Sohal v Solicitors Regulation Authority

MR JUSTICE JEREMY BAKER: This is an appeal brought by Mr Sohal under Section 49 of the Solicitors Act 1974 against the decision of the Solicitors' Disciplinary Tribunal dated 17 April 2013 striking him off the Roll of Solicitors.

The appeal is limited to a challenge against the sanction imposed by the Tribunal following its findings of breaches of both the Solicitors' Code of Conduct 2007 and the Solicitors' Accounts Rules 1998.

The appellant is 35 years of age having been born on 2 May 1979. After completing a law degree and LPC at Glamorgan University he secured a position as a legal executive at Benson Watkins Solicitors in Swansea. However, in 2002 he was made a trainee solicitor and remained at that firm until 2004 when he moved to Myer Cohen Morgan Hewitson where he completed his training and was admitted to the Roll in 2005. Subsequently he left that firm to join, firstly, RDP Solicitors and then Beachcrofts in Bristol.

The history of the matters of particular relevance to these proceedings commenced in May 2008 when he and a fellow solicitor whom he had known since university, Rhys Williams, purchased Benson Watkins Solicitors. Subsequently, in October 2008, they purchased another firm, Glass & Co. At approximately the same time they also acquired another firm, Scott Norris & McCarry.

Throughout this period they relied upon the existing accounts clerk from Benson Watkins Solicitors, namely, Julie Morris, and they also retained that firm's accountant, Chris James. However, in 2009 the latter gave up such work and was replaced by Julie Bendle.

It was thereafter discovered that there been a considerable number of breaches of the Solicitors' Accounts Rules committed by Benson Watkins prior to the purchase. These were discussed with Julie Morris, who assured the appellant and Mr Williams that these would be rectified and that compliance would be assured in the future albeit that thereafter she had various periods being unable to work due to ill health and initially Paula Jones lent assistance.

In February 2010 the appellant and Mr Williams purchased another firm, Hopkin John Solicitors, and from then on Donna Johnson was also available to provide assistance to Paula Jones.

The appellant was aware that the financial problems were continuing during this period and, as he subsequently acknowledged in his witness statement dated 27 February 2013, it was a grave error on his part that he had assumed that the current staff both knew and were able to comply with both the Solicitors' Accounts Rules and appropriate accounting practices.

Unfortunately on 2 May 2010 the appellant was involved in a road traffic accident when, as a pedestrian, he was struck by a passing motor vehicle and sustained personal injuries, including a fractured zygoma, fractured wrists and various cuts and bruises. He underwent an initial operation on his facial fracture and remained absent from work for a period of about six weeks, during which period Julie Morris had also been absent due to ill health. Subsequently he also suffered psychologically from the trauma of the accident which was exacerbated by the earlier death of his sister, who had been killed in similar circumstances when she was nine years of age, and his excessive use of painkillers and sleep-inducing medication.

On his return to work the appellant discovered that the financial irregularities which were previously known to him had worsened, in particular that between March and June of 2010 the total sum of £58,164.25 had been improperly transferred from the firm's client account to its office account.

On his return to work the appellant began to get pressure from the former partners of Benson Watkins to sort out the financial situation and in October 2010 the appellant borrowed an initial sum of money, namely £55,000 from his father, which was placed in the office account. It was not, however, until February of 2011 that a further sum of £58,000, which had been provided by his brother and others, was placed into the client account in order to seek to make up for the shortfall in those funds.

In the meantime, on 11 January 2011, members of the Forensic Investigation Unit of the Solicitors' Regulation Authority attended at the premises of Benson Watkins and after they carried out an inspection of the books of account they discovered a number of serious irregularities, including:

During the course of a subsequent interview with the investigating officer the appellant denied that he had been responsible for the original transfer of the sum of £58,164.25 into the office account but admitted that he had thereafter dishonestly sought to cover it up in the manner which had been discovered by the Forensic Investigation Unit.

Thereafter the Solicitors' Regulation Authority commenced disciplinary proceedings against the appellant and Mr Williams which were heard by the Tribunal on 4 and 5 March 2013. At the hearing, at which the appellant was represented by counsel other than Mr Treverton-Jones QC, the appellant admitted all of the allegations against him with the exception of being responsible for the original transfers of the total sum of £58,164.25 into the office account, these allegations being that:

(10)That he failed to carry out reconciliations as required by Rule 32(7) of the Solicitors' Accounts Rules 1998.

