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
		18/07/2013

Lord Justice Moses:

1. The Solicitors Regulation Authority appeals against sentences imposed by the Solicitors Disciplinary Tribunal in five cases, four of which were heard consecutively over a 10-day period between 12 and 21 September 2011. The Tribunal considered the appropriate sanction in the fifth, which had been heard earlier in April 2011 (case no. 9823/2007). The cases involved overlapping issues concerning seven different respondents but these appeals concern only three respondents in five of the cases. Although the facts in relation to the three are different, the appeals are concerned with one essential point: whether the fines imposed in relation to the respondents Oluseun Oluwakemi Ajanaku, Ambrose Emeana and the six month suspension imposed in respect of Stephen Ijewere were clearly inappropriate. The Authority contends that this court should either suspend them or strike them off the Roll of solicitors. I should make it clear at the outset that there is no suggestion that the Tribunal, after full and careful hearings, failed adequately to identify the relevant facts. The sole question is whether the sentences failed properly to reflect the gravity of the conduct of all three of these respondents. In order to assess whether their conduct was such as to merit striking off or suspension it is necessary to identify the relevant facts. (Square brackets refer to paragraphs in the relevant decisions.)

Oluseun Oluwakemi Ajanaku

2. Mr Ajanaku is a respondent in three of the five cases. In case no. 9922/2008 he had purported to be in partnership with Mr Emeana, under the partnership name Ross Kingsley and Co. He was found to have entered into a sham partnership arrangement to facilitate Mr Emeana being able to practise contrary to Practice Rule 13 of the Solicitors Practice Rules 1990. The purpose behind this sham was to enable Mr Emeana to practise as a sole principal when he was not qualified to do so. On 8 November 2006 Mr Ajanaku had agreed to accept that he had been a partner in the firm since 1 September 2006. He and Mr Emeana remained in partnership until 1 October 2007 [56.20].
3. A forensic inspection followed at which Mr Ajanaku attempted, falsely, to claim that he had played a full role in the firm [59.3, 59.4]. This false information included an account of the working arrangements in practice, the banking arrangements, and the existence and identity of employees of the firm.
4. The Tribunal accepted that Mr Emeana had been the instigator but concluded that Mr Ajanaku had consented to and facilitated the sham partnership [77]. It regarded this matter as serious: clients had been misled concerning the status of the firm and both public and clients had been exposed to risk. Lenders would have gained reassurance from the partnership where in reality the firm was a sole practice operated by an inexperienced solicitor. Neither of these two men had been qualified to supervise [78]. The Tribunal took the view that it was appropriate to impose a large fine "to indicate how unacceptable the behaviour of both respondents (a reference to Mr Emeana) had been. The SRA had not alleged that the respondents had been dishonest, but the conduct underlying the allegations showed a lack of integrity." The Tribunal would have, in relation to this matter, imposed against Mr Ajanaku and Mr Emeana a fine of £20,000.
5. The other two sets of allegations against Mr Ajanaku concern a different partnership under the name Elliott Stephens & Co. They involved three other respondents including Mr Ijewere. Under 1031/2009 the Tribunal found that over a period of about three years from May 2004, when he became a partner in the firm, Mr Ajanaku had permitted billing intended to cover the firm's overheads to be described as "disbursements" and "sundries". They were not paid out for the benefit of a client in a particular transaction and their description was, accordingly, misleading [56.7, 56.10]. The Tribunal found that "if he was not aware, he was at fault in failing to inform himself about the firm's usual billing practices".
6. Further, he had failed to comply with the Solicitors Introduction and Referral Code 1990. He had failed to keep signed records of agreements with referrers (s.2.2 of the Code), failed to conduct six months reviews with referrers (s.2(10)), entered into agreement with referrers who had not given an undertaking to comply (s.2A(2)), failed to provide information and the amount paid as a referral fee to clients (s.2A(3)) and had not satisfied himself that the referrer had provided that information to the client (s.2A(4)). The Tribunal took the view that even if he was unaware of the referral arrangements he should have checked and had not done so. It accepted that he had not been involved directly in the referral arrangements [57.13]. In addition, referral fees had been paid directly from client accounts in breach of Rule 22 of the Solicitors Accounts Rules. Although he had argued that he had no mandate to operate the account or to examine the accounts, the Tribunal commented that he was a salaried partner and strictly liable for breaches of those rules [58.8].
7. There are additional findings in relation to a failure properly to write up the books of accounts (Rule 32) and to supervise all the offices in accordance with Rule 13 of the Solicitors Practice Rules 1990. The Tribunal noted that none of the principals appear to be qualified to supervise. It took the view that he was personally responsible because, over two years between joining the practice and the time of an inspection, he had failed to make any enquiry of Mr Ijewere [60.10].
8. The Tribunal noted that Mr Ajanaku had explained that he was unable to attend the hearing because of his financial difficulty. He said he lived virtually hand-to-mouth and could not feed his family or pay his children's school fees. The incident had caused a break-up in his marriage and had led to health problems for which he was being treated in Nigeria [82]. It determined that the appropriate sanction should be a fine of £3,000 [110].
9. Under 10321/2009 Mr Ajanaku and four other respondents, including Mr Ijewere, were found to have committed various breaches of the Solicitors Accounts Rules (SAR) with the same firm, Elliott Stephens & Co. They had failed promptly to rectify debit balances shown on client bank accounts, contrary to Rule 7 of those Rules. There were differences between liabilities to clients and cash held in client accounts: in the year ending 30 November 2006, there was a deficit of £10,086, in the following year there was a shortfall of £48,948.84 (as at 30 June 2007) and £749,367.52 as at 30 November 2007. These deficits related to a number of separate client matters; there were 76 overdrawn client matters as at 30 June 2007 and 103 as at 30 November 2007.
10. The other allegations related to the firm's engagement in mortgage transactions which bore several of the hallmarks of mortgage fraud. Mr Ajanaku had signed certificates of title in five transactions involving a gifted deposit, where the mortgage advance was substantially in excess of the initial purchase price and where a third party provided funds for completion and no funds were received from the purchaser. Lender clients were not informed of material facts and given misleading information as to the nature of the transactions. The Tribunal noted that Mr Ajanaku was less experienced than Mr Ijewere. He had been admitted as a solicitor in 2003, about two or three years before most of the conveyancing transactions which were impugned. He was fined £5,000 [120]. The Tribunal considered the appropriate fine for each individual case and then looked at the appropriate overall sanction on the basis that all allegations were heard together. In total he was fined £28,000.

