England and Wales High Court (Administrative Court) Decisions

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

		Royal Courts of Justice Strand, London, WC2A 2LL
		30 May 2012

Mr Justice Eady :

1. Mr Hugh Bryant is a solicitor. He is now aged 61. After leaving Oxford in 1973, he worked in marine insurance and later in industry. He decided on a change of career in 1980 and was admitted as a solicitor on 2 July 1984 at the age of 33. Between 1985 and 1990, he returned to marine insurance as a chief underwriter and deputy managing director in Liverpool. He then worked for various firms of solicitors, specialising in such areas as shipping law, marine insurance and aviation. Although he changed firms on a number of occasions, this was because he had been headhunted at various times. He set up his own firm in partnership with the late Mr Reginald Bench in 1999. This firm, Bryant Hamilton & Co, also specialised in marine, aviation and insurance law together with other commercial work.
2. Throughout the period I have described, Mr Bryant had a successful career and an unblemished reputation. Unfortunately, things began to go wrong in 2004 when he made a protected disclosure to the National Criminal Intelligence Service ("NCIS") in respect of an American client. His first contact was on 2 February of that year and he later spoke to an individual at NCIS on 17 June. This appears to have led to a communication by NCIS to the Law Society, which commenced an investigation at Bryant Hamilton concluding on 14 November 2004. A forensic investigation unit report, dated 13 December 2004, was produced in the light of their findings.
3. On 25 January 2005, the Law Society intervened in the practice, with the serious consequences which are almost inevitable in such cases. Mr Bryant has not practised since that time. In June 2005, the police carried out a "dawn raid" on the homes of Mr Bryant and Mr Bench. In August of that year, they were arrested and questioned, although no criminal proceedings were ever begun and the police informed them in November 2005 that their investigations had come to an end. Nevertheless, disciplinary proceedings took place before the Solicitors' Disciplinary Tribunal in October 2006. On 17 October of that year, the Tribunal ordered that Mr Bryant be struck off the roll of solicitors in the light of its conclusion that he had been dishonest.
4. An appeal was heard by the Divisional Court in October 2007 and a full and detailed judgment was handed down in December of that year: Bryant and Bench v Law Society [2007] EWHC 3043 (Admin), [2009] 1 WLR 163. The finding of dishonesty was quashed and a two year suspension from 17 October 2006 was substituted for the striking-off order. The court had concluded that Mr Bryant was guilty of conduct unbefitting a solicitor, but to a much lesser extent than that found by the Tribunal: see the judgment at [237].
5. In summary, the Law Society's case against Mr Bryant was that six transactions by the American client were fraudulent and that Mr Bryant had deliberately involved himself in the fraud. There was an alternative case, to the effect that the transactions were "dubious"; that is to say, they bore the indicia of fraud, to the extent that no solicitor should have become involved with them without carrying out sufficient enquiries to establish that they were not fraudulent. It was ultimately held by the court that the finding of dishonesty by the Disciplinary Tribunal had been legally flawed, in that (a) the Tribunal had applied a purely objective test instead of a mixed subjective/objective test and (b) it had wrongly ruled inadmissible some character testimonials described as "unusually impressive": see the judgment at [153]-[163] and [172].
6. The conclusions of the Divisional Court may be summarised for present purposes as follows:

i) Each of the six transactions had been properly described as "dubious" in the sense that no solicitor should have become involved.

ii) Mr Bryant's professional misconduct lay in incompetence/negligence rather than dishonesty (i.e. he should have appreciated that the transactions were of a "dubious" nature and went on acting for the client long after he should have stopped doing so).

7. It is right to record that there was considerable mitigation advanced on Mr Bryant's behalf by Mr Treverton-Jones QC (who also represented him on the present appeal), and in particular:

i) An old and respected City firm of solicitors had acted for the American client for a number of years before Bryant Hamilton was instructed.

ii) It did not appear that any criminal proceedings had ever been taken against the American client arising out of the transactions.

iii) Mr Bryant had not personally gained from acting for the client other than through ordinary fee income.

iv) No individual or company had ever complained to the Law Society about Mr Bryant's conduct or that of his firm.

v) His record up to that point appeared to be unblemished.

vi) He had been financially ruined by the Law Society intervention and its aftermath. He had not subsequently succeeded in obtaining any work as a solicitor.