It was alleged that the conduct which fell within the first charge, namely, those matters set out in paragraph 12 (i) to (vi) above, had been carried out dishonestly by the appellant. In due course the appellant, in an addendum to his written basis of plea, admitted both objective and subjective dishonesty in relation to those matters set out at paragraph 12 (ii) to (iv) above albeit in circumstances which it was asserted provided mitigation for the appellant's conduct.

The Tribunal not only heard from the appellant but read and heard from other witnesses, including character witnesses, who spoke eloquently of his general probity and good character, and those relating to his ill health, including the consultant psychiatrist Dr Brian Harris.

The Tribunal, in a carefully considered judgment, acquitted the appellant of being responsible for the original transfer of the £58,164.25 into the office account but in the light of the evidence, including the appellant's admissions, it found that he had acted with dishonesty in relation to those matters set out in paragraph 12 (ii) to (iv) above in accordance with the test set out in Twinsectra Limited v Yardley & Ors [2002] UKHL 12.

Thereafter, having taken into account the mitigation which was presented to it on behalf of the appellant, the Tribunal imposed the sanction of striking off the appellant from the Roll of Solicitors.

It is against that sanction that the appellant appeals, submitting that in view of the mitigating circumstances the penalty which should have been imposed is the lesser one of suspension from the Roll either for a period of time or indefinitely.

In clear and cogent submissions on behalf of the appellant Mr Treverton-Jones sets out three main matters of mitigation; firstly, the appellant's youth and inexperience at the material time, secondly, the pressure which he was under as a result of the defaults in the bookkeeping and the pressure he was receiving from his erstwhile partners and, thirdly, the psychological difficulties that he was suffering which adversely affected his judgment.

In furtherance of the third matter the appellant seeks to rely upon fresh evidence which was not provided to the Tribunal, namely, further medical evidence relating to both the physical and psychological effects of the road traffic accident on 2 May 2010, this being reports from consultant Orthopedic Surgeon Mr Malkan dated 2 February 2014, Consultant Psychological Professor Tarrier dated 14 February 2014 and Consultant Clinical Pharmacologist Dr Lader dated 23 February 2014.

It is apparent that under CPR 52.11(2) a court will not receive evidence which was not before the lower court save with leave. Although the test for giving such leave is now to be determined in accordance with the overriding objective in CPR 1.1 the principles set out in Ladd v Marshall [1954] 1 Weekly Law Reports 1489 remain of some relevance, namely, that:

I have been invited to and have considered the evidence sought to be relied upon by the appellant de bene esse.

Mr Malkan sets out the physical injuries suffered by the appellant and confirms the abrasions and fractures caused as a result of the road traffic accident on 2 May 2010. He noted that the abrasions to the head healed within about eight weeks of the accident, the facial fracture caused continuous pain and discomfort for an initial period of about ten months and then began to wane, leaving the appellant with some pain in cold weather, the fractures to the wrists were very painful for the first six weeks and since then have gradually improved over the following eight to ten months leaving some intermittent pain and discomfort on wakening and after heavy use.

Professor Tarrier stated that it was his opinion that as a result of the accident the appellant suffered post traumatic stress disorder, some phobic anxiety about the accident and depression. This resulted in various symptoms, including loss of sleep, nightmares and flashbacks, social withdrawal, irritability, loss of concentration and poor decision-making. These symptoms were most acute in the period between May 010 and November 2010. The appellant received some medication, counselling and EMDR treatment from about March/April 2011 onwards and is now significantly improved albeit he continues to take antidepressant medication.

The appellant told Professor Tarrier that at the time when he had committed these disciplinary offences he had not intended doing anything "dishonourable". The professor stated in his opinion that any financial irregularities would most likely have occurred as a result of his impaired judgment caused by the effects of the accident. Indeed, at one point in his report he suggests that the appellant did not have any dishonest intent.

Dr Lader noted that following the accident the appellant had apparently taken excessive amounts of painkillers and other medication such that in the context of his psychological injury the appellant would have had marked impairment of his psychological function, including lack of concentration, memory loss and depression.

As has been observed, the Tribunal had before it expert evidence in the form of a report from a consultant psychiatrist, Dr Harris, based on interviews with the appellant in February 2013. He considered the appellant presented to him as an honest individual, who, as a result of the accident, had suffered both post traumatic stress disorder and major depression, with symptoms including distress, avoidance, suicidal ideation, loss of sleep, loss of concentration, loss of appetite, loss of libido, anxiety and depression, all of which were noted to be most acute in the period from mid-2010 to early 2011.

