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England and Wales High Court (Administrative Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Beller v The Law Society [2009] EWHC 2200 (Admin) (24 July 2009)
URL: http://www.bailii.org/ew/cases/EWHC/Admin/2009/2200.html
Cite as: [2009] EWHC 2200 (Admin)
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QUEEN'S BENCH DIVISION
DIVISIONAL COURT
Strand London WC2A 2LL |
||
B e f o r e :
MR JUSTICE BURTON
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| BELLER | Claimant | |
| v | ||
| THE LAW SOCIETY | Defendant |
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MR G WILLIAMS QC (instructed by JONATHAN GOODWIN) appeared on behalf of the Defendant
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- LORD JUSTICE THOMAS: This is an appeal by a solicitor in respect of disciplinary proceedings brought against him by the Law Society. It is the exercise of his statutory right of appeal.
- The appellant was born in 1948, admitted in 1976, and thus is a solicitor of some seniority. By the order of the Solicitor's Disciplinary Tribunal, made now over 2 years ago, on 5 July 2007, he was found guilty of conduct unbefitting of a solicitor as he had failed to comply with professional undertakings, and was ordered to be struck off. He appeals solely on the basis of the sanctions imposed, because he had not contested the fact that he had failed to comply with professional undertakings.
- The appeal was brought on 11 September 2007. Although the order has not been stayed, it is obviously neither just nor right that the matter should have been outstanding for a 2 year period.
- The facts can be simply stated. At the material time, and it appears for some time before, the appellant had been a sole practitioner with his own firm in the West End. From the papers that we have read, it appears that he practised successfully and without any adverse matters until about the year 2000. On 30 April 2001 the Law Society's Solicitors Investigation Compliance Office issued a report alleging that he had permitted funds to be transferred in and out of his client account when not fully conversant with the transactions and without proper written instructions. This was a matter to which the Law Society rightly gave considerable attention, because it was appreciated, and has been for some time, that it is important to ensure that a solicitor's client accounts are not used as a means of money laundering.
- He was charged with matters relating to that report before a Solicitors' Disciplinary Hearing in February 2004. From the decision of that Tribunal, it appears that he had a nucleus of about 15 clients who made loans to one another. Prominent amongst those was a man, Mr Scott Young, about whose conduct it will be necessary to say a little in a moment.
- The sums that passed through the account were approximately £30 million in 1999. It appears that the appellant derived significant income from commissions on these loans. It appeared that he had a very close relationship with a number of those clients, including Mr Scott Young. In the case of Mr Scott Young, it appears, from the decision of the Tribunal, that he had permitted him to use his solicitor's client account for money to pass through that account rather than be passed to the bank so as to avoid the bank using payments that were received as a means of reducing Mr Scott Young's overdraft. The account, it appears, was used to pay for a number of disbursements for Mr Scott Young, including personal matters.
- The decision of the Tribunal given on 9 April 2004 makes it very clear that the appellant regarded Mr Scott Young as highly respectable and that he had a close relationship with him. Indeed, Mr Scott Young came and gave evidence to the Tribunal on his behalf. The decision found that only one of the five charges was proved, and that one charge was proved only in part; the Tribunal found that there was an absence of written instructions, but did not find proved the allegation that the client had not understood the underlying transactions. The appellant was fined an amount of £4,000 and ordered to pay half of the costs.
- He continued practising. During that period, it is quite clear that he continued this close relationship with Mr Scott Young. It will not be necessary to set out the details of what transpired, but before referring to some of the matters it is important to say what happened, at least as regards the position of the Law Society.
- On 31 March 2006, the appellant notified the Law Society that he had given undertakings involving Mr Scott Young on three transactions totalling about £1.4 million, and another transaction totalling £5 million. He stated that he had given these undertakings in reliance of what he had been told and the trust he had proposed in Mr Scott Young, and having regard to the fact that another firm of solicitors practising in the city seemed to have a strong relationship with him.
- On 10 April 2006, the well known solicitors, Lawrence Graham, notified the Law Society of a further breach of the undertaking by the appellant. The breach had been notified to the appellant by Lawrence Graham on 29 March by fax and although the appellant had not, in terms, notified this as a further breach of an undertaking, he had, in fact, referred to the matters in his letter. The matters related to the release of some £2.2 million to Mr Scott Young even though the appellant had given to a trust (which had paid to him two instalments of £1 million and £1.2 million) an undertaking that he would hold those sums to the order of the trust.
- On 13 April 2006 the Law Society intervened, took over the practice and resolved to undertake disciplinary proceedings.
- The appellant's case before the Tribunal was to admit the breach of the undertakings. He explained that Mr Scott Young had gone to the United States after a nervous breakdown which had been the result of the failure of a transaction upon which Mr Scott Young was engaged and upon which he had relied to meet certain undertakings. He also relied upon the fact, again which he had mentioned in his letter of notification to the Law Society, that Mr Scott Young had taken securities, which the appellant had held to cover the undertakings, in excess of £15 million, without his permission from his office.
