Case No.CO/3334/2008
Royal Courts of Justice
Strand
London WC2A 2LL
B e f o r e:
LORD JUSTICE MAURICE KAY
MR JUSTICE WYN WILLIAMS
Between:
SUDESH CHAMBA
Claimant
v
THE LAW SOCIETY
Defendant
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Mr K Hamer (instructed by Messrs Chamba & Co., West Bromwich B70 6NZ) appeared on behalf of the Claimant
Mr G Williams QC and Miss J Willets (instructed by Messrs Townshends, Birmingham B3 1AS) appeared on behalf of the Defendant
J U D G M E N T
LORD JUSTICE MAURICE KAY: This is an appeal pursuant to section 49(1)(b) of the Solicitors Act 1974 (as amended). The factual background is as follows. The appellant, Mr Sudesh Chamba, practised as a solicitor. He was admitted in 1994. For a time he practised on his own account from an address in Wolverhampton and another address in West Bromwich. In 1998 he took a partner, Mr Momi, but that partnership was dissolved in July 2002 whereafter the appellant again practised on his own until he was joined by a salaried partner working at the West Bromwich office. That salaried partner resigned in March 2006.
The firm's work was concerned principally with conveyancing, but it also undertook immigration, personal injury and family work at the Wolverhampton office.
The disciplinary proceedings that were eventually taken against the appellant were precipitated by an investigation which began in February 2006 and resulted in a report dated 30th June 2006. That investigation led to proceedings in the Solicitors Disciplinary Tribunal ("SDT") in relation to nine allegations of conduct unbefitting a solicitor. Two of those allegations (in fact numbers 2 and 3) were allegations of dishonesty. One alleged improper withdrawals from the client account in breach of rule 22(1) of the Solicitors' Account Rules 1998; the other was an allegation of utilising client funds for his own purposes. Plainly and unsurprisingly it was those two allegations upon which the SDT concentrated when it came to consider the case. The other seven allegations all related to financial or accounting matters but did not allege dishonesty. They included a failure to maintain books of account in accordance with the Rules, failure to advise two clients to seek independent legal advice before entering into loan agreements with the appellant in breach of rule 1 of the Solicitors' Practice Rules and irregularities in the operation of the client account and the payment of professional disbursements. There was also an allegation of failure to remedy the earlier breaches promptly on discovery and failure to comply with the Solicitors' Account Rules by virtue of being a principal of the firm in breach of rule 6 of those Rules.
The first allegation of dishonesty was described in this way in the findings of the SDT:
"From the Respondent's Accountant's Report for the year ended 29 February 2004, the FIO identified that the respondent drew a cheque on client account for £30,000 on 23 July 2003 to settle his liability to a former partner. The payment was allocated to a client ledger in the Respondent's name. That client ledger showed that there were no monies in client account at the time to cover this payment. The resulting debit balance on the client account was subsequently cleared on 21 August 2003.
At an interview with the FIO on 4 May 2006 the respondent agreed that he had knowingly made the payment from client bank account, as he did not have funds available at the time the payment was due. He accepted that the utilisation of client funds to settle a personal liability was not the action of an honest solicitor."
The appellant's account of that transaction was that he had been in the process of arranging a facility with his bankers but that it was not in place when the first payment to his former partner fell due and he had drawn the money from the client account with the intention of replacing that money as soon as he was able to, following a loan from his bankers. He in fact received sums from his bankers shortly after and repayment was made. The client account was deficient in respect of the sum taken for some four weeks.
The other allegation of dishonesty arose when the appellant and his wife were in the process of purchasing a residential property. Unwisely, they exchanged contracts for that purchase before exchanging contracts on the sale of their existing property and that was the circumstance which led to the appellant availing himself of funds from the client account. On this occasion he had negotiated with a client an arrangement whereby he could utilise the client's funds on a short-term basis, but in the event the circumstances of the client altered. The client changed his mind and required repayment. In interview the appellant admitted that he knowingly utilised client monies to complete his own purchase and that that was not the action of an honest solicitor. He repaid the sums in three tranches, one of them after a period of about a month and the other two following a period of about seven months (the second and third tranche being discharged together).
