private international law would regard section 226 as procedural; rather it is whether in Canadian law the company has an existence since the rules of English private international law provide that the status of a foreign company is to be determined by the law of the place of incorporation.
28. It is, of course, tempting for any lawyer to say that a question of law (even if it is foreign law) has only one right answer. But a court can only resolve a question of foreign law on evidence. Courts are always liable to differ when it comes to assessment of evidence, but in this case the only evidence which the Tribunal had was that of Mr Connelly; it is not surprising that they accepted it.

Ground 2: (1) "Effecting transactions or orders to trade"

29. I have already set out the provisions of section 118(1) and (5). It is common ground that CFDs are not qualifying investments but that ordinary shares are qualifying investments. If Swift Trade's behaviour consisted of effecting transactions or orders to trade in shares, there can be no dispute that, on the Tribunal's findings such transactions or orders to trade gave a false and misleading impression as to the supply of or demand for (or as to the price of) qualifying investments. Swift Trade's contention is that it did not effect transactions or orders to trade in shares. It was only Merrill Lynch or Penson who did that. Mr Vineall submitted on Swift Trade's behalf that, although it might be said in a general sense that Swift Trade caused Merrill Lynch or Penson to effect transactions or orders to trade in qualifying investments, Swift Trade did not themselves effect the transactions or orders to trade.
30. Once, however, it is appreciated that Merrill Lynch's or Penson's transactions or orders to trade in the relevant shares were automatically effected by computer without any human intervention, it seems to me that Swift Trade effected the transactions or orders to trade just as much as Merrill Lynch or Penson did. No doubt a human being in either of the companies offering DMA could have countermanded the automatic activity of the computer but that never happened and Swift Trade knew it would not happen, because their behaviour occurred over a period of many months.
31. As the Tribunal pointed out in paragraph 38 of their determination, it is not necessary that behaviour contravening section 118(5) of the 2000 Act should be solely behaviour of Swift Trade because the opening words of section 118(1) envisage that the behaviour can be that of "one person alone or two or more persons acting jointly or in concert". "Jointly" means no more than "together with another" and does not require that both parties act with the same ulterior purpose or intention. I have no difficulty, therefore, with the concept that Swift Trade did effect transactions or orders to trade in shares, even though that was done through intermediaries such as Merrill Lynch and Penson. Dr Peglow in his submissions for the interveners (who were permitted to intervene since the FSA has made similar allegations against them as they have made against Swift Trade) made much of the fact that Merrill Lynch and Penson were personally liable on the transactions or orders to trade automatically registered by computer. But that is nothing to the point if all that is required is that Swift Trade effect the transactions or orders to trade.

Ground 2: (2) Behaviour occurring "in relation to qualifying investments"

32. Even if Swift Trade did not "effect" transactions or orders to trade in qualifying investments because CFDs are not qualifying investments, its behaviour nevertheless occurred "in relation to qualifying investments" for the simple reason that the orders for CFDs which they did effect were contracts for differences in particular shares. Once the orders for CFDs had been made and automatic transactions on orders to trade (by way of hedging the CFDs) had been made or effected, Swift Trade's behaviour was "in relation to" those shares. The words "in relation to" are words of great width and were no doubt deliberately used in the statute for that purpose.
33. Mr Vineall relied on the fact that the phrase "related investment" was a defined term in section 130A of the 2000 Act and was used in section 118A to catch such investments for the purpose of the insider trading provisions of section 118 namely sections 118(2) and 118(3). There was, therefore, he submitted, an express intention of Parliament to apply some sub-sections of section 118 to a wider definition of qualifying investments and (by implication) an intention that section 118(5) did not apply to related investments such as CFDs might be said to be. But the definition of "related investment" is:-

"an investment whose price or value depends on the price or value of the qualifying investment."

It can be seen that the concept of a "related investment" is different from "behaviour … which … occurs in relation to … investments". The phrase "in relation to" applies to both "qualifying investments" and "related investments" in section 118(1)(a) and cannot therefore be construed restrictively (or indeed at all) by reference to the phrase "related investments".

