Scott v Solicitors' Regulation Authority [2016] EWHC 1256 (Admin)

Posted by James Danks on
This matter involves a statutory appeal against the Appellant's striking off the Roll by the Solicitors' Disciplinary Tribunal ("SDT") despite dishonesty not having been proven, but in circumstances where he had acted without integrity. Lady Justice Sharp's strongly worded judgment upheld the SDT's Findings that the Appellant had little care as to his professional rules and obligations and that the most serious sanction available to the SDT was not reserved only for those cases in which dishonesty is found.

Facts

Robert Scott ('the Appellant') was admitted to the Roll on 2 November 1992 and was principal of Key 2 Law LLP ('the Firm') and ran two further companies (K2C and A3DT). The Appellant employed an unregulated 3rd person, BW, to generate a client base for K2C, a company that acted for consumers in complaints against their credit card companies. In the event that these complaints were not resolved, the Firm would then act in subsequent litigation, with each client paying £300 being held in the Firm's client account for K2C.

Despite BW being neither regulated nor employed by the Firm, the Appellant allowed him effective control over the Firm's K2C client account and over 17 months, over £500,000 was dissipated by the Appellant on instruction from BW for reasons other than those expected by the clients and with no underlying legal transactions.

BW was similarly involved with A3DT, a company that was another client of the Firm and for whom the Appellant was a Director along with his wife. This company was predominantly set up to attract investors in technology, one of whom, MK, paid £20,000 to the Firm. These monies were to be held by the Firm for the purchase of shares in A3DT and were sent following receipt of correspondence from the Firm confirming its retainer with A3DT. Nevertheless, in a period of just over four weeks, this entire sum had been dissipated on matters other than those intended and again following instructions from BW.

Following a Forensic Investigation of the Firm, this matter was brought before the SDT in June 2014 under three heads of charge:

  1. his failure to cooperate with the SRA in an open and timely manner (in breach of Principle 7)
  2. numerous breaches of the SRA Accounts Rules 2011 and
  3. the failure by the Appellant to run his business effectively.

The SDT, despite finding the Appellant's conduct objectively dishonest (as per the standard test in Twinsectra v Yardley [2002] (UKHL 12), did not find him to be subjectively dishonest due to personal issues he was experiencing at the relevant time and the esteem he held BW in. However, they did conclude that due to the Appellant's lack of regard for his obligations to protect clients' money and assets, he lacked integrity and therefore struck him from the Roll.

The Appeal

The Appellant's fundamental Ground of Appeal was that the SDT erred by focusing on objective, rather than subjective, considerations and with dishonesty not being found proven, the SDT should not have reached their finding that that he acted without integrity. The Appellant also appealed the sanction imposed being excessively harsh compared to matters of similar seriousness and therefore inappropriate.

Judgment

In considering this appeal, Sharp LJ considered the meaning of 'integrity' by reference to Hoodless and Blackwell v FSA [2003] UKFTT FSM007 and specifically:

            "In our view "integrity" connotes moral soundness, rectitude and steady adherence to an ethical code. A person lacks integrity if unable to appreciate the distinction between what is  honest or dishonest by ordinary standards. (This presupposes, of course, circumstances where ordinary standards are clear. Where there are genuinely grey areas, a finding of lack of integrity would not be appropriate.)"

Although the SDT referred itself to Hoodless by reference to a slightly inaccurate quotation of the above, in light of the Appellant's defence that he followed BW's instructions, this was necessarily inconsistent with his professional duties that went directly to integrity when the approach taken by Davis LJ in SRA v Chan and ors was also considered:

            "As to want of integrity, there have been a number of decisions commenting on the import this word as used in various regulations. In my view, it serves no purpose to expatiate on its meaning. Want of integrity is capable of being identified as present or not, as the case may be, by an informed tribunal or court by reference to the facts of a particular case".

Sharp LJ was clear in the judgment that there had been a failure by the Appellant to stand "back and ask himself if it was right to make payments, sometimes to organisations he did not know. It was telling there was no evidence to support the legitimacy of the transactions…the extent of the facility afforded to BW was remarkable and even if the appellant's conduct was not dishonest, this put the allegations at a very high level of seriousness".

Sharp LJ also specifically chose to emphasise various features in relation to seriousness:

  • Failing to cooperate in itself is very serious;
  • The movements of funds, both intra-firm and externally, was clearly improper; and
  • Dishonesty is not a requisite factor for a lack of integrity. The Appellant's reckless behaviour as to client account was sufficient in the circumstances of this case.

Having considered matters "in the round…it seems to me that the SDT's findings of recklessness and lack of integrity were not only justified but inevitable"

In relation to sanction, there is of course the long-established principle that the tribunal who heard the evidence at first instance is best placed to determine the appropriate sanction. In the absence of a decision being clearly inappropriate, it should not be altered.

The misconduct in this matter was clearly seen to be very serious and Sharp LJ made reference to Bolton v The Law Society [1994] 1 WLR 512:

            "Any solicitor who is shown to have discharged his professional duties with anything less than complete integrity, probity and trustworthiness must expect severe sanctions to be imposed on him".

The judgment also noted the matter of Law Society (SRA) v Emeana and ors [2013] EWHC 2130 (Admin):

            "…in cases where there has been a lapse of standards of integrity, probity and trustworthiness, a solicitor should expect to be struck off, and that striking off is the most serious action, but it is not reserved for offences of dishonesty"

Having considered the court's decision on the Findings and the views expressed above, it perhaps necessarily follows that the appeal on sanction was dismissed.

About the Author

James is a Senior Associate in our Professional Regulatory team, he has a decade of experience in advising regulators and respondents to disciplinary proceedings.

James Danks
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