Stephen Ijewere

11. Under 10318/2009 Mr Ijewere was accused of the same matters as those concerning Mr Ajanaku whilst working at Elliott Stephens & Co. His responsibility was found to be greater than that of Mr Ajanaku. He had been admitted in 2006. In an e-mail to the Tribunal, he stated he had always held his profession in high regard and accepted that he had made mistakes [80, 81]. He underlined that there had been no dishonesty but he had been guilty of bad management. He had not renewed his Practising Certificate so that he could learn properly from the criticisms which had been made. He asserted that no funds had been found missing. The Tribunal's comments on the gravity of these proved allegations are of significance. The Tribunal observed that although dishonesty had not been alleged the allegations were "very serious", in particular in relation to those transactions which bore the hallmarks of property fraud. He had exposed clients, especially lenders, to risk. The Tribunal acknowledged that it was a "serious reputational matter" for a solicitor to be involved in such transactions where there were a total of 37 cases and what they described as "uplifts totalling £1.6m". He had failed to pay sufficient attention to clear and well-known guidelines. His firm had benefited from repeated instructions where he had been noted to have "cut corners". Client accounts appeared to have been in deficit on a number of different occasions in very significant amounts. The Tribunal described the breaches as serious [107-109]. The Tribunal would have suspended Mr Ijewere in relation to 10321/2009 alone (the mortgage fraud cases and the provision of misleading information to lender clients) and would have fined him £6,000 under 10318/2009 alone for breaches of the Solicitors Introduction and Referral Code and misleading information in relation to sundries and disbursements. But looking at the case as a whole it imposed a suspension overall of six months with no fine.
12. Under 9823/2007 the Tribunal recorded the results of the hearing before a different tribunal of the SRA in April 2011. This alleged that he had failed to honour an undertaking to pay an individual's costs in relation to an abortive licence within a reasonable period of time. The total amount due, in September 2006, was £989.35. Further, he had failed to comply with an undertaking given to vendor solicitors that £5,000 would be remitted by 17 April 2008, the day before completion. In addition, in relation to the first undertaking, he had provided information to the Solicitors Regulation Authority that had been inaccurate: he told the Authority that he had not received recorded delivery post relating to his undertaking.
13. Three further allegations were made in relation to practising as a solicitor in breach of conditions. He was working a sole practitioner when his Practising Certificate was subject to a condition that he was not to be responsible for the supervision of work carried out on any conveyancing files [43.2]. He had sent correspondence on headed notepaper of Elliott Stephenson & Co. which referred to individuals as partners in the firm when they were no longer partners.
14. The Tribunal sentencing Mr Ijewere in September 2011 noted that although dishonesty had not been alleged the allegations were serious. He appeared, so it thought, "to take a cavalier attitude towards his professional obligations and his dealings with the profession's regulator" [34]. It continued:-

"Although the allegations were serious in nature, the lack of a specific finding or comment as to Mr Ijewere's motivation and state of mind, at the time of the proved breaches meant the Tribunal ought to err on the side of leniency." [35]

It took the view that an appropriate sanction for these matters had they been considered alone was a fine of £8,000. Overall, as I have said, he was given a six month suspension.

