England and Wales Court of Appeal (Civil Division) Decisions

IN THE MATTER OF THE PETITION OF
NEIL HARDING TAYLOR
AND IN THE MATTER OF THE SOLICITORS ACT 1974
AND IN THE MATTER OF THE MASTER OF THE ROLLS (APPEALS AND APPLICATIONS) REGULATIONS 1991

		Royal Courts of Justice Strand London, WC2A 2LL
		01 November 2005

1. SIR ANTHONY CLARKE: This is a petition by Mr Neil Taylor brought under section 49(1(a) of the Solicitors Act 1974 ("the 1974 Act") by way of appeal to me, as Master of the Rolls, against a decision of the Solicitors Disciplinary Tribunal ("the SDT") made under section 47(1)(d) of the 1974 Act. The relief sought is the removal or variation of the conditions imposed by the SDT on any practising certificate granted to the petitioner by the Law Society.
2. On 8 June 1999 the Law Society presented a case in the SDT against the petitioner. At the conclusion of the case, the Tribunal imposed upon the petitioner an indefinite period of suspension. Pursuant to Rule 4(d) of the Solicitors (Disciplinary Proceedings) Rules 1994 the petitioner made an application to the SDT by affidavit dated 19 November 2004 for the SDT to terminate the indeterminate period of suspension. The application was heard by the SDT on 24 March 2005. The Tribunal terminated the indefinite period of suspension, ordered the petitioner to pay the costs of and incidental to the response of the Law Society, who had adopted a neutral stance, but in addition ordered that any practising certificate granted to the petitioner in the future should be subject to two conditions, namely: he might practise only in employment or in partnership first approved by the Law Society, and he should not be permitted to handle clients' money. The findings were filed with the Law Society on 13 June 2005.
3. It is submitted by Mr Marriott on behalf of the petitioner that the conditions which the Tribunal ordered should appear on any practising certificate issued to him by the Law Society were wrong in principle. The Law Society has presented a cross-petition, also under section 49(1(a) of the 1974 Act by way of appeal to me as Master of the Rolls. It is not in dispute that I have jurisdiction to entertain such an appeal (see R v Master of the Rolls ex parte McKinnell [1993] 1 WLR 88).
4. The Law Society take two points. The first, which is taken more by way of submission than appeal, is that the condition that the petitioner should not handle clients' money is only appropriate if he practises in employment. The Law Society submits that such a condition would be illogical if the petitioner were to practise in partnership because as a partner in a firm he would be held out to the public as handling clients' money. Rule 6 of the Solicitors Accounts Rules would impose obligations on a partner as a principal in relation to client money. The second point which is taken by way of appeal is that the conditions should not have been imposed by reference to the petitioner's practising certificate.
5. The allegations against the petitioner were that he failed to deliver a report signed by an accountant contrary to section 34(1) of the 1974 Act, committed breaches of the Solicitors Accounts Rules 1991 and practised while uncertificated. The petitioner did not attend the SDT hearing in 1999 but instead sent a letter to the Tribunal which is set out in the findings of the SDT.
6. The petitioner accepted the penalty and instructed a solicitor to advise and if thought appropriate to apply to the Tribunal for the indeterminate period of suspension to be terminated. His case may be summarised in this way. The failure to deliver the accountant's report was subsequently dealt with by the Law Society who granted him a waiver. The breaches of the Solicitors Accounts Rules amounted to the failure to perform a reconciliation and practising whilst uncertificated, came about because the Law Society were unable to issue the petitioner with a practising certificate because of a financial dispute that he had with the Solicitors Indemnity Fund ("the SIF"). He had paid the normal premium but had refused to pay a further sum which the SIF had imposed by way of loading because of previous claims experience. The petitioner had cleared his debts to the profession and to the SIF by the time the hearing before the SDT took place earlier this year.
7. The findings of the SDT earlier this year reflect the fact that he had regularised his position and the Tribunal gave him credit for work that he done since the indeterminate suspension was imposed in 1999. Although the Tribunal ordered that the indefinite period of suspension be terminated, it also expressed serious doubts as to the petitioner's ability to act again as a sole principal because of earlier failures, as it put it, to get to grips with the special requirements of practice.
8. I consider first the submission that the SDT should not have imposed the conditions it did. The SDT considered the matter with care. It set out the history of the matter, including the findings of the Tribunal which led to the order of 8 June 1999. It also set out the points made on behalf of the petitioner and referred to a number of testimonials which were put before it and which I have also seen. Having expressed its doubts as to the ability of the petitioner to act again as a sole principal, the Tribunal made this order:

"The Tribunal ORDERS that the application of Neil Hardy Taylor ... for the determination of the indefinite suspension be GRANTED. The Tribunal further orders that any Practising certificate granted to Mr Taylor in the future shall be Subject to conditions that he may practise only in employment or partnership approved by The Law Society and on the basis that he shall not be permitted to handle clients' money and the Tribunal further Orders that he pay the costs of the response of the Law Society to this application fixed in the sum of £565.00."

