FCA as gatekeeper of UK crypto AML regime: two years in
Judgment date 26 October 2012
High Court uphold decision of SDT to reject application for re-hearing
The appellant solicitor (F) was a senior partner in a firm in which the Solicitors Regulation Authority (SRA) had shown interest. The result of that interest was that F faced proceedings before the Solicitors Disciplinary Tribunal (SDT) in December 2010. In summary the particulars were that he provided misleading statements to prospective professional indemnity insurers in circumstances where he knew that such statements were incorrect and inaccurate, failed adequately to supervise fee earners, failed to provide client care letters and cost information to clients, failed to deliver clients’ papers promptly on termination of the retainer, misled certain clients, the Legal Complaints Service and the SRA and failed to comply with the Law Society’s Guidance on Property Fraud.
The matter had been due to be heard on 10 June 2010 but on 7 June the SRA received a letter from F’s solicitors that he was unwell and not able to attend the hearing. A medical certificate was provided and the matter duly adjourned. The matter was re-listed to be heard on 2 December 2010.
Between the 10 June and 2 December, there had been correspondence between those acting on behalf of the SRA, the SDT and F, which addressed the issue of the length of the hearing which was notified as 2 December 2010. F expressed that given that he disputed each and every document on which the SRA was relying, the hearing would last 5 days. Those on behalf of the SRA did not agree with this estimate as they had invited F to inspect the original documentation if he had concerns, and proposed a 2 day hearing. Despite certain correspondence being sent to only one of the offices that F had worked from (despite F stating that this was not the appropriate address) F conceded that he had received all the correspondence save for the letter inviting him to inspect the original documentation.
On the morning of the hearing on 2 December, F did not attend. In his absence, unsuccessful attempts were made to contact F by telephone. The Tribunal decided to proceed in F’s absence concluding that he was aware of the hearing date.
The Tribunal found the particulars proved, although only one allegation of dishonesty was established, the others being established on a reckless basis. His name was struck from the Roll and was ordered to pay SRA costs of over £28,000.
The day after the substantive hearing F issued an application pursuant to Rule 19 of the Solicitors (Disciplinary Proceedings) Rules 2007 (the Rules), inviting the SDT to set aside its earlier decision and grant a re-hearing on the basis that F had thought that the hearing date of 2 December had been vacated.
A differently constituted Tribunal (the Second Tribunal) considered that application on 16 December, rejected it, and ordered F to pay £7500 costs. They found that the correspondence that had been received by F did not give him a reasonable basis for forming the opinion that the hearing on 2 December had been, or would be vacated.
Challenge to decision on re-hearing
F challenged the decision of the Second Tribunal.
In rejecting this challenge, the Court confirmed that the burden of establishing the justice of ordering a re-hearing lies on the party seeking it. It was held that ‘the evidence that the Appellant had known about the first hearing and had been running shy of the whole process, hoping to delay it for as long as possible, was…overwhelming’. Further, it was noted that ‘the conclusion of the Second Tribunal is unassailable…the Tribunal plainly had a very good “feel” for the truth in this case and I can see no grounds for this court coming to a different conclusion’.
F had attended on 16 December but had chosen not to give evidence, and therefore was not cross examined. The Court found that there had been ‘a deliberate decision’ and that there was no ‘basis for complaining now about the consequences of that decision’. F was an experienced solicitor who must have known the significance of ensuring that the Second Tribunal accepted his account that he was under the apprehension that the matter had been vacated.
Challenge to substantive SDT hearing
F also made challenges to the procedure adopted at the original SDT hearing.
In the normal scheme prescribed by the Rules, the SRA’s application to the Tribunal in respect of an allegation made against a solicitor is to be supported by the Rule 5 statement and the documents attached which is then served on the solicitor by the SDT before the notice to admit (facts or documents) is given by the SRA. What happened in the present case (as a result of the error in address) was that the application and supporting statement and documents was not in fact properly served on F until after he had received the notice to admit document. It was therefore argued that the Tribunal was wrong to receive the Rule 5 and Rule 7 documents as evidence and to treat the documents exhibited to each of them as authentic.
The Court found that this ‘technical’ argument was without merit; whilst it was accepted that the 6 day time limit prescribed in the rules for returning the counter notice, should only run from when the Rule 5 statement had been properly served there is no legitimate basis for suggesting that a premature notice to admit is invalid. It was held that
‘anyone who simply issues a blanket counter-notice and shows no willingness to engage constructively with the process may well be the subject of the comment that he or she is simply being obstructive and is setting out to delay or frustrate the process’.
Although it might have been said that F had issued a technically valid counter-notice within the relevant time limit in relation to the Rule 7 statement, ‘the clear conclusion was that this was being done simply to hinder or frustrate the process’. F had deliberately not attended the hearing to make submissions as to why he required witnesses to be called and documents to be proved. The Tribunal were right to invoke their discretion as at Rule 14(1) of the Rules that they may ‘in its discretion, in respect of a whole case or of any particular fact or facts, proceed and act upon evidence given by the Statement’.
It was further held that there were ‘no possible grounds for criticising’ the decision of the Tribunal to proceed in the absence of F.
It was held that the Tribunal ‘examined the evidence with care, asked questions about it and was only prepared to find established what which the evidence did establish. As evidence of this, the Tribunal rejected some of the allegations of dishonesty’.
One further challenge made on behalf of F was that the Tribunal acted unreasonably by not affording F a chance to make submissions by way of mitigation after they had made adverse finding. This was also rejected by the Court;
'The Appellant chose to stay away. By not doing so he must be taken to have appreciated that, if adverse findings were made against him, he would not be present to make submissions about his personal circumstances, the facts as found or other matters of mitigation’.
The Court endorsed the judgement of Leveson J, as he then was, in Elliot v Solicitors Disciplinary Tribunal and another  EWHC 1176 (Admin) when he said
‘Those who fail to attend lose the right to participate and explain, and they do so at their peril. As [was] conceded, if, without more, a solicitor deliberately absented himself it would not be feasible to argue that he was entitled to a re-hearing’.
The appeal was accordingly dismissed.
Solicitors are reminded by the Court, once again, that deliberately waiving their right to attend a hearing may diminish the number of appeal points they may have. By the nature of their profession they would appreciate the importance of attending and giving their account on disputed matters. How a registrant engages with the regulatory process is, as ever, key to the outcome of their matter and blanket objections to evidence with no reasoning or helpful engagement will be dimly viewed.
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