Before the SDT the appellant admitted all of the allegations including the two allegations of dishonesty. Then (as now) he was most ably represented by Mr Hamer who sought to persuade the SDT not to impose a striking off order because (it was suggested) the circumstances of the cases of dishonesty were unusual and not of the most serious kind. The factual background of the other nine disciplinary offences was unremarkable. Moreover, the appellant had made candid admissions, had expressed his apologies and was able to advance cogent personal mitigation. That included reference to health problems at and around the time of the two dishonesty matters and some 40 testimonials which had been given by professional colleagues and others and which spoke highly of his competence and integrity, referring also to his generosity in the time that he gave to religious communities and the disadvantaged community as a whole. Nevertheless, the SDT rejected Mr Hamer's submission and proceeded to order that the appellant be struck off.
It is necessary to describe and to set out in some detail the findings of the SDT. It noted that the appellant had admitted the allegations and in relation to the allegations of dishonesty it observed that if it had been necessary for the Tribunal to apply the well-known test in Twinsectra Ltd v Yardley [2002] UKHL 12 the Tribunal would have been bound to find that he had acted dishonestly. It referred to the basis upon which the appellant had accepted his dishonesty in the context of "a successful, long and unblemished career" and it referred to the submission that the breaches were isolated and did not form part of a course of conduct. There was throughout an acceptance that the appellant was confident that he would be able to replenish the funds and it was accepted that there was no intention permanently to deprive the clients in question of their money.
The SDT made a passing reference to the seven other matters observing that "the books of account had over a long period of time been in considerable disarray and there had been a persistent history of shortages on client account ." That, it seems to me, is uncontroversial, although Mr Hamer has taken the trouble to explain how the history of shortages was less substantial than might first appear from the superficial figures. The SDT referred also to the borrowing of money from persons who were not advised to obtain independent advice. It then proceeded to make its principal findings in these passages between paragraphs 45 and 50 of its written reasons:
All in all the Tribunal concluded that the [appellant] had failed to grasp the importance of due compliance with the Solicitors Accounts Rules which were in place to protect members of the public. He had not exhibited a proper regard for the sanctity of client funds and he had failed to exercise a proper stewardship over client monies in his hands.
It would be recognised that in order to fulfil its duty to protect the public and maintain the good reputation of the solicitors' profession the Tribunal would have to give proper consideration to the imposition of a striking off order upon a solicitor who had utilised clients' money for his own purposes and...had admitted that in doing so he had acted dishonestly.
The Tribunal gave careful consideration to the submissions made on [his] behalf that it need not in such circumstances impose the ultimate sanction. The Tribunal had considered the testimonials...
The Tribunal took the view that it would be only in the most exceptional case where a solicitor had been found to be dishonest that the Tribunal would not impose a striking off order. In the two incidences where the [appellant] dishonestly used clients' money for his own purposes, he simply helped himself to client funds as an expedient to deal with his own personal financial problems. The Tribunal concluded that the [appellant] simply did not recognise the sanctity of client funds and however certain he was that monies would be forthcoming to replace the money taken from client account, to use clients' money in this way was so unacceptable as to be deeply shocking and any solicitor who deliberately behaved in this way ought not to expect to remain a member of the solicitors' honourable profession.
Even if the facts had been placed before the Tribunal without an allegation and/or an admission of dishonesty the Tribunal would have regarded the...behaviour as being so grave, so potentially damaging to the public and so damaging to the good reputation of the solicitors' profession that it would have considered it appropriate to order that the [appellant] be struck off the Roll of Solicitors.
Both because of the underlying facts and the finding of dishonesty, which was not contested, the Tribunal ordered that the [appellant] be struck off the Roll of Solicitors."
Before turning to the grounds of appeal it is appropriate to set out some of the guiding legal principles. I begin with the well-known authority of Bolton v Law Society [1994] 1 WLR 512 in which Sir Thomas Bingham, MR, observed that the correct approach had been laid down in a number of unreported decisions of his predecessor. The Master of the Rolls then summarised those principles "... in the hope that it may serve to make these principles better known and dispel any misunderstanding that there may be in any quarter." I take the following passage from pages 518B to 519A:
"Any solicitor who is shown to have discharged his professional duties with anything less than complete integrity, probity and trustworthiness must expect severe sanctions to be imposed upon him by the Solicitors Disciplinary Tribunal. Lapses from the required high standard may, of course, take different forms and be of varying degrees. The most serious involves proven dishonesty, whether or not leading to criminal proceedings and criminal penalties. In such cases the tribunal has almost invariably, no matter how strong the mitigation advanced for the solicitor, ordered that he be struck off the Roll of Solicitors. Only infrequently, particularly in recent years, has it been willing to order the restoration to the Roll of a solicitor against whom serious dishonesty had been established, even after a passage of years, and even where the solicitor had made every effort to re-establish himself and redeem his reputation...