8. Once the two year suspension period ended, in October 2008, Mr Bryant was granted a series of practising certificates subject to certain conditions. First, with effect from 1 November 2008 to 31 October 2009, a certificate of 11 December 2008 imposed the following conditions:

i) He may act as a solicitor only in employment which has been first approved by the Solicitors Regulation Authority.

ii) He is not a member, officeholder or share owner of any incorporated solicitor's practice.

iii) He is not a sole principal partner or a salaried partner of any solicitor's practice.

iv) He shall immediately inform any actual or prospective employer of these conditions and the reasons for their imposition.

9. For the following year an SRA adjudicator granted a practising certificate to Mr Bryant on 2 March 2010 with the following conditions:

i) He is not a sole practitioner or sole director of a recognised body.

ii) He may act as a solicitor in the role of a manager as defined in Rule 24 of the Solicitors' Code of Conduct only with the prior written approval of the SRA.

iii) He is not the Money Laundering Officer of any legal practice.

iv) He attends a course accredited by the SRA on the Solicitors' Code of Conduct 2007, the Solicitors' Accounts Rules and the Money Laundering Regulations within six months of the date of notification of this decision and provides confirmation of his attendance in the form of a certificate or letter of attendance from the course provider(s) when he applies for his next practising certificate.

v) He shall immediately inform any actual or prospective partner, co-manager, or co-owner of these conditions and the reasons for their imposition.

10. It will be noted that the provision relating to the SRA course had been imposed for the second year following the suspension, but not the first. There was an internal appeal which was dismissed by an Appeals Committee of the SRA on 29 April 2010.
11. In respect of the practice year 2010 to 2011 an adjudicator granted Mr Bryant a practising certificate on 18 February 2011 subject to the following conditions:

i) He may act as a solicitor only in employment which has first been approved by the SRA.

ii) He is not a sole practitioner or a manager or owner of a recognised body.

iii) He shall immediately inform any actual or prospective employer of these conditions and the reasons for their imposition.

iv) He may not be a designated Money Laundering Officer of any legal practice.

v) In this condition "manager" is defined in s.207 of the Legal Services Act 2007 and "owner" is as defined in Rule 24 of the Solicitors' Code of Conduct 2007.

12. It will be noted that the condition preventing Mr Bryant's acting as a designated Money Laundering Officer was imposed for the second and third years, but not for the first. Also, the need to obtain approval from the SRA for any employment was mentioned only in the first and third practice years. Nonetheless, it seems clear that all these conditions are directed towards protecting and reassuring the public, while the first and second are also intended to take into account rehabilitation.
13. An Appeal Committee dismissed Mr Bryant's appeal against these conditions on 30 March 2011. It is against that decision that Mr Bryant now appeals to this court.
14. Until July 2009, any appeal against the imposition of such conditions lay to the Master of the Rolls, but the Legal Services Act 2007 inserted an amendment to the Solicitors Act 1974, whereby appeals now lie to this court. The relevant provision is contained in s.13 of the 1974 Act, as amended by Schedule 16 of the Legal Services Act 2007:

"13 Appeals etc in connection with the issue of practising certificates

(1) A person who makes an application under section 9 may appeal to the High Court against –

…

(c) A decision to impose a condition on a practising certificate issued in consequence of the application.

…

(4) On an appeal under subsection (1), the High Court may –

(a) affirm the decision of the Society,

…

(c) direct the Society to issue a certificate to the applicant free from conditions or subject to such conditions as the High Court may think fit,

…

(g) make such other order as the High Court thinks fit."

15. There is no dispute between counsel as to the appropriate test to be applied on such an appeal. Reference was made to the case of Lebow [2008] EWCA Civ 411 decided by Sir Anthony Clarke MR (as he then was) on 12 February 2008. At [23] his Lordship explained:

"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."

16. It was explained by Mr Treverton-Jones in his submissions to me, and also in the evidence of Mr Nigel West, that recent developments in the marketplace have had the (no doubt unintended) consequence that solicitors, such as Mr Bryant, who have had conditions imposed on their practising certificates, are finding it to all intents and purposes impossible to obtain employment. This appears to be in large measure a factor of the demands made for increased premiums for indemnity insurance where a solicitor is employing someone subject to such conditions.
17. Mr Treverton-Jones submits that this problem really lies at the heart of the present appeal, since it is necessary to recognise that the Law Society would in the past have expected that any solicitor subject to a period of suspension would be able to resume practice thereafter. It is obvious that, traditionally, the imposition of a suspension would not have been expected to be of terminal effect. A similar point was argued by Ms Lebow in her appeal to the Master of the Rolls, who briefly addressed the point at [35]:

" … 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 … the imposition of the conditions will not do her harm, she submits that the imposition of the 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."

