ANNA WATERHOUSE v DUBAI FINANCIAL SERVICES AUTHORITY [2019] DIFC CFI 048 — Refusal of leave to appeal FMT regulatory findings (12 December 2019)

The DIFC Court of First Instance denied Anna Waterhouse’s application for permission to appeal a 127-page decision by the Financial Markets Tribunal (FMT), affirming that the Tribunal’s findings regarding her regulatory breaches were rooted in established facts rather than errors of law.

What was the core dispute between Anna Waterhouse and the Dubai Financial Services Authority regarding the conduct of the Private Wealth Management section?

The litigation centered on an appeal against a decision by the Financial Markets Tribunal (FMT) concerning Anna Waterhouse’s conduct while serving as the Head of Compliance and Head of Legal for the Middle East and North Africa (MENA) region at Deutsche Bank. The dispute arose from the failure of the bank’s Private Wealth Management (PWM) section to disclose that it was "Advising and Arranging" investments without proper regulatory authorization. The DFSA alleged that Waterhouse, as a licensed Compliance Officer and Money Laundering Reporting Officer, was aware of these breaches yet failed to report them to the regulator for approximately two years, instead providing misleading information.

The stakes involved the finality of the FMT’s disciplinary findings, which concluded that Waterhouse had breached Principles 1 and 4 of the DFSA’s regulatory framework. Waterhouse sought to challenge these findings, arguing that the Tribunal applied an incorrect legal test for recklessness. However, the Court found that the Tribunal’s decision was fundamentally based on factual findings regarding her state of knowledge. As the Court noted:

When the 127 page Decision of the Tribunal is read as a whole it is clear that it turned on findings of fact as to the knowledge of the Appellant and her failure to pass that knowledge on to the DFSA.

Which judge presided over the application for permission to appeal in CFI 048/2019?

Justice Sir Jeremy Cooke presided over the matter in the DIFC Court of First Instance. The order was issued on 12 December 2019, following a decision to determine the application for permission to appeal on paper, pursuant to RDC 44.14, after an initial adjournment due to the Appellant’s medical circumstances.

What legal arguments did Anna Waterhouse and the Dubai Financial Services Authority advance regarding the test for recklessness?

Anna Waterhouse argued that the FMT failed to apply the correct legal test for "recklessness," citing the House of Lords decision in R v G [2003] UK HL 50. Her counsel contended that because the DFSA did not explicitly allege "dishonesty," the Tribunal was required to apply the criminal law standard of recklessness—specifically, whether the Appellant was subjectively aware of a risk and unreasonably took that risk. She argued that the Tribunal failed to make the necessary specific findings to satisfy this threshold.

Conversely, the DFSA maintained that the Tribunal’s findings were not predicated on a complex legal definition of recklessness, but rather on the Appellant’s proven knowledge of the regulatory breaches and her deliberate failure to disclose them. The DFSA argued that once the Tribunal established that Waterhouse knew of the unauthorized "Advising and Arranging" activities and knew that such activities required disclosure, the breach of regulatory Principles 1 and 4 was an inevitable conclusion. The DFSA successfully argued that the Appellant’s focus on the R v G test was a distraction from the factual reality of her non-disclosure.

What was the precise jurisdictional question Justice Sir Jeremy Cooke had to answer regarding the appeal of the Financial Markets Tribunal decision?

The Court had to determine whether the Appellant’s 17 grounds of appeal—many of which were duplicative—raised a valid "Point of Law" as required by Article 33(1) of the Regulatory Law 2004. Because the proceedings before the FMT were a hearing de novo rather than a mere review of the DFSA’s Decision Making Committee, the Court had to decide if the Appellant had identified any legal error in the Tribunal’s reasoning or if she was simply attempting to re-litigate findings of fact. The central jurisdictional hurdle was whether the Appellant could demonstrate a "real prospect of success" under RDC 44.19, given that the FMT’s decision was heavily reliant on the assessment of evidence and the Appellant’s credibility.

How did Justice Sir Jeremy Cooke apply the test for permission to appeal under RDC 44.19?

Justice Sir Jeremy Cooke applied the threshold test set out in the Rules of the DIFC Courts, emphasizing that permission is not granted as a matter of course. He evaluated whether the grounds of appeal offered any realistic chance of overturning the Tribunal’s decision. Finding that the Appellant’s arguments regarding the R v G test were inapplicable due to the Tribunal’s clear factual findings of knowledge, he concluded that the appeal lacked merit.

The Court reasoned that the Tribunal’s findings were comprehensive and that the Appellant’s attempt to introduce irrelevant evidence out of time further undermined her position. The Court’s reasoning is summarized by the following:

Under RDC 44.19 permission to appeal may only be given where the Court considers that the appeal would have a real prospect of success or where there is some other compelling reason why the appeal should be heard.

Which specific statutes and rules were applied by the Court in CFI 048/2019?

The Court relied on Article 33(1) of the Regulatory Law 2004, which restricts appeals from the Financial Markets Tribunal to the DIFC Courts to points of law only. Additionally, the Court applied RDC 44.14, which governs the determination of applications for permission to appeal on paper, and RDC 44.19, which establishes the "real prospect of success" threshold. The Court also referenced Article 66 of the Regulatory Law in the context of the breaches found by the Tribunal.

How did the Court utilize the cited precedents in its reasoning?

The Court utilized R v G [2003] UK HL 50 to address the Appellant’s argument regarding the test for recklessness. Justice Sir Jeremy Cooke distinguished the case, noting that while R v G provides the standard for recklessness in criminal law, it was not the governing standard for the regulatory breaches found by the FMT. The Court found that the Tribunal’s findings of knowledge were sufficient to establish the breaches without needing to satisfy the specific subjective risk-taking test from R v G. The Court also referenced Batra v Financial Conduct Authority and Warren v A G of Jersey [2011] UK PC 10 to reinforce the principles of regulatory oversight and the finality of tribunal findings.

What was the outcome of the application and the specific orders made by the Court?

The Court refused the Appellant’s application for permission to appeal, effectively upholding the FMT’s decision. Justice Sir Jeremy Cooke ordered that the FMT’s decision of 12 August 2019, including its annexes, could be published. Regarding costs, the Court ordered that the Appellant pay the Respondent’s costs on the standard basis, subject to assessment by the Registrar if the parties could not reach an agreement.

The costs of the Respondent are therefore to be paid by the Appellant on the standard basis and to be the subject of assessment by the Registrar if the parties are unable to agree them.

What are the wider implications of this decision for practitioners appearing before the Financial Markets Tribunal?

This decision reinforces the high threshold for appealing FMT findings in the DIFC. Practitioners must recognize that the DIFC Courts will not entertain appeals that are essentially attempts to re-argue facts. The ruling clarifies that where a Tribunal makes clear findings of knowledge and conduct, the application of complex criminal law tests like those in R v G is often irrelevant. Furthermore, the decision underscores that the standard for "integrity" in a regulatory context is distinct from, and broader than, the criminal standard of "dishonesty." Litigants must ensure that any appeal is strictly confined to a genuine point of law, as the Court will not permit the re-litigation of factual findings that were established during a de novo hearing.

Where can I read the full judgment in Anna Waterhouse v The Dubai Financial Services Authority [2019] DIFC CFI 048?

The full judgment is available on the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0482019-anna-waterhouse-v-dubai-financial-services-authority-1

Cases referred to in this judgment:

Legislation referenced:

• Regulatory Law 2004, Article 33(1)
• Regulatory Law 2004, Article 66
• Rules of the DIFC Courts (RDC) 44.14
• Rules of the DIFC Courts (RDC) 44.19