Harris v The Solicitors Regulation Authority

The appellant, Michael Abraham Philip Harris, was born in 1937 and was admitted as a solicitor in 1965. At the material times he was practising as a sole principal in the firm of Harris & Co, in Southsea, Hampshire. At the hearing before the tribunal the appellant faced 10 allegations. He admitted eight of the allegations, namely allegation 1, that he failed to comply with the requirements of the Solicitors Introduction and Referral Code 1990 and rule 9 of the Solicitors Code of Conduct 2007, with regard to work referred to his firm for which fees had been paid to the introducers, in particular failing to give conveyancing clients information to which they were entitled with respect to the arrangements pursuant to which estate agents referred client matters to the firm. Records were only kept for a nine month period up to 8 April 2008. In that period referral fees totalling £10,447.43 had been paid.

Allegation 2 was that he provided inaccurate and misleading costs information to clients in conveyancing matters contrary to rule 2.03 of the Solicitors Code of Conduct 2007. The appellant had not given clients proper breakdowns of costs and disbursements. In addition, he had charged clients for effecting bank transfers. In so doing he charged considerably more than he had been charged by the bank. In the five month period ending 29 February 2008 the appellant earned £4,745 by this practice. His clients had not been informed of the profit element that was being charged.

Allegation 3 was that he failed to keep his accounts properly written up contrary to rule 32 of the Solicitors Accounts Rules 1998, to which I shall refer to by the letters "SAR".

Allegation 4 was that he withdrew monies from client account other than as permitted by rule 22 of SAR, so resulting in shortages. As at 24 March 2010 there was a cash shortage on the firm's client bank account in the sum of £54,480.93. On 5 May 2010 the appellant replaced £12,291.75 of this amount.

Allegation 5 was that he failed to remedy breaches of the SAR promptly upon discovery contrary to rule 7 of SAR. The length of time to remedy the breaches took 40 months, 38 months and 29 months. Remedial steps were taken only after the respondent commenced its investigation of the firm.

Allegation 6 was that he used client funds for his own purposes contrary to rule 1 of the Solicitors Practice Rules 1990 and rule 1.O2 and 1.06 of the Solicitors Code of Conduct 2007. The appellant effected three separate transfers of funds from client bank account to office bank account totalling £9,391.75. The net effect was to reduce the overdrawn office account balance to a sum below the limit agreed by the bank. On 31 March 2007 the accounts book showed the reversal of the transfers. However, no transfer of funds to office bank account was effected until 8 July 2009, the date after the forensic investigation unit commenced an inspection of the firm's accounts books and documentation. The tribunal made a finding that the appellant knew that client funds were sacrosanct but that despite this, for a period of three years he was prepared to leave client funds in the office account. The tribunal found that the appellant's conduct was improper and that he was grossly reckless in the way in which he kept client money in the office account for so long, but the tribunal did not find the conduct dishonest (paragraph 51.3 of the judgment)

Allegation 9 was that he failed to disclose material facts to lender clients contrary to rule 1.02 and 1.06 of the Solicitors Code of Conduct 2007. This related to two residential conveyancing transactions in which the firm acted for vendor, purchaser and mortgagee. In the first transaction the mortgagee was not informed that the purchaser was not providing the balance of the purchase price. The certificate of title signed by the appellant wrongly confirmed that the firm was not also acting for the vendor. In the second transaction the mortgagee client was not informed that the firm had no record of the derivation of funds for the balance of the purchase price.

Allegation 13 is that he failed to deliver his accountant's reports when the same became due, contrary to rule 35 of SAR. Solicitors must deliver accountant's reports to the respondent within six months of the end of the accounting period to which they relate. These reports provide the mechanism by which the respondent can monitor the propriety of a solicitor's dealings with clients' funds. The appellant was late in delivering such reports by periods of almost six months, one month and 16 days. All of the late reports revealed breaches of SAR and cash shortages on client bank accounts.

Allegation 11 was that the appellant drafted two wills under which he stood to derive a substantial benefit without advising either testatrix to seek independent legal advice contrary to rules 1, 15, 16 and Appendix 16D of the Guide to the Professional Conduct of Solicitors (8th Edition). The appellant had drafted a will dated 10 January 2006 for his aunt who subsequently died at the age of 91 on 5 January 2007. At grant of probate on 8 February 2007 her net estate was valued at £190,000. The appellant was both co-executor and one third beneficiary under the terms of the will. In addition he drafted a will for another aunt also dated 10 January 2006, 15 days before her death. Under this will he was both an executor and a substantial beneficiary. The estates of both aunts are the subject of ongoing litigation. Beneficiaries under the prior wills, under which it was not clear whether the appellant was a beneficiary or not, are challenging the new wills. The testatrixes had not taken independent advice and the appellant should have refused to act.