It is important that there should be full understanding of the reasons why the tribunal makes orders which might otherwise seem harsh...
In most cases the order of the tribunal will be primarily directed to one or other or both of two other purposes. One is to be sure that the offender does not have the opportunity to repeat the offence. This purpose is achieved for a limited period by an order of suspension; plainly it is hoped that experience of suspension will make the offender meticulous in his future compliance with the required standards. The purpose is achieved for a longer period, and quite possibly indefinitely, by an order of striking off. The second purpose is the most fundamental of all: to maintain the reputation of the solicitors' profession as one in which every member, of whatever standing, may be trusted to the ends of the earth. To maintain this reputation and sustain public confidence in the integrity of the profession it is often necessary that those guilty of serious lapses are not only expelled but denied re-admission. If a member of the public sells his house, very often his largest asset, and entrusts the proceeds to his solicitor, pending re-investment in another house, he is ordinarily entitled to expect that the solicitor will be a person whose trustworthiness is not, and never has been, seriously in question. Otherwise, the whole profession, and the public as a whole, is injured. A profession's most valuable asset is its collective reputation and the confidence which that inspires."
Five years later in Weston v Law Society (unreported) The Times, 15th July 1998, Lord Bingham of Cornhill, CJ (as he had then become) said:
"The striking off of any solicitor found to have acted dishonestly in relation to clients' money had now to be seen as all but automatic."
The use of the words "all but" is significant because the context was one in which the court declined to lay down "too inflexible principle".
In Bultitude v Law Society [2004] EWCA Civ. 1853, Kennedy LJ stated at paragraph 45 that this court:
"... can, and in my judgment should, take cognizance of what the profession regards as the normal necessary penalty to be imposed upon those found to have acted dishonestly."
More recently, in Law Society v Salsbury [2008] EWCA Civ. 1285, the Court of Appeal was concerned to revisit the general principles in the aftermath of the Human Rights Act. Jackson LJ, having set out a lengthy extract from Bolton and having also referred to Bultitude and some other authorities, said at paragraph 30:
"From this review of authority I conclude that the statements of principle set out by the Master of the Rolls in Bolton remain good law, subject to this qualification. In applying the Bolton principles the Solicitors Disciplinary Tribunal must also take into account the rights of the solicitor under articles 6 and 8 of the Convention. It is now an overstatement to say that 'a very strong case' is required before the court will interfere with the sentence imposed by the Solicitors Disciplinary Tribunal. The correct analysis is that the Solicitors Disciplinary Tribunal comprises an expert and informed tribunal, which is particularly well placed in any case to assess what measures are required to deal with defaulting solicitors and to protect the public interest. Absent any error of law, the High Court must pay considerable respect to the sentencing decisions of the tribunal. Nevertheless if the High Court, despite paying such respect, is satisfied that the sentencing decision was clearly inappropriate, then the court will interfere."
What had happened in Salsbury is that although the SDT had made a striking off order, the Divisional Court had allowed the appeal of the solicitor. However, the Court of Appeal reinstated the striking off order. At paragraph 37 Jackson LJ said:
"In my view, the Divisional Court fell into error in holding that there were exceptional facts which brought this case to the very bottom of the scale of dishonesty. The Court also erred in concluding that this case fell into the very small residual category where striking off was not appropriate. On the contrary, this was a case of serious dishonesty by the solicitor, where the normal consequences should follow. The Solicitors Disciplinary Tribunal quite properly took into account the particular circumstances of this case, but nevertheless concluded that striking off was both appropriate and proportionate."
The grounds of appeal in the present case can be reduced to two headings. The first, which Mr Hamer refers to as his principal ground of appeal, is to the effect that the SDT erred in law by requiring the appellant to establish "a most exceptional case" if striking off was not to be imposed. The second is that the SDT in any event accorded insufficient weight to the facts of the case and to the personal mitigation advanced on behalf of the appellant.
In advancing the first ground Mr Hamer focuses on the first sentence in paragraph 48 of the SDT's written reasons, which I again set out:
"The Tribunal took the view that it would be only in the most exceptional case where a solicitor had been found to be dishonest that the Tribunal would not impose a striking off order."
