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J was a partner in FH, a firm of solicitors authorised to conduct financial activities under the Financial Services and Markets Act 2000. In 2005, the business of FH was converted to an LLP. In September 2006 the FSA issued a Decision Notice imposing a penalty on FH of £150,000, in respect of the conduct of a partner other than J. In February 2009, the Court of Appeal ruled that the proper penalty to impose on FH was £954,770, subject to a number of matters to be referred back to the Financial Services and Markets Tribunal. In May 2010, the Tribunal determined that the partners in FH at the time of the breach (including J) should be liable for the penalty and that liability for the penalty was not confined to the assets of the partnership but extended to the assets and resources of the individual partners. In June 2011, the Tribunal finally determined that there should be two penalties, £68,215.50 and £386,554.50. J applied to set aside the statutory demand served on him by the FSA. The district judge dismissed the application. The Court of Appeal had determined that J was one of the people liable, and Para 13.4.3 of the Insolvency Practice Direction did not permit the court to look behind that order. While at common law an agreement between a debtor and a creditor which released the debtor from liability to pay also operated to discharge any co-debtor, the fact that four of the former partners in FH had entered in individual voluntary arrangements (IVAs) did not have the same effect. If there had been, or there were to be, other recoveries, the overstatement of the indebtedness in a statutory demand did not of itself justify it being set aside. HHJ Kaye QC (sitting as a High Court judge) dismissed J's appeal. The court would not look behind the judgments of the Court of Appeal and the Tribunal. On the terms of the IVAs, creditors' rights against third parties were reserved, so J had not been released.
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