Acting to stop harm: the FCA and Appointed Representatives
Judgement Date: 26 March 2013
High Court considers apparent bias and the circumstances in which a panel member should disclose potentially relevant interests.
The appellant Solicitor (S) appealed against the decision of the Solicitors Disciplinary Tribunal (SDT) made following a two day hearing on 6 September 2011.
In May 2008, the respondent Solicitors Regulation Authority (SRA) had begun an investigation into S’s practice and in February 2010 a decision was made to refer his conduct to the SDT. S admitted certain breaches of the Solicitors Accounts Rules (the Rules), but denied more serious allegations that he had: dishonestly used loan funds advanced to him by his lender-client Abbey for an unauthorised purpose; provided a false explanation of that use to the SRA investigator; failed to register legal charges in 4 cases; failed to declare a conflict in interest on the remortgage of his property, failed to fulfil an undertaking to repay a loan and failed to be alert to suspicious characteristics of transactions.
The SDT found the disputed allegations proved and ordered that his name be struck from the Roll of Solicitors. He was ordered to pay costs of £30,000.
The Appeal - Bias
It was submitted on behalf of S that the composition of the Tribunal was such that it could not be said to have been independent or impartial.
The complaint concerned the presence on the Tribunal of Mr Richard Hegarty, who had previously carried out work for the SRA. From 1997 Mr Hegarty had held an appointment as a member of the SRA’s Adjudication Panel, as an adjudicator. This role, which was part time and incidental to his own private practice as a solicitor, required him to make such decisions as whether the SRA should intervene in a solicitor’s practise, whether their case should be referred to the Tribunal etc. That appointment ended in August 2009. In November 2009 Mr Hegarty was appointed as a solicitor member of the SDT.
It was argued that the investigation into S’s case had begun in May 2008, more than a year before the cessation of Mr Hegarty’s appointment as an adjudicator. Whilst it was conceded that Mr Hegarty had not had any involvement in the investigation or decision made in S’s case, it was submitted that it would be surprising if those involved in the investigation of S’s case had not been known to Mr Hegarty during his time as investigator.
Further, it was submitted that by failing to make disclosure, the Tribunal had deprived itself and S, of a vital opportunity to ensure the fairness of the proceedings. It was suggested that during his time in appointment, he would have had access to the SRA’s computer system and may have gained knowledge of the investigation by that means.
Lastly, Mr Hegarty had previously been head of the panel which had determined that the SRA should intervene in the practice of a firm of solicitors called Dean and Dean. The result of that intervention had been that the former senior partner of Dean and Dean had issued proceedings against the SRA and a number of individuals (including Mr Hegarty), such that Mr Hegarty had a continuing interest in common with the respondent in defending those proceedings.
Complaint was made that the SRA had not done anything to investigate the concerns about Mr Hegarty’s independence, such as asking him to comment on his knowledge of other investigators.
The SRA’s position in relation to this ground of appeal was that there was no evidence of bias, actual or apparent. There was no suggestion that, during his time as adjudicator, Mr Hegarty had any personal involvement with the investigation into S and there was no evidence that he had even been aware of an investigation. It was submitted that the need for disclosure in a ‘borderline’ case where the member of the Tribunal had a genuine doubt as to whether the relevant interest might give rise to the risk of bias. If the Court were to find that, in the absence of any disclosure, a risk of bias had arisen in this case, this would come close to finding that anyone who had previously been associated with the SRA was disqualified form sitting on the Tribunal. Dealing with the ‘Dean and Dean point’, this had only been raised the day before the hearing and S should not be permitted to rely on it; in any event it could not found a basis of a finding of bias.
Having considered the test as set down in Porter v Magill  2 AC 357, the judgement of Lord Bingham in Davidson v Scottish Ministers (No.2)  UKHL 34, and the ECHR case of Piersack v Belgium  5 EHRR 169, it was said that it was clear from the authorities that the mere fact that Mr Hegarty had previously held an appointment as an adjudicator for the respondent could not of itself give rise to actual or apparent bias.
There were, of course, good reasons why an individual should not hold an appointment with the SRA at the same time as sitting on Tribunals hearing disciplinary cases, given that it would amount to simultaneous involvement in both the investigatory and decision making arms of the process (such as was found objectionable in Kaur v ILEX [2012} 1 All ER 1435). This was not the case here.
It was held that the suggestion that Mr Hegarty may have used the SRA computer system was ‘fanciful’ and ‘speculative’. Similarly, the submission in relation to the ‘Dean and Dean proceedings’ was clearly S simply ‘clutching at straws’.
What of the failure of Mr Hegarty to raise the issue? In line with the guidance given in Davidson as to when it is necessary to disclose, it was held that
‘There is no requirement for an individual sitting in a judicial capacity to disclose every previous activity or association that he or she may have had, whether or not the activity or association is capable of forming the basis for a reasonable apprehension of bias. The duty extends only to activities or associations which would or might provide the basis for such a reasonable apprehension’.
Accordingly, there was no general duty on Mr Hegarty to disclose his previous appointment. He would have had to disclose any personal friendship or close association between himself and any of the witnesses or any other matter that may have affected (or be reasonably seen to) affect his impartiality.
Important and useful guidance was given in relation to the duties incumbent on a body such as the SRA;
‘We do not consider that, whenever the question of bias is raised, there is an automatic duty on the relevant judicial authority to carry out an instigation as to whether there are factors which might have formed the basis for a reasonable apprehension of bias and should therefore have been disclosed to the parties in advance. Such a duty would place a considerable burden on judicial authorities and may well lead to a proliferation of appeals amounting in reality to ‘fishing expeditions’ aimed at finding some material that might form the basis for a successful appeal. In a case such as this, where no evidence capable of forming the basis of such an allegation of actual or apparent bias has been advanced by the party alleging such bias, it seems to us that a judicial authority would be entitled to decline to undertake any active investigation’.
Second Ground of Appeal – finding of dishonesty
It was submitted that the Tribunal had erred in law in finding that the appellant had acted dishonestly. It was argued that the Tribunal had failed to have any proper regard for the fact that S had not benefitted financially from the unauthorised use of the monies provided by Abby and that the monies were repaid without any loss to Abbey. The Tribunal had erred in accepting the evidence of Ms Guile, the investigator whom it was said he had misled.
This ground of appeal was also rejected; the Tribunal had properly applied the test as laid down in Twinsectra Limited v Yardley and Others  2 AC 164. The fact that S had not derived any personal financial gain from the conduct and the fact that there was no ultimate loss were only two factors to be considered in determining whether the actions were dishonest. The Tribunal’s finding was based on its assessment of the credibility of the witnesses and they were fully entitled to reach the decision they did.
A useful summary of the law in relation to apparent bias and the circumstances in which panel members should raise potential conflicts/bias, this case also dissuades those defending professional to embark on ‘fishing expeditions’ to locate material that may form the basis of an appeal.
Skip to content Home About Us Insights Services Contact Accessibility