England and Wales High Court (Administrative Court) Decisions

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

		Royal Courts of Justice Strand London WC2A 2LL
		12 January 2012

1. MR JUSTICE NICOL: This is an appeal by Mohammed Ali Javed under Section 49 (1) of the Solicitors Act 1974 against the decision of the Solicitors Disciplinary Tribunal of 29 October 2010. The tribunal found six allegations proved against the appellant and ordered him to be struck off the Roll of Solicitors. The tribunal also ordered him to pay costs of the proceedings, those costs not to be enforced without the leave of the tribunal. Pursuant to a direction from Lord Justice Stanley Burnton, the appeal was heard by me as a single member of the High Court.
2. The allegations against the appellant which were proved were as follows:

"(1) Failed to act with integrity in breach of Rule 1.02 of the Solicitors Code of Conduct 2007;

(2) Behaved in a way that was likely to diminish the trust the public places in the legal profession in breach of Rule 1.06 of the Solicitors Code of Conduct, in that he had been involved in fraudulent mortgage transactions;

(3) Failed to fulfil an undertaking in breach of Rule 10.05;

.....

(5) Failed to make appropriate arrangements to close his practice, Conifer and Pines, in a proper manner in breach of Rules 1.04, 1.05 and 1.06 of the Solicitors Code of Conduct;

(6) From 22 October to 29 December 2009, failed to make arrangements for the effective management of his firm contrary to Rule 5.01 of the Solicitors Code of Conduct;

(7) Failed to respond in an open, prompt and co-operative way towards correspondence from the Solicitors Regulatory Authority in breach of Rule 20.05 of the Solicitors Code of Conduct."

Allegation number (4) was that the appellant -

"(4) Acted in breach of Rule 20.01/20.02 between 17 December 2008 to 27 February 2009 in that he had practised as a solicitor without having in force a practising certificate."

The tribunal found that allegation not to be proved.

3. The most serious matter alleged against the appellant concerned a fraudulent mortgage transaction. The Solicitors Regulatory Authority ("SRA") alleged, and the Solicitors Disciplinary Tribunal found, that the appellant had acted dishonestly in relation to this transaction. The transaction in question concerned a property known as 14 C Avenue where the appellant acted for the purported vendors, a Mr and Mrs S. In fact, the two who pretended to be the owners of that property were not. The purported purchaser, a Mr M D S K, agreed on 21 June 2008 to buy the property for £950,000. A mortgage had been obtained from Halifax for £665,000. The completion took place on the same date as contracts were exchanged - ie, 21 June 2008 - and the full purchase price was paid into the firm's account. Save for some £60,000, the funds were then distributed on the direction of the so-called vendors.
4. On 17 July 2008 Walker Morris, solicitors for Halifax, wrote to the appellant. Following further correspondence, the balance which had been retained by the appellant's firm, £60,000, was sent to Walker Morris by Halifax. Halifax lost the balance of the loan.
5. In the proceedings brought by the SRA against him, the appellant accepted that the whole transaction was fictitious in that the people posing as Mr and Mrs S were imposters. His case was that he was unaware that this was the position and he vigorously denied that he was dishonest in the role he played in this transaction.
6. The SRA's case was that this transaction was full of characteristics redolent of fraud. It pointed to a number of features. First, only a few weeks previously the appellant had been involved with another transaction - again involving Walker Morris - with similar characteristics. In that case the appellant had acted for the purported purchaser. It is not suggested that in the course of that transaction the appellant had been dishonest. But he discussed it with an SRA investigating officer on 15 May 2008. That was a little over a month before the current transaction was completed, and even less since the first interview with the couple pretending to be Mr and Mrs S.
7. The appellant accepted that he was aware of Law Society guidance concerning such fraudulent transactions. Amongst other features which the Law Society warned could be signs of property fraud were the following:

"Fraudulent buyer or fictitious solicitors especially if the buyer is introduced to your practice by a third party, for example, a broker or estate agent who is not well known to you. Be aware of clients you never meet and solicitors not known to you. Unusual instructions: for example, the solicitor being instructed by the seller to remit the net proceeds of sale to anyone other than the seller."