Allegation 12 was that he made a transfer of funds from one client to another by way of a loan other than as permitted by rule 30 of SAR. On 3 July 2009 the appellant made three transfers of money from the probate ledger of the first aunt referred to in allegation 11 to other unconnected ledgers. These amounts totalled £55,240.34. The appellant had also taken for his personal use £106,740.34 from the estate funds. The will of the aunt did not include specific authority for the executors to take loans from the estate.

The findings of the tribunal in relation to allegations 11 and 12 are set out at paragraphs 56.1 to 56.5 of the tribunal's judgment:

The reasons for the sanction imposed are set out at paragraphs 66 and 67 of the tribunal's judgment:

In Levy v Solicitors Regulation Authority CO/12515/2010, Cranston J most recently summarised the legal principles that apply on an appeal under section 49 of the Solicitors Act 1974:

Broadly the grounds of appeal fall into three categories. Mr Peter Collins for the appellant summarizes them in his skeleton argument. He has helpfully and fairly developed his submissions before us. We are grateful to Mr Collins and to Mr Geoffrey Williams QC who appears for the respondent for their submissions.

The amended grounds of appeal contain nine grounds. Ground 1 is that the tribunal erred in law in failing to address its mind to consider and/or set out in its judgment the standard of proof which it was applying to the appellant's case before the tribunal. The tribunal did not make clear that it is the criminal standard of proof that is to be applied (see Re A Solicitor [1993] QB 69 and Campbell v Hamlet [2005] 3 All ER 1116. Grounds 2 to 3 and 7 to 9 challenge the sanction imposed. The issue is essentially whether the decision of the tribunal to suspend the appellant from practice as a solicitor for a period of two years was excessively harsh and inappropriate and whether the tribunal provided cogent reasons for its decision.

Mr Collins relies in particular on the mitigating features that the tribunal summarizes at paragraphs 60 to 64 of the judgment. Mr Collins accepts that those paragraphs contain a fair summary of his mitigation. The mitigating factors are summarised by Mr Collins in ground 7 of the amended grounds. At paragraph 14 of the amended grounds in relation to ground 7 Mr Collins sets them out as follows:

Grounds 4 to 6 concern allegations 11 and 12 and challenge some of the tribunal's findings in relation to these allegations.

In ground 4, it is contended that the tribunal erred in law in failing to provide details or an explanation as to why the tribunal came to its conclusion and found the respondent's evidence evasive and unreliable in this regard and what the tribunal meant by "in this regard". I do not read the other matters set out in relation to ground 4 of the amended grounds. Mr Collins does not maintain ground 4 having read the transcript of evidence.

In ground 5 it is contended that the tribunal erred in law in that it failed to separate out the findings in relation to allegation 11 and 12 into separate findings. In ground 6 it is contended that the tribunal erred in law in failing to determine and/or make findings on the appellant's arguments on the issue that the appellant believed that what he had done, by removing monies from the estates of his two aunts, was lawful and permissible in accordance with section 32 of the Trustee Act 1925 and/or under the presumption of advancement. It is contended that if the appellant's arguments had been properly considered by the tribunal the tribunal would have reached a different conclusion, namely that the appellant had a reasonable and lawful reason for removing the monies, which would have had an impact on the finding in respect of the appellant's conduct.

Mr Williams for the respondent responds as follows. As for ground 1, the appellant has admitted eight of the 10 allegations found proved. No issue of standard of proof can arise. The two allegations that were denied involved breaches of mandatory rules and the findings of fact found in relation to allegations 11 and 12 would inevitably lead to a finding of breach of those mandatory provisions by the tribunal. On ground 2 Mr Williams submits that, given the admissions made by the appellant and the adverse findings made by the tribunal in relation to a number of serious allegations, this is not a case where the tribunal could have imposed a reprimand or fine. In this regard he refers to the well known passage in the judgment of Sir Thomas Bingham MR in Bolton v Law Society at page 518:

Ground 3 is that suspension can be either for a fixed period without limit or for an indefinite period – see section 47(2)(b) of the Act. Given the findings made by the Tribunal, the absence of any further elaboration with regard to the period of suspension fixed in this case does not render the order of the tribunal inappropriate. In the light of Mr Collins' concession I do not need to refer to what Mr Williams says in response to ground 4.

Ground 5 is that the allegations were related on the facts and the tribunal did not err in dealing with its findings and conclusion in relation to those two allegations together.

