England and Wales Court of Appeal (Civil Division) Decisions

		Royal Courts of Justice Strand London, WC2
		12th February 2008

SIR ANTHONY CLARKE MR:

1. This is an appeal by Miss Lebow from a decision made by a Law Society adjudicator on 29 May 2007 to impose conditions on her 2006/2007 practising certificate. Those conditions are that:

"she is not a sole principal or sole director of an incorporated or unincorporated legal practice; and

she is not a Principal, director or member of an incorporated or unincorporated legal practice where all the other Principals, directors or members have less than 3 years post admission experience practising as a solicitor, or post registration experience practising as an REL or RFL in England and Wales

unless the arrangements have first been approved by the SRA."

An appeal from that decision to the Law Society's appeal panel was dismissed on 31 July 2007.

2. Miss Lebow brings this appeal under section 13(2)(b) of the Solicitors Act 1974 by way of petition filed on 31 August 2007. She seeks an order directing that her practising certificate be issued free of conditions. No application was made to stay the conditions which are currently in force. She is currently holding over under her practising certificate. She has applied for a practising certificate for 2007/2008 but that application has not yet been determined. I understand that it is likely to be determined in the light of the decision in this appeal. She is at present making use of her practising certificate. She represents clients on a freelance basis before the Magistrates' Courts.
3. Miss Lebow was admitted as a solicitor on 15 January 1983. She practised on her own account under the style of Beatrice Lebow Solicitors at 139 Haringey Road London from September 1989 to 30 November 2003 when she ceased to practise as a sole practitioner. She did so having experienced difficulties in obtaining professional indemnity insurance. From November 2003 until December 2004 she practised as a consultant with Kingsland Solicitors of 27 Downham Road in London. She then worked on a part-time basis as an employed solicitor for Property Legal Services London Ltd and its connected company Profit By Property. She works at the present time as a self-employed consultant, as I have just indicated.
4. Her regulatory history is summarised in the Law Society's written submissions and was set out in full in the Law Society's caseworker's report, which was before the adjudicator. Although Miss Lebow invites me to disregard the history, it does seem to me to be of some relevance. It can be summarised briefly in this way: (1) On 22 September 1999 the Law Society expressed disapproval of breaches of the Solicitors' Accounts Rules committed by Miss Lebow. (2) On 4 January 2002 she was reprimanded for breaches of the Solicitors' Accounts Rules and for misleading solicitors acting for a party on the other side. She was also ordered to pay compensation to a complainant for whom she was found to have provided inadequate professional services. (3) On 28 June 2002 she was warned in respect of any further breaches of the Solicitors Accounts Rules. (4) On 27 November 2002 she was reprimanded for breaches of the Solicitors Indemnity Insurance Rules 2001. (5) On 27 January 2003 she was again reprimanded in respect of breaches of the Solicitors Accounts Rules. (6) On 10 June 2003 she was warned in respect of a breach of the Solicitors Indemnity Insurance Rules 2002. (7) On 6 February 2004 she was reprimanded for a breach of the Solicitors Indemnity Insurance Rules 2003.
5. On 7 April 2005 Miss Lebow was granted a practising certificate for the year 2004/2005 subject to conditions that should she hold, receive or be responsible for client funds she must deliver to the Law Society six-monthly accountant's reports and, if relevant, a 'cease to hold' report. The conditions were imposed due to her failure to file an accountant's report for the period ended November 2003 and in the light of her breaches of the indemnity insurance rules. On 26 July 2006 she was issued a practising certificate for the year 2005/2006 subject to the same conditions as the previous year, except that she was now required to file the reports within two months of the end of the relevant accounting period. The conditions were imposed in the light of the fact that she had failed to file accountant's reports as required for the periods ending 30 November 2003, which were overdue for the previous year, 30 November 2004 and 30 November 2005.
6. On 16 January 2007 she was held to have breached section 34 of the Solicitors Act 1974 in that she failed to file accountant's reports for the years ending 30 April 2004, 30 April 2005 and had, in so doing, breached conditions imposed on her practising certificate. She applied to appeal that decision out of time but the appeals panel refused her application for an extension of time on 3 April 2007.
7. As at the time the caseworker prepared the report, which the adjudicator had before her, on Miss Lebow's 2006/2007 practising certificate application, the accountant's reports for 30 April 2004, 20 April 2005, 31 October 2005, 30 April 2006 and 31 October 2006 remained outstanding. The adjudicator considered Miss Lebow's application for a 2006/2007 practising certificate on 29 May 2007. She directed that it be issued subject to the conditions now subject to appeal. She gave these reasons:

"I have decided to depart from the recommended condition to require Ms Lebow to deliver half yearly Accountant's Reports because I have no confidence that she will comply with such condition; she has not done so in the past. Furthermore, her previous history suggests that she is either unable or unwilling to comply timely or at all with the professional obligations required of her as a sole principal.

I have therefore decided that the above conditions are more appropriate for the purposes of protecting the public and the reputation of the profession. Ms Lebow is currently engaged as a self employed consultant; if she decides to return to private practice as a Principal the conditions I have imposed mean that she will be relieved of the sole responsibility of ensuring compliance with the rules and regulations of conduct."

8. As I have indicated, an appeal from that decision was dismissed on 31 July 2007. The appeal panel gave these reasons:

"The Appeals Panel did not consider that there was anything in the grounds of appeal to persuade them to alter the decision reached by the Adjudicator at First Instance. There are too many accountant's reports outstanding to make continuing the previous condition worthwhile and, in view of these outstanding accountant's reports, it is in the interest of the public that Ms Lebow should not be permitted to work as a sole principal/director or with inexperienced co-principals/co-directors."

9. As I have indicated Miss Lebow now appeals against the decision to impose the conditions which I set out earlier.

Miss Lebow's submissions

10. She makes a number of points in support of her appeal in her petition, which she developed in her skeleton argument and which she has further emphasised orally this morning. First, she submits that neither the adjudicator nor the appeals panel took proper account of the reasons why she had not filed accountant's reports earlier than she did. In failing to take proper account of her reasons, the appeals panel paid too great attention to the views expressed by the Law Society's case worker and the adjudicator. She submits that at the time she had to close her practice and look for work she also had to take sole care of her elderly mother and her daughter. She was provided with no assistance by the Law Society during this time to help her find a suitable accountant. She also submits that her disciplinary record prior to 2004 be discounted on the present appeal.
11. Next, she submits that the failure to file accountant's reports by 22 February 2007 was her accountant's fault and that his error was compounded by the fact that he wrongly informed her on 29 May 2007 that he had in fact filed them whereas he had done no such thing. That was a point which she particularly emphasised in the course of her oral submissions this morning. She further submits that all the necessary documentation was provided to her accountants in good time but that they failed to submit them in time. If she had been aware of a problem in respect of the filing she would have contacted the SRA in good time.
12. She submits that, having relied on her accountant, while accepting that she is responsible for ensuring that the reports are properly filed, she ought not to be penalised for the accountant's failure to file them in time. If she had been aware of any difficulties in filing the reports by the 22 February 2007 deadline she would have appealed the decision to impose that deadline. She goes on to submit that even if the reports had been filed by 29 May the adjudicator should have taken account of the fact that they had been filed in making the assessment as to whether conditions should be imposed.
13. She submits that it is unreasonable of the SRA to take account of her failure to file 'a cease to hold' certificate. As I understand it, a 'cease to hold' certificate is a certificate which has to be filed when a solicitor ceases to hold clients' monies; only once such a certificate has been filed will the Law Society ordinarily not require the filing of further accountant's reports. Miss Lebow has applied for a waiver of that requirement. She did so on 29 August 2007 but the SRA has not yet responded to the application. Indeed she says that it has failed to acknowledge receipt of the application and failed to respond to a further copy of the request, albeit sent very recently on 25 January 2008.
14. Miss Lebow submits both orally this morning and submitted in writing that it is unreasonable for the SRA to require a 'cease to hold' certificate because they already have a copy of her closing bank statement which she has already supplied to the SRA; and she further submits that it would be unreasonable, given the cost, to require her to submit yet another accountant's report on the point, if indeed she was able to find such an accountant, which she says she will have great difficulty doing. She underlines the fact that such an accountant's report will be expensive. I should add that, as I understand, it she also blames the accountant she had instructed for failing to file the final accountant's report and the 'cease to hold' certificate.
15. Finally, on the substance of the matter, she submits that since she has not been in practice on her own account since 2003 the conditions imposed are, as she puts it, unnecessary and unduly onerous. She further submits, perhaps in the alternative, that since she has not been in practice since 2003, such conditions are superfluous and serve no purpose.
16. Finally, she raises two procedural points. The first is that the SRA's practice of not providing an oral hearing on applications to the adjudicator or on appeal is contrary to Article 6 of the European Convention on Human Rights. She stressed in writing and stresses again this morning that at no time did the SRA inform her that she could seek an oral hearing. Her second point is that the SRA failed to make readily available the Master of the Rolls (Appeals and Applications) Regulations 2001, which govern this appeal. She submits that that failure is contrary to either the letter or, at any rate, the spirit of the European Convention on Human Rights.