8. The SRA alleged that the current case had a number of features which should and which, on their case, did alert the appellant to the fraudulent nature of the present transaction.
9. First, the clients were introduced to the appellant by an intermediary whom the appellant had previously met for just one hour, who had not previously introduced any clients before Mr and Mrs S (or the couple purporting to be Mr and Mrs S) and gave the appellant no means of getting in touch with them at all.
10. Secondly, the clients had not previously been known to the appellant. They did produce copies of the documents which purported to be Italian passports in their names. The copies were purportedly verified by another firm of solicitors. But the SRA observed that the originals of those documents were not seen by the appellant or those in his firm.
11. Thirdly, the Land Registry documents produced by the couple gave the property at 14 C Avenue as their residential address but utility bills, which they also produced, showed them living at a different address.
12. Fourthly, the appellant provided a proper client care letter which the clients were asked to countersign. Underneath their signatures they wrote their names. The female member of the couple claimed to have the first name "Sally", but the document (the client care letter) misspelt the name as "Saly".
13. Fifthly, the couple gave directions for payment out of the proceeds of sale which were unusual. Only a relatively small amount of the proceeds were to go to the couple themselves directly. The rest was to be paid to various other recipients. One of those recipients was a company called Elixir Traders Ltd. The appellant did a company search on that company and it did, indeed, show a Mr and Mrs S registered as directors, but the registration had been applied for only a few days before their first contact with the appellant's firm.
14. Sixthly, Mr and Mrs S authorised payment of £315,000 to a Mr I A. The appellant's firm was provided with a copy of a passport in the name of a Mr E A. Neither the first nor the second names corresponded with the name of the person who was to be the payee. Two days later those instructions were cancelled by Mr S, saying that Mrs S had made a mistake. Next, another recipient of part of the proceeds was a Mr Peyman-Fard. There was nothing on the appellant's file to indicate who Mr Peyman-Fard was. There was no confirmation of his identity. There was no recorded explanation as to why he was to receive a substantial part of the sale proceeds.
15. It was the appellant's case that the person responsible for this fraud was another member of his firm, Mr Ali Shah, and that his own role was negligible. As against that, the SRA was able to point to evidence that his role was very much greater than that. So, for instance, the client care letter to which I have already referred said that the appellant would personally carry out much of the work himself. Subsequent to the events with which the tribunal was primarily concerned, the claimant notified his indemnity insurers. A form that he was required to fill in obliged him to identify both the fee earner and the person supervising the matter. He said that he himself acted in both capacities. That form was signed by the appellant. In his evidence to the tribunal the appellant said frequently that he had been personally concerned with this matter and personally concerned to see that his clients had the best possible care and attention and a very high level of service.
16. The tribunal had before it the report of an investigating officer which included the record of interview with the appellant, various documents assembled by the investigating officer and it heard evidence from, amongst other people, the appellant himself. In the central part of its decision the tribunal said:

"68 Having considered all evidence, both written and oral, the tribunal was satisfied, so that it was sure, that all the allegations, except for allegation four, had been proved to the higher standard. Moreover, the tribunal was satisfied that in conducting the sale of 14 C Avenue in total disregard of all the various hallmarks of mortgage fraud, the respondent was aware that his conduct had been dishonest by the standards of reasonable and honest people and that he himself had realised that by those standards his conduct was dishonest.

69 The tribunal did not find the respondent to be a credible witness in that his evidence was confusing, unconvincing and inconsistent. Moreover, the tribunal was extremely concerned about the difference in the version of events given in oral evidence by the respondent and those set out in his firm's correspondence following the discovery of the fraud, both with the solicitors for the Bank of Scotland and with the firm's indemnity insurers.

70 The tribunal did not accept that the respondent had taken proper notice of the various hallmarks of mortgage fraud or that he had made appropriate investigations following what he had claimed to be satisfactory answers to his questions. In cross-examination, the respondent had confirmed that the sale of 14 C Avenue had been the first transaction for almost £1,000,000 that his firm had ever handled. The tribunal did not accept that the respondent had left various steps in such a matter to various and sometimes unknown members of staff.

71 The tribunal did not accept that the respondent did not know who had written the attendance note of the initial visit of the purported Mr and Mrs S to his firm. It noted that Conifer & Pines had been a small firm and that it was clear from the firm's letters that [the] respondent had had conduct of the matter. Further, the tribunal did not accept the respondent's evidence that he had not been aware of all of the details of the various documents in the sale file including, inter alia, the completion statement, the faxed application form and the letter to Expedited Ltd. Moreover, the tribunal did not accept that the respondent had not been aware of the details of all the post-completion correspondence particularly the letters to and from Walker Morris. The tribunal found that the respondent had previous dealings with Expedited Ltd and that he had been aware of its involvement in the purchase of 14 C Avenue. The tribunal did not accept the respondent's statement that the transaction had not involved any non-Bank lending."

17. The tribunal then heard mitigation from the solicitor who was then acting for the appellant and concluded thus:

"Sanctions and Reasons

76 Having fully considered the submissions on behalf of the respondent, the tribunal was of the view that given its findings of dishonesty in relation to the first and second allegation, the appropriate penalty, in the particular circusmtances, was that the respondent be struck off the Roll of Solicitors and it is so ordered."

