Solicitors Regulation Authority v James & Ors [2018] EWHC 3058 (Admin)

Transcript

Solicitors Regulation Authority v James & Ors [2018] EWHC 3058 (Admin) concerned three separate appeals by the Solicitors Regulation Authority from decisions of the Solicitors Disciplinary Tribunal that, whilst dishonesty had been established in each case, “exceptional circumstances” justified imposing suspensions (themselves suspended) rather than striking the solicitors from the Roll. The Divisional Court (Lord Justice Flaux and Mr Justice Jeremy Baker) allowed all three appeals and substituted an order striking each respondent off.

In James, Ms Sov Ani Ramona James, admitted in July 2010, worked as a clinical negligence solicitor at McMillan Williams from 2010 to February 2015. Between August 2013 and January 2015 she made nine sets of misleading statements to her client and firm, suggesting that proceedings had been stayed, judgment on liability obtained, and extensions of time granted when none of this was true. In November 2014 she created and backdated four letters to give the impression she had been progressing the file. The SDT found her dishonest beyond reasonable doubt applying the objective test in Ivey v Genting Casinos Ltd [2017] UKSC 67, [2018] AC 391. The SDT accepted that she had been under considerable pressure at work in a firm with a toxic culture, and that she had suffered from a mild depressive disorder with mixed anxiety causing stress-related hair loss. The SDT found that her misconduct had continued over 17 months and caused considerable harm. However, it concluded that the combination of the firm’s culture, her mental ill health and her difficult personal circumstances amounted to “exceptional circumstances” sufficient to justify a suspended suspension for two years, suspended for three years, together with a restriction order prohibiting her from acting as a sole practitioner, partner or COLP, and from holding client money.

In MacGregor, Mrs Esteddar Mariam MacGregor, admitted in June 1991, was a salaried partner, Managing Partner and COLP at Ziadies, working part-time. By July 2014 she knew that the equity partner, Mrs Abey, had been over-claiming interpreters’ travel expenses and travel time from the Legal Aid Agency and was engaged in a scheme involving false invoices to conceal the improper claims. Although as COLP she had a duty to report this to the SRA, Mrs MacGregor did not do so, fearing for Mrs Abey’s health. Over a period of a few days in July 2014, Mrs MacGregor assisted on three or four occasions in cross-checking false invoices against calendars to ensure the dates on the false invoices did not clash with what the named interpreters had been doing. She appreciated this was wrong and ceased after two or three days. She did not report the misconduct to the SRA until April 2015, some eight to nine months later. The LAA had by March 2015 concluded there had been systematic over-claiming and requested repayment of over one million pounds. The SDT found that Mrs MacGregor had committed serious misconduct by failing to report and had acted dishonestly in assisting the cross-checking. The SDT accepted that she was under high pressure at work and at home and may have had a particular reaction to triggers concerning her fear of people dying, although the medical evidence was inconclusive as to whether she was suffering from a mental disorder. The SDT concluded that there were exceptional circumstances, given the unusual combination of her concern for Mrs Abey’s health, her deep loyalty to her friend and colleague, and the perceived unbearable pressure. The sanction imposed was a two year suspension, itself suspended for three years, with a restriction order in similar terms to that in James.

In Naylor, Mr Peter Naylor, admitted in September 2006, was an associate solicitor in the Corporate Department of TLT LLP from May 2010 to September 2014. In July 2013 he was instructed by a client to make applications to the FCA in relation to restructuring three companies, with a deadline of 31 March 2014. Mr Naylor was under considerable stress and pressure at work, having seen his doctor in 2011 and 2013 with stress-related symptoms and depression. In early 2014 he had a tearful meeting with senior partners describing himself as “broken” and was promised a break before taking up a secondment to another entity starting on 1 March 2014. The break did not materialise and he was assigned further work right up to the start of the secondment. He did not in fact make the necessary applications to the FCA by the 31 March 2014 deadline, but between March and June 2014 sent five emails to the client giving the misleading impression that the applications had been submitted and a response was awaited. The SDT found that the misconduct arose from an adjustment disorder as a reaction to severe stress and that whilst under acute stress he had reverted to patterns of avoidance and denial. Two consultant psychiatrists agreed that even if he was capable of being honest at the material time, his predisposing vulnerabilities would have been difficult to resist. The SDT found him dishonest, holding that the medical evidence did not establish that he did not know the difference between honesty and dishonesty. The SDT concluded that his mental ill health was an exceptional circumstance, justifying a two year suspension, itself suspended for two years, with a restriction order that included a requirement for half-yearly medical reports on his mental health.

