England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
DIVISIONAL COURT

		Royal Courts of Justice Strand London WC2
		Monday, 9 December 2002

1. LORD JUSTICE ROSE: The appellant appeals against a decision of the Solicitors' Disciplinary Tribunal whereby he was ordered to be struck off the Roll of Solicitors. The Tribunal heard the case against this appellant (and a number of others) over a period of three days, in March 2002. It gave written reasons for its findings on 20th June 2002. Before the Tribunal the appellant was represented by leading counsel.
2. The allegations against the appellant were that he had been guilty of conduct unbefitting a solicitor in a number of respects. First, drawing, or causing, or permitting to be drawn monies from a client account otherwise than in accordance with Rule 7 of the Solicitors' Accounts Rules 1991 and contrary to Rule 8 of those Rules; secondly, using client funds for his own purposes; thirdly, misapplying, or causing or permitting to be misapplied, monies held in client account, in the capacity of stakeholders, and acting improperly in conflict of interest situations. Furthermore, it was said that the appellant and others had failed to maintain properly written books of account, contrary to Rule 11 of the Solicitors' Accounts Rules of 1991. It is unnecessary for present purposes further to rehearse the details of the allegations against the appellant, all of which he admitted.
3. The findings of the Tribunal need, for present purposes, to be rehearsed in two parts: those in relation to the firm of which the appellant was, at the relevant time, an equity partner, and those relating to him personally. So far as the firm was concerned, the Tribunal found that all seven solicitors, who had been partners in the firm, and who included a man called Palmer, who was ultimately convicted of criminal offences, to which in a moment I shall return, had been guilty of conduct unbefitting a solicitor.
4. The Tribunal at page 73 paragraph 3 described the conduct of the firm and partners as "wholly shocking and disgraceful." What had happened, as the Tribunal found, was that, for a period of years in the mid 1990s, the firm had systematically used client money to finance the operations of the firm. In his submissions to this court today, Mr Foster, on behalf of the appellant, has accepted, as indeed he was bound to, that the firm would have gone under had it not been for the respite which this scheme permitted.
5. The first inspection, in April 1996, revealed something over half a million pounds of client funds had been used in the business. The report catalogued this as a "flagrant misuse of client funds and improper transfers." The Tribunal commented that when, in July 1996, the partners were confronted with this catalogue of events, they claimed ignorance of what breaches of the relevant Solicitors' Rules were involved. The Tribunal said that, while the system may have had an innocent beginning, limited to the simultaneous extraction from client account of monies expended immediately for disbursements, the system was allowed to develop so that the firm was effecting withdrawals from client accounts in relation to office account cheques not just for disbursements. The evidence showed that the partners in the firm, at the time responsible for the finance function (and it is to be noted that at the relevant time the appellant was a member of the finance committee) generally allowed the withdrawals from client account monies in an inappropriate manner. The Tribunal also pointed out that, within a month of affecting not to understand what breaches of the Rules were being committed, the partners, including the appellant, recognised their procedures were not in compliance with the Accounts Rules and expressed regret for inappropriate transfers and misuse of client funds.
6. Earnest assurances were given in 1996 that the breaches would not be repeated. The appellant was one of the partners who gave such assurance. As the Tribunal comments:

"The 'earnest assurance' was not fulfilled."

The second report, recording the position as at the end of June 1997, recorded significant and continuing misuse of clients funds, though the client account deficiency was somewhat reduced, being in the region of £150,000 to £230,000.

7. The partner, Palmer, to whom I have referred, was the major architect and operator of the scheme of improper client account transfers to finance the office account. But the Tribunal found that the other partners, including the appellant, did not take adequate steps either to stop the scheme or to control Palmer. Indeed, after Palmer had left in July 1997, improper transfers continued to take place.
8. The Tribunal commented on the fact that this appellant alone was the one to enter unqualified guilty pleas. (In relation, in particular, to the transfers in the case of Mr W, qualified pleas were entered by the other partners). It was submitted that the Tribunal could not find dishonesty against any of the partners because that had not been specifically charged. The Tribunal rejected that submission, and evidence was heard from all of the partners by the Tribunal.
9. The Tribunal said at page 75 that they did not:

"...accept that the [partners] can have been in any doubt whatsoever that the case they had to meet would concern issues relating to their individual probity and integrity, and to their personal individual knowledge of, and role in, the admitted impropriety..."

The Tribunal concluded that the appellant had, to the satisfaction of the Tribunal, beyond reasonable doubt, behaved with conscious and advertent impropriety.

