High Court confirms that Panels are not obliged to put Counsel on notice that they are contemplating a particular sanction, and gives useful guidance on Camacho conditions.

Judgement Date – 23 July 2013

Background

The appellant solicitor (E) was admitted as a solicitor on 1 August 2000 and set up practise as a sole practitioner in January 2004. Between 2006 and 2008 E practised in partnership with a Mr BI, a conveyancing solicitor at a firm called Macartan and Co. In 2006 she employed her brother (D) as a trainee solicitor and in 2008 she also appointed her daughter (W) as a salary partner. On 2 February 2010 the Forensic Investigation Unit of the SRA commenced an inspection of Macartan and Co’s books of account, which ultimately resulted in (E) appearing before the Solicitors Disciplinary Tribunal (SDT) with her daughter (W) on 15 November 2012. Both E and W jointly admitted 10 breaches of the Solicitors Accounts Rules 1998 and the Solicitors Code of Conduct 2004. E admitted four further breaches on her own account.

In general terms the allegations related to: poor bookkeeping leading to unexplained transfers, funds being taken from client accounts to pay the firm’s costs and evidence that the client account was being used to subsidise the cash flow of the firm; E’s brother (D) being given complete access to the client account in breach of rule 23 and in the course of such access D had committed and/or had been involved in a whole series of mortgage frauds; breaches in respect to conveyancing transactions, including E acting for her daughter W in relation to the sale of property to her brother.; failure to supervise D.

It was accepted that E had had significant health problems during much of the period in question, which meant she was confined at home, from where she sought to run her practise.

The SDT Panel ordered that E be suspended from practise for 6 months and that she should pay costs. They further ordered that upon the expiry of that fixed term suspension, E shall be subjected to conditions imposed by the tribunal. The condition was that E may not practice as a sole practitioner, partner or member of an LLP, LDP or ABS; and may only work as a solicitor in employment approved by the SRA. The conditions had no limit but it was said that either party could apply to the tribunal to vary the conditions.

In relation to W, she was ordered to pay a fine of £3000 and costs. 

The Appeal

E appealed by virtue of section 49(1)(b) of the Solicitors Act 1974 against the condition that was attached by the SDT; the ‘Camacho condition’. No challenge was made to the 6 months suspension or the fine of £3000, which it was conceded was justified.

The two main grounds of appeal were that;

  1. The SDT failed to follow a ‘fair’ procedure when deciding to impose conditions on E’s future practise as a solicitor; in particular the SDT failed to forewarn E that it had the intention of imposing conditions and had failed to give E’s advisers the opportunity to make submissions on their imposition. 
  2. The condition imposed was, in all the circumstances, inappropriate, especially in its unlimited form.

Camacho conditions

Haddon Cave J took the opportunity to consider Camacho conditions and their legal status. The SDT has the power under section 47(2) of the Solicitors Act 1974 (in addition to its powers of suspension of the solicitors practising certificate or striking off or fining) to impose conditions on a practice certificate to run after a period of suspension of a solicitors practising certificate (see Camacho v law Society (No 1) [2004] EWHC 1042 (Admin) and Camacho v Law Society (No 2) [2004] 1 WLR 3037. The Court held that the following propositions flowed from those decisions;

  1. The power of the SDT under section 47(2) is ‘very wide’
  2. The SDT has a range of sanctions available to it, including strike off, suspensions, fines, or imposing conditions of future practise
  3. It is not generally appropriate that the SDT should delegate its disciplinary functions to the Law Society
  4. If appropriate the SDT itself should impose conditions ‘as part of the sanction’ that it is imposing in the particular case
  5. The SDT can impose conditions indefinitely
  6. Appellants should generally be given liberty to apply to vary such conditions in the future, or to have them ameliorated.

It was accepted that there were, in practise, three ways in which conditions of practice can be imposed: first by the SDT of its own motion as per Camacho; secondly by the Law Society imposing conditions on a practising certificate pursuant to regulation 7 of the solicitors regulation; and third, by the SDT making recommendations to the Law Society (a course which the Court doubted was now valid in light of Camacho).

Decision

It was held that the Law Society’s powers (option 2 above) are intended to be non-punitive in nature. The powers, however, which the SDT is exercising under section 47(2) are ‘very different’. They are disciplinary powers. It was said that;

‘In my judgement, the imposition of conditions by the SDT is about both risk and reputation. It is about both the risk to the public and protecting the reputation of the solicitors profession…. For those reasons I reject [counsel for E]’s submission that the SDT’s powers to impose conditions is either akin to that of the Law Society, or is of an entirely non punitive nature. When punitive is understood in its proper sense in this context, which both the protection of the public and safeguarding the reputation of the profession, it is clear that the SDT’s exercise of the power to impose conditions is ‘part of the sanction’, as Camacho put it, i.e. punitive’. [44-46]

It was held that the SDT did not have a duty to give a ‘warning’ that they were considering conditions; Camacho conditions are (or should) be now well recognised and were explicitly referenced in the published SDT guidance. The experienced and panel, comprised of ‘distinguished’ solicitors in practise, would have been well aware of the effect of the sanction before they imposed it.

It was observed that ‘there is no general obligation on a Court or tribunal to indicate in advance the nature of the sanctions which it has in mind, within the range of sanctions which might reasonably be in the contemplation as available.’  It was a matter ‘for forensic judgement’ as to whether submissions are made by those representing individuals as to the appropriate ness of various sanctions.

As a result of the above it was held that there was no procedural unfairness by the SDT in this case.

Further, it was held (having considered the well-known remarks of Bingham MR in Bolton v Law Society) that given the serious and numerous breaches that had been admitted, there were no grounds for interfering with the penalty imposed here or, in particular, the impositions of conditions of future practise. The argument by E’s counsel, that it is unsatisfactory that the SDT should impose conditions and have to deal with variations because the SDT is thereby stepping into the arena of the regulator, was rejected. It was said that Camacho made clear that the imposition of conditions is ‘part of the sanction’. In imposing conditions and subsequently making variations the SDT is not acting as a regulator, but merely carrying out its statutory disciplinary duty. 

This case is helpful in its clarification of both the practicalities of and the rationale for Camacho conditions.  It is also a reiteration of the fact that Panels do not have to put Counsel on notice that they are considering a particular sanction, as long as it would be within the contemplation of the parties given the circumstances.