On appeal, Ms Chloe Carpenter for the SRA submitted that in each case the SDT had erred in principle or made an evaluation that was outside the bounds of what it could properly decide. She argued that the SDT had failed to focus on the critical factors identified in Sharma v Solicitors Regulation Authority [2010] EWHC 2022 (Admin) and Imran [2015] EWHC 2572 (Admin), namely the nature, scope and extent of the culpability and dishonesty and whether it was momentary or over a period of time. Instead, the SDT had focused on matters of personal mitigation such as pressure of work, mental health issues, stress and depression. She emphasised that if leniency were extended in these cases, that would lower the tariff and make it difficult to strike off for dishonesty, citing Bultitude v The Law Society [2004] EWCA Civ 1853. Mr Geoffrey Williams QC for Ms James, Mr Gregory Treverton-Jones QC for Mrs MacGregor and Ms Fenella Morris QC for Mr Naylor submitted that the SDT was an expert tribunal particularly well-placed to assess sanction and that the Court should be reluctant to interfere with a multi-factorial evaluative decision unless it fell outside the bounds of what the SDT could properly decide, relying on Bawa-Garba v General Medical Council [2018] EWCA Civ 1879. They emphasised the combination of factors in each case, including the toxic working environment in James, the misplaced loyalty and concern for Mrs Abey’s health in MacGregor, and the adjustment disorder and workplace pressure in Naylor.

The Divisional Court reviewed the applicable legal principles, noting that in Bolton v Law Society [1994] 1 WLR 512 Sir Thomas Bingham MR stated that the almost invariable sanction for dishonesty was striking off the Roll. The Court emphasised that there were three stages to sanction: assessing the seriousness of the misconduct, keeping in mind the purpose of sanctions (principally maintaining the reputation of the profession), and choosing the sanction which most appropriately fulfilled that purpose. As set out in the SDT Guidance Note and confirmed in Sharma, a finding of dishonesty will almost invariably lead to striking off save in exceptional circumstances. The Court held that whilst the assessment of whether exceptional circumstances exist is fact-specific and not prescribed, the most significant factor carrying most weight must be the nature and extent of the dishonesty. Although matters of personal mitigation including mental health issues and workplace pressures can and should be considered as part of the balancing exercise, where the SDT has concluded that notwithstanding any mental health issues the respondent’s misconduct was dishonest, the weight to be attached to those issues will inevitably be less than is attached to other aspects of the dishonesty such as the length of time for which it was perpetrated, whether it was repeated and the harm it caused.

The Court held that the problem in all three cases was that the SDT had not engaged in the required balancing exercise. Whilst the SDT had made findings as to the length of time of the dishonesty, its seriousness and the harm caused in earlier passages of the judgments, when it came to evaluate whether there were exceptional circumstances it had failed to focus on the critical questions of the nature and extent of the dishonesty and degree of culpability and had not engaged in the balancing exercise required between those critical questions on the one hand and matters of personal mitigation on the other. Had it done so, it should have concluded that in none of the cases could the dishonesty be said to be momentary. In James the dishonest conduct extended over 17 months and in Naylor over some three months. In MacGregor, whilst the dishonesty was only for two to three days, that had to be seen in the context of the failure as COLP to report the fraud and misconduct for another eight months. In each case the dishonesty was repeated on a number of occasions and caused harm.

The Court further held that mental health issues, specifically stress and depression suffered as a consequence of work conditions, could not without more amount to “exceptional circumstances” justifying a lesser sanction where the SDT had found dishonesty. In applying the Ivey test, the SDT in each case had made findings that despite any mental health issues, each respondent knew the difference between honesty and dishonesty and knew that what they were doing was dishonest. The Court held that, whilst such mental health issues could be taken into account in assessing whether there were exceptional circumstances, the presence of stress and depression could not without more amount to exceptional circumstances. The effect of the contrary approach would be that exceptional circumstances would no longer be a narrow residual category but much more the norm, entailing a lowering of the tariff. The Court distinguished the two reported cases where striking off was held not to be appropriate for dishonesty, Burrowes v The Law Society [2002] EWHC 2900 (Admin) and Imran, both of which were isolated “moment of madness” cases to be contrasted with the repeated dishonesty over periods of time in the present appeals.

