Solicitors Regulation Authority v Sharma

MR JUSTICE COULSON:

By an order dated 14 May 2009 the Solicitors Disciplinary Tribunal found that the two allegations proved, and that contrary to his case, the respondent had acted dishonestly. He was suspended from practice an as solicitor for 3 years and ordered to pay costs in the sum of £7,000. The written findings were provided by the tribunal on 1 August 2009. Pursuant to section 49 of the Solicitors Act 1974 the appellant now challenges that decision on the grounds that it is excessively lenient.

I propose to outline briefly the applicable principles and then the relevant facts, and the significant elements of the Tribunal's decision before going on to analyse the specific points which arise on the appeal. Speaking for myself, I am very grateful to both counsel for their submissions.

Applicable Principles of Law.

General

That statement of principle was confirmed by the then Master of the Rolls Sir Thomas Bingham in Bolton v the Law Society [1994] 1 WLR 512. The various decisions since Bolton were analysed and summarised by the Court of Appeal in The Law Society V Brendan John Salisbury [2008] EWCA Civ 1285. In that case Jackson LJ analysed amongst other things the impact of the Human Rights Act 1998 on the principles governing appeals from professional disciplinary tribunals. He referred to a number of cases, and summarised the state of the law at paragraph 30 of his judgment in these terms:

(b) Dishonesty.

Support for the proposition that a finding of dishonesty against a solicitor will not all automatically lead to striking off can be found in the decision of this court in Burrowes v the Law Society [2002] EWHC 2900 Admin. That was a case in which a married couple wished to make a will, but when their solicitor Mr Burrowes attended upon them to draw it up there was no witnesses. He told them that as a result the will could not be completed. They instructed him that whatever the consequences they wanted to execute the will there and then without witnesses, and in what was subsequently described as "a moment of madness", Mr Burrowes added to each will the details of two people who were not present, one of whom worked for his firm. There was no suggestion of any personal gain on his part.

Another unusual feature of the case was that although the parties before the Tribunal had agreed an amendment to the charges faced by Mr Burrowes, the Tribunal itself refused to allow that amendment. That was the subject of some criticism by this court. In all the circumstances of the case the court concluded that the decision to strike off Mr Burrowes was disproportionate. In what Rose LJ described as "the unusual circumstances of this case", no alternative penalty was imposed on Mr Burrowes.

In Bultitude v the Law Society [2004] EWCA civ 1853, a solicitor who had devised a system of false debit notes in order to account for a long series of credit balances which had been the subject of concern on the part of the accountant who had been appointed by the Law Society to look into Mr Bultitude's firm's affairs was struck off by the Tribunal. The divisional court substituted a penalty of suspension for 2 years but the order to strike off was reinstated by the Court of Appeal. Kennedy LJ said:

Finally in this series of cases there is the decision in Salisbury to which I have already referred. There the allegation referred to the dishonest amendment of a cheque to which £1,000 was added by Mr Salisbury in circumstances where it was accepted that that money was indeed due to him. Mr Salisbury was struck off the Tribunal. The divisional court substituted an order for 3 years suspension, but in the Court of Appeal the original order was reinstated. At paragraph 37 of his judgment Jackson LJ said.

This morning during Mr Treverton-Jones' very helpful submissions we were also referred to the decision of this court in the Law Society v Andrew John Tilsiter [2009] EWHC 3787 Admin, which was another case in which the solicitor was found guilty of dishonesty, again in relation to financial matters. The Solicitors Disciplinary Tribunal had suspended him from practice but this court substituted an order that he be struck off the Roll. In addition we have been referred to a number of decisions of the Solicitors Disciplinary Tribunal itself. Some of those were helpfully summarised in the judgment of Rose LJ in Burrowes and others have been identified in Mr Treverton-Jones' skeleton argument.

Speaking for myself I am not persuaded that it is appropriate in these sorts of cases to embark upon a long trawl through the decisions of the Tribunal, particularly given that so many of them are so obviously fact-sensitive, to try and identify some that may be similar to the case under review. Simply by way of example I note that of the cases summarised by Rose LJ in Burrowes, most (if not all) are cases in which there was significant personal mitigation by reference to stress and mental health issues, which obviously do not arise in the present case. There is also some doubt as to whether allegations of dishonesty or findings of dishonesty were being made in every case.

It seems to me, therefore, that looking at the authorities in the round, that the following impartial points of principle can be identified: (a) Save in exceptional circumstances, a finding of dishonesty will lead to the solicitor being struck off the roll, see Bolton and Salisbury. That is the normal and necessary penalty in cases of dishonesty, see Bultitude. (b) There will be a small residual category where striking off will the a disproportionate sentence in all the circumstances, see Salisbury. (c) In deciding whether or not a particular case falls into that category, relevant factors will include the nature, scope and extent of the dishonesty itself; whether it was momentary, such as Burrowes, or other a lengthy period of time, such as Bultitude; whether it was a benefit to the solicitor (Burrowes), and whether it had an adverse effect on others.