34. Mr Vineall also submitted that section 118 is a penal section in what is a quasi - criminal statute which should be construed favourably to "the accused". He also relied both on Article 6 and 7 of the ECHR and on the EU Directive which preceded the enactments of sections 118(2), (3), (5), (6) and (7). But I do not find it possible to find any ambiguity in sections 118(1) and (5) which can be assisted by any of these considerations. Nor do I consider that section 118(5) of the 2000 Act applies to behaviour not covered by the Directive; but even if it did that would not be objectionable in itself, since the Directive imposes a minimum not a maximum obligation on the member states of the EU.

Section 118(8)

35. Since, on the Tribunal's findings, sub-sections 118(1) and (5) apply, there is no room for the application of section 118(8). The Tribunal seemed to have thought that section 118(8) would have applied if section 118(5) did not. There is obvious force in that view but I would prefer to express no concluded opinion especially as no formal reliance was placed on sub-section (8) by the FSA before it served its written opening submissions shortly before the beginning of the hearing.

Conclusion

36. I would therefore uphold the decision of the Upper Tribunal and dismiss this appeal.

Lord Justice Lewison:

37. I do not agree with the Upper Tribunal's analysis either of the relevant Canadian law or with its ruling that the company was a proper litigant according to the English private international law. I say that for the following reasons.
38. The rule of English private international law is clear. It is encapsulated in rule 19 in Dicey Morris & Collins on The Conflict of Laws (15^th ed):

"All matters of procedure are governed by the domestic law of the country to which the court wherein any legal proceedings are taken belongs (lex fori)."

39. Dicey Morris & Collins go on to explain at 208:

"In determining who are the proper parties to proceedings, the first question is whether the claimant or defendant is the sort of person or body that can be made a party to litigation. This is a question for the lex fori." (Emphasis added)

40. Under English procedural law it is not possible to take proceedings against a dissolved company, "though the question whether a company has been dissolved must be decided by reference to the law of the place of incorporation." The inability to take proceedings against a dissolved company is illustrated by one of the cases to which we were referred.
41. In Banque Internationale de Commerce de Petrograd v Goussakow [1923] 2 KB 682 a bank which had been incorporated in Russia sued one of its customers, who dealt with the Paris branch of the bank. The contract between the bank and its customer was governed by French law. However, following the Bolshevik revolution the Soviet Government made decrees the effect of which was that the bank ceased to exist. The British Government recognised the Soviet Government, but the French Republic did not. The action would, therefore, have been maintainable in France. However, this court held that even though the contract was governed by French law and valid under French law, the action was not maintainable in England, because in the eyes of English law the effect of the decrees (made by the recognised government of the company's place of incorporation) the bank had ceased to exist, and a non-existent company could not bring an action.
42. Thus the only question of Canadian law that was relevant was the question whether Swift Trade had been dissolved, in the sense of ceasing to have any existence. The Canadian legislation dealing with that question is Part XVIII of the Canadian Business Corporations Act 1985 ("CBCA"). That Part of the Act sets out a number of ways in which a corporation may be dissolved. Section 210 provides that a corporation may be dissolved by resolution of the directors or, in certain cases, by special resolution of the shareholders. Articles of dissolution must then be sent to the Director, who must issue a certificate of dissolution. Section 210 (6) provides:

"The corporation ceases to exist on the date shown in the certificate of dissolution."

43. Section 211 provides for dissolution following a vote at an AGM. This time, the Director must be given a statement of intent to dissolve and he must issue a certificate of intent to dissolve. Section 211 (6) provides:

"On issue of a certificate of intent to dissolve, the corporation shall cease to carry on business except to the extent necessary for the liquidation, but its corporate existence continues until the Director issues a certificate of dissolution."

44. Section 211(16) provides:

"The corporation ceases to exist on the date shown in the certificate of dissolution."

45. Section 219 deals with the effect of a court order for liquidation of a corporation. Section 219 (1) provides:

"If a court makes an order for liquidation of a corporation,

(a) the corporation continues in existence but shall cease to carry on business, except the business that is, in the opinion of the liquidator, required for an orderly liquidation…"

46. Once the liquidator's final accounts have been approved under section 223 (5) the court must direct the Director to issue a certificate of dissolution. Section 223 (8) provides:

"The corporation ceases to exist on the date shown in the certificate of dissolution."