The Law Society's position

17. In summary, the Law Society makes these submissions: First, Miss Lebow provides no evidence to support her contention that undue weight was placed on the Law Society's case worker's report. She remained responsible for the proper filing of the relevant accountant's reports and, by failing to ensure that they were filed in time, breached a condition imposed on her then practising certificate. She has still failed to file the accountant's report for the period ending 31 October 2006 and the relevant 'cease to hold' report. She thus remains in breach of her professional obligations, although it is fair to say that the SRA accepts that she has applied for a waiver of the obligation to file a 'cease to hold' report.
18. Secondly, the duty to file accountant's reports is that of the solicitor and not the accountant. Failure on the part of the accountant may go to mitigate her disciplinary offence but her failure to ensure that the reports were properly filed supports the decision to impose regulatory conditions. Throughout the Law Society's submissions they stress that this is not a disciplinary process but a regulatory process, and that the purpose of regulation is to protect the client in the future and to protect the reputation of the profession.
19. Next, it is submitted that Miss Lebow's reliance on ceasing to practice as a sole practitioner in 2003 is illogical and even disingenuous. She continued to use her client account after that date, which necessitated the need to file accountant's reports. In any event, as she has no plans to practice as a sole practitioner in the future, the conditions cannot be unduly onerous. They do, however, protect the public and the reputation of the profession.
20. As to the use of the client account after November 2003 it is accepted by Miss Lebow that she did use her client account. On the other hand it is also accepted on behalf of the Law Society that the use of the client account is not itself a breach of the rules, although Mr Ryan submits on behalf of the SRA -- that it is an extremely undesirable practice because it may mean, at any rate in the absence of a 'cease to hold' certificate, that the SRA will know nothing about it, which makes it very difficult for them properly to regulate the practice concerned.
21. I should note that Miss Lebow says that she was at that time employed by a property company. She took advice from the Law Society, although she cannot remember who at the Law Society, and she was told that since she was a solicitor she could continue to use the client account and that there would be no need for her to file reports. It was only later that she discovered that that was not correct. Mr Ryan says that he is unable to verify from the SRA whether that is correct or not.
22. Finally, the Law Society says this in response to Miss Lebow's procedural case. Mr Ryan submits that there is no evidence that Miss Lebow ever requested an oral hearing. She, I think, accepts that but says in response that nobody suggested that she should, might or could. Mr Ryan submits that the failure to request such a hearing was fatal to a similar submission in Thompson v the Law Society [2004] EWCA Civ 167. In any event Mr Ryan submits that the right to appeal to the Master of the Rolls provides an oral hearing sufficient to satisfy Article 6 of the European Convention on Human Rights. As to the lack of availability in the 2001 regulations, he notes that the SRA had drawn Miss Lebow's attention to the right of appeal. In any event, as the petition was filed in time, Miss Lebow clearly suffered no prejudice from this aspect of the matter.

