QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| Brian Hazelhurst
Stephen David Garrett
Martyn Robert Brown
|- and -
|Solicitors Regulation Authority
Mr Jonathan Goodwin (instructed by Jonathan Goodwin Solicitor Advocate) for the Respondent
Hearing date: 10th February 2011
Crown Copyright ©
Mrs Justice Nicola Davies :
3. (a) Facilitated, permitted or acquiesced in money being withdrawn from client bank account, contrary to Rule 22 of the SAR 1998;
(b) Failed to keep accounts properly written up in accordance with Rule 32 of the SAR 1998;
(c) Failed to exercise any or adequate supervision contrary to Rule 13 of the SPR 1990.
i) the Tribunal failed to give any reasons for its apparent refusal to take into account any of the powerful mitigating factors it referred to in its judgment;
ii) the Tribunal made a finding of fact – that there was a lack of "a tight and rigorous control of cheque requisitions" – without any proper basis for doing so, in that there was no evidence before the Tribunal regarding what system of control should have been in place that would have prevented Ms Morley's thefts;
iii) the Tribunal made a finding of fact – that there was a "lack of…..a system of file review" –without any proper basis for doing so, in that the evidence was that there was a system of file review and there was no evidence before the Tribunal regarding what system of file review should have been in place that would have prevented Ms Morley's thefts;
iv) the Tribunal did not consider the range of sanctions available to it before imposing a fine;
v) the Tribunal did not explain why a fine was appropriate nor why the fine was set at the level at which it was set;
vi) the Tribunal did not explain which infractions the fine related to.
i) an accurate summary of the facts giving rise to infringement of the Rules and by reason of that infringement, professional misconduct;
ii) consideration of what had been said by way of mitigation, with a view to determining whether any of what had been said should influence the choice of sanction having regard to the purpose of sanction;
iii) a review of the range of sanctions;
iv) identifying the sanction to be imposed and providing reasons why the sanction was appropriate.
"16. We would put the matter at its simplest by saying that justice will not be done if it is not apparent to the parties why one has won and the other has lost.
17. As to the adequacy of reasons, as has been said many times, this depends on the nature of the case…
18. …if the judgment does not make it clear why the judge has reached his decision, it may well be impossible within the summary procedure of an application for permission to appeal to form any view as to whether the judge was right or wrong…
19. It follows that if the appellate process is to work satisfactorily the judgment must enable the appellate court to understand why the judge reached his decision. This does not mean that every factor which weighed with the judge and his appraisal of the evidence has to be identified and explained. That the issues of the resolution of which were vital to the judge's conclusion should be identified and the manner in which he resolved them explained…"
"It is important that there should be a full understanding of the reasons why the Tribunal makes orders which might otherwise seem harsh. There is, in some of these orders, a punitive element: a penalty may be visited on a solicitor who has fallen below the standards required of his profession in order to punish him for what he has done and to deter any other solicitor to behave in the same way. Those are the traditional objects of punishment. But often the order is not punitive in intention…in those 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…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."
"From this review of authority I conclude that the statements of principle set out by the Master of Rolls in Bolton remain good law, subject to this qualification. In applying the Bolton principles the Solicitors Disciplinary Tribunal must also take into account the rights of the solicitor under article 6 and 8 of the Convention. It is now an overstatement to say that "a very strong case" is required before the Court will interfere with the sentence imposed by the Solicitors Disciplinary Tribunal. The correct analysis is that the Solicitors Disciplinary Tribunal comprises an expert and informed Tribunal, which is particularly well placed in any case to assess what measures are required to deal with defaulting solicitors and to protect the public interest. Absent any error of law, the High Court must pay considerable respect to the sentencing decisions of the Tribunal. Nevertheless if the High Court, despite paying such respect is satisfied that the sentencing decision was clearly inappropriate then the Court will interfere. It should also be noted that an appeal from the Solicitors Disciplinary Tribunal to the High Court normally proceeds by way of review; CPR Rule 52.11 (1)".
a) the SDT was correct in its approach;
b) the SDT was correct and justified in stating in paragraph 44 of its Determination that:
"the Tribunal was extremely concerned both by the breaches of the Accounts Rules and by the lack of adequate supervision of an un-admitted member of staff. In the Tribunal's view the lack of a tight and rigorous control of cheque requisitions and a system of file review contributed to the insufficient supervision of Ms Morley. It was vital for the reputation of and trust in the profession that clients' monies were held strictly in accordance with the Solicitors' Accounts Rules."
i) personal payments by Ms Morley £2,853.57;
ii) payments of a personal nature by Ms Morley £13,634.65;
iii) incorrect payments to financial institutions £14,388.23;
iv) cash withdrawn from estates by Ms Morley £71,950.54.