9. In the course of his submissions this morning Mr Marriott has made it clear on behalf of the petitioner that he does not submit that the Tribunal should not have imposed a condition which would prevent the petitioner practising as a sole practitioner. His submissions are essentially twofold. First, he submits that the conditions should not have involved giving directions or orders to the Law Society. He submits that if any conditions were to be imposed they should have been imposed as free-standing conditions by the SDT. Secondly, he submits that the conditions should either have been for a finite period or should have been subject to a liberty to the petitioner to apply to the SDT to vary or remove the conditions if appropriate in the future. Thirdly, he submits that the Tribunal should not have imposed a condition that he should not be permitted to handle clients' money.
10. I take each of those points in turn. As to the first, there is no issue between Mr Marriott, on behalf of the petitioner, and Mr Williams QC, on behalf of the Law Society. Indeed Mr Marriott's submission is entirely consistent with the Law Society's cross-petition. The position is this. In Camacho v the Law Society [2004] 1 WLR 3037, the Divisional Court, comprising Thomas LJ and Silber and Goldring JJ, reconsidered the earlier decision of the same court constituted in the same way in the same case. As I read the judgment of Thomas LJ, giving the judgment of the court, the court rejected the submission that the Tribunal could give directions to the Law Society. The conclusions of the court are set out in paragraph 16 of the judgment.
11. In paragraph 16 the court set out its conclusions in five subparagraphs as follows:

"(i) If a tribunal considers that a period of complete suspension followed by a period of restricted practice is the appropriate sanction to protect the public, then, as it is accepted that the tribunal has power to impose such conditions or restrictions, it is the tribunal which should impose that penalty and not leave it to others. A body entrusted by Parliament to exercise disciplinary powers and protect the public should not, unless there are compelling reasons, delegate part of that task to others; there are no compelling reasons which apply to the jurisdiction of the tribunal. It is well able to decide the appropriate terms and it should impose those terms as part of the penalty in the public interest.

(ii) It was urged upon us, and we accept, that the Law Society in the exercise of its regulatory powers cannot bind itself to accept a recommendation from the tribunal, exercising disciplinary functions, to impose a condition on a practising certificate. The jurisdiction of the Law Society to impose conditions on practising certificates is derived from its regulatory powers under sections 9-18 of the Act which are quite distinct from the disciplinary powers under sections 46-54. The Law Society has to consider the application for a practising certificate on the materials available to it when the application is made. There is also a separate appeal procedure in respect of the imposition of terms - first to an adjudication panel and then to the Master of the Rolls.

(iii) Thus, although we accept that the Law Society will accord our views or those of a tribunal the utmost respect, the Law Society does not have to follow any recommendation made by us or the tribunal. Neither we nor the tribunal has any means of being certain that the penalty that is determined to be in the public interest will be imposed. As the tribunal is an independent body, separate and apart from the Law Society (with its combined duties of regulation and representation of the profession), we consider that in each case the tribunal must address the question as to whether the public interest is best served by it imposing a condition which it can be certain will be put into effect or leaving the matter entirely to the Law Society. Unless there are exceptional reasons, we consider that the tribunal should impose itself the conditions it considers appropriate, as that is part of the decision it has made: if the defendant considers the conditions too harsh or wrong in principle, then as the imposition of the conditions is part of the penalty, the route of appeal should be that route that has been provided in respect of the penalty and not that provided in respect of the regulatory powers.

(iv) In this case, we have no doubt that the public interest demands that the conditions which we consider are necessary to protect the public must have the necessary certainty of imposition; we were of the view that the penalty of indefinite suspension was far too harsh and the justice of the case and the protection of the public would be met by a period of complete suspension followed by a return to practice on conditions. As we considered that the just penalty, it would have been an abdication of our responsibility not to have imposed that penalty, as it is now accepted we had power to do so.

(v) We see no reason whatsoever why the Law Society cannot police orders made by the tribunal; it may entail some cost, but that is the cost of self-regulation that the Law Society must bear. We trust therefore that the Law Society will ensure that the orders of the tribunal will be vigilantly policed by the Law Society and any breach made the subject of disciplinary proceedings. Any breach of an order of the tribunal restricting the terms on which a solicitor can practice would be a disciplinary offence which would generally merit a separate penalty and not merely intervention in practice; that penalty would be required because the solicitor would have breached an order of the tribunal which it had imposed as a penalty; there is no reason why a solicitor should be treated any differently or more leniently than any other person who breaches the terms of an order imposed by a court or disciplinary tribunal and which has been imposed as part of the penalty to protect the public.