47. Similar provisions about the effect of a certificate of dissolution are to be found in section 212 (4) and section 213 (5).
48. Some of the consequences of dissolution are dealt with by sections 227 and 228 of the CBCA. Under section 227 on the dissolution of a body corporate the proportion of the property distributable to a creditor or shareholder who cannot be found is to be paid to the Receiver General. Under section 228 property of a body corporate that has not been disposed of at the date of its dissolution vests in the Crown.
49. The effects of a dissolution may be undone by the revival of the corporation under section 209 of the CBCA. That, too, involves the issue of a certificate by the Director, and the corporation is "revived as a corporation" on the date shown in the certificate: section 209 (3). The effect of revival is explained by section 209 (4) which says that subject to any direction of the Director:

"… the revived corporation is, in the same manner and to the same extent as if it had not been dissolved:

(a) restored to its previous position in law, including the restoration of any rights and privileges whether arising before its dissolution or after its dissolution and before its revival; and

(b) liable for the obligations that it would have had if it had not been dissolved whether they arise before its dissolution or after its dissolution and before its revival."

50. This section therefore, deals explicitly with substantive rights and obligations that have arisen after the date of dissolution of a corporation. They can be made to bind the corporation, provided that it is revived.
51. I come at last to section 226 on which the FCA relied. Section 226 (2) provides:

"(2) Notwithstanding the dissolution of a body corporate under this Act,

(a) a civil, criminal or administrative action or proceeding commenced by or against the body corporate before its dissolution may be continued as if the body corporate had not been dissolved;

(b) a civil criminal or administrative action or proceeding may be brought against the body corporate within two years after its dissolution as if the body corporate had not been dissolved; and

(c) any property that would have been available to satisfy any judgment or order if the body corporate had not been dissolved remains available for that purpose."

52. Section 226 (3) deals with service of proceedings. Significantly it does not say that proceedings may be served on the dissolved body corporate. Instead proceedings are served on natural persons. In addition, in contrast to section 209 (4), section 226 does not retrospectively validate putative obligations which arose after the date of dissolution.
53. The question to be answered as a matter of Canadian law was whether Swift Trade continued to exist after the date of dissolution shown in the certificate of dissolution. The question was not whether proceedings could be taken against a dissolved company, because section 226 is clear that they can. So more narrowly the question was whether section 226 in some way qualified the blunt statement in section 210 (6) and elsewhere.
54. Unfortunately, in my judgment Mr Connelly, the FCA's expert witness on Canadian law, was not asked the right question. The questions that he was asked, and the questions that he answered were:

"Please would you provide your opinion on the legal status of Swift Trade at (and since) the date of the Decision Notice, namely on whether the Decision Notice, and the proceedings that have followed the Decision Notice, are invalid by reason of the fact that, prior to the date of the Decision Notice, Swift Trade had been dissolved."

"Under Canadian law, can proceedings be continued against Swift Trade post dissolution?"

55. The first of these questions might have been appropriate if it had simply asked for Mr Connelly's opinion on Swift Trade's legal status at (and since) the date of the Decision Notice. However, by narrowing the question (viz. by introducing the word "namely") the FCA concentrated on the validity of the proceedings. Since Mr Connelly is a Canadian lawyer, he could, of course only express an opinion on the validity of the proceedings as a matter of Canadian law. The second of the quoted questions again confines itself to the validity of the proceedings in Canadian law.
56. Thus Mr Connelly was never asked the simple question whether a dissolved corporation continued to have legal existence despite the fact of its dissolution. That is the critical question and it is one that he did not answer in terms. Indeed his opinion does not even mention section 210 (6) or any of the other sections of the CBCA in which it is stated that a corporation ceases to exist on the date stated in the certificate of dissolution. No authority was cited for the proposition that section 210 (6) was in some way overridden by section 226. Both sides placed some reliance on the decision of the Alberta Court of Appeal in Enron Canada Corp v Husky Oil Operations Ltd (2007) ABCA 27, (2007) 401 Alta. Rep. 291. The question that arose in that case was whether a (former) shareholder in a dissolved company could rely on defences that would have been available to the dissolved company in response to a claim brought under the Albertan equivalent of section 226. The Court of Appeal held that it could. Conrad JA who gave the only reasoned judgment relied on a number of strands in his reasoning. The particular paragraphs relied on were [27] in which he said:

"Finally, the peculiar nature of the dissolved corporation's existence suggests that the shareholder is entitled to defend on the merits of the underlying action. Although section 227 contemplates two actions – one against the dissolved corporation and one against the shareholder – the dissolved corporation has gone and its assets have been distributed. There are no officers or directors to express the dissolved corporate will, and no funds left behind to defend existing or contemplated lawsuits. The dissolved corporation is a bare shell – a legally deemed fiction – for the purpose of facilitating lawsuits against the shareholders under section 227 (4)."