10. So far as the specific allegations in relation to the appellant are concerned, as I have said, he alone pleaded guilty without qualification in relation to the matter of W. The appellant admitted in his evidence before the Tribunal that he had effected a transfer of £50,000 from client account in August 1995 because the money was needed for the practice. He admitted that he then took no steps to ensure the money was returned to client account but left the matter for Palmer and Mr Cowen (who was another of the partners) to sort out. The appellant denied dishonest intent but admitted in his evidence that he had consciously taken W's money out of the client account in breach of the Accounts Rules for the benefit of the firm, and had told no one outside the firm, nor did he do anything for the next 6 months to see that the money was replaced.
11. He also agreed in his evidence that he knew the firm was financed by the improper use of client money and, but for that, the firm would have collapsed. The Tribunal said they were impressed with the efforts made by the appellant, after the departure of Palmer, to restore the practices and procedures of the firm. But the fact was that he had admitted acting in conscious breach of the Accounts Rules, in relation to the improper transfer of W client monies, and had wholly failed to stop, control, report or rectify the effects of that improper use.
12. The Tribunal concluded that the combination of conscious impropriety and gross abstention in the performance of his duties was not the conduct to be expected of a solicitor with integrity. They, therefore, made the order for striking off the appellant's name from the Solicitors' Roll, to which at the outset I referred.
13. The submission which is made by Mr Foster, by way of challenge to that conclusion, is that striking off was excessively harsh, in the light of the delay which occurred in connection with the proceedings against the appellant, in breach, it is said, of his rights under Article 6 of the European Convention, and having regard to the nature of the appellant's misconduct, and his herculean efforts to put the firm back on its feet once Palmer had departed. Mr Foster submitted that it was naivety for which, in essence, the appellant was being punished. All these matters, he submits, did not give rise to the need to strike off the appellant. This court should substitute a short period of suspension.
14. Before examining the substance of these submissions, it is necessary to identify, briefly, the approach which this court should, as it seems to me, adopt to an appeal of this kind. The classic authority as to the approach of this court is Bolton v Law Society [1994] 1 WLR 512. (To a passage in the judgment of Sir Thomas Bingham (then Master of the Rolls), I will refer later in relation to the propriety or otherwise of striking off). As to the approach, in general, which this court should adopt, it is not contested to the contrary by Mr Williams, on behalf of the Law Society, that Mr Foster's submission, based in particular on Ghosh v General Medical Council [2001] 1 WLR 1915 and MacMahon v Council of the Law Society of Scotland SLR 36, is appropriate. That is to say, in dealing with an appeal of this kind, a greater flexibility is now appropriate than was suggested in Bolton which was decided before the coming in to force of the Human Rights Act. In Ghosh, at 1923, Lord Millett, giving the judgment of the Privy Council, in an appeal under the Medical Act 1983 (but, for my part, it seems that the principle should be of equal application in relation to appeals by solicitors) said this:

"The Board's jurisdiction is appellate, not supervisory. The appeal is by way of a rehearing in which the Board is fully entitled to substitute its own decision for that of the committee. The fact that the appeal is on paper and that witnesses are not called makes it incumbent upon the appellant to demonstrate that some error has occurred in the proceedings before the committee or in its decision, but this is true of most appellate processes.

It is true that the Board's powers of intervention may be circumscribed by the circumstances in which they are invoked, particularly in the case of appeals against sentence. But their Lordships wish to emphasise that their powers are not as limited as may be suggested by some of the observations which have been made in the past."

Lord Millett went on to refer to Evans v General Medical Council (unreported) and just above G said this:

"For these reasons the Board will accord an appropriate measure of respect to the judgment of the committee whether the practitioner's failings amount to serious professional misconduct and on the measures necessary to maintain professional standards and provide adequate protection to the public. But the Board will not defer to the committee's judgment more than is warranted by the circumstances. The council conceded, and their Lordships accept, that it is open to them to consider all the matters raised by Dr Ghosh in her appeal; to decide whether the sanction of erasure was appropriate and necessary in the public interest or was excessive and disproportionate; and in the latter event either to substitute some other penalty or to remit the case to the committee for reconsideration."

There is a passage to similar effect in the judgment of the Privy Council delivered by Lord Cooke of Thorndon in Preiss v General Dental Council [2001] 1 WLR 1926 at paragraph 27. In MacMahon v The Council of the Law Society of Scotland, Lord Gill (Lord Justice Clerk), giving the opinion of the court, having referred to Ghosh and Preiss, said:

"...we must now apply a less rigorous test. We should simply look at the tribunal's decision in the light of the whole circumstances of the case, always having due respect for the expertise of the tribunal and giving to their decision such weight as we should think appropriate."