- At the hearing that took place on 5 July 2007, the appellant was tendered to the Law Society to be examined, but no examination took place and the broad facts, as I have endeavoured to outline them, were accepted. The Disciplinary Tribunal took the view that those facts were so serious that the only penalty they could impose was the penalty of removing him from the Roll. It did so on the basis that the reputation of the profession depended upon solicitors honouring undertakings, and it was essential to the conduct of non-contentious business that people could repose trust in a solicitor performing undertakings, and a solicitor should, therefore, never put himself in a position where he would breach an undertaking.
- It is clear, in my view, that by far the most serious part of the matters that were before the Tribunal related to the sum of £2.2 million which had been paid into the appellant's client account to be held to the order of a trust, and that the appellant had released the sum of money without the assent of the trust and merely upon being told by his client, Mr Scott Young, that it was all right to pay him the money. It seems to me that, unless there were wholly exceptional circumstances, such conduct alone would compel any responsible Disciplinary Tribunal to regard that, in itself, as sufficient to remove a solicitor from the Roll. It was the grossest breach of an undertaking involving a very substantial sum of money. It is no excuse, and no mitigation, to pay out to one client such an enormous sum of money on being told by that client that it was all right to pay, when there has been a breach of an undertaking to another client. The whole point of the undertaking to the other client was that the client had to have the solicitor's word that the money would only be transferred upon his consent. By breaching that undertaking and not being in a position to perform that undertaking, there was, in my view, such a serious breach of the rules, and the potential of such damage to the profession, that unless there were wholly extraordinary circumstances, that was sufficient, of itself, for striking off the Roll.
- We have investigated, because it was not clear from the circumstances set out in the decision, whether there were mitigating circumstances. It is not necessary for me to set out the facts as they have more clearly emerged before us. It is sufficient to say that there were, unfortunately, no mitigating circumstances that could explain such serious breaches of an undertaking.
- The other matter that is of very serious concern, and which is relied upon as mitigation, is that the appellant said he could trust Mr Scott Young. It is now obvious from the matter relating to the £2.2 million, that Mr Scott Young is a man who is dishonest. It is also obvious, from the circumstances in which Mr Scott Young removed securities that had been placed with the appellant, totalling some £15 million, that Mr young committed a further and grave act of dishonesty in taking them. Those acts of dishonesty by Mr Scott Young are relied upon by the appellant in saying that, until those two matters occurred, he had no idea that Mr Scott Young was dishonest, and no reason not to trust him. But a solicitor who gives to other people an undertaking must always act on the assumption that the persons to whom he gives an undertaking must be protected, and that he cannot rely upon the apparent trustworthiness of his client to see him right. He has to stand behind his undertakings himself and any attempt to say, 'Well I trusted my client, and therefore I could do what he asked me to do', would totally undermine, in a grave manner, the high-standing in which the solicitor's profession is held.
- Furthermore, it seems to me that the Law Society were entitled to take a view that it is very important that solicitors realise, on pain of having their name removed from the Roll, that they must take great care in dealing with clients, particularly if they are sole practitioners, where clients ask them to do things which are not strictly in accordance with the rules. It would have been quite open to the Tribunal to regard this case as a case where there were further aggravating matters which plainly called for a deterrent sentence.
- There is, of course, very substantial personal mitigation. As a result of the litigation undertaken by the appellant, all funds have been secured and no one has lost anything. That is much to his credit. He did not contest the charges; that again is much to his credit. He was suffering from severe ill health at the time of these events. His personal circumstances relating to his family are also strong mitigating factors. He has lost, personally, very substantial sums of money by making those available to make good the short-fall, and, as if that was not sufficient, his wife has also been defrauded by Mr Scott Young of some £200,000. All of that, of course, is most unfortunate, but all of that mitigation cannot in anyway mitigate a penalty that was inevitable for the grave failings committed by this solicitor. As I have already said, it is no defence to say that he was duped; he was plainly duped, but a solicitor who gives an undertaking must not put himself in a position where he is unable to perform the fundamental obligations he owes to others. Being duped by your own client is no excuse.
- For those reasons, therefore, I, speaking for my own part, regard the decision of the Tribunal as one not only well within the range with which this court would not interfere, but one which, had they not made it, many would have regarded them as failing in their duty to protect the profession. The consequences are undoubtedly very severe to this appellant, but there can be no circumstances which would justify this court in interfering with the decision made. For those reasons, therefore, conscious though I am of the strong mitigation that this appellant has, and also conscious that there is no suggestion in the award of the Solicitors' Disciplinary Tribunal of any dishonesty, the appeal must be dismissed.
- I agree.
- MR WILLIAMS: My Lord, I make an application for costs on behalf of the Law Society. The application is in the total sum of £10,000, a figure which has been agreed with my learned friend. I make that application.
- MR SACHDEVA: My Lord, that is entirely right, there is no objection to the principle or to the quantity from this claimant.
- LORD JUSTICE THOMAS: Very well, we shall make an order in that sum.
- Thank you very much indeed.