57. This was a case to which Mr Connelly referred in a footnote to his report. He cited it as authority for the proposition that "proceedings against a dissolved corporation permitted by provisions like section 226 (2)… can be defended and appealed on behalf of the dissolved corporation." The case was put to him in the course of his cross-examination. He appears to me to have agreed that this was a procedural provision. He also agreed that the issue in the case was whether the shareholder was entitled to raise the defences of the dissolved company; and that it was really about an action against the shareholder. He did not suggest that the Enron case was authority for the proposition that a dissolved corporation continues to exist. In my judgment the tenor of the quoted paragraph is that it does not. As Conrad JA observed the corporation "has gone" and there is no one left to express its corporate will. Nor did the court say (or Mr Connelly suggest) that the dissolved corporation itself could defend the proceedings. What it decided was a shareholder (who had a real existence) could raise the defences that the dissolved corporation could have raised. It most certainly did not say that a dissolved corporation could initiate proceedings. It is a poor sort of existence if the dissolved corporation is no more than a punchbag. But the real point is that the case was not concerned with the issue facing the Upper Tribunal; and there was no discussion of any Albertan equivalent of section 210 (6).
58. The nearest that Mr Connelly's report came to dealing with the critical question (and the only passage in it on which the FCA rely) was in a section of his opinion headed "Canadian law relevant to the status of Swift Trade". Mr Connelly pointed out that before it was dissolved, it was amalgamated with another company, and the successor to the amalgamated corporation was then dissolved. He said that those steps were of no relevance and explained why. He said:

"… because the relevant provisions .. state that an amalgamated corporation … is subject to all the rights and liabilities … of each of the amalgamating corporations and that a continued corporation is subject to all of the obligations of a continuing corporation, including, specifically, proceedings to which the continuing corporation was subject. Therefore, notwithstanding that termination of the existence of Swift Trade following issuance of the Warning Notice involved various steps it did not relieve the entity dissolved from any of the liabilities of Swift Trade."

59. It is this passage in Mr Connelly's report on which the FCA relies as stating that Swift Trade continued to have some form of existence after its dissolution. To my mind this is a complete misreading of what Mr Connelly said. First it is important to appreciate that when he referred to the "entity dissolved" what he was talking about was the amalgamated company; not Swift Trade. Second, what he was dealing with was not the existence of Swift Trade, but whether liabilities of Swift Trade continued to exist. Those liabilities, as Mr Connelly had explained, had been passed to the amalgamated corporation. It was that corporation that inherited Swift Trade's liabilities. Third, Mr Connelly explicitly referred to the "termination of the existence of Swift Trade", which is the polar opposite of the conclusion that the FCA wish to advance and which the Upper Tribunal accepted.
60. Mr Connelly went on to consider what kind of proceedings were validated by section 226 of the CBCA, and concluded that the actions of the FSA from the time of the warning notice counted as "administrative proceedings" despite the fact that the actions were all taken outside Canada. But it is abundantly clear from section 226 that proceedings may be taken against dissolved companies; so that discussion did not touch the critical point.
61. The other relevant passages from his oral evidence were, first, an unorthodox examination in chief. Mr Otty QC had prepared a written opening on behalf of the FCA and he put part of it to Mr Connelly. The exchange went like this:

"Q. It is paragraph 17 …

"In the light of the Canada Business Corporations Act, Mr Connelly concludes that the proceedings commenced by the warning notice issued by the Authority were valid at the date of the decision notice and thereafter have remained valid. The legal status of Swift Trade has, as a matter of Canadian law, continued to be at all relevant times that of a party capable of being a defendant or respondent in any action or proceeding begun prior to its dissolution".

Is that a fair summary of your evidence?