He submits that that adopts a test of "a most exceptional case" and in effect imposes a burden on a solicitor to establish such exceptionality, whereas the correct approach is for the SDT to decide whether striking off is appropriate having regard to all the circumstances of the individual case.
I accept that the correct approach is as Mr Hamer propounds it, but I do not accept that the SDT failed to apply it or applied a different test in this case. In my judgment in paragraph 46 (set out earlier in this judgment) the SDT correctly identified the need "to give proper consideration to the imposition of a striking off order." Moreover in paragraph 47 it "gave careful consideration to" the submission that "it need not in [the circumstances] impose the ultimate sanction." It certainly did not reject Mr Hamer's submission as to the correct approach. It seems to me that the criticised sentence in paragraph 48 is not a statement of legal principle but the expression of a "view" about the unlikelihood of striking off being inappropriate in a case of dishonesty. To that extent it is no more than a reflection of the "almost invariably" formulation in Bolton or "all but automatic" in Weston, or "the normal necessary penalty" in Bultitude, or "the very small residual category where striking off was not appropriate" in Salsbury. These are all quantitative observations rather than normative requirements or tests. They leave room for a case in which striking off is not necessary or appropriate but they acknowledge the rarity of such a case where dishonesty is established. In view of my analysis of the SDT's reasoning the first ground of appeal falls to the ground. Rejection of it does not, as Mr Hamer submits, "ratchet up the test an extra notch". The test is precisely as he suggests. It does not bracket all cases of dishonesty together, albeit that all the authorities refer to the quantitative rarity of dishonesty attracting a lesser sentence.
The second ground of appeal is in my judgment unarguable. It is to the effect that the SDT accorded insufficient weight to the circumstances of the case and to the appellant's personal mitigation. I entirely accept that before these events the appellant was a much respected solicitor, admired by many, who did good works in the community. There is abundant evidence of this.
In Bolton the Master of the Rolls referred to the fact that in disciplinary proceedings against dishonest solicitors it is common for there to be a volume of evidence pointing to the usual integrity of the solicitor in question. However, it was there and elsewhere acknowledged that that will rarely avail a solicitor in a case of dishonesty. Moreover, as the authorities demonstrate, this court pays considerable respect to the expert and specialist assessment of the SDT. It is obvious from the reasoning of the SDT in this case that it carefully considered the facts of the case and the personal mitigation. In my judgment a ground of appeal on the basis of "insufficient weight" is doomed to fail. I consider that absent any error of law, and I find none, the imposition of the sanction of striking off in this case is incontrovertible, even after every allowance is made for the mitigating factors.
Accordingly, I would dismiss this appeal.
MR JUSTICE WYN WILLIAMS: I agree.
MR WILLIAMS: My Lords, I make an application for costs on behalf of the Law Society. In the time during which the court was adjourned we have been able to agree terms subject to your Lordships' approval. The appellant agrees to an order that he should pay the costs of the Law Society in relation to this appeal fixed in the sum of £13,000 payable by six equal monthly instalments, with the first payment to be made on 13th February 2009. My Lord, the order of the SDT plainly stands and I am instructed that that order is or has been discharged. So I would ask your Lordships for an order in those agreed terms.
LORD JUSTICE MAURICE KAY: Yes, what is six into 13? How much per instalment is it?
MR HAMER: It was rather complicated on the calculator. We agree with the order that the appellant pay the respondents agreed costs of £13,000 by six equal monthly instalments commencing on 13th February 2009. Maybe the parties could work out the payments.
MR WILLIAMS: I am instructed that it is £2,166.
MR HAMER: So be it.
LORD JUSTICE MAURICE KAY: So long as everybody knows. Then we will agree the order in the form in which you have agreed it.
MR HAMER: My Lord, I am instructed to ask for permission to appeal. I am not certain whether in fact this court in any event can deal -- your associate is indicating you cannot. I think it is a matter I must take to the Court of Appeal. Is that right? May I just ask the associate. It is a statutory appeal.
LORD JUSTICE MAURICE KAY: The associate thought the Court of Appeal has no jurisdiction but plainly it has: Salsbury is a case, Bolton is a case.
MR HAMER: Of course it is. My understanding, to help your Lordships, my understanding was that I did not need permission if one looks at the White Book I have brought the authority across.
LORD JUSTICE MAURICE KAY: I think you are right. I think the normal position is that the Court of Appeal plainly has jurisdiction and if you want to go there you should ask in the first instance here for permission to appeal.
MR HAMER: Yes.
LORD JUSTICE MAURICE KAY: Is it a second appeal within the meaning of the--
MR HAMER: No, it is a statutory appeal, my Lord, it is not a second appeal. It is not a second appeal. There is a note in the White Book but Mr Williams and I did discuss it outside and I bow to his greater knowledge on these matters. He takes the view that it is essentially a matter I should seek from the Court of Appeal, but I also seek it from your Lordship if I need to. Can I take you to the passage--
LORD JUSTICE MAURICE KAY: Yes, you will have to bear in mind that in these impoverished times the best the Court Service can do for us is a 2006 copy of the White Book. So deal with it by CPR numbers rather than page numbers.
MR HAMER: My Lord, can I take you to what is CPR 52.3 which is the rule. It may be we could hand up one and my learned friend and I could share one.
LORD JUSTICE MAURICE KAY: If it is only the rules we are going to look at we will probably manage.
MR HAMER: 52.3 provides that an appellant or respondent requires permission to appeal (a) where the appeal is from the decision of the judge in a County Court or a High Court. So it seems to me we are in the High Court here. Except an appeal against -- it is not in those. I agree with you it is not in those. Then it says "or as provided by the relevant practice direction". The only matter I would draw to your Lordships' attention though is that my copy of the White Book at 52.3 under the words "statutory appeals" says:
"A 'statutory appeal' is an appeal to the court from a Minister of State, government department, tribunal or other person."
That is obviously this case. It is a statutory appeal:
"Neither Part 52 of the CPR nor the practice direction imposes a general requirement for permission to appeal in respect of statutory appeals."
LORD JUSTICE MAURICE KAY: Is that not dealing with the position where the statutory appeal lies to the Court of Appeal rather than first of all to here?
MR HAMER: I think it is probably my Lord dealing with it either (inaudible) or to the Court of Appeal. It is the next sentence that says:
"In Colley v Council for Licensed Conveyancers, the Court of Appeal rejected the contention that paragraph 17.2 of the practice direction imposed a requirement for permission to appeal in all statutory appeals."
In other words they are saying that you do not need permission. I have Colley here and that is why... Colley was a statutory appeal case.
LORD JUSTICE MAURICE KAY: If we just go on to 52.13, just so we can clear our heads about second appeals:
"Permission is required from the Court of Appeal for any appeal to that court from a decision of a county court or the High Court which was itself made on appeal."
I think that must be why Mr Williams thinks that permission can only be granted by the Court of Appeal. Then of course you get the enhanced criteria in subrule (2). I thought in most cases where one went from a Tribunal to the High Court on a statutory appeal that was a first appeal and then from here to the Court of Appeal was a second appeal.
MR JUSTICE WYN WILLIAMS: If that is not the case appellants of this kind have greater rights than appellants who start in the County Court, say.
MR HAMER: Yes. Mr Williams tells me, and I am sure he is right, although he did not deal with the matter in Salsbury, his junior did, and his junior had to seek permission to appeal from the Court of Appeal. It may be that your Lordships feel that I should apply there if and in so far as I need to.
LORD JUSTICE MAURICE KAY: Yes, we think you do. We think you should apply there. You certainly cannot pursue the matter in the Court of Appeal without permission. It is not one of the exceptional cases like a committal order or habeas corpus and so on. So you need permission from somewhere, whether it is here or there.
MR HAMER: It seems to me quite clear from the rules that I can seek it, if your Lordship looks at rule 52.3 subrule (2):
"An application for permission to appeal may be made-
to the lower court ... or
to the appeal court..."
LORD JUSTICE MAURICE KAY: It says:
"An appeal to the High Court on a point of law pursuant to section 11 of the Tribunals and Enquiries Act is a first appeal."
It says that in 52.13(2).
MR HAMER: Yes. So it seems that it is not a matter for your Lordships, as your associate seemed to indicate.
LORD JUSTICE MAURICE KAY: Take your custom elsewhere.
MR HAMER: So the only orders, just to recap, that I think your Lordship needs to make then are (1) appeal dismissed, and (2) costs.
LORD JUSTICE MAURICE KAY: We thank you both very much for all your submissions.