The Determination of the SDT
"So far as Mr Hazelhurst, Mr Murphy, Mr Garrett and Mr Brown are concerned, we were very concerned that there was a complete breakdown of supervision here. We have all had good employees, or what we thought were good employees, but we have all dealt with clients' money and, although it has been repaid, you have to be particularly careful and on the lookout all the time to see that everything is done properly. We have, therefore, imposed a monetary penalty, and I will read the order against Mr Hazelhurst. The orders against Mr Murphy, Mr Garrett and Mr Brown are in exactly the same terms."
"The decision of the Tribunal
43. Having considered all the evidence and the submissions of the Applicant and on behalf of the Respondents, the Tribunal found three allegations against the First, Second, Third and Fourth Respondents both admitted and proved and the allegation against Ms Morley proved. The Tribunal was satisfied that Ms Morley's conduct had been dishonest by the standards of reasonable and honest people and that she herself had realised that by those standards her conduct had been dishonest.
44. The Tribunal was extremely concerned both by the breaches of the Accounts Rules and by the lack of adequate supervision of an un-admitted member of staff. In the Tribunal's view the lack of a tight and rigorous control of cheque requisitions and a system of file review contributed to the insufficient supervision of Ms Morley. It was vital for the reputation of and trust in the profession that client monies were held strictly in accordance with the Solicitors' Accounts Rules."
Evidence of breaches
"As a Firm we have to accept that, with the benefit of hindsight, the supervisory arrangements in place at the time that Ms Morley was employed were not sufficiently robust."
The appellants' case as to the breaches
i) during the three years of the thefts, the Firm's accounts were independently audited by accountants in accordance with the guidance contained in the Solicitors Accounts Rules. The auditors discovered nothing untoward in the books of accounts. Further, a representative of the Law Society visited the Firm on 2 and 3 May 2006 following complaints made as to Ms Morley's failure to respond to correspondence and to deal adequately with complaints. The representative conducted a monitoring visit and inspected some of Ms Morley's files. No concern was raised by him as to any dishonest acts relating to Ms Morley or any employee or member of the Firm.
ii) Ms Morley was a trusted employee of the Firm. She had worked there for eight years, having begun as a secretary and been gradually promoted to fee-earner. Until the discovery of the fraud, there was no reason to believe she was anything other than trustworthy.
Reasoning of the SDT as to breaches
i) that independent practitioners had seen and assessed the Firm's books and/or Ms Morley's files and found nothing untoward; and
ii) that Ms Morley was a trusted employee.
On behalf of the respondent, Mr Goodwin stated that the sentence in paragraph 43 of the Determination which reads: "Having considered all the evidence and the submissions of the applicants and on behalf of the respondent….." covers this point.
"The Tribunal shall have power to make such order as it may think fit, and any such order may in particular include provision for any of the following matters
(a) the striking off the roll of the name of the solicitor to whom the application or complaint relates;
(b) the suspension of that solicitor from practising indefinitely or for a specified period;
(c) the payment by that solicitor or former solicitor of a penalty….which shall be forfeit to Her Majesty;"
"So far as Mr Hazelhurst, Mr Murphy, Mr Garrett and Mr Brown are concerned, we were very concerned that there was a complete breakdown of supervision here. We have all had good employees or what we thought were good employees, but we have all dealt with clients' money and although it has been repaid, you have to be particularly careful and on the look out all the time to see that everything is done properly. We have, therefore, imposed a monetary penalty."
i) the breaches of the SAR 1998 were offences of strict liability, the appellants were guilty of breaches of the Rules because Ms Morley's frauds necessarily rendered them in breach. The essence of disciplinary inquiries is misconduct, such a definition implies an ethical dimension. It is no part of the respondent's case that the appellants' breach of the Rules was in any sense as a result of unethical behaviour on their part. The appellants had no reason to suspect Ms Morley of dishonesty, their behaviour in failing to suspect her of dishonesty cannot be described as inexcusable or deplorable.
ii) The appellants have taken steps to ensure that the problem which occurred should not occur again. They are aware of and willingly abide by the profession's code of conduct as demonstrated by the fact that they self-reported Ms Morley's activities, went to length and expense to ensure that no client suffered loss and co-operated fully with the SRA. As there is no reason to doubt their integrity, the profession's reputation does not require a harsher punishment than a reprimand. Such errors as have occurred have, in large measure, been balanced out by the steps which they have taken to re-establish their clients' confidence and with it, the confidence of the public. In considering the way in which the appellants responded to this crisis, it is submitted that any member of the public would be reassured that they were competent and trustworthy solicitors.