Discussion

23. This appeal is by way of re-hearing, although one of the factors which successive Masters of the Rolls and I myself have taken into account in the past is the importance of the judgment of the adjudicator and the appeal panel. It is important to have in mind that the imposition of conditions on a practising certificate is a regulatory decision and one based on the need to protect the public and the reputation of the profession. Conditions, however, if they are to be imposed, must be both necessary and proportionate.
24. I consider briefly first Miss Lebow's Article 6 points. As I have indicated, the Law Society relies upon the decision in Thompson v the Law Society where, as it happens, I gave the judgment with which the other two members of the court agreed. It involved two applications for judicial review arising out of decisions by the Office for the Supervision of Solicitors and the OSS professional regulation case work committee. Those decisions were reviewed by the Law Society's adjudication panel. The hearings took place on the papers only. No request for an oral hearing had been made in respect of the reviewable first decision but an application for an oral hearing was made in respect of the second review. The request was refused. The Court of Appeal heard the judicial review applications as a court of first instance – see paragraph 11. The court considered the points both at common law and under Article 6. Insofar as the common law was concerned it held that the duty of an adjudicator or equivalent at first instance and the appeal body was to act fairly. What is fair depends on the circumstances of the case – see paragraph 45.
25. At paragraph 46 I set out paragraph 37 of the judgment of Kennedy LJ in Smith v the Parole Board [2003] EWCA Civ 1269 where he said this:

"An oral hearing should be ordered where there is a disputed issue of fact which is central to the Board's assessment and which cannot fairly be resolved without hearing oral evidence."

However, at paragraph 47 I said this:

"I cannot at the moment think of a circumstance in which a solicitor who did not ask for an oral hearing before the adjudicator or appeal panel could complain that no oral hearing was held. In my judgment, [the claimant's] failure to ask for an oral hearing is fatal to his argument at common law."

26. Miss Lebow made detailed submissions in a series of letters to the Law Society. She did not request an oral hearing, although she did say that it was extremely difficult to convey in writing alone how difficult it had all been for her without appearing to be, as she put it, a "whinger" who is not taking responsibility for her own actions. Nevertheless it is plain that she did not request an oral hearing. She is however an experienced solicitor familiar, no doubt, with Article 6 of the European Convention on Human Rights. It seems to me that she might reasonably be expected at least to enquire as to whether she could request an oral hearing, especially in the light of the difficulty she said she had in representing her views in writing.
27. However it appears to me that her failure to request an oral hearing is fatal to this application, just as it was in Thompson, at any rate so far as the common law is concerned. What then is the position under Article 6 of the European Convention on Human Rights? I set out the position as I saw it in paragraphs 90 to 92 of my judgment in Thompson in these terms:

"90. Section 12 of the [1974] Act confers a discretion on the Law Society to impose such conditions in certain defined circumstances… The expression 'vesting a discretion' simply means that the solicitor has been notified as provided in section 12(1)(e) which permits the Law Society to consider whether to impose a condition at the next renewal of the practising certificate.

91. The decision to vest a discretion does not therefore itself determine any of the solicitor's legal rights. Moreover, if the Law Society should subsequently impose a condition on the certificate, the solicitor has a right of appeal to the Master of the Rolls under section 13(A)(6) of the Act. The Master of the Rolls conducts such appeals under the Master of the Rolls (Applications and Appeals) Regulations 2001 which provide (subject to very limited exceptions) that the hearings of such appeals shall be in public. So far as I can see, those rules are entirely compatible with Article 6(1) of the Convention.

92. In these circumstances it is to my mind clear that the decision to 'vest a discretion' was not a determination of the claimant's civil rights and, in any event, viewed as a whole, the process does not infringe his Convention rights in this regard."

Miss Lebow appeals against a decision to impose conditions, not against the vesting of a discretion. Assuming in her favour that the imposition of practising certificate conditions determines civil rights, it seems clear, following Thompson, that the absence of an oral hearing before the adjudicator and the appeals panel does not infringe her Convention right.

