Thames Water fined for “entirely foreseeable” pollution
Solicitors Regulation Authority v Richard Ali Chan, Rajob Ali, Abode Solicitors Limited  EWHC 2659
Judgment date: 22 July 2015.
The Solicitors Regulation Authority (SRA) appealed to the High Court to challenge certain decisions made by a Panel of the Solicitors Disciplinary Tribunal, and the sanction ultimately imposed. The SRA submitted that the original findings were “inconsistent with the Tribunal’s own primary findings of fact with regard to the respondents’ conduct”.
Mr Justice Davis, in his lead judgement, allowed the appeal for the greatest part, unpicking and unravelling the conclusions of the Panel, finding them to be “not sustainable”. However, he stopped short of striking the solicitors off. Instead the matter was remitted back to the Tribunal for determination of appropriate sanction in light of the allowed grounds of appeal.
The Respondents were Mr Chan and Mr Ali, two solicitors, and Abode, a limited liability company controlled by the two. It was alleged against them in a number of charges that they had operated, through Abode, a number of schemes to avoid or mitigate the impact of Stamp Duty Land Tax in the context of conveyancing transactions. It was said that the solicitors introduced numerous clients to such schemes (both buyers and lenders) which were of personal risk to them. In addition, the schemes were of healthy profit to Abode (and the solicitors), who stood to collect commissions and referral fees from the scheme providers. It was alleged that the clients were not informed of the “aggressive and risky nature of the schemes or of their (the solicitors’) own personal opportunity to gain commissions”.
It was said that Abode had completed 556 conveyancing transactions involving such schemes between 2009 and 2012, with the financial benefit to the solicitors being large: £994,693.
It was alleged that four schemes were operated: the “Husband and Wife” scheme; the “Unlimited Company” scheme; the “Nominee” scheme; and the “Option” scheme. One of the scheme providers was a company called Omega Planning Limited. Incorporated in the Seychelles, the directors and shareholders were the solicitors themselves. It was said that clients who used the company’s service were never informed of the nexus between Omega and Abode.
In addition, it was alleged that the solicitors had disregarded the advice of tax counsel that they should not provide an option company themselves (Omega), and that they should advise clients that the schemes were aggressive and without any guarantee of success.
The original decision
The first instance decision was carefully reasoned, comprising some 222 paragraphs over 66 pages. The Panel ultimately found that the solicitors had acted in breach of the Solicitors’ Code of Conduct and the Solicitors’ Accounts Rules. However, it reasoned that although the behaviour of the solicitors amounted to misconduct, this misconduct arose largely from their failure to understand the requirements of the schemes and their own responsibilities. The Panel found incompetence, in addition to a lack of insight into their failings, but declined to go on to find that either had acted with lack or integrity, or independence, or in such a way to diminish public trust, as had been alleged. Each was fined £15,000. Abode was revoked of its status as a Recognised Body to provide legal services.
The SRA challenged certain conclusions reached by the Tribunal, as well as the sanction imposed on the two solicitors. It was argued that the Tribunal ought, on the basis of its findings of fact, to have gone on to make further and more extensive findings of breach as charged, which can be summarised as:
Had they done so, the SRA argued, “the inevitable and only proper sanction would have been one of striking off”.
The High Court decision
Poorly drafted allegations
Lord Justice Davis was clearly troubled by the form of the charges that had been before the Panel; allegations he said were “many and varied… for the most part unduly and unnecessarily convoluted and prolix”. He picked out two of the most cumbersome of the allegations, including the unwieldy allegation 1.1:
“They failed, alternatively facilitated, permitted or acquiesced in a failure to disclose material information to lender and/or purchaser clients and/or failed to act in the best interests of lender and/or purchaser clients, contrary to Rules 1.02, 1.03, 1.04, 1.05, 1.06 and/or 4.02 of the Solicitors Code of Conduct 2007 (“SCC 2007”) in the period up to 5 October 2011 and/or from 6 October 2011 they breached all, alternatively any, of Principles 2, 3, 4, 5 and/or 6 of the SRA Principles 2011 (“the Principles”). Further, or alternatively, from 6 October 2011, the respondents failed to achieve outcomes O(1.1) and O(4.2) of the SRA Code of Conduct 2011 (“2011 Code”)”
Expressing his displeasure, Davis J had this to say:
“This sort of drafting – whether in the context of Solicitors' Disciplinary Tribunal proceedings or any other kind of disciplinary or regulatory proceedings – is unacceptable. It would not be tolerated in the civil courts. It would not be tolerated in the criminal courts. It should not be tolerated in disciplinary tribunals… such a style of drafting charges can operate only to make the task of a tribunal more difficult. They create a real risk that a tribunal will lose sight of the larger picture and will treat the more and the less significant points alike.”