18. The appellant makes a number of points in grounds of appeal. He submits that the tribunal erred in failing to make any - or any clear - findings in relation to some of the other matters that had been alleged against him. In particular, there was an allegation that he had been involved in another fraudulent transaction - a property known as 132 P Gardens. Secondly, it was alleged that he had given an undertaking to another party which he had then broken. In relation to this second matter, his position was that it was indeed correct that he had not observed an undertaking but that was because the undertaking had been based on deception, and so was ineffective.
19. In my view there is a degree of force in the appellant's criticisms of the tribunal in this regard. It will be recalled that the tribunal said they accepted all but one of the allegations against the appellant.
20. Allegation 2 was that he had behaved in a way which was likely to diminish the trust the public places in the legal profession, in breach of Rule 1.06, in that he had been involved in fraudulent mortgage transactions. I observe that the word "transactions" is in the plural. That appears to be a reference to both 14 C Avenue and 132 P Gardens. And yet the tribunal is silent as to its reasons for making an adverse finding against the appellant in relation to 132 P Gardens. Somewhat similarly, the tribunal said that it accepted, amongst other allegations, the claim that he had failed to fulfill an undertaking in breach of Rule 10.05. The tribunal nowhere responds to the appellant's case that he was justified in behaving in that way because he had been deceived into giving this undertaking. It would have been open to the tribunal to say that in all the circumstances it was unnecessary for them to reach a final conclusion on those matters. That was not the course that they took. They found against the appellant in relation to those as well as the other matters. In those circumstances they were obliged to give - albeit brief - reasons for the conclusions to which they came.
21. Having said that, the error, in my judgment, is not material unless the appellant is able to make good his criticisms of the tribunal's findings in relation to the transaction concerning 14 C Avenue. This is because in relation to that transaction the allegation was clearly that he had acted fraudulently and dishonestly.
22. In the course of his helpful oral submissions the appellant accepted that if the tribunal's findings in relation to 14 C Avenue were sustainable then the tribunal would have been entitled to come to its conclusion that the only appropriate sanction for a solicitor who behaved fraudulently or dishonestly was to be struck off the Roll.
23. So far as the 14 C Avenue matter is concerned, the appellant submitted that the tribunal failed to take account of the evidence of his poor mental health at the material time. The tribunal did have medical evidence from, amongst other people, the appellant's general practitioner. That was in a letter dated 19 July 2010 from the Northolt Family Practice. However that recorded that the appellant had been unwell since June 2009. It will be remembered that the transaction concerning 14 C Avenue took place in June 2008, almost a year before. It is right that in the course of his representative's final submissions to the tribunal there was allusion to the claimant's depression having commenced somewhat earlier but that part of the representative's submissions does not seem to be reflected in the evidence before the tribunal. The tribunal clearly was aware that, as at the time of the hearing before it, the claimant still had at least some residue of the mental ill health to which the general practitioner had referred. It was patently aware of that because in response to the claimant's illness at one stage it adjourned the hearing to a later date.
24. I therefore reject the submission that the tribunal failed to take account of the appellant's ill health. It did take account of his illness at the time of the hearing. It did not have evidence that he had been ill at the time of the transaction involving 14 C Avenue.
25. Another part of the appellant's grounds of appeal was that the tribunal had misdirected itself as to the proper test of dishonesty. The appellant accepts that the proper test which the tribunal was obliged to apply is that set out in Twinsectra Ltd v Yardley [2002], 2 All ER 377, [2002] UKHL 12, in particular in the speech of Lord Hutton at paragraph 36. Lord Hutton put it this way:

"36 It would be open to your Lordships to depart from the principle stated by Lord Nicholls that dishonesty is a necessary ingredient of accessory liability and to hold that knowledge is a sufficient ingredient. But the statement of that principle by Lord Nicholls has been widely regarded as clarifying this area of the law and, as he observed, the tide of authority in England has flowed strongly in favour of the test of dishonesty. Therefore I consider that the courts should continue to apply that test and that your Lordships should state that dishonesty requires knowledge by the defendant that what he was doing would be regarded as dishonest by honest people, although he should not escape a finding of dishonesty because he sets his own standards of honesty and does not regard as dishonest what he knows would offend the normally accepted standards of honest conduct."