The Court also held that pressure of work or extreme working conditions, whilst relevant by way of mitigation, could not either alone or in conjunction with stress or depression amount to exceptional circumstances. Pressure of work or working conditions could never justify dishonesty by a solicitor. Such matters might excuse carelessness or a lapse of concentration, but dishonesty was completely different, involving conscious and deliberate wrongdoing. That principle was not altered by the fact that in James the pressure on the respondent was caused in large part by a toxic and uncaring culture in the firm. That might provide an explanation for the dishonesty but could not excuse it.

In James, the Court held that the SDT’s conclusion that circumstances were exceptional focused on issues of personal mitigation and failed to focus on the most significant factor of the nature and extent of the dishonesty and degree of culpability. The dishonesty had been repeated over a 17 month period, was not isolated or a moment of madness, and caused harm to the client. Whilst the toxicity of the working environment might reduce culpability, the SDT had not engaged in the required balancing exercise. Had it done so, it should have concluded that striking off was the appropriate sanction and only that would properly protect the public and the reputation of the profession.

In MacGregor, the Court held that the SDT’s findings at paragraphs 32 to 37 underplayed the seriousness of the misconduct. As COLP, Mrs MacGregor had a duty to report Mrs Abey’s misconduct and personal loyalty could not excuse her failure to do so. Having participated in the fraud, she then failed to report it for another eight to nine months, effectively concealing it. The medical evidence was inconclusive twice over as to whether she was suffering from a mental disorder at the time. The highest it could be put was that she was in a distressed and pressured state of mind. The SDT’s reasoning on exceptional circumstances at paragraph 37 had not focused on the most important factor of the nature and extent of the dishonesty and degree of culpability and had not engaged in the balancing exercise. Whilst spontaneous, there was no question of Mrs MacGregor not appreciating that what she was being asked to do was dishonest. The dishonesty had to be seen in the context of her overall misconduct and failure to report for eight to nine months. The overall misconduct was extremely serious and striking off was the appropriate sanction.

In Naylor, the Court held that whilst the SDT referred to Sharma at paragraph 66, when it came to consider exceptional circumstances it only referred to the mental health issue at paragraph 67 and neither referred to the most significant factor of the nature and extent of the dishonesty nor engaged in the required balancing exercise. The critical point about the medical evidence was that the psychiatrists were not able to say that the adjustment disorder prevented Mr Naylor from appreciating the difference between honesty and dishonesty, on which basis the SDT had concluded he was dishonest. He had lied to his client repeatedly in emails over some three months, serious dishonest conduct which could not be excused by his mental health issues. This was not a moment of madness. Had the SDT engaged in the correct analysis, it should have concluded that striking off was the only appropriate sanction.

In short, the Court held that in concluding there were exceptional circumstances in each case, the SDT both erred in principle and was wrong in that it made evaluative decisions outside the bounds of what it could properly and reasonably decide. The sanctions imposed were unduly lenient and clearly inappropriate. The appeals were allowed in all three cases, the orders for suspended suspension quashed, and orders made striking each respondent off the Roll.

Bolton v The Law Society [1994] 1 WLR 512
Solicitors Regulation Authority v Sharma [2010] EWHC 2022 (Admin)
Solicitors Regulation Authority v Imran [2015] EWHC 2572 (Admin)
Solicitors Regulation Authority v Emeana [2013] EWHC 2130
Lusinga v Nursing & Midwifery Council [2017] EWHC 1458
Bawa-Garba v General Medical Council [2018] EWCA CIV 1879, [2019] 1 WLR 1929, [2019] 1 All ER 500
General Medical Council v Chandra [2018] EWCA Civ 1898, [2019] 1 WLR 1140
Khan v General Pharmaceutical Council [2017] 1 WLR 169, [2016] UKSC 64, [2017] 3 All ER 873
Fatnani & Raschid v General Medical Council [2007] EWCA Civ 46, [2007] 1 WLR 1460
Buchanan v Alba Diagnostics Ltd [2004] UKHL 5; [2004] RPC 34
Marinovich v General Medical Council [2002] UKPC 36
Bultitude v The Law Society [2004] EWCA Civ 1853

Wingate & Evans v Solicitors Regulation Agency [2018] EWCA Civ 366, [2018] 1 WLR 3969
Solicitors Regulation Authority v Andersons Solicitors [2013] EWHC 4021
The Law Society v Salsbury [2008] EWCA Civ 1285, [2009] 1 WLR 1286
Ghosh [1982] EWCA Crim 2; [1982] QB 1053
Bryant v Solicitors Regulation Authority [2012] EWHC 1475
R (Campbell) v General Medical Council [2005] EWCA Civ 250
Biogen Inc. v Medeva [1997] RPC 1

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