Solicitors Regulatory Authority v Good [2019] EWHC 817 (Admin)

Transcript

Solicitors Regulation Authority v Good [2019] EWHC 817 (Admin) is a judgment of the Divisional Court (Lord Justice Flaux and Mrs Justice Carr) allowing an appeal by the Solicitors Regulation Authority against a decision of the Solicitors Disciplinary Tribunal that Mr Good’s conduct was not dishonest. The Court substituted a finding of dishonesty and imposed the sanction of striking off.

The Solicitors Disciplinary Tribunal had found proved allegations that Mr Good, founder of Rapid Response, had caused the firm routinely to overcharge clinical negligence clients by rendering bills of costs which he knew to be excessive and often grossly excessive as regards hourly rates (an across-the-board rate of £400, almost four times the relevant Guideline rate) and success fees (a blanket 100 per cent success fee applied to every case). The SDT found that Mr Good’s conduct lacked integrity and breached Principle 2 and Principle 6 of the SRA Principles 2011. The SDT also found that Mr Good had set the policy on rates and success fees, that only he could change it, that he knew the rates were excessive or grossly excessive, and that he had deliberately insulated the costs department from the rest of the firm to prevent questions being raised. The SDT found that Mr Good had displayed a calculated disregard for Practice Directions, a disregard of judicial criticism from no fewer than six costs judges on detailed assessment, and a planned attempt to seek inflated and unjustifiable costs. In one case, Humphrey, a bill of £37,298 was reduced to £3,330 on detailed assessment, a reduction of 91 per cent. In North, a bill of £48,962 was reduced to £8,026, a reduction of 83.5 per cent. Acumension, the costs specialists acting for the NHS Litigation Authority, refused to negotiate with the firm and described its bills as “beyond obscene”.

Notwithstanding those findings, the SDT concluded that Mr Good was not dishonest. The SDT applied the test from Ivey v Genting Casinos Ltd [2017] UKSC 67. At paragraph 20.80 of its judgment the SDT stated that it had determined that, although Mr Good’s conduct did not adhere to ethical standards, he believed he was entitled to “test the rate” and that the bills would be subject to scrutiny by the courts or costs experts. The SDT noted that there was no suggestion the firm had recovered costs that were otherwise than reasonable and proportionate. The SDT determined that, whilst members of the public would disapprove of the charging practices, they would not find his conduct dishonest. The SDT then fined Mr Good £30,000.

The SRA appealed on two grounds: first, that the SDT was wrong in the light of its findings of fact to have dismissed the allegation of dishonesty; second, that the sanction of a fine was excessively lenient and clearly inappropriate and Mr Good should have been struck off.

On the first ground, Mr Cunningham QC for the SRA submitted that the evaluative exercise at paragraph 20.80 was fundamentally flawed because it failed to engage with the SDT’s own findings as to Mr Good’s knowledge and deliberate misconduct. The SDT had found at paragraph 20.62 that Mr Good had set the rate at an artificially high level in the knowledge that clients would not object so that he could maximise costs without regard for the need for costs to be reasonable and proportionate. The SDT had found that his stated justification by reference to the complexity of the work was not credible and that, to the extent any belief that all clinical negligence cases were complex was maintained after the decision in Humphrey in April 2013, it was maintained solely for the purpose of justifying the continued charging at such rates. The SDT had found at paragraph 20.68 that Mr Good had specifically designed the policy so as deliberately to ensure a lack of any meaningful risk assessment so as to justify the charging of a 100 per cent success fee, and that he knew applying a 100 per cent uplift on all cases would lead to bills being rendered that were excessive or grossly excessive. At paragraph 20.77 the SDT had found that Mr Good had deliberately insulated the costs department, created guidance documents designed to restrict independent thought, demonstrated a calculated disregard for Practice Directions intended to obscure the true level of experience of fee earners in order to attempt to charge wholly unwarranted excessive and preposterous costs, displayed a continuing disregard of received comment from costs judges, and introduced costs practices that were an unmeritorious and unwarranted planned attempt to seek inflated and unjustifiable costs. The SRA contended that those findings as to knowledge and deliberate conduct were not brought into the equation at all in the dishonesty evaluation, that the conclusion that Mr Good had a genuine belief was inconsistent with those findings, and that the SDT’s reliance on the fact that no excessive costs were actually recovered did not render dishonest conduct honest but went to mitigation. The SRA further submitted that the conclusion that the public would not find the conduct dishonest was inconsistent with the SDT’s earlier finding at paragraph 20.78 that members of the public would not expect a solicitor to institute a policy that led to charges being levied at almost four times the acceptable rate and to then charge a 100 per cent uplift, particularly against the NHS.

Mr Greaney QC for Mr Good submitted that the SDT had had the advantage of seeing Mr Good give evidence over three days and was best placed to determine whether he was dishonest. He submitted that the SDT had applied the Ivey test correctly by finding that Mr Good believed he was entitled to test the rate and that the bills would be subject to scrutiny, and then by applying the objective test. He submitted that the findings in paragraph 20.62 were not inconsistent with those findings; what the SDT had found not credible was the justification for the rate, not the genuineness of the belief. He relied on Raychaudhuri [2018] EWCA Civ 2027 for the proposition that the Court should be cautious in interfering with an evaluative judgment by a specialist tribunal which had seen the witnesses.