26. The complaint of the appellant is that the tribunal ignored that injunction and applied instead a wholly objective criterion of dishonesty. In my judgment, though, that simply ignores the way in which the tribunal phrased itself in paragraph 68 of its decision which I previously quoted. I find this ground of appeal wholly unmeritorious, and dismiss it.
27. Otherwise, the appellant submits that the tribunal should not have come to the conclusion which it did based on the evidence before it. He submits that the evidence may have shown that he was less punctilious than he should have been. He was perhaps more gullible than he should have been, but not that he was dishonest, and that the court should allow his appeal on that basis. The difficulty with that submission is that the tribunal was the body which heard oral evidence from the appellant. This court - even though it is not limited to appeals on grounds of law but also will consider appeals on factual disputes - nonetheless will be very slow to interfere with findings of fact which the lower tribunal has reached based on its assessment of witnesses who have given oral evidence before it. This is an axiomatic part of any appellate structure but it applies just as much in the context of appeals to the High Court against decisions of the Solicitors Disciplinary Tribunal.
28. In Twinsectra, Lord Hutton said (at paragraph 43):

"43 It is only in exceptional circumstances that an appellate court should reverse a finding by a trial judge on a question of fact (and particularly on the state of mind of a party) when the judge has had the advantage of seeing the party giving evidence in the witness box."

Like all such propositions, they are not inflexible. But in my judgment there is nothing in the circumstances of the present case which would entitle me to depart from the usual and sensible approach.

29. For the reasons which I have briefly summarised, which are set out in more detail in Mr Geoffrey Williams QC's helpful written submissions, there was in my view ample material on which the tribunal could reach the conclusion that it did. I phrase it that way because whether or not the tribunal did or did not accept the appellant as a credible witness was essentially, for the reasons that I have just given, a matter for the tribunal itself to determine. The fact that there was an ample foundation on which it could reach that conclusion is a good reason not to depart from the usual course of leaving undisturbed such factual findings.
30. Finally, Mr Javed has submitted that the sanction that was imposed by the tribunal was excessive. In a heartfelt submission he reminded the court of the impact that such a sanction will have on him personally and on his family. He asked the court to reflect on whether such a severe sanction was appropriate in the circumstances of the case.
31. I appreciate that the findings and sanction in a case like this can have reverberations, not only for the appellant personally but also for those who are close to him. However, the standing of the solicitors profession, the integrity with which it is regarded, the honesty of its members is of critical importance. The benefits that members of the profession have from being solicitors carries with it the risk that if they fall below the high standards that the public is entitled to expect of members of that profession, then they have to accept the consequences that their participation in that profession may be brought to an end. Part of the role of the Solicitors Disciplinary Tribunal is to make its assessment of when such a sanction is necessary in the interests of preserving the public reputation of the solicitors' profession.
32. Although this court has a full jurisdiction to take a different view regarding sanctions, it will pay proper regard to the views of the Solicitors Disciplinary Tribunal as to when it considers that the sanction of removal from the Roll is necessary. In my judgment this is not a case where I would depart from that judgment.
33. Accordingly, this appeal is dismissed.
34. MR WILLIAMS: I have an application to make for costs. I produce a schedule which was served certainly more than twenty-four hours ago upon Mr Javed. It is, as the court will anticipate, in a substantial sum.
35. I say this briefly. Obviously one bears in mind the approach to costs adopted by the tribunal in respect of enforceability. We are acutely aware of the financial realities so far as Mr Javed is concerned. But there is a difference between this appeal and the tribunal proceedings because of course he had no option but to become involved in those. It was his election to appeal.
36. I would ask my Lord to assess costs. If the decision is that any costs awarded should not be enforced without leave, could I respectfully suggest that that leave should be that of the tribunal?
37. MR JUSTICE NICOL: What would be my power to add that condition?
38. MR WILLIAMS: Section 49 (4) permits you to make such order as you think fit. I submit that that would cover such an order and prevent the court being troubled. All I can say anecdotally is that it is an order that has been made before. I am not able to help as to the case. Your powers are unrestricted, in my submission.
39. MR JUSTICE NICOL: Mr Javed?
40. THE APPELLANT: I am not in a position to pay anything at all.
41. MR JUSTICE NICOL: Can we take this in stages? Is there anything you want to say to me as to why, in principle, you should not have to bear the costs of the SRA? The usual principle is that if a party is unsuccessful in litigation they have to pay the other side's costs. Is there anything that you want to say as to why that should not be the case?
42. THE APPELLANT: My Lord, I do not know what to say about it.
43. MR JUSTICE NICOL: Have you a copy of the schedule?
44. THE APPELLANT: Yes.
45. MR JUSTICE NICOL: Is there anything you want to say about the amounts in that?
46. THE APPELLANT: No, my Lord.
47. MR JUSTICE NICOL: I will order you to pay the costs of the appeal. I will summarily assess them at £26,101.44. I will make it a condition that they are not to be enforced without the leave of the Solicitors Disciplinary Tribunal. That is the same condition as was applied to the costs you had before that tribunal.
48. THE APPELLANT: Yes.