By way of advice to those drafting charges in the regulatory sphere, Davis J went on to say:
“One can perhaps understand the desire not to leave any relevant allegation out. But allegations are capable of being relatively shortly stated, with particulars relating to each such allegation then provided. It is not acceptable to lump allegations, with a plethora of “alternativelys”, “further or alternativelys” and “and/ors” and with reference to a variety of different rules, principles and outcomes, into one convoluted and rolled-up charge… In addition, those drafting such charges would, in my view, be well advised to bear in mind the desirability in principle of aiming to seek to include in a charge sheet the minimum number of charges necessary to meet the justice of the particular case: and not the maximum number possible.”
The appeal points
Davies J acknowledged that the High Court would “not lightly” interfere with the decisions of a “specialist body entrusted with finding the facts and imposing the sanction considered appropriate”. But he was clear as to the limits of this position: “if the (High) court’s own conclusion is that the Tribunal’s evaluation and conclusion are wrong then it is its duty to interfere”.
Davies J was in “no doubt” that the SRA’s complaints about the conclusions of the Tribunal were to be accepted. He considered that the allegations of want of integrity and acting with lack of independence simply followed from the primary facts found by the Tribunal. Findings to the contrary were “flatly inconsistent”. He further thought it plain that the interests of the clients, in paying to take part in the schemes offered, were “subordinated to the financial interests of the respondents”. Davies J found that the solicitors “knew full well what they were doing”. In particular, he singled out for criticism the Panel’s conclusion that the solicitors had “no proper understanding of their duties to their clients”; the judge going on to say: “one wonders how such persons are then to be considered fit to be solicitors at all”. Davies J also noted that the Panel had found that the solicitors had shown no evidence of insight, refusing to admit that what they had done was wrong. In summary, it was noted that the Tribunal “seriously underestimated the gravity of its own findings”, and that:
“In my view, the evidence and the primary findings of fact of the Tribunal – all eminently justified – compel a conclusion that there was here a want of integrity and a failure to act with independence. They also compel a conclusion that the respondents so acted as to diminish the trust the public would place in the respondents and the provision of legal services. It would indeed be lamentable, on these facts, if it were adjudged otherwise. The charges were, in my view, all established on the evidence in these respects.”
Davies J was clear that on such a reappraisal of the Panel’s conclusions, it was plain that a fine of £15,000 each would no longer be appropriate. He hesitated however, as to whether it would be appropriate for the High Court to strike the solicitors off. He reminded himself that this was not a case in which dishonesty had been alleged: “I cannot at this stage be entirely satisfied that some lesser sanction than striking off possibly may be adjudged by the Tribunal to be appropriate.” Accordingly, he remitted the matter back to the Tribunal for re-determination of the appropriate sanction.
It is unusual for the High Court to interfere with a decision made by a specialist Tribunal. The well-trodden authorities suggest that the Court will be slow to undermine findings of a lower Panel. This was confirmed as recently as July of this year in the case of Smart v NMC  EWHC 1807. However, in the “right” sort of cases, as is apparent here, the Court may act, and act decisively.
Interestingly, Davies J took the opportunity to take aim at and make an example of instances of particularly poor drafting. Not only do wordy particulars make a regulatory tribunal’s job more difficult at the fact finding stage, the judge also feared that a side effect could be that a panel would lose sight of the bigger picture.
Finally, this case raises questions as to whether dishonesty might properly have been alleged and confirms the primacy and seriousness of an allegation of dishonesty.
This blog was written by Tom Orpin-Massey, Barrister, Regulatory & Professional Discipline.
For further information, please contact Tom Orpin-Massey.
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