Dr Harris noted that the appellant had been taking excessive amounts of painkilling and other medication in this period and that the severity of his symptoms would have been increased by the appellant's memory of the similarity of the fatal accident involving his own sister some years earlier.

Dr Harris concluded that the appellant's psychological disorders in the context of excessive use of medication and other life events in this period would have impaired his ability to manage the financial problems associated with his legal practice.

In relation to the question of whether the more recent expert evidence should be admitted as fresh evidence in this case it is quite clear that it is credible, however, to my mind it is equally clear that it could have been obtained with reasonable diligence for use before the Tribunal.

In that regard criticism has been made of the appellant's previous legal team. I reject that criticism because in this regard I consider that it can be reasonably inferred that the reason why such further evidence was not obtained by those representing the appellant at the time, is that they considered that such relevant evidence which could be provided had already been obtained and presented to the Tribunal from Dr Harris.

In my judgment, this reflected the reality of the situation in that I am not satisfied that the contents of these more recent reports, either individually or collectively, have added any significant material over and above that contained in Dr Harris' earlier opinion.

In this regard I note that Professor Tarrier states in terms that he is in agreement with the opinion of Dr Harris. Moreover in the light of the appellant's admission to the Tribunal that he was both objectively and subjectively dishonest at the material time it is difficult to envisage how Professor Tarrier's suggestion of lack of dishonest intent could be maintained or relied upon. Indeed, very properly, Mr Treverton-Jones on the appellant's behalf does not seek to do so.

In these circumstances I am not satisfied that the more recent reports would have an important or indeed any influence on the result of this appeal over and above that evidence which is already available from Dr Harris.

In so far as the Tribunal is concerned, it is apparent that it was well aware of both the physical and psychological symptoms arising out of the appellant's accident on 2 May 2010, in particular, the effect of his post traumatic stress disorder, as set out in Dr Harris' report.

Therefore, having regard to the overriding objective in CPR 1.1, I do not consider that it would be in the interests of justice for the more recent reports to be admitted as fresh evidence as this court, as was the Tribunal below, is enabled to deal with the case justly and proportionately on the evidence already available to the appellant.

It is acknowledged on behalf of the appellant that the normal sanction where dishonesty is involved in a solicitor's misconduct is one of striking off the Roll.

As Sir Thomas Bingham explained in Bolton v Law Society [1994] 1 Weekly Law Reports 512 this is, amongst other matters, to ensure that the profession's most available asset, namely, its reputation for honesty, is maintained.

Clearly, as was acknowledged by Coulson J in SRA v Sharma [2010] EWHC 2022 (Admin), there will be exceptions to this general approach and relevant matters will include whether the dishonest conduct was momentary or repeated over a period of time, whether it benefited the solicitor and its effect upon others.

It is also acknowledged on behalf of the appellant that the approach which should be taken by this court in considering the merits of this appeal is that set out by Jackson LJ in Salsbury v Law Society [2008] EWCA Civ 1285, namely, that:

I accept that the appellant was, at the time of acquiring these various firms of solicitors, relatively young and inexperienced. Moreover, he did so without carrying out due diligence so as to ensure that he had full knowledge of the responsibilities which he was incurring. Both of which matters are in themselves, I regret, evidence of lack of judgment on his part at the time.

I accept, however, that as a result of these two matters when he began to discover the extent of both the lack of proper accounting practices and the consequential financial difficulties, he would have been faced with a difficult situation under pressure not only from the needs of the practice but also the conduct, albeit justified, of the previous partners. Moreover, he did not intend to personally gain from his misconduct over and above seeking to ensure the survival of his practice and, in relation to the last matter of dishonesty, his ability to be maintained on the Roll.

The losses were made good by contributions from the appellant's family and his misconduct took place when it was clear that his judgment is likely to have been adversely affected by the physical and particularly the psychological injuries suffered in the road traffic accident.

All of which matters, together with the various statements attesting to his hard work and general good character, were taken into account by the Tribunal when it determined the sanction in this case. However, it is equally clear that the steps which the appellant took in order to seek to remedy the situation was not a momentary lapse but involved serious and repeated dishonest behaviour on his part.

