High Court gives further guidance on dishonesty

Judgement date: 11 March 2014

Background

The appellant solicitor (S) appealed against a decision of the Solicitors Regulatory Authority’s Solicitors Disciplinary Tribunal (the Tribunal) to strike his name from the register in view of findings of misconduct.

The Tribunal found that S had breached the Solicitors Accounts Rules by:

  1. improperly withdrawing  money from client account, contrary to Rule 22 of the Solicitors Code of Conduct;
  2. acting dishonestly and in breach of Rule 1.02 of the Solicitors Code of Conduct by failing to pay money into client account without delay or at all and/or by instructions Mr Kamruzzaman (a junior solicitor) to delay paying money into a client account and instead using client money for his own purposes;
  3. breached Rule 5.01(1) of the Solicitors Code of Conduct in failing to make arrangements for the effective management of the firm as a while and, in particularly, in failing to exercise appropriate supervision over staff.

The Court dealt with two specific examples of the above when giving judgement in the appeal. Firstly, Mr Kamruzzaman had stated before the Tribunal that he had received cash in the sum of £6085 from a number of clients whilst S was in Bangladesh and used this to pay, among other things, a personal loan that S had taken out and airline tickets for S’s wife and mother to fly to Bangladesh.

S denied knowing anything about the above £6085 and giving any instructions as to how they should be used by Mr Kamruzzaman whilst he was in Bangladesh.

Secondly, Mr Kamruzzaman had stated before the Tribunal that he had been given £4,500 case and a cheque for £13,000 by clients which he gave to S and entered on the file. Mr Kamruzzaman stated he later met S in Bangladesh and was given £6,000, which he was instructed to put into certain clients’ accounts to clear balances where funds were short.

S accepted he had given Mr Kamruzzaman £6,000 in case to be taken back to the UK to pay for some shortfall in client funds.

Appeal

S appealed on the following grounds:

  1. the Tribunal erred in finding provide an allegation of breach of the Solicitors Accounts Rules in not paying client money into a client account without delay;
  2. the Tribunal erred in finding the S acted dishonestly;
  3. the Tribunal erred in preferring the evidence of Mr Kamruzzaman
  4. the Tribunal were unreasonable to conclude that there was no reasonable doubt in respect of those allegations;
  5. in the absence of findings of dishonest the S would not have been struck off.

Oral submissions made on behalf of S further refined these grounds to the following points of appeal:

  1. the Tribunal failed to apply the proper standard of proof before making findings of dishonesty
  2. the Tribunal attached far too great weight to the evidence of Mr Kamruzzaman.

Decision

In considering the question of dishonesty in this case the Court had regard toBultitude v Law Society [2004] EWHC 1370 (Admin) and noted that, in cases such as the instant case, it was not necessary for the regulator to prove an intention to deprive the client permanently of funds.

The Court further noted, when considering the weight given to the evidence of Mr Kamruzzaman by the Tribunal, that there is a heavy onus on an appellant seeking to overturn findings about the credibility of witnesses made by a tribunal which has seen and heard those witnesses. The Court had regard toTwinectra Limited v Yardley [2002] 2 AC 164 and the decision of the House of Lords that the Court of Appeal had not been entitled to reverse credibility findings made by the trial judge. In that case the Court of Appeal had held the Cranston J was wrong to not find dishonest and substituted findings that the respondent to the appeal had been dishonest.

The Court in the instant case accepted, with reference to an appellant seeking to overturn a finding that he was dishonest and having had regard toShamsian v General Medical Council [2011] EWHC 2885 (Admin) that the appellant ‘had a lower hurdle to surmount’ [7].

With regard to the standard of proof the Court noted that the Tribunal was required to prove the allegations beyond reasonable doubt.  The Tribunal engaged in a relative credibility comparison between the versions of events as communicated by S and Mr Kamruzzman when making their decision and the Court in this case held that by doing so the Tribunal, ‘had not lost sight of the basic requirement that … the regulator must prove dishonesty beyond reasonable doubt’ [10].

Having drawn out the two examples above, whereby it was said that S had behaved dishonestly, the Court held that the explanation advanced by S in relation to the first example was an ‘obvious implausibility’ [14]. Additionally, the Court noted that in respect of the second example, on S’s own admission, he had given Mr Kamruzzaman £6,000 in cash to be used to pay a shortfall in client funds.

On this basis, the Court held that the findings of the Tribunal were‘unimpeachable’ [15] and that ‘with these findings of fact including dishonesty… in the Bultitide sense, the decision that the appropriate sanction was to strike [S] from the Roll of Solicitors was inevitable’ [17].

In dismissing the appeal Mr Justice Rix stated that the appeal was ‘quite hopeless’ and suggested that if the ordinary judicial review rules applied to disciplinary appeals permission would not have been granted [17].

Another case illustrating, once again, the position with regards to dishonesty in respect of solicitors and the powers of appeal courts to overturn findings that a Registrant was dishonest.