As for ground 6, nothing has been said on the appellant's behalf that can excuse the appellant from contravening the two mandatory conduct rules in question. In support of ground 7 Mr Williams relies on that part of the judgment of Sir Thomas Bingham in Bolton at 159 where he considers the relevance of mitigating circumstances in this jurisdiction:

Grounds 8 and 9: Mr Williams submits that the sanction imposed cannot be described as clearly inappropriate. He reminds us of the decision of the Court of Appeal in Salisbury v Law Society, in particular the judgment of Jackson LJ at paragraph 30 to which I have already referred.

In my judgment, as to ground 1, first I note that the appellant pleaded guilty to eight of the 10 allegations. Second, in relation to the two allegations denied by the appellant but proved against him the appellant has contravened two mandatory professional rules. The rules were mandatory in respect of a solicitor not drawing up a will from which he would receive a gift of a significant amount where the client was not independently advised. The absence of reference to the standard of proof in the judgment of the tribunal is not of any significance in this case. The appellant admitted 8 of the allegations.

In relation to the other two allegations the appellant accepted that he was in breach of mandatory rules: Principle 15.05 of the Guide to the Professional Conduct of Solicitors and rule 30 of the Solicitors Accounts Rules. As to grounds 2 and 3 and 7 to 9 the sanction imposed was not excessive or unreasonable. This was a serious case of wide ranging professional misconduct. The breaches of the Solicitors' Accounts Rules were particularly serious. I have no doubt that misconduct such as that which occurred in this case does grave damage to the reputation of the profession and puts clients at real risk. The mitigation put forward on the appellant's behalf was properly recorded and considered by the tribunal.

It is clear in my view that the tribunal considered the range of sanctions that could be imposed. The judgment does not refer to lesser sanctions being inappropriate but I am satisfied that the tribunal reached a proper conclusion and that nothing less than suspension could be imposed in the present case. The tribunal does not state expressly why two years would be an appropriate term of suspension. Mr Collins suggested that a period of six months would be a more appropriate term in the light of mitigation put forward on the appellant's behalf. I am satisfied that the sentence of two years' suspension was entirely appropriate and proportionate in the circumstances. As to grounds 4 to 6 I can discern no errors of law made by the tribunal. The appellant acted, as he accepts, in breach of mandatory rules contained in the Guide to the Professional Conduct of Solicitors and of the Solicitors' Accounts Rules.

I would uphold the tribunal's decision and dismiss the appeal for the reasons I have given. The suspension will commence at 4 pm on 5 August 2011.

LORD JUSTICE PITCHFORD: I agree.

MR WILLIAMS: I apply for an order for costs on behalf of the respondent. The situation is that the disciplinary tribunal made an order for detailed assessment of costs. Yesterday my instructing solicitors sent to Mr Harris's firm by fax a costs schedule and did likewise with the court. The difficulty with asking the court to assess costs, as I formally do, is that Mr Harris is unwell and may understandably be unable to come to grips with the schedule. While seeking a summary assessment of costs I have those points in mind. The alternative, as there is going to be a detailed assessment, is that a similar order should be made by this court.

MR COLLINS: Given that the appeal has been dismissed I cannot argue that the appellant should not pay the costs of this appeal. My instructions are quite vague. I have spoken to the person behind me who cannot recall seeing a copy of the costs schedule. My learned friend's instructing solicitor does fax those instructing me quite regularly. It is likely that they would have received a copy of the costs schedule. Given what my learned friend said it seems more appropriate for an order to be made against the appellant to be subject to detailed assessment if not agreed. The only difficulty is if you are minded to assess it now, in which case…

LORD JUSTICE PITCHFORD: I am not understanding why Mr Harris's involvement is significant. He is not the solicitor instructing.

MR COLLINS: He is the only solicitor at that practice. There is a locum at the practice but he is the one who has instructed me throughout the proceedings.

LORD JUSTICE PITCHFORD: You will appreciate that it may result in more costs than would follow a summary assessment?

MR COLLINS: The order of the tribunal was that the costs could not be agreed in front of the tribunal. There was an order that if the parties did not agree the costs my learned friend's instructing solicitors were going to prepare a costs schedule which was going to be sent to Mr Harris to agree or disagree. In the event of no agreement the costs would be subject to detailed assessment by the court.

LORD JUSTICE PITCHFORD: That is what you are asking us to do?

MR COLLINS: It may be to incorporate the costs of the appeal into the costs which the costs judge assesses if there is no agreement.

LORD JUSTICE PITCHFORD: That will be a matter for the parties and the costs judge rather than us. We shall make an order that the appellant shall pay the costs of the respondent to the appeal. Ordinarily of course we would make a summary assessment of costs.