SRA v Chan [2015] EWHC 2659 (Admin), Davis LJ, Ouseley J (Divisional Court)The SRA appealed against the decision reached and sanction imposed by the Solicitors' Disciplinary Tribunal ('SDT'), in a
SRA v Chan [2015] EWHC 2659 (Admin), Davis LJ, Ouseley J (Divisional Court)
The SRA appealed against the decision reached and sanction imposed by the Solicitors' Disciplinary Tribunal ('SDT'), in a case concerning two solicitors who had been responsible for setting up and operating a high risk conveyancing scheme. It is particularly worth noting the Divisional Court's stinging criticisms of the complex charges drafted for the purpose of the original SDT hearing.
The solicitors had designed the scheme to avoid or mitigate the impact of stamp duty land tax. This system was carried out through an option company and was potentially profitable for the solicitors but created great risk for the clients (purchasers) involved in the transactions. The clients were not informed about the aggressive and risky nature of the schemes which denied them the opportunity to obtain independent legal advice and ensure that they were making an informed decision. The agreement under this scheme gave the option company the right to buy the property in 25 years' time at the then market price or original purchase price plus £1000 (whichever was higher).
At the disciplinary hearing, the Tribunal found that the solicitors had not complied with the necessary requirements when operating the scheme but their misconduct was based on their failure to understand the requirements and their responsibilities. The Tribunal concluded that they had been incompetent and had no insight but did not consider them to have acted either without integrity or independence; or in such a way as to diminish public trust.
The SRA submitted that the Tribunal should have concluded that the solicitors were connected with a business that was not reputable (as per the charge against them), and that they had acted without integrity and independence, and in a manner which diminished the public trust in them and in the provision of legal services. Overall, it was submitted that the conclusions reached were inconsistent with the Tribunal's own primary findings of fact relating to the Solicitors' conduct in respect of the scheme. This is the latest in a recent line of High Court judgements (see for example the PSA appeals of Onwughalu and M), underlining that the court will carefully scrutinise the Tribunal's conclusions to assess whether they accord with the underlying factual findings.
The SRA also challenged the sanction of a £15,000 fine and submitted that striking off was the only appropriate sanction in the circumstances. Despite the fact that they were found guilty of serious misconduct, dishonesty had not been specifically alleged. The solicitors' continued failure to understand their obligations and responsibilities was also an important factor. This caused difficulty in deciding whether strike off was the only appropriate sanction. The issue of sanction was therefore remitted to the Tribunal for further consideration and re-determination.
The drafting of the charges in this matter was said to be 'unnecessarily convoluted and prolix'. It was deemed unacceptable by the court, adding that it would not be tolerated in any civil or criminal court proceedings and should not be tolerated in disciplinary tribunal. The poor charge drafting had made the tribunal's task more difficult in this case. The court stated that allegations are capable of being relatively shortly stated, with particulars relating to each such allegation then provided. The court also went on to advise that in principle, one should seek to include the minimum number of charges necessary in a charge sheet in order to meet the justice of the particular case and not the maximum amount possible.
The appeal was allowed, highlighting that the clients should have been told what the schemes involved and should have been given the opportunity to decide whether to continue to lend. There was an obvious inference that the solicitors had failed to give proper advice due to their own financial interests.
The SRA appealed against the decision reached and sanction imposed by the Solicitors' Disciplinary Tribunal ('SDT'), in a case concerning two solicitors who had been responsible for setting up and operating a high risk conveyancing scheme. It is particularly worth noting the Divisional Court's stinging criticisms of the complex charges drafted for the purpose of the original SDT hearing.
The solicitors had designed the scheme to avoid or mitigate the impact of stamp duty land tax. This system was carried out through an option company and was potentially profitable for the solicitors but created great risk for the clients (purchasers) involved in the transactions. The clients were not informed about the aggressive and risky nature of the schemes which denied them the opportunity to obtain independent legal advice and ensure that they were making an informed decision. The agreement under this scheme gave the option company the right to buy the property in 25 years' time at the then market price or original purchase price plus £1000 (whichever was higher).
At the disciplinary hearing, the Tribunal found that the solicitors had not complied with the necessary requirements when operating the scheme but their misconduct was based on their failure to understand the requirements and their responsibilities. The Tribunal concluded that they had been incompetent and had no insight but did not consider them to have acted either without integrity or independence; or in such a way as to diminish public trust.
The SRA submitted that the Tribunal should have concluded that the solicitors were connected with a business that was not reputable (as per the charge against them), and that they had acted without integrity and independence, and in a manner which diminished the public trust in them and in the provision of legal services. Overall, it was submitted that the conclusions reached were inconsistent with the Tribunal's own primary findings of fact relating to the Solicitors' conduct in respect of the scheme. This is the latest in a recent line of High Court judgements (see for example the PSA appeals of Onwughalu and M), underlining that the court will carefully scrutinise the Tribunal's conclusions to assess whether they accord with the underlying factual findings.
The SRA also challenged the sanction of a £15,000 fine and submitted that striking off was the only appropriate sanction in the circumstances. Despite the fact that they were found guilty of serious misconduct, dishonesty had not been specifically alleged. The solicitors' continued failure to understand their obligations and responsibilities was also an important factor. This caused difficulty in deciding whether strike off was the only appropriate sanction. The issue of sanction was therefore remitted to the Tribunal for further consideration and re-determination.
The drafting of the charges in this matter was said to be 'unnecessarily convoluted and prolix'. It was deemed unacceptable by the court, adding that it would not be tolerated in any civil or criminal court proceedings and should not be tolerated in disciplinary tribunal. The poor charge drafting had made the tribunal's task more difficult in this case. The court stated that allegations are capable of being relatively shortly stated, with particulars relating to each such allegation then provided. The court also went on to advise that in principle, one should seek to include the minimum number of charges necessary in a charge sheet in order to meet the justice of the particular case and not the maximum amount possible.
The appeal was allowed, highlighting that the clients should have been told what the schemes involved and should have been given the opportunity to decide whether to continue to lend. There was an obvious inference that the solicitors had failed to give proper advice due to their own financial interests.