Then at paragraph 16 he went on:

"Nevertheless, in following this approach we think that it is good sense to keep in view the obvious reasons that have been repeated over the years for according respect to the views of specialist tribunals in appeals of this kinds..."

15. For my part, I approach determination of this appeal in accordance with the tests there indicated.
16. It is necessary at this stage to rehearse, as summarily as may be, the chronology of events in connection with the proceedings against the appellant, because that is what bases Mr Foster's submission that there has been in this case inappropriate delay to which effect should be given in determining the appropriate penalty for this appellant.
17. The first inspection, as I have already indicated, resulted in a report in August 1996, which showed substantial cash shortages on the client account between April and June 1996. The firm provided observations on that report on 4th September 1996. In October 1996 the Compliance and Supervision Committee of the Office for the Supervision of Solicitors, resolved to take disciplinary proceedings against the equity partners. An appeal was lodged against that decision and that, in January 1997, was dismissed. Instructions were then given for proceedings to be taken before the Solicitors' Disciplinary Tribunal. They were issued on 23rd May 1997, which, it is common ground between Mr Foster and Mr Williams, should be properly regarded as the starting date in relation to proceedings against this appellant.
18. In July 1997, Palmer was arrested for criminal offences and left the firm. He was charged in August 1997. Disciplinary proceedings were listed for November 1997, and a directions hearing took place, but they were adjourned because of the pending criminal proceedings against Palmer. Also, as I have mentioned, assurances had, at that time, been given by the firm that no further breaches would occur.
19. In relation to the first inspection, a letter was written by solicitors acting for the appellant on 8th December 1997 indicating pleas by way of admission to certain of the allegations which arose from that inspection. But it is to be pointed out that the letter denied any knowledge of breach of the Solicitors' Accounts Rules, and did not admit conduct unbefitting a solicitor so far as the appellant was concerned.
20. Meanwhile, a second inspection had started on 28th July 1997, and that led to a report in February 1998, in relation to which the firm made representations at the end of that month. On 6th May 1998 the committee authorised reinspection of the accounts, and a third inspection was carried out which led to a report in July 1998. On that report the firm made observations at the beginning of August and further representations through its solicitors in October 1998.
21. In November 1998 the committee resolved to incorporate the second and third inspection reports in the disciplinary proceedings and authorised a fourth inspection, which started in February 1999 and led to a report on 23rd December 1999. Again, there was a cash shortage on client account, although by that stage it had been reduced to only some £5,000. It is to be noted that each of the four reports led, in due course, to admissions by the appellant of his guilt in relation to the charges which arose from them.
22. Representations were made on the fourth report in May 2000. Meanwhile, in April 1999, Palmer had been convicted at the Crown Court and sent to prison. In June 2000 a report in relation to the salaried partners of the firm was submitted to the OSS, whose committee in August decided not to add any of the salaried partners to the disciplinary proceedings against the equity partners.
23. On 19th September 2000 a statement was made, exhibiting the second, third and fourth reports, and making reference to the conviction of Palmer. On 15th December 2000 the appellant's solicitors suggested a meeting to discuss the case with Mr Williams, acting for these purposes for the Law Society, and such a meeting took place at the beginning of January 2001. On 26th January 2001 written pleas were promised by the appellant's solicitors shortly. On 2nd March and on 17th May 2001 Mr Williams sought progress from the appellant's solicitors. On 30th May they wrote to Mr Williams saying that there was confidence that, after a further consultation with counsel, pleas would be confirmed.
24. On 25th September there was a directions appointment at the Solicitors' Disciplinary Tribunal and a substantive hearing date was fixed. On 19th October the appellant's solicitors telephoned to obtain a three week final extension of time for pleas, which were ultimately submitted on 13th November 2001, and were followed by a further meeting between Mr Williams and the appellant's solicitors. On the day before the substantive hearing, a definitive schedule of pleas and written statements of the solicitors, including the appellant, documents by way of discovery, and letters from third parties in support, were sent to Mr Williams.
25. In the light of that chronology of events, taking into account the degree of complexity of the matter, the conduct of the authorities responsible for prosecuting the appellant, and the appellant's own conduct, (those being the matters to which on the authorities regard is to be had: see, for example, the judgment of Lord Bingham of Cornhill in Dyer and Watson [2002] 3 WLR 1488 at paragraphs 52 - 55, and the judgment of Lord Hope of Craighead, with which the other members of the Privy Council agreed in Pattern Mills v HM Advocate and the Advocate General for Scotland 22nd July 2002) and bearing in mind paragraph 30 of the Pattern Mills judgment (which indicates that there is a relatively high threshold to be crossed before it can be said in any particular case that a period of delay is unreasonable, so as to give grounds for real concern that a Convention right has been violated), I am of the view that there has been no inappropriate or unreasonable delay in relation to the proceedings against this appellant.
26. In any event, even if I had taken a different view, it is difficult to sea how, in the circumstances of the present case, the penalty imposed by the Disciplinary Tribunal could properly be reduced in the way which Mr Foster suggests. Of course there are cases in which, if there has been inappropriate and unreasonable delay, it is possible and appropriate to reflect this in the penalty imposed: that may be a means whereby satisfaction can be given for breach of an Article 6 right. But, in the present case, it is, in my judgment, pertinent to bear in mind the approach indicated by Sir Thomas Bingham MR in Bolton v Law Society at page 518 of his judgment, with which the other members of the court agreed. These observations are pertinent to the level of penalty for the conduct which this appellant admitted. At 518D he said:

"If a solicitor is not shown to have acted dishonestly, but is shown to have fallen below the required standards of integrity, probity and trustworthiness, his lapse is less serious but it remains very serious indeed in a member of a profession whose reputation depends upon trust. A striking off order will not necessary follow in such a case, but it may well. The decision whether to strike off or to suspend will often involve a fine and difficult exercise of judgment to be made by the tribunal as an informed and expert body on all the facts of the case."

That passage of course I read in the context of the approach, following Ghosh, which I identified at an earlier stage in this judgment. Sir Thomas Bingham went on at 518G:

"In most cases the order of the tribunal will be primarily directed to one or other or both of two other purposes. One is to be sure that the offender does not have the opportunity to repeat the offence. This purpose is achieved for a limited period by an order of suspension: plainly it is hoped that experience of suspension will make the offender meticulous in his future compliance with the required standards. The purpose is achieved for a longer period and quite possibly indefinitely, by an order of striking off. The second purpose is the most fundamental of all to maintain the reputation of the solicitors' profession as one in which every member, of whatever standing, may be trusted to the ends of the earth. To maintain this reputation and sustain public confidence in the integrity of the profession it is often necessary that those guilty of serious lapses are not only expelled but denied re-admission."

Those observations, as it seems to me, are pertinent in the present case.

27. For my part, approaching the matter in the way which I have earlier indicated, it is quite impossible to contend that striking off was an excessive penalty for the conduct which this appellant admitted, despite the strenuous efforts made by Mr Foster to draw attention to the mitigating features. In those circumstances, for my part, I would dismiss this appeal.
28. MR JUSTICE FULFORD: I agree.
29. MR WILLIAMS: My Lord, I make an application for costs on behalf of the Law Society. I have this morning been able to give those instructing my learned friend a schedule of my costs, which I will invite the court to assess.
30. LORD JUSTICE ROSE: If you have only given it to him this morning -- what, Mr Foster, do you have to say about this schedule?
31. MR FOSTER: My Lord, I have not myself seen that schedule.
32. LORD JUSTICE ROSE: It does not sound, Mr Williams, as though we are going to embark on a summary assessment of costs in that context.
33. MR WILLIAMS: My Lord, shall I ask for detailed assessment?
34. LORD JUSTICE ROSE: You can ask for what you like, but what I am saying is we are not going to embark on that in this context, as Mr Foster has only just been given the schedule.
35. MR WILLIAMS: My Lord, he was given it because the work started late. My application will be for a detailed assessment of costs.
36. LORD JUSTICE ROSE: There are two points. Mr Foster, first of all, can you resist the application for costs?
37. MR FOSTER: My Lord, I am going to try.
38. LORD JUSTICE ROSE: Secondly, if you cannot, do you resist the application for a detailed assessment?
39. MR FOSTER: If you are against me on point one, I cannot resist the application for detailed assessment. My Lord, as to the principle of whether or not costs should be awarded against Mr Langford, costs are in your discretion of course, I invite you to say that the financial burden associated with being struck off should not be added to by an order for costs. This was an arguable appeal which raised an important and previously, in this jurisdiction, unadjudicated upon point of principle, as to the way this court should approach the matter. It was important that that was decided. This was a useful vehicle for that decision. Had this court, having heard those submissions, approached the matter in the way that I was contending realistically for, the result might have been different. In those circumstances, I invite you to say that there should be no order as to costs.
40. LORD JUSTICE ROSE: Thank you. The appellant will pay the respondent's costs, which will be the subject of a detailed assessment.