A. Yes, sir, it is."

62. Not only was this a leading question, but the paraphrase of Mr Connelly's report was inaccurate. What Mr Connelly had in fact said was that these were the sort of proceedings that could be taken against a dissolved corporation. Moreover, the question in substance asks, whether as a matter of Canadian law, Swift Trade was "the sort of person or body that can be made a party to litigation". But that question, as Dicey Morris & Collins say, is a question for the lex fori, that is English law.
63. There are two passages from his cross-examination that also bear on the question. They are:

(1) "Q. … So if one thinks about section 226 as a whole it's really a procedural provision. It provides for – it opens up the possibility to bring proceedings, for example, against the company that has been dissolved i.e. nonexistent. So for the purposes of bringing proceedings we have this 226 (a)?

A. For the purposes of bringing them or continuing ones that have already commenced.

Q. Continuing, yes. Because 226 (a) says regardless of the dissolution which could also be read as regardless of the non-existence one can bring these proceedings. That would be correct, wouldn't it?

A. I think that's fair."

(2) "Q. … If one goes back to the dissolution of a company – [section] 226 uses the term "as if". It is a deeming provision, isn't it, which does not substantively alter the underlying situation, the reality? It really means regardless of the non-existence one can bring proceedings or proceedings can be brought against a dissolved company?

A. Well, it certainly is a deeming provision. It doesn't say regardless of non-existence. It says regardless of dissolution."

64. The first of these answers is unequivocal: proceedings can be brought despite the fact that the company does not exist. This ties in with the way in which Mr Connelly had referred in his report to the "termination of the existence of Swift Trade". The second is more equivocal. Mr Connelly distinguishes between dissolution and non-existence, but does not explain what the distinction is. Moreover I do not consider that in either of these answers he rejected the point put to him that, even in Canadian law, section 226 was purely procedural. But even if he had, whether English law would regard it as procedural was a question for the Upper Tribunal to decide for itself according to English law.
65. It seems to me to be clear that Canadian law has a procedural provision that enables a lawsuit (or administrative proceeding) to be brought against a dissolved company. It enables a dissolved company to be sued. It does not make the dissolved company liable for obligations that have arisen after its dissolution. That is achieved by substantive revival under section 209 (4). In England and Wales we have a different procedural rule. Under our procedure a dissolved corporation cannot be sued.
66. The Upper Tribunal summarised Mr Connelly's evidence at [16]. They said, correctly, that Mr Connelly had said that proceedings such as those initiated by the FCA are regarded in Canada as falling within section 226, and that there is no distinction to be drawn between proceedings in and proceedings out of Canada. That, however, bears on the question of the recognition of proceedings; not on the legal status of a dissolved corporation. They accepted the general submission put forward on the Appellant's behalf that a dissolution that is effective under the law of the place on incorporation is recognised in England. They went on to say at [18]:

"As propositions of law, however, they seem to us to be uncontroversial and in no way inconsistent with what Mr Connelly said."

67. Taken literally, that is true. But that is because Mr Connelly said nothing about whether Swift Trade had been dissolved in the sense of ceasing to exist other than the passages to which I have referred. So there was no inconsistency. I suspect that in view of section 226 the question itself would be irrelevant or meaningless to a Canadian lawyer. But if the Upper Tribunal meant to say that Mr Connelly had asserted that Swift Trading had a legal existence following its dissolution, I cannot find any evidence to support that conclusion.
68. The Upper Tribunal then referred to rule 19 (then rule 17) in Dicey Morris & Collins and to the Goussakow case to which I have also referred. They distinguished that on the basis that:

"The difference between that case and this is that there was no identifiable provision of Soviet law which corresponded with s 226, and therefore no provision which preserved the bank even for limited purposes."

69. In the first place this begs the question at issue; namely whether section 226 did preserve Swift Trading even for limited purposes. Second, it overlooks section 210 (6) which says in terms that a corporation ceases to exist on the date of dissolution. Third it overlooks provisions such as section 211 (6) and 219 (1) which show that the Canadian legislature is well able to preserve the existence of a corporation for limited purposes and when it wishes to do so, it does so expressly.
70. At [20] the Upper Tribunal were referred to the provisions of the domestic Companies Act which provide for restoration of a company to the register. They said of that:

"On restoration the position, as nearly as may be, is that the company is treated as if it had never been dissolved; but those provisions do not alter the fact that a company which has been dissolved but not restored has ceased to exist for all purposes. That proposition, too, is uncontroversial, but it seems to us quite irrelevant as the Act has no application to Canadian corporations."