For these principal reasons, we reject the contentions advanced by the Law Society and the tribunal and make it clear that it is the duty of the tribunal in each case where it considers that restrictions are required to consider imposing those restrictions itself."

12. In all the circumstances, and essentially for the reasons given by the court in Camacho, I accept the submissions made on behalf of both parties in this case. It appears to me that the SDT should not give orders or directions to the Law Society. It should decide what, if any, conditions should be imposed and if it decides that conditions should be imposed it should impose them pursuant to its wide powers "to make such order as it may think fit" under section 47(2) of the 1974 Act.
13. In the present case, as I read the order which I quoted earlier, the SDT did give a direction or order to the Law Society. In my judgment it ought not to have done so. It follows that, as formulated, the conditions stated in the order must be quashed. It does not, however, follow that no conditions should be imposed. It is quite plain that the Tribunal took the view that it was necessary in the public interest to impose some conditions.
14. This brings me to the other points taken by Mr Marriott. The first condition which the SDT imposed was that the petitioner should not practise as a sole practitioner. In my judgment that condition was entirely justified. Moreover, it would be appropriate to impose a finite period for the operation of that condition because it is plain that the SDT took the view that the petitioner needed the support of employment or partnership before he practised as a solicitor. However, it should not be, as Mr Marriott put it, a sentence for life. The way to avoid that problem is to add to the condition "a liberty to the petitioner to apply to the Tribunal to vary or discharge the conditions, if appropriate". Such a course was expressly approved in principle in Camacho v The Law Society.
15. It appears to me that there should be no reference to the Law Society in the conditions imposed. The condition, as at present formulated, requires the petitioner to obtain the permission of the Law Society for any particular employment or partnership. It appears to me that the order of the SDT should not include that condition. That does not mean that when and if the petitioner applies to the Law Society for a practising certificate the Law Society may not think it appropriate only to grant a practising certificate once it has approved the particular employment or partnership that the petitioner has in mind. Whether it is open to the Law Society to impose such a condition, and, if it is, whether it is appropriate for the Law Society to impose such a condition, is a matter for it to decide in the exercise of its regulatory powers under the 1974 Act.
16. There remains one further question, which is whether the conditions imposed by this court in substitution for those imposed by the SDT should contain any restriction on the handling by the petitioner of clients' money. I have reached the conclusion that they should, but not in relation to any future partnership which the petitioner may join. For the reasons given by the Law Society to which I referred earlier, it would not be appropriate. Indeed it would be wholly illogical for such a condition to be imposed on a partner, since a partner hold its partners out as handling their clients' money.
17. It is submitted by Mr Marriott that if that is so it would be illogical to impose a condition in relation to any future employment by the petitioner as a solicitor. While I recognise that there is some force in that submission, it appears to me that the position of an assistant solicitor is different from a partner. An assistant solicitor is not, for example, bound by Rule 6 of the Solicitors Accounts Rules as I understand it. It appears to me that it would be appropriate to impose such a condition and that the condition should be that, while in employment, the petitioner should not operate a client account.
18. It follows that the petition, and indeed the cross-petition, succeeds in part. The order of the SDT will be quashed and substituted by the following: The application of the petitioner for the determination of the indefinite suspension be granted. In the future the petitioner may not practise as a sole practitioner but only in employment or partnership. When employed, he must not operate a client account. The petitioner to have liberty to apply to the Tribunal to vary these conditions. I add by way of postscript that nothing I have said is intended to fetter in any way the carrying out of any regulatory powers which the Law Society may have.
19. MR MARRIOTT: I think that is it, my Lord.
20. SIR ANTHONY CLARKE: I hope that is clear. It is certainly intended to be.
21. MR MARRIOTT: I think that is right. If I can just go through it. The application is obviously granted, the petitioner may not practise as a sole practitioner but only in partnership or in employment. The word "approved" goes. When employed he must not operate a client account, and liberty to apply to the Tribunal. That gives a huge measure of clarity, my Lord. My Lord, there is only one issue and that is the issue of costs.
22. SIR ANTHONY CLARKE: Yes.
