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URL: http://www.bailii.org/scot/cases/ScotCS/2005/CSIH_77.html
Cite as: [2005] ScotCS CSIH_77, [2005] CSIH 77

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Law Society Of Scotland v. Shepherd [2005] ScotCS CSIH_77 (17 November 2005)

FIRST DIVISION, INNER HOUSE, COURT OF SESSION
Lord President  Lady Cosgrove  Lord Reed	[2005CSIH77] P2066/04 OPINION OF THE COURT delivered by THE LORD PRESIDENT in PETITION of THE COUNCIL OF THE LAW SOCIETY OF SCOTLAND Petitioners; against RICHARD DOUGLAS McKENZIE SHEPHERD Respondent: _______



 



 

Act: Dunlop; Balfour & Manson (Petitioners)

Alt: Clark; Lefevre Litigation (Respondent)



10 November 2005

[1]      The petitioners seek the review of the findings of the Scottish Solicitors' Discipline Tribunal on a complaint made by them against the respondent, in so far as the Tribunal made no finding of professional conduct in respect of the respondent's failures when acting for lenders in a conveyancing transaction to report accurately to them.

[2]      At the hearing of the complaint before the tribunal the facts were agreed and no oral evidence was given. Having heard submissions on behalf of the petitioners and the respondent, the tribunal held that in certain cases there had been professional misconduct on the part of the respondent. However, it considered that in other cases his failures fell short of professional misconduct. These included his failures to report accurately to lenders for whom he was acting.

[3]      The first of these cases related to the purchase of a property in Aberdeen where the respondent acted for the purchaser and a bank from which a loan was sought. When submitting his report on title to the bank in connection with the obtaining of a loan of £61,750, he informed the bank that the purchase price was £65,000, when the purchase price shown in the disposition was £60,000. According to the missives that sum was apportioned to the heritage, whereas £5,000 was apportioned to certain movables.

[4]      The second case related to two other properties in Aberdeen, where the respondent was again acting for the purchaser and the bank. In this case the tribunal stated that, when submitting a report on title to the bank, the respondent failed to disclose certain matters. First, solicitors by whom such a report was submitted were asked to confirm whether the borrower was related or connected to the seller of the property. The respondent answered this question in the negative. However, he knew of a connection, in respect that the seller was a company which was owned and directed by the brother of the purchaser. Secondly, in the same document solicitors were asked to confirm that "the purchase monies including the deposit will pass through our firm's clients' account and will be paid to the seller's legal representative". The respondent failed to disclose that he knew that the purchaser had paid the balance of the purchase price (that is to say, the part not being lent by the bank) directly to the seller. Thirdly, solicitors were asked to confirm that "there is nothing else is within our knowledge of which you as a prudent lender ought to be aware that we have not told you". The respondent failed to state in his report that the local authority had not yet issued a temporary habitation certificate in respect of either of the two properties.

[5]      The tribunal went on to state: "Accordingly in these three areas the respondent misled the bank into believing that it was in order for loan funds to be advanced" to the seller. In giving its decision the tribunal stated:



"In relation to the failures to report to lenders the tribunal was not persuaded that the respondent was engaged in a deliberate course of misrepresentation or that the failures were materially prejudicial and therefore these failures did not go as far as to amount to professional misconduct".

[6]      For the petitioners Mr Dunlop accepted that it was only in exceptional circumstances that the court would interfere with a decision of the tribunal as to whether conduct was or was not professional misconduct. In general, decisions on such questions were left to the tribunal. He accepted that he required to satisfy the court that the tribunal in the present case had misdirected itself or was plainly wrong (Sharp v The Law Society of Scotland 1984 S.C.129). He pointed out that in each instance the respondent misinformed the bank although he knew the true position. The tribunal had failed to recognise that in each instance the respondent, as he put it, "knowingly misrepresented" the facts. It was true that the tribunal was not persuaded that the respondent had "engaged in a deliberate course of misrepresentation". However, professional misconduct did not require dishonesty. It could take the form of the discharge of professional duties "with anything less than complete integrity, probity and trustworthiness" (Bolton v Law Society [1994] 1 WLR 512, Sir Thomas Bingham M.R. at page 518). In E. v T. 1949 S.L.T. 411 Lord President Cooper stated that he was not prepared to affirm that professional negligence could never amount to professional misconduct. In the present case the respondent's conduct amounted to recklessness rather than carelessness. As regards prejudice, he accepted that there was no evidence that, had it not been for the inaccuracies, the bank would not have lent the money which it had done. However, a risk of prejudice might be enough (Council of the Law Society of Scotland v J 1991 S.L.T 662 at page 665). The purpose of the questions asked by the bank was to prevent mortgage fraud.

[7]      It should be borne in mind that, according to the complaint which was made by the petitioners, the relevant duty of the respondent was as follows: "It is the duty of a solicitor acting for a lender in a conveyancing transaction to accurately inform the lender so as not to mislead the lender on material matters which might have a bearing on whether or not loan funds are advanced". The petitioners went on to aver: "The respondent failed to accurately report to lenders and so misled them in relation to material matters which may have affected the advancement of loan funds". The petitioners did not make the claim, which they did in respect of other conduct of the respondent, that he had acted recklessly. The assertion by Mr Dunlop that the respondent "knowingly misrepresented" implies that the respondent had no honest belief in the truth of what was stated in the reports on title. That is not supported, but it is contradicted, by the findings of the tribunal to which we have already referred. As Mr Clark for the respondent pointed out, the fact that the respondent's reports to the bank were inaccurate in certain respects was consistent with having occurred through error, oversight or professional negligence. This was plainly an area within which it was pre-eminently a matter for the tribunal to determine, with the benefit of their practical knowledge and experience, whether the respondent's conduct did or did not amount to professional misconduct. That depended upon the gravity of the failures and upon consideration of the whole circumstances in which they occurred. We do not accept that there was any misdirection on the part of the tribunal or that they were clearly wrong in the conclusion which they reached.

[8]      Accordingly we refuse the prayer of the petition.