Ambrose Emeana

15. Mr Emeana was involved with Mr Ajanaku in the sham partnership Ross Kingsley & Co. He was admitted as a solicitor on 16 January 2006 and thus was not qualified to supervise an office under SPR Rule 13 until at least 2009, if he had undertaken the necessary management training [38]. As I have already recorded, the Tribunal took the view that both Mr Emeana and Mr Ajanaku were equally culpable [77]. It suggested that Mr Emeana might have been the instigator [79]. It imposed a fine against him in respect of this matter of £20,000 [83].
16. Under 10320/2009 Mr Emeana was involved with a different respondent, Mr Alagoa practising in the partnership under the name of Ross Kingsley & Co. The firm had improperly retained the sum of £342,000 for the purpose of funding a transaction approximately three months after it had become clear that the proposed transaction would not proceed. The money had been advanced as a loan directly into Ross Kingsley & Co.'s bank account [70].
17. Books of account were not properly written up, contrary to Rule 32 of the Solicitors Accounts Rules 1998. There had been significant and wide scale failures in the operation of the accounting system. As at 31 May 2008 there was a minimum cash shortage of at least £125,000.
18. On two occasions the firm had failed to honour undertakings. Mr Emeana had failed adequately to supervise an unadmitted member of staff, leading to the breach of an undertaking to pay an agreed sum of £58,500 [84].
19. The Tribunal noted that the failure to keep the books of account properly had meant that funds of some clients had been used for the benefit of others [96.2]. There were significant and wide scale failures in the operation of the firm's accounting system [95.2]. As for the cash shortage, the partners had replaced about £54,000 out of the £250,000 but the balance remained unpaid at the date of intervention [99.3].
20. Further, it had failed to inform a lender of a £220,000 discount in a purchase price. A client had purchased a property at a price of £2.6m with a mortgage from a lender bank in the sum of £1.82m. Only £2.38m had been transmitted to the vendor's solicitors disclosing the existence of a discount. The Council of Mortgage Lenders Handbook makes it clear that solicitors are obliged to tell a lender if the purchase price is not as set out in the instructions or if there is a cashback to the buyer [100.3].
21. In total, 15 allegations were proved against Mr Emeana in relation to 10320/2009. The most serious breaches were described as breaches of undertakings, the use of clients' funds of £6,000 for his benefit, the failure to supervise an unadmitted fee earner and the failure to disclose material information or to act in the best interest of lender clients [151-151]. A fine of £15,000 was considered appropriate [154]. The overall sanction was £35,000.