23. MR MARRIOTT: As you know, there is no provision for making a costs order against the Tribunal. Costs are obviously in theory completely in your discretion. I would ask you to say this: that the petitioner has to a large degree succeeded, he has a gateway back into the Tribunal to vary conditions and you have relaxed considerably those conditions; that the costs schedule of the petitioner ...
24. SIR ANTHONY CLARKE: Do you have a copy of it? I am sure I did received it but I do not seem to be able to put my finger on it.
25. MR MARRIOTT: Do you have Mr Williams' as well, my Lord?
26. SIR ANTHONY CLARKE: I do not. I am not saying I did not have it ...
27. MR MARRIOTT: Within a few hundred pounds they are broadly the same, just over £4,000 inclusive, and I ask for an order that the petitioner, having effectively succeeded substantially in the relief that he sought from your Lordship, be awarded his costs from the Law Society in a fixed sum.
28. MR WILLIAMS: My Lord I resist that. The conditions had not been relaxed. In fact the submissions that they should be have been rejected.
29. SIR ANTHONY CLARKE: But they have been in part. To be fair to the petitioner, the petitioner's position is certainly different now from what it was before. He has not succeeded in full, I recognise that, and in a way you succeeded as well. But there does not seem to be any power to make the SDT pay any costs.
30. MR WILLIAMS: I do resist that, and if the perceived extra element of success of the petitioner is based on the obtaining of liberty to apply to the SDT that could have been mentioned at the SDT on the day. Nothing wrong with saying to a Tribunal "You made this order, could you please incorporate 'liberty to apply.'" That was not done as far as I am aware. So unfortunately we have had to trouble your Lordship on that.
31. SIR ANTHONY CLARKE: The trouble is none of those points were discussed with the SDT, including your point.
32. MR WILLIAMS: No, my Lord.
33. SIR ANTHONY CLARKE: In fact it may well be that if this debate had taken place before the SDT the SDT itself may have reached the conclusion we now have to ... Anyway there it is.
34. MR WILLIAMS: Indeed, but it is the petitioner who seeks and has been granted. And the point I make is that that application could have been made on the day. It is my submission that effectively the Law Society was here really in the interest of this jurisdiction generally and the impact that these kind of orders could have. It is a very rare situation for the Law Society to cross-petition before my Lord. We have, as I see it, obtained all the orders that we asked for on the cross-petition to you; and on that basis I do not see that the Law Society could have been more successful than it has been, given the limited ambitions. I am instructed to seek costs and I formally do so, but you have a schedule. It is my submission that in fairness ...
35. SIR ANTHONY CLARKE: Very well, thank you.
36. MR MARRIOTT: My Lord, I do not know how my Lord can say that he has succeeded because effectively the lion's share of his petition was to try to secure approved employment. He has lost that. This man can now hold his head up high and go in, subject to the regulatory requirements elsewhere. You have given him the permission effectively to be employeed or to go into partnership without the consent of the Law Society.
37. SIR ANTHONY CLARKE: Can I ask you this, which perhaps is not directly relevant to costs, I intended to ask this earlier. Is there any obligation on the petitioner to inform any partner or employer of the history of this matter?
38. MR MARRIOTT: At present there is not, but he ...
39. SIR ANTHONY CLARKE: In Camacho I notice that the order included some such provision.
40. MR MARRIOTT: Until he seeks a practising certificate he cannot actually get employment. The conditions to be imposed on the practising certificate could refer -- I am not saying it would, but it could say that he must notify, and they often do.
41. SIR ANTHONY CLARKE: Very well, I will leave that. Is there anything further?
42. MR MARRIOTT: My Lord, my primary submission is that there has been considerable relief given to the petitioner. It is all very well for my learned friend to say that no liberty to apply was sought on the day and it could have been, but at the end of the day you have narrowed the distinction concerning client money but, more importantly, have removed the fetters of approved employment with the Law Society. That is the most important part of the decision, my Lord, therefore I ask for costs.
(Costs judgment)
43. SIR ANTHONY CLARKE: It appears to me that the petitioner has succeeded to a significant extent and that the Law Society should pay the bulk of the petitioner's costs. It is true that the petitioner could have taken a point as to liberty to apply at the hearing, but that is not the only point upon which he has succeeded. Further, although I entirely accept the submission that the Law Society have acted reasonably throughout, it appears (and I certainly hope) that one of the benefits of today will be to clarify the position for the future. Indeed, the purpose of the Law Society's cross-petition was to clarify the position for the future. That is something which the Law Society should pay for and not the petitioner.
44. In these circumstances, I conclude that I should award the petitioner the bulk of his costs and I propose to award him £3,500. I do that without involving any criticism of the Law Society in any way.

SIR ANTHONY PETER CLARKE

THE MASTER OF THE ROLLS