In the case I refered to,the point the instructor with CAA only ratings tried to make was that he wasn't instructing towards the student's first solo, as this authorisation would be given by the instructor with both sets of ratings, and that this was also how it would be done in the UK where as an AFI, he would have to let a FI authorise the first solo. This is what the FAA did not accept saying that ALL instruction prior to first solo was instruction towards first solo - if that makes sense.
Sqeakmail, you seem to know who I was looking for.
Meeb, you're right. Plenty about this school was bent. Unfortunately it holds CAA approvals which give it a plausible banner of respectability.