The Appropriate Sanction

22. This court must bear in mind that the Tribunal is an expert and informed tribunal, best able to assess what is needed to uphold standards of integrity, probity and trustworthiness in the profession of solicitor. But it is not restricted to interfering only in "very strong cases". It should interfere where the sanction was "clearly inappropriate" (Law Society v Salsbury [2008] EWCA Civ 1285 [30]).
23. The essential argument advanced on behalf of both Mr Ijewere and Mr Ajanaku is that neither was guilty of dishonesty. Suspension or striking off should be reserved for far more serious cases and both were able to supply examples of cases where fines had been imposed such as Tinkler v SRA [2012] EWHC 3645 (Admin) where for six breaches, including misleading clients as to the nature of the partnership, permitting unadmitted persons to influence or control the practice, and failing to act in clients' best interests, a fine of £40,000 was reduced to £20,000. In Weston v Law Society suspension was imposed for breach of the Solicitors Accounts Rules for which Mr Weston was not directly responsible. In Adeeko v SRA [2012] EWHC 841 a solicitor was suspended for 18 months in relation to inadequate accounts in a single ledger concerning a single file.
24. This appeal took a familiar course. The respondents were able to show cases of at least as great a gravity where fines were imposed and the appellant authority was able to refer to cases where it appeared the failures were no more severe but at least suspension was ordered.
25. I did not find this process of assistance. Of course, the disciplinary tribunal must strive for consistency. But uniformity is not possible. The sentences imposed are not designed as precedents. The essential principle is that which was identified by Sir Thomas Bingham MR in Bolton v Law Society [1994] 1 WLR 1286. The profession of solicitor requires complete integrity, probity and trustworthiness. Lapses less serious than dishonesty may nonetheless require striking off, if the reputation of the solicitors' profession "to be trusted to the ends of the earth" is to be maintained.
26. The principle identified in Bolton means that in cases where there has been a lapse of standards of integrity, probity and trustworthiness a solicitor should expect to be struck off. Such cases will vary in severity. It is commonplace, in mitigation, either at first instance or on appeal, whether the forum is a criminal court or a disciplinary body, for the defendant to contend that his case is not as serious as others. That may well be true. But the submission is of little assistance. If a solicitor has shown lack of integrity, probity or trustworthiness, he cannot resist striking off by pointing out that there are others who have been struck off, who were guilty of far more serious offences. The very fact that an absence of integrity, probity or trustworthiness may well result in striking off, even though dishonesty is not proved, explains why the range of those who should be struck off will be wide. Their offences will vary in gravity. Striking off is the most serious sanction but it is not reserved for offences of dishonesty.
27. In my view, all three of these solicitors should be struck off the Roll. I have considered whether an indefinite or fixed term of suspension would be adequate. The Guidance Notes on Sanction (SDT, August 2012), suggests that suspension will be appropriate where striking off is the most appropriate sanction, but the presence of compelling or exceptional personal mitigation and a realistic prospect that the respondent will recover or respond to training, exist. No mitigation was advanced which held out any prospect for protecting the profession by a lesser sanction. In my view, only striking off is appropriate for maintaining the standards of the profession.
28. Mr Ajanaku was guilty of persistent flouting of the rules. He did so in a way which posed a serious risk to his clients. He persisted in behaving in that way in relation not to one, but to two firms. His behaviour, viewed as a whole, showed either a deliberate flouting of the rules or so gross an ignorance of that which they demanded, as to merit being struck off. In my opinion, the reputation of the profession is seriously undermined by the imposition of fines for cases such as this.
29. Participation in a sham partnership undermines the profession and the protection to which the public are entitled to be derived from regulation and proper working of partnerships. With Mr Ajanaku's essential assistance, Mr Emeana was able to practise as a de facto sole principal when he was not qualified to do so. That alone would have justified both being struck off. In addition, there were serious defects in the balances shown on client account. It needs no further emphasis from me to underline the importance of compliance as a means of protecting the public. I repeat, there were 103 overdrawn client matters as at 30 November 2007 for which Mr Ajanaku was found to share responsibility.
30. If this were not enough, the participation in mortgage transactions bearing the hallmarks of mortgage fraud lends further force to the argument that the Tribunal underestimated the gravity of his offences viewed as a whole.
31. In this matter, as in the case of the other respondents, the Tribunal considered each allegation separately and thoroughly. They properly considered an overall fine in the light of the different fines they would have imposed had there only been one case. But in my view, they lost sight of the gravity of Mr Ajanaku's professional misconduct as a whole. They failed to appreciate the damage to the profession if Mr Ajanaku was allowed to continue having shown so serious a disregard for the rules.
32. I make similar comments in relation to Mr Emeana, who was not represented. He too shows no appreciation whatever for the demands of the profession. He shows no understanding of the standards of integrity and trustworthiness. In those circumstances, it seems to me that the profession can only be protected by allowing the appeal and ordering that he be struck off.
33. I should also draw attention to the behaviour of Mr Emeana and Mr Ajanaku in misleading the Regulator. Self-regulation of a profession requires those who hold themselves out as professionals to co-operate with regulators and give completely frank and honest answers when questioned. The Tribunal underestimated the gravity of the misleading answers they gave to the Regulators.
34. I would also allow the appeal in relation to Mr Ijewere. Again, the Tribunal ought to have considered his behaviour as a whole. Its comment which I have quoted at paragraph 14 indicates far too charitable a view. If Mr Ijwere sought leniency it was for him to explain his motivation and state of mind. His failure properly to participate in the hearing was no justification for leniency. It does not seem to me possible merely to impose a fine in the case of a solicitor who has breached professional undertakings, given misleading information as to the existence of partners, failed to rectify debit balances shown on client account, and been involved in transactions with the hallmarks of fraud. There was no basis for a short period of suspension, since there was no basis for thinking that after such a short period he might be fit to act as a solicitor.
35. I acknowledge that the sanctions I propose in relation to all three of these respondents are the most severe which can be imposed. But I cannot see how the integrity of the profession can be upheld by the imposition of lesser sanctions. I do not believe that the public would find it acceptable that those who have behaved in this way should be allowed to act as solicitors.

Mr Justice Burnett:

36. I agree.