71. Again, taken literally, it is correct that the English Companies Act was irrelevant. But section 209 of the CBCA contains an analogous procedure for reviving a dissolved corporation, the effects of which are as described in the quoted extract from the Upper Tribunal's decision. In my judgment the Upper Tribunal were thus wrong to dismiss this point out of hand. The Upper Tribunal reached its main conclusion at [21] as follows:

"We found Mr Connelly's evidence on Canadian law persuasive, and are satisfied that it does provide that Swift Trade has a continuing, even if limited, existence sufficient to validate proceedings against it in Canada. That is not the same as saying that it remains in existence for the purposes of English law, as Dr von Pommern-Peglow rightly said, but Mr Connelly's evidence was not that s 226 is confined to Canadian proceedings, but that it is of more general application, validating (within the confines of the section) proceedings against the company, irrespective of the forum. In other words, it is not a purely Canadian procedural provision, but a provision which (for reasons we shall develop shortly) preserves the otherwise dissolved company for certain purposes. We observe too that, although it plainly does have some procedural characteristics, we detect nothing in the section consistent with an intention that its effects are to be confined exclusively to Canadian proceedings."

72. There are, in my judgment, several flaws in this reasoning. First, it is extremely difficult to find any part of Mr Connelly's evidence which actually makes the statement attributed to him. Second, if he had made the statement attributed to him, it would have been little more than unreasoned assertion and would not have explained how section 210 (6) fitted into the picture. Third, although it is true that Mr Connelly said that section 226 applied to foreign proceedings that does not turn a procedural provision into a substantive law. The reasons which underpin the conclusion that section 226 is not a purely procedural provision are not contained in this paragraph but "are [to be] developed shortly". The last sentence of the paragraph again deals only with the territorial reach of section 226; and does not address the crucial issue.
73. The "reasons [to be] developed shortly" are found at [24] which says:

"The logical consequence of Dr von Pommern-Peglow's argument, as we see it, is that proceedings may be taken or continued against a dissolved company but the company cannot participate (since s 226(2) makes no express provision for it to do so) and that the outcome of the proceedings, even if they are Canadian, and whatever it might be, is of no more than academic interest since the company cannot be affected by it. That, if we may say so, is a nonsense. It is in our view plain that, alien though the concept may be to English law, the Canadian law which determines Swift Trade's existence provides that it continues to exist, notwithstanding its dissolution, for limited purposes which include proceedings of the kind with which we are concerned."

74. There are, in my judgment, a number of flaws in this paragraph too. First it is not a nonsense that the company cannot participate in the proceedings. This is explained by the Enron case. The purpose of section 226 is to enable claims to be pursued against former shareholders, and it is they who have the ability to raise whatever defences the dissolved company could have raised. Second, the outcome is not of academic interest. On the contrary, it is of vital importance because it is the mechanism which enables a claim to be pursued against a former shareholder; and if successful execution will lie against such a shareholder. The last sentence of the paragraph contains no additional reasons, but is simply a repetition of the conclusion.
75. I therefore disagree with the Upper Tribunal's conclusion that the Canadian law which determines Swift Trade's existence provides that it continues to exist, notwithstanding its dissolution, for limited purposes which include proceedings of the kind with which we are concerned. It is, in my judgment, a procedural provision which cannot govern who may sue and be sued in England according to English procedural rules. The substantive Canadian law is that a dissolved company ceases to exist on the date shown in the certificate of dissolution.
76. Now comes another problem. According to our law a question of foreign law is a question of fact. It is true that it is a question of fact of a rather special kind, but question of fact it remains. An appeal to the Court of Appeal from a decision of the Upper Tribunal is limited to an appeal on a question of law: Courts Tribunals and Enforcement Act 2007 s. 13 (1). The mere fact that I disagree (even strongly disagree) with the Upper Tribunal's evaluation of the point of Canadian law does not of itself give rise to a legal error. In what circumstances can an appeal court interfere with what is ostensibly a question of fact?
77. In my judgment the circumstances are those described by Lord Radcliffe in the well-known passage in Edwards v Bairstow [1956] AC 14, 36:

"If the case contains anything ex facie which is bad law and which bears upon the determination, it is, obviously, erroneous in point of law. But, without any such misconception appearing ex facie, it may be that the facts found are such that no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal. In those circumstances, too, the court must intervene. It has no option but to assume that there has been some misconception of the law and that, this has been responsible for the determination. So there, too, there has been error in point of law. I do not think that it much matters whether this state of affairs is described as one in which there is no evidence to support the determination or as one in which the evidence is inconsistent with and contradictory of the determination, or as one in which the true and only reasonable conclusion contradicts the determination. Rightly understood, each phrase propounds the same test. For my part, I prefer the last of the three, since I think that it is rather misleading to speak of there being no evidence to support a conclusion when in cases such as these many of the facts are likely to be neutral in themselves, and only to take their colour from the combination of circumstances in which they are found to occur."