In other words, the Master of the Rolls appears to have been recognising that it is important to focus on the true purpose for imposing conditions, which is the need to protect the reputation of the profession and to maintain public confidence in the services it provides – notwithstanding any adverse consequences for the individual solicitor.

18. My attention was also drawn in this context to a further decision of Sir Anthony Clarke in Razeen [2008] EWCA Civ 1220, where he explained at [12]:

"[Advocate for the Law Society] submits that the regulatory conditions are imposed either to protect the public interest or the reputation of the profession or both. It appears to me that the essential point is whether the conditions are necessary and proportionate to protect the public interest. Reference to reputation of the profession is really an incident of the protection of the public interest. Mr Goodwin submits that Miss Gill and Mr Venables [they were, respectively, an authorised officer of the SRA who imposed the conditions in Mr Razeen's case and the SRA adjudicator who dismissed the appeal] applied that test when assessing the necessity of imposing the conditions. Given Mr Razeen's evidence and admitted flouting of the rules as they stood at the time regarding supervision during the existence of his partnership with Mr Rodrigo, he submits that it was plainly necessary for the conditions to be imposed. He relies on a passage in the judgment of the then Master of the Rolls, Sir Thomas Bingham, in Re A Solicitor No 6 of 1993. Although Mr Goodwin has observed that it is important to have regard to the whole of that passage, I will simply read the relevant bit, which is in these terms:

'The purpose of a condition on a practising certificate is not punitive, but is intended to ensure that a solicitor who has run into trouble in a professional capacity is subject to a degree of oversight in the conduct of his professional life at least until he has demonstrated over a period that he is not in need of any such supervision to protect the public.'

There are many similar statements of principle by various different Master of the Rolls, including myself, over the years. It appears to me, however, that Mr Venables had this principle well in mind, and I am not able to accept any submission to the contrary."

One can readily see, therefore, at least at the time of Sir Thomas Bingham's judgment, that it was assumed that the imposition of conditions on a practising certificate was compatible with a continuing professional life and an opportunity to demonstrate, over a period, that such supervision would no longer be needed for the protection of the public. According to the evidence before me, the position has fundamentally changed: the imposition of conditions is now in practical terms recognised to be "the kiss of death". To all intents and purposes they render the prospect of further practice impossible. In a sense, therefore, it may be said that what were originally intended to be temporary and precautionary measures have, in reality, become permanent and punitive.

19. In the present case, Mr Bryant's own evidence sets out the attempts he has made to obtain employment with solicitors he has known for a long time, and who would be willing in principle to employ him, were it not for the problems associated with professional indemnity insurance. More generally, as I have said, there is the evidence of Mr Nigel West confirming this to be a widespread problem. Mr Williams QC criticises the evidence as falling far short of demonstrating that Mr Bryant has become unemployable by reason of the conditions imposed. There is force, however, in Mr Treverton-Jones' response to the effect that, if he has been unable to succeed with those who have known him for many years, and who would apparently be willing to employ him, it is hardly likely that he would fare better with any stranger he may approach out of the blue.
20. It is unthinkable that Mr Bryant would apply to any prospective employer without revealing his disciplinary record and, although I have no concrete evidence about this, it is reasonable to suppose that (a) this would have to be revealed by any such employer to his professional indemnity insurers and (b) that the insurers would respond in much the same way as they now appear to do in relation to those employees who are subject to conditions. What troubles the insurers, presumably, is not so much the mere fact of the conditions but rather the disciplinary hinterland which they represent. This was an argument deployed by Mr Williams which, in my judgment, is difficult to refute. He drew attention, in particular, to paragraph 16 of Mr West's witness statement:

"Amongst the standard enquiries [from insurers] are questions as to whether any principal or fee-earner in the practice has, in the last ten years, had a Practising Certificate made subject to conditions, been made subject to any disciplinary sanction or been the subject of any regulatory investigation. The perception within the profession is now that, in the new harsher environment, anything of this kind which could be argued to impact on a firm's risk profile has a direct and potentially dramatic effect on premium, and the availability of cover, particularly in smaller firms which tend to have a more restricted choice of insurer. Many of the qualifying insurers will not in fact quote for the smaller firms of four partners or less."

