Matthews v Solicitors Regulation Authority [2013] EWHC 1525 (Admin)

The Administrative Court held that, where the Solicitors Disciplinary Tribunal (the tribunal) considers it necessary to impose a fine on a respondent solicitor, the tribunal must take into account the respondent's overall liability in the proceedings, including costs, when deciding on the level of fine.

M, a solicitor, admitted the two charges brought against him in the tribunal, namely that he failed to act in his lender clients' best interests and failed to properly supervise an employee of his practice (R). Although M had initially supervised R, who was not a solicitor, R was later left effectively to run the firm's conveyancing department on his own. R then undertook conveyancing transactions which bore the hallmarks of mortgage fraud.

There was no suggestion in the tribunal proceedings that M had been aware of the relevant transactions. Additionally, M's evidence to the tribunal was that his firm had not gained any material advantage from R's activities, as the profits largely went to R. Nevertheless, the tribunal found that M's failure to supervise R was a serious matter and imposed a fine of £5,000. It also ordered M to pay the SRA's costs of £16,000.

In the tribunal proceedings, M did not dispute that he was liable for the SRA's costs but submitted that, as a result of the proceedings, he had not been able to work. Accordingly, it was unlikely that he would be able to pay the costs order in the near future and he asked the tribunal to order that the SRA could not enforce the costs order without first obtaining the tribunal's leave. The tribunal declined to make such an order on the basis of an assurance from the SRA that it would only seek to enforce the costs order if it was appropriate to do so.

M appealed against the fine and costs order on the grounds that both were excessive. Following D'Souza v Law Society [2009] EWHC 2193 (Admin), the court held that the respondent's means were material both when considering the amount of any costs order and in respect of the fine imposed. The court found that the tribunal had not properly considered M's means and noted that the tribunal may have felt able to disregard the amount of the costs of the proceedings as a result of the SRA's assurance regarding enforcement. However, this had been the wrong approach.

The court noted that there had been substantial mitigation in M's favour, including the fact that he had (wrongly) relied on the good conduct and integrity of R, and that there had been no suggestion of dishonesty or fraudulent conduct on M's part. In all the circumstances, including the difficulties that M had faced in finding work as a result of the disciplinary proceedings, the court found that a fine of £5,000, when added to a costs liability, was clearly excessive. Notwithstanding this, the court held that the tribunal had been entitled to decide that the case merited a fine rather than then a reprimand although it acknowledged that, in cases where it was necessary to reduce a fine substantially in view of the respondent's means, there was 'the risk perhaps of lessening, in the view of those who see the penalty, the seriousness with which it was regarded' (para 32).

The court concluded that the total liability, by way of fine and costs, should be limited to £5,000 with the fine reduced to £500 and the balance (£4,500) by way of costs. It also ordered that the SRA should not seek to enforce the order unless M had the means to pay.