The Divisional Court held that the SDT’s analysis in paragraph 20.80 contained significant errors of principle and was fundamentally flawed. The Court identified five errors or flaws. First, the SDT had simply overlooked the serious findings of knowledge and deliberate misconduct which it had made earlier in the judgment and had failed to bring those into the equation at all, even though knowledge is relevant to the genuineness of belief. The SDT had not said that, notwithstanding the level of knowledge and deliberate misconduct found, Mr Good’s belief was genuine. Second, even if Mr Good had a genuine belief, it was difficult to see how that could exonerate him in the light of the findings as to his knowledge and deliberate misconduct, and to the extent the SDT was concluding by implication that his belief was genuine, that was inconsistent with the findings at paragraph 20.62. Those findings came perilously close to a finding that Mr Good did not have the alleged belief at all, but in any event the finding that the belief was maintained after Humphrey solely for the purpose of justifying the continued overcharging was wholly inconsistent with that belief being genuine. Likewise, the finding that Mr Good had set the rate at an artificially high level in the knowledge that clients would not object so that he could maximise costs without regard for proportionality was wholly inconsistent with any belief being genuine. Third, the SDT had not explained why it concluded that Mr Good had the asserted belief, let alone why it was genuine, and the implied finding that he believed nothing was hidden was inconsistent with the earlier finding at paragraph 20.77 about deliberate lack of transparency. Fourth, the SDT’s reliance on the fact that the amounts billed were never recovered, that procedures were in place to ensure the firm could never recover excessive costs, and that Mr Good reduced the rates after the decision in G, were matters of mitigation; the SDT had missed the point that in the light of the findings of knowledge and deliberate misconduct the only proper conclusion was that in rendering bills which he knew to be excessive or grossly excessive and artificially high, Mr Good was dishonest in the first place. Those matters might mitigate the gravity of the dishonesty but could not eradicate it. The fact that bills could be challenged was not a guaranteed protection, and the rhetorical question arose as to why Mr Good had gone to all the trouble to institute the policy unless it was in the hope that paying parties would on occasion pay the bill without questioning it. Fifth, the conclusion that the public would not find the conduct dishonest was inconsistent or very difficult to reconcile with the earlier finding at paragraph 20.78 that the public would not expect such charging practices and was difficult to understand without further explanation.

The Court held that in the highly unusual circumstances of the case it could and should intervene. There were clear and unequivocal findings of fact as to knowledge and deliberate misconduct which were not challenged on appeal. The Court was in as good a position as the SDT to assess that, on the basis of those findings, the only proper answer to the objective question was that, applying the standards of ordinary decent people, Mr Good was dishonest. There was no question of moral nuance or internal tension in the circumstances of the case such as should lead the Court to defer to an evaluation by the SDT which was fundamentally flawed. The Court set aside paragraph 20.80 and substituted a conclusion that Mr Good was dishonest and that allegation 2 was made out beyond reasonable doubt. It followed that the sanction of a fine must be quashed and, since no exceptional circumstances were advanced which would justify a lesser sanction given the finding of dishonesty, the only appropriate sanction was striking off.

On the second ground, which the Court considered obiter, the Court held that even if Mr Good was not dishonest but only guilty of the lack of integrity found by the SDT, the sanction of a £30,000 fine was excessively lenient and clearly inappropriate so that the Court should intervene and substitute the sanction of striking off. First, the passage at paragraph 26 of the judgment dealing with sanction contained a miscalibration of the seriousness of the misconduct and downplayed significantly its seriousness. On the basis of the strong and critical findings the SDT had made about Mr Good’s knowledge and deliberate misconduct, such as his deliberate setting of artificially high rates pursuant to a planned policy to seek inflated costs, his deliberate disregard of Practice Directions and decisions of costs judges, and his knowledge that the rates and success fee were excessive or grossly excessive, the SDT should have concluded that the lack of integrity was particularly grave. Second, whilst Emeana [2013] EWHC 2130 (Admin) was not authority for the proposition that whenever there is a finding of lack of integrity the appropriate sanction is striking off, it was authority for the proposition that where the lack of integrity is particularly serious, as it was in the present case, the reputation of the profession is seriously undermined by the imposition of fines and that reputation will only be properly protected in such a case by the sanction of striking off. Third, Mr Good’s misconduct was particularly serious, even if not dishonest, because it is of paramount importance that the public and other members of the profession are able to have complete trust in a solicitor when it comes to statements or bills of costs. Were it otherwise there would always be a risk that the paying party would settle a bill which was in fact excessive or grossly excessive to the knowledge of the solicitor rendering the bill. The serious lack of integrity demonstrated by Mr Good completely undermined any such trust. The maintenance of the reputation of the profession and public confidence in it required that the sanction be striking off. The public would not regard it as acceptable that someone who breached that trust in the way Mr Good did should be allowed to act as a solicitor.

In short, the Divisional Court allowed the appeal, set aside the SDT’s finding that Mr Good was not dishonest, substituted a finding that he was dishonest, quashed the sanction of a £30,000 fine, and imposed the sanction of striking off the Roll.

Ivey v Genting Casinos (UK) Ltd (t/a Crockfords) [2017] UKSC 67; [2018] Crim LR 395, [2018] AC 391
Solicitors Regulation Authority v Day & Ors [2018] EWHC 2726 (Admin)
Bawa-Garba v General Medical Council [2018] EWCA CIV 1879, [2019] 1 WLR 1929, [2019] 1 All ER 500
Raychaudhuri v General Medical Council [2018] EWCA Civ 2027
Shaw v Solicitors Regulation Authority [2017] EWHC 2076
Solicitors Regulation Authority v James & Ors [2018] EWHC 3058 (Admin)
Bolton v The Law Society [1994] 1 WLR 512
Solicitors Regulation Authority v Emeana [2013] EWHC 2130
Ghosh [1982] EWCA Crim 2; [1982] QB 1053
Henderson v Foxworth [2014] UKSC 41, [2014] 1 WLR 2600

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