78. It seems, to me therefore, that the test to be applied is whether the only reasonable conclusion on the effect of section 226 contradicts the Upper Tribunal's determination. Longmore and Floyd LJJ have taken the view that there was enough (or just enough) to entitle the Upper Tribunal to reach the conclusion that it did. Naturally their views have given me considerable pause for thought. However, with all due diffidence I consider that the flaws in the Upper Tribunal's reasoning do surmount the high hurdle imposed by Edwards v Bairstow. In short:

i) The real question was not one that Mr Connelly was asked or answered;

ii) There is no discussion either by him or the Upper Tribunal of the many contra-indications in the CBCA to the conclusion that Swift Trade continued to have legal existence after it had been dissolved;

iii) The Upper Tribunal wrongly dismissed as irrelevant an argument based on the contrast between revival (although presented as restoration) and the effect of section 226;

iv) The leap from the proposition that section 226 was not solely concerned with proceedings in Canada to the conclusion that it was not therefore procedural is an unreasoned non-sequitur;

v) The Upper Tribunal misunderstood the function and effect of proceedings brought under section 226.

79. I also consider that the Upper Tribunal never really asked itself the critical question; namely: whether English private international law would regard section 226 as procedural. In my judgment it would. In my judgment these flaws in the Upper Tribunal's reasoning coupled with the absence of any real evidence that dealt with the critical question makes this one of those extremely rare cases in which the only reasonable conclusion contradicts the Upper Tribunal's determination.
80. I would therefore have allowed the appeal on the first of the grounds argued before us. It was common ground that if we reached that conclusion the Decision Notice, the reference to the Upper Tribunal and its decision were all nullities. On the remaining grounds I agree with Longmore LJ's conclusions for the reasons that he gives. Since neither Longmore LJ nor Floyd LJ agree with me on the first ground of appeal, the appeal must be dismissed.

Lord Justice Floyd:

81. I agree with Longmore LJ that, for the reasons he has given, the decision of the Upper Tribunal was one to which they were entitled to come and that the appeal must be dismissed.
82. The status (if any) of Swift Trade at the relevant date was a question of Canadian law. In English law, Canadian law is treated as a question of fact. An appeal to this court from the Upper Tribunal lies only in relation to a question of law (see section 13 of the Tribunals Courts and Enforcement Act 2007). Although, as Mr Vineall QC pointed out, findings of fact in relation to foreign law have been described as "of a very different character" to normal findings of fact (see per Megaw LJ in Dalmia v National Bank of Pakistan [1978] 2 Lloyd's LR 223 at 286 (left hand col., first para.)), they have never been described as questions of law. On an appeal such as this it is necessary for the appellants to show that the Upper Tribunal made an error of law in reaching its finding of fact that Swift Trade continued to exist, albeit for limited purposes, as a matter of Canadian law. That would only be so in the context of the present case if the Upper Tribunal's conclusion of fact was one for which there was no evidence, or one to which they could not reasonably come: Edwards v Bairstow [1956] AC 14.
83. As Longmore LJ has demonstrated, there was, in the written opinion of Mr Connelly, in the evidence which he gave in chief and in the other material he produced (i.e. the Enron case) some evidence on which the Upper Tribunal could reasonably find that Swift Trade, despite having been dissolved, had a continued, limited existence as a matter of Canadian law. There was no evidence called to rebut this material. It was not suggested to Mr Connelly in cross-examination that his opinion was contrary to other provisions in the CBCA. He was, at one point in his cross-examination, careful to draw the distinction between non-existence and dissolution. Despite Lewison LJ's powerful analysis of this and other material, I am not in the end persuaded that the appellants have surmounted the demanding hurdle set by Edwards v Bairstow. Whilst the evidential basis might be described as shaky, it cannot be described as non-existent. That, in my judgment, is the end of the matter so far as this ground of appeal is concerned.