Mr Treverton-Jones endeavoured to draw a distinction in sentencing practice between cases of dishonesty involving the appropriation of clients' money and other cases of dishonesty which did not involve financial loss to clients. It does not seem to me that this distinction is borne out in the authorities to which I have referred. It seems to me that it is the nature, scope and extent of the dishonesty itself that matters. Questions as to financial loss may however be relevant in considering whether a particular case falls within or outside the exceptional category to which the authorities refer.

The facts of this case.

Prior to joining Stephenson Harwood, the respondent had set up an investment company called Amaya Limited, which was incorporated in the Isle of Man. By 2006 or 2007 the respondent was the sole beneficial owner of all the shares in Amaya. The directors of Amaya were Mr Stockton Birthisel and Mr John Sturgeon. Birthisel and Sturgeon also had their own company, Atlas Corporate Services Limited, which provided corporate services to companies incorporated in the Isle of Man. Berthisel and Sturgeon held the shares in Amaya as nominees pursuant to a bare trust, of which the respondent was the sole beneficiary.

By 2007 Amaya owned 750,000 shares in an English company, International Consolidated Minerals Limited, ("ICML"). ICML had entered into discussions with Platinum Diversified Mining Inc ("Platinum") with a view to a reverse takeover by ICML. This involved the shareholders in ICML exchanging their shares for shares in Platinum, and thereby acquiring control of Platinum. An agreement to this effect was concluded in August 2007.

As a result of this agreement the shareholders of ICML, including Amaya, were required to sign both an acceptance letter and a stock transfer form, transferring the ICML shares to Platinum. As the nominee directors of Amaya, Berthisel and Sturgeon were required to sign these documents in order to affect Amaya's acceptance of the Platinum offer. However there was a problem. Amaya, effectively the respondent, owed Atlas, the corporate provider run by Berthisel and Sturgeon, at least £26,000 by way of outstanding fees. It appears that these fees had been owing for some time. Thus when, on 10 September 2007, the respondent wrote to Berthisel and Sturgeon at Atlas, asking them to sign the relevant documents to effect the take-over of Platinum, the letter began with an apology for failing to pay the fees and contained a "written assurance" from the respondent that those fees would be paid in the next 30 days.

I should add at this point that it appears from the transcript of the Tribunal hearing that in addition to the question of the outstanding fees there were what was referred to as "other difficulties" between Atlas and Amaya at that time, but those have never been articulated and were not explained to the Tribunal. At all events, the respondent did not pay the fees as he had promised to do, and Berthisel and Sturgeon did not sign the documents on behalf of Amaya.

Thus at some point in the period the respondent decided that, instead of paying Atlas, he would forge the signatures of Berthisel and Sturgeon on the relevant documents. It was common ground that they were all forged on the same day in September. Those documents were:

An undated stock transfer form purporting to transfer 50,000 ICML shares held by Amaya to Platinum. The respondent forged the signatures of both Berthisel and Sturgeon on the document.

A sale and purchase agreement between ICML shareholders and ICML. The respondent forged the signature of Berthisel on this document.

A power of attorney dated 10 September 2007 by which Amaya purported to appoint any director of Platinum to be its attorney. The respondent forged the signatures of both Berthisel and Sturgeon on this document.

A letter also dated 10 September 2007 purporting to emanate from Amaya on the Isle of Man to ICML and Platinum, relating to this transaction. The respondent forged the signature of Berthisel on the document.

A stock transfer form, undated, but stamped 19 October 2007 which transferred 160,327 shares in ICML held by Amaya to Sassari Asset Management Limited. The respondent forged the signatures of both Berthisel and Sturgeon on this document. Sassari was a company in which the respondent and his family held beneficial interests. It was incorporated in the Bahamas but its correspondence address was care of a trust in Zurich.

On 9 October 2007 the respondent wrote on Stephenson Harwood headed notepaper, to Capita Registrars enclosing the stock transfer document to which I have referred at (e) above. The respondent said that the stock transfer form had been "duly signed by two directors." That was of course untrue.

Matters came to light in November 2007, and on 14 November the respondent resigned his partnership. An explanation was provided by the respondent to the appellant, although it appears that part of that explanation was subsequently withdrawn. The respondent did not pay the outstanding fees to Atlas until January 2009, when a consent order was entered in the High Court in the Isle of Man for the payment to Atlas of the sum of £26,000 in respect of outstanding fees.

The Tribunal's decision.