It commenced in early August 2010 with the appellant making a false entry in the books of account to the effect that earlier that year the sum of £52,641.75 had been paid to the Solicitors' Benevolent Fund in order to cover up for the earlier loss. It then progressed to the appellant forging a document purporting to emanate from the Solicitors' Benevolent Fund which was created to look as though the sum of £52,641.75 had been donated to this body in furtherance of the deception.

Although these earlier actions may have been intended to postpone or prevent further inquiries by one or more of the previous partners, it did involve deliberate forging of a document from a charitable organisation and, having seen the document concerned, it is clear that it was not a slipshod and amateur forgery but was one which had a degree of sophistication about it and would, as it was intended and indeed did, when used, persuade the onlooker to believe in its authenticity.

Thereafter, when the appellant knew that an inspection from the Solicitors' Regulation Authority was about to take place he dishonestly sought to cover up for the outstanding losses by creating what it is understood to be some 58 false bills and a larger number of postings on the accounts system, some 158 in all.

This was not, as was suggested in written submissions, unpremeditated. On the contrary, it was considered misconduct which was deliberately designed to frustrate the imminent investigation by the Solicitors' Regulation Authority.

In my judgment, this series of acts of misconduct involved deliberate dishonesty by the appellant on a significant scale. Even accepting, as did the Tribunal, that it did not involve direct personal financial gain by way of theft or the like it included the forgery of a document from a charitable body and eventually involved a determined attempt to frustrate the lawful investigation of the appellant's misconduct by the Solicitors' Regulation Authority. Furthermore, there was a risk to clients' money and the Tribunal was entitled to take into account the other non-dishonest conduct as forming a backdrop of significant and widespread default by the appellant albeit not conduct in itself which would have justified the ultimate sanction of striking off.

In my judgment, despite the mitigating evidence in this case, both as to the appellant's general good character, his youth and inexperience, the pressures upon him at the material time and the deleterious effects of his accident upon his thought processes, not only was the Tribunal entitled in the interests of the protection of the profession's reputation to conclude that the appropriate sanction in this case was one of striking off, but I am satisfied that it was the most appropriate sanction in this case. I should make it clear that this is a conclusion which I would have reached in any event had I been persuaded to admit into evidence the more recent medical reports, which, as I have already observed, in the light of the admitted deliberate and repeated dishonesty do not add significantly to the medical evidence which was before the Tribunal.

Accordingly, and for those reasons, this appeal is dismissed.

MR WILLIAMS: My Lord, I make an application for costs on behalf of the Solicitors' Regulation Authority.

Firstly and briefly, in principle this appeal has failed on all of its grounds and it was an elected decision of Mr Sohal to bring it and accordingly the profession should be given the opportunity to recover its costs of resisting the appeal. Secondly, with respect to quantum I would ask my Lord to conduct a summary assessment. It may be that my Lord has our schedule of costs.

MR JUSTICE JEREMY BAKER: Yes, I am just looking for it. I do have that schedule.

MR WILLIAMS: I could help my Lord with respect to quantum should that be required. I think it is right to say that had the result of this appeal gone the other way we have been served with a schedule of the appellant claiming £51,155.44.

MR JUSTICE JEREMY BAKER: Yes. I have seen that as well.

MR WILLIAMS: I am grateful.

MR JUSTICE JEREMY BAKER: I will just hear from Mr Treverton-Jones.

MR TREVERTON-JONES: My Lord, I cannot object to the application for costs against my client in principle. As for quantum, my Lord, can I make two or three short points?

MR JUSTICE JEREMY BAKER: Yes.

MR TREVERTON-JONES: The first is that your Lordship may feel that this was in many respects a very simple case. The dishonesty was not complex, the facts were not complex, although there is a fair volume of material, and I pose the question whether it was proportionate for the SRA to resort to instruction of leading counsel in a case which did not raise any significant issue of law, certainly no issue of law that was disputed, merely because the appellant had chosen to instruct leading counsel. My Lord, that is my first point.

My Lord, my second point is that when one adds up the hours spent, I have not done a detailed calculation, Mr Dunn, the Grade A fee earner, I make it between 18 and 19 hours, and Mr Ames, the Grade B fee earner, 52 hours. For an appeal of this sort that does seem with respect, and I do not doubt for a moment that the time was spent, but it does appear, with respect, to be an excessive amount of time to have spent on the matter.

My Lord, one or two reasons why our costs were significantly higher. Our costs, first of all, include the cost of the transcript, they include the cost of the two professors, they include