Solicitors Disciplinary Tribunal sanction should not have assumed dishonesty
On 18 July 2012 the Divisional Court considered an attempt to challenge a Solicitors Disciplinary Tribunal sanction against a solicitor in the matter of Iqbal v SRA (unreported). The Tribunal had found that a solicitor had in error held out two partners of another firm as partners in his own business, however the Tribunal did not find that he had been dishonest in that regard. When the Tribunal decided on their sanction they did so on the basis of contending that he had misled a lender and the solicitor was “removed from the roll”. The Court decided that to have done so would mean that dishonesty had been established and that the sanction needed to be determined on the basis that there had been no finding of dishonesty. However, their sanction remained that the solicitor should be removed from the roll.
Solicitors Disciplinary Tribunal Guidance on Sanctions published
On 24 August 2012 the Solicitors Disciplinary Tribunal (SDT) published a Guide to Sanctions and how it arrives at decisions. Over 14 pages the SDT summarise principles developed over time in case law regarding sanctions, how such sanctions are determined, mitigation and costs. Guidance is provided as to the circumstances in which the sanction will be a reprimand, a fine, supervision, suspensions and striking off. The guide is available here.
Contingency fees: No cap on commercial cases!
On 25 July 2012 the Civil Justice Council published the recommendations of the working party appointed to consider the expected introduction of damage based agreements (DBAs) in April 2013 (part of the Jackson Report). The Working party chaired by Sir Michael Napier has recommended that for commercial cases there should be no cap on the level of contingency fee that a solicitor can agree with a commercial client; that there should be no requirement to notify Defendants that the Claimant’s solicitor is acting under a DBA; and that there should be no bar on offering a partial DBA in a similar way to “no win/low fee” agreements. It is still envisaged that the DBA model will follow the “Ontario model”, the successful claimant will recover base legal costs from the Defendant and this will be offset against the contingency fee (the percentage of damages payable to the Claimant’s lawyer).
No unjust enrichment
On 19 July 2012 David Donaldson QC provided his Judgment in the matter of Menelaou v Bank Of Cyprus PLC (Defendant) and Boulter & Co (Third party)  EWHC 1991 (Ch). The judgment deals with a fairly complex factual scenario but does illustrate that, despite a general willingness on the part of the Courts to be flexible in the application of remedies arising from unjust enrichment, there are logical limits beyond which the Courts will not go.
A Mr and Mrs Menelaou, the parents of the Claimant, lived with their family at Rush Green Hall, against which the Bank of Cyprus held two charges in respect of borrowing exceeding £2.2m. In 2008 the couple decided to sell Rush Green Hall and buy a smaller property and also to provide a gift to Mr M’s sister of a deposit on another property. They instructed the solicitors Boulter & Co to act.
A sale price of Rush Green Hall was agreed for £1.9m and a deposit received by the solicitors of £190,000. Later an offer was made to purchase another property Great Oak Court for £875,000. The solicitors were instructed that the purchase of Great Oak Court was to be in the Claimant’s name. The bank agreed to release its two charges in return for receipt of £750,000 and a charge in respect of the parents’ indebtedness over Great Oak Court. The solicitors provided a certificate of title containing an undertaking to obtain a legal charge. The solicitors sent a charge purporting to be signed by the Claimant. The deed purported to secure the borrowings of the parents against Great Oak Court however it had been altered by the solicitors to refer to the parents’ indebtedness rather than that of the Claimant.
In September 2008 the transactions completed, Rush Green Hall was sold and Great Oak Court was purchased. However in 2010 the family decided to try to sell Great Oak Court but could not do so because of the charge registered by the Bank. The Claimant therefore applied for rectification of the register against Great Oak Court and for the removal of the Bank’s charge since she had not signed the charge and the deed had been altered to secure her parents’ indebtedness without her instructions.
At an early stage of the Trial the Bank was prompted to withdraw their allegation that the charge secured the debts owed by the parents. The Judge having pointed out that since the deed had been altered then the deed could only be in respect of any indebtedness of the daughter alone not her parents. Related to this development was the solicitors’ admission of breach of contract and negligence but on the basis that the Bank would have to mitigate its loss by pursuing the counterclaim against the Claimant. By the counterclaim the Bank sought to establish that Great Oak Court was held on trust for the bank or that the Bank had an equitable charge by way of unpaid vendor’ s lien in the amount of the purchase price of Great Oak Court.
The Judge found that when the purchase monies for Rush Green Hall were received by the solicitors that they were acting as agents for the parents. That the purchase price of Great Oak Court had not been funded by the Bank’s monies. Whilst the Bank argued there had been unjust enrichment the Judge found that no remedy arose as a direct result of “detriment to the bank”. The Judge was particularly unimpressed by the attempt to relieve the solicitors of their obligations by the attempt to claim unjust enrichment: “That is a poor reason for the court to pummel or manipulate the law of unjust enrichment into fashioning a remedy in the circumstances-hopefully rare-of the present case”. The claimant was successful and the claims against the Bank succeeded. Therefore the Bank had no security for the borrowings of the parents but the Bank was protected by the undertakings and other obligations of the solicitors and judgment was awarded in favour of the Bank against the solicitors. Therefore the Bank had no security against Great Oak Court for the borrowings of the parents.