21. In these circumstances, it seems to me to be reasonably clear that even if Mr Bryant were to succeed fully in his appeal, in the sense of having all the conditions removed from his certificate, he would still face the practical difficulties in obtaining employment purely by reason of his disciplinary record.
22. Be that as it may, it is right that I should still address the conditions on their merits and answer the appropriate questions for determining such an appeal. Mr Williams suggests that these are twofold:

i) Are the conditions necessary in the interests of the public and the reputation of the profession?

ii) Are the conditions reasonable and proportionate?

23. It is necessary to remember that Mr Bryant has not been in practice since 2005 and, against that background, it is hardly surprising that the SRA should wish to impose conditions at least partly with a view to assisting rehabilitation (obviously assuming that employment opportunities are available).
24. As I have already noted, there are other important considerations. These are the closely related needs to protect the public and to maintain or restore confidence in the profession. In his oral submissions, Mr Williams asked me to apply the test of "an informed member of the public". What would he/she think if a solicitor who has been found to be guilty of misconduct, such as to justify a suspension for two years, were to be allowed to resume practice, after a gap of six or seven years, without any restrictions or oversight from his professional body? Mr Treverton-Jones' response was to the effect that we have no way of knowing. Some members of the public might be startled, as Mr Williams suggests, while others may not. As Sir Anthony Clarke and Sir Thomas Bingham both made clear in the judgments cited above, confidence in the profession is to a large extent a matter of public perception. I have little doubt, applying Mr Williams' test, that the reasonable onlooker would register surprise and disquiet if no supervision were required or opportunities afforded for rehabilitation.
25. This is, I believe, to a large extent recognised in the alternative course suggested by Mr Treverton-Jones on Mr Bryant's instructions. That is to say, he proposes that his client should offer undertakings to the SRA which would afford some measure of protection for the public and opportunity for oversight. These undertakings could be given and accepted without anything appearing on the practising certificate which he hopes could then be obtained. As I have already made clear, however, even though the practising certificate bore no conditions on its face, it would still be necessary for prospective employers and their insurers to be informed of the disciplinary background. There is no evidence that there has been any established practice in the past of the SRA accepting undertakings in lieu of conditions. What is more, that is hardly surprising in view of the long established practice of imposing conditions in circumstances such as these and of the statutory basis for doing so.
26. It was provided in s.12 of the Solicitors Act 1974 that the Law Society should have a discretion to impose conditions on any practising certificate issued. On 1 July 2009, these provisions were repealed and the relevant powers were thereafter to be found in the SRA Practising Regulations 2009: Regulations 3.1 and 6. Under Regulation 3.2(b)(ii) the SRA has a discretion to impose a condition or conditions in accordance with Regulation 6 if Regulation 3 itself applies. The relevant circumstances include where an applicant has been reprimanded, made the subject of disciplinary sanction, struck off or suspended by the court.
27. If the SRA considers that the imposition of a condition or conditions is appropriate in the case of any solicitor's practising certificate, and those conditions are proportionate, it would be inappropriate not to impose them (or alternatively to lift them) simply because there is now a harsher climate in the insurance marketplace. There is little doubt that indemnity insurers are asking questions of this kind and, correspondingly, increasing premiums or refusing cover, for good reasons based on experience. It would be quite inappropriate to be influenced in the exercise of the statutory jurisdiction in relation to the grant of practising certificates for reasons of that kind, rather than prioritising the relevant criteria of what is required to protect the public interest and the reputation of the profession. The market conditions may, however, provide one more reason for ensuring that any conditions are indeed necessary and proportionate to achieving those objectives.
28. I must, therefore, apply my mind to the five conditions which are now the subject of challenge. Having done so, and paying due regard to the judgment of the panel, I find it quite impossible to conclude that the imposition of these conditions was irrational, illogical, unnecessary or disproportionate. As I have already indicated, they seem to me to be sensible and directed towards proper objectives. Furthermore, I see no reason for by-passing the well established statutory regime and seeking to address these legitimate concerns by way of undertakings. Either they would make no difference or they would be less effective in serving the SRA purposes of protecting the public and maintaining confidence in the profession.
29. The appeal must accordingly be dismissed.