Acting to stop harm: the FCA and Appointed Representatives
McCarthy v Visitors to the Inns of Court and Bar Standards Board  EWCA Civ 12
Judgment date 20th January 2015
This case was an appeal to the Court of Appeal of the High Court’s decision not to quash the decision of the Visitors of the Inns of Court to uphold a decision of the Bar Disciplinary Tribunal (the Tribunal) in finding a barrister (DM) guilty of misconduct and disbarring him.
DM had been instructed on a Direct Access basis. Rule 6 of the Rules relating to the engagement of a barrister via Direct Access required DM to send out a letter setting out the terms and fees in respect of each piece of work. A complaint (a dispute about fees) was made and DM was accused of providing legal services without having sent Rule 6 letters. DM contended that he had done so and produced four of the Rule 6 letters which he asserted had been sent at the time. DM’s lay client, ST, and her husband, TA, disputed this.
DM was found guilty by the Tribunal of dishonestly producing these four forged documents and was subsequently disbarred.
The decision was upheld on appeal by the Visitors to the Inns of Court – the outcome of which we summarised in a previous update: McCarthy v Bar Standards Board, Visitors to the Inns of Court, 25 January 2012.
DM sought judicial review but the decision was again upheld by the High Court (McCarthy v Visitors to the Inns of Court and Bar Standards Board  EWHC 3253 (Admin).
TA, the chief witness before the Tribunal, had provided a written statement to the BSB prior to the hearing but it appeared that the BSB did not wish to serve TA’s statement before DM had served his. Disclosed as part of the appeal process were two letters, one of which states ‘We have decided that we will not disclose Tim’s witness statement until shortly before the hearing date. This will remove the possibility of Mr McCarthy fitting his case around that statement’.
DM’s solicitors on his behalf agreed directions with the BSB; in particular that ST and TA need not put in statements but should attend the substantive hearing for the purposes of cross-examination. This had been agreed to by DM’s solicitors in ignorance of the fact that by that time a full, unsigned statement had been obtained from TA. The directions also provided that any additional material upon which the BSB proposed to rely should be served 28 days prior to the substantive hearing.
In compliance with the directions DM duly submitted a substantial witness statement. TA duly served a witness statement in response, a number of paragraphs of which responded in detail to matters referred to in DM’s witness statement.
The disciplinary Tribunal heard from the complainant and TA, and cross examination focused on emails passing between DM and TA. The Tribunal chose to believe TA’s evidence on the documentation. The Tribunal were unaware when making their decision that TA’s witness statement, taken as his evidence-in-chief, was not his first witness statement and that the directions had been agreed in ignorance of the existence of the draft statement which the BSB had deliberately chosen not to.
On the initial appeal the Visitors stated that ‘it is our clear view that the Rule (Rule 7(1) (a) of the Disciplinary Hearing Rules) requiring evidence to be served does include statements of witnesses’ and further noted that the attitude displayed in the BSB letter (outlined above) was ‘unacceptable’. Despite this, by a majority of two to one the Visitors concluded that no unfairness flowed from the error because had DM been able to call the statement being put in he would not have been in a stronger position and that the evidence against DM was extremely powerful and accordingly that the verdict of the Tribunal was not unsafe.
This decision was challenged in judicial review proceedings heard by Moses LJ who dismissed the claim for judicial review. He concluded that the failure of the BSB to disclose the statement was a breach of the rules governing proceedings in the Tribunal and also that the failure was procedurally unfair. Rule 7 of the Disciplinary Tribunals Regulations requires the BSB as soon as practicable to supply the barrister concerned with a copy of the evidence of each witness intended to be called and with a list of documents to be relied upon. Moses LJ concluded that the Visitors should have subjected the undisclosed evidence to analysis by comparing it with the evidence found in the statement from the witness which was disclosed in the course of the Tribunal proceedings. He concluded that the unfairness was carried into the hearing before the Visitors.
However, in considering whether the decision should be quashed Moses LJ stated that unless it could be said that there was no real possibility of any alternative result then his view was that the Visitors decision ought to be quashed. However, he found that there could have been no alternative explanation for the late production of the Article 6 letters and considered DM’s explanation to be incredible.
The issue in the appeal to the Court of Appeal was whether the decision of the Visitors to the Inns of Court ("the Visitors") dismissing Mr McCarthy's appeal from the Bar Disciplinary Tribunal ("the Tribunal") should be quashed with a view to the underlying matter being remitted to the Tribunal.
It was argued that given the unfairness identified Moses LJ should have quashed the decision of the Visitors. It was contended that the failure to disclose TA's first statement amounted to a violation of article 6 of the European Convention on Human Rights, as well as a breach of rule 7 of the Disciplinary Hearing Rules and procedural unfairness at Common Law. It was further suggested that the Strasbourg Court would require a rehearing in those circumstances and that Moses LJ applied the wrong test.
In the judgment given by Burnett LJ it was noted that the judicial review claim had not been argued on the basis of article 6 and that no argument had been developed as to article 6 and how it related to regulatory proceedings and the disclosure of draft statements. He, therefore, did not wish to determine that issue but considered that the question of whether a finding of non-disclosure in disciplinary proceedings calls for a rehearing is answered in the same way whether it is approached via the common law or article 6.
He stated that the ultimate question is whether the proceedings as a whole were fair. The significance of an infringement of article 6, or procedural impropriety of the sort which occurred in this case, depends upon the factual circumstances. It was held that the appropriate test to apply in regulatory proceedings is the same as that in criminal proceedings as set out by the Supreme Court in McInnes v Her Majesty's Advocate  UKSC 7 in which Lord Hope identified two questions that fall to be considered in disclosure cases.
The first is whether the material under consideration should have been disclosed. The second is the consequence of any failure to disclose. In respect of second question the test to be applied is whether, taking all the circumstances of the trial into account, there is a real possibility that the jury would have arrived at a different verdict.
Burnett LJ held that in the light of the central place TA's credibility occupied in the Tribunal hearing, that one member of the Tribunal would anyway have dismissed the charges, and that cross-examination on the first statement was capable of undermining TA's credibility given that there were differences between the two statements, there was a real possibility that the Tribunal would have come to a different conclusion had disclosure been made. The decision was quashed and the cases remitted to the Tribunal for rehearing.
This decision reinforces the clear message of the previous two decisions that regulators do have a duty of disclosure in respect of witness statements which are capable of undermining their case. It further highlights that in circumstances in which this has not taken place the test of fairness to be applied is whether as a consequence of the failure to disclose is there a real possibility that a different decision would have been reached.
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