28. Miss Lebow's submission that the present appeal does not assist the SRA is flawed. It rests on the contention that this appeal is separate from the process by which the SRA imposed practising certificate conditions. It is not separate from it but rather is part of that process, as is clear from section 13 of the 1974 Act. It is the appellate stage of the process and arises following the culmination of the internal process whereby the SRA exercised its discretion to impose conditions. The right to bring the present appeal from the adjudicator's decision provided by section13(2)(b) of the act, which takes the form of an oral re-hearing, renders the procedure whereby practising certificate conditions are imposed, viewed as a whole, consistent with Article 6 of the European Convention on Human Rights.
29. As to the second Article 6 point, namely the Law Society's failure to make available the 2001 regulations, the position here is that, whatever the rights and wrongs of that, Miss Lebow was able to obtain a copy of the 2001 regulations and was able to file her petition in time. Moreover her petition is extremely clear and coherent, as indeed is her skeleton argument, and as indeed have been her oral submissions this morning. So she has not been prejudiced in any way by any failure in that regard. I note in passing that I am not persuaded that the relevant regulations are contained in the eighth edition of the Guide to the Professional Conduct of Solicitors and invite the SRA to check the position and to ensure that relevant regulations are in the relevant publication.
30. I turn briefly to the substantive grounds of appeal. As I have indicated, the essential point made by the adjudicator was that to continue the previous conditions on previous practising certificates would serve no regulatory purpose because Miss Lebow had failed to comply with previous conditions relating to the filing of such reports. At the time the matters were before the adjudicator, accountant's reports from April 2004 to October 2006 were outstanding.
31. I recognise that Miss Lebow submits that she failed to file reports due to personal difficulties she had at the time she wound up her practice, difficulties in hiring a suitable accountant and her accountant's failure to file reports on time in circumstances where she says that the accountant had said that he or she had done so. However, she rightly accepts that it was her responsibility to ensure that the reports were filed on time.
32. I see nothing to justify the submission that the adjudicator was unduly influenced by the case worker's report. She simply concluded that more stringent or at any rate different conditions were required than had been imposed in the past. I see no flaw in the adjudicator's approach to Miss Lebow's submissions. The difficulties which she had in 2003 following the closure of her practice do not explain or at any rate wholly justify why five reports were still outstanding in 2007. The fact is that, accepting Miss Lebow's submission that she did indeed have the difficulties which I have described in relation to the accountant, it was nevertheless her responsibility to ensure that they were filed and that was a responsibility which she failed to discharge.
33. Now all those facts, if accepted by the SDT, may be mitigation in the disciplinary proceedings which I understand are likely to come before the SDT in the comparatively near future. But as I have already said the imposition of practising certificate conditions is not a disciplinary matter but a regulatory matter and conditions are imposed to protect the public and the reputation of the profession.
34. Filing proper accountant's reports on time is an essential aspect of the regulatory framework of the solicitors' profession. It is the means by which the regulator is able to scrutinise the proper keeping of client accounts and ensure that the Solicitors Accounts Rules are being complied with properly. The failure to file such accountant's reports on time is a matter of some importance, especially when it occurs over a period of time.
35. I recognise that there is now only one accountant's report outstanding and the 'cease to hold' certificate has not been lodged. The question, however, is whether the risk of failures in the future if Miss Lebow should return to practice as a sole practitioner is serious enough to warrant regulatory control and if so what control is necessary or appropriate? I recognise that at present Miss Lebow is not acting as a sole practitioner and she says that she has no intention of doing so. In response to the point that in that event the imposition of the conditions will not do her harm, she submits that the imposition of conditions on the practising certificate in real life makes it more difficult for a solicitor to obtain employment because a prospective employer would be more likely to employ a solicitor with a practising certificate without conditions than a practising certificate with conditions. While I see the force of that, it does seem to me that the failure to file reports in a timely fashion in the past does, or would, give rise to a risk to the reputation of the profession if Miss Lebow should decide in the future to practise as a sole practitioner – that's to say, a sole principal or a sole director of an incorporated or unincorporated legal practice.
36. If she had a practising certificate without any conditions there would be nothing to stop her practising in that way. The question is whether in those circumstances the imposition of the conditions was both proportionate and reasonable. In my judgment it was both proportionate and reasonable. The failure to file the accounts was a matter of some importance even if her accountant was significantly to blame.
37. In short, the imposition of the present conditions is a proper exercise of regulatory control. It looks to the future and seeks to provide Miss Lebow with necessary support should she wish to re-enter practice in a capacity other than her present one. They are necessary conditions in that they offer appropriate protection by ensuring that should her circumstances change she is given proper practice support. They are proportionate in that they only bite if her practice changes. It may fairly be said that they have no significance in the context of the kind of work she does at the moment and that being so, it may be that the considerations she relied upon which I have set out above will be available if she should wish to apply for some future employment of one kind or another. But in all the circumstances of the case I think I really have no alternative but to dismiss the appeal, though I wish her well for the future.

Order: Appeal dismissed