Despite this, the Tribunal went on to identify what it described as a number of factors "which permit us to view this as a somewhat exceptional case." Those factors were put in these terms:

The written findings were provided later on 1 August 2009. They repeated the oral findings to which I have just referred, and they also made a further finding that the letter to Capita on 9 October 2007 was clearly designed to mislead and deceive. They said:

Analysis.

In my judgment, the Tribunal was quite right to approach the question of sentencing on the basis that, unless exceptional circumstances could be shown, the respondent should be struck off the Roll of Solicitors. That is the approach set out in the authorities which I have summarised above. However, I have concluded that the Tribunal was plainly wrong to conclude that the circumstances of this case were exceptional such that the usual sanction should not be applied. In my judgment this was a serious case which simply could not justify the leniency shown by the Tribunal. There are a number of reasons for that conclusion.

First, the respondent was guilty of repeated acts of forgery. He signed five different documents with a total of eight forged signatures, and also sent a separate letter untruthfully confirming the validity of those two signatures. Other than outright theft from clients it is in my view difficult to envisage a more serious offence for a solicitor to commit.

Secondly, the dishonesty in this case was not a one off event. It was not the moment of madness that occurred in, Burrowes. On the contrary the dishonesty was sustained over a period of time and over a number of different documents. If the dates inserted by the respondent into the document are correct, then the period of dishonesty extended to at least a month between 10 September and 9 October 2007. I also accept Mr William's submission that the letter of 9 October gave the respondent a final opportunity to correct his earlier dishonest conduct, which he did not take.

Thirdly, the letter of 9 October was a serious aggravating factor because not only was the letter itself untrue, but it seems to me that it was a deliberate and dishonest attempt to mislead a third party. Further, although it was a letter wholly concerned with the respondent's private business affairs, it was written on Stephenson Harwood notepaper, doubtless in an attempt to enhance its status and reliability.

Fourthly, the respondent earned a benefit from the forgeries, because the Platinum transaction proceeded as he wanted it to on the basis of those forged signatures. The respondent also received another kind of benefit. The forging of the solicitors allowed him to continue not to pay the money owed to Atlas by way of outstanding fees.

Finally it seems me, although this is a lesser point, it is not irrelevant to note that the respondent denied dishonesty before the Tribunal and was subsequently found guilty of dishonesty. The denial therefore acts as a further bar to any real mitigation on the respondent's behalf.

In those circumstances it does not seem to me that this case can properly be described as an exceptional case suggesting leniency in sentence. Indeed, in my view the Tribunal was quite right to say that the dishonesty in this case was "at the top end of the scale." That conclusion is reinforced by a consideration of the reasons put forward (very briefly) by the Tribunal as to why, despite the avowed seriousness of the case, they considered there were exceptional circumstances.

Their first finding was that "there was no harm to the public." I assume that by this that the Tribunal meant that no client suffered financial loss. It seems to me that that is a very narrow way of looking at dishonesty, and wholly fails to recognise the wider issues involved. In my judgment there is harm to the public every time a solicitor behaves dishonestly. It is in the public interest to ensure that, as it was put in Bolton, a solicitor can be "trusted to the ends of the earth."

The other justification for leniency put forward by the Tribunal was that the respondent was the beneficial owner of 100 per cent of the shares in Amaya. That is in reality the same point, namely that no third party had suffered a loss. In my judgment, it is equally unconvincing as a ground for leniency. It appears to be tantamount to saying that if a solicitor is dishonest in his own business affairs then that is somehow a much lesser offence, and I regard that as a wholly erroneous approach.

There are wider considerations here too. Commercial transactions frequently take place, as these did, behind a welter of offshore companies and nominee directors. There is therefore an even greater onus on those involved in those half-hidden transactions to conduct them with the utmost probity and integrity. That did not happen here. Moreover, although the respondent was the beneficial owner of the shares, he did not of course own the shares in his own name. Doubtless for tax reasons or for some other perceived advantage, he held those shares in a company with nominee directors. He was choosing to use the corporate structure for his own benefit, and it cannot now be argued that his dishonest decision to circumvent that very same structure for his own benefit was in some way a lesser offence of dishonesty just because clients' money was not involved.

For all those reasons, therefore, I am in no doubt that the Tribunal were right to say that only an exceptional case would justify a sentence of anything other than striking off the roll, and right to say that these offences were "at the top end of the scale" but they were plainly wrong to conclude -- despite those findings -- that the circumstances here justified a lesser sentence.

In my judgment the sentence of suspension was excessively lenient. This was a serious and significant case of dishonesty. The normal and natural sanction is striking off the roll, and that would therefore be the sentence I would propose.

LORD JUSTICE LAWS: I agree that this appeal should be allowed and that the order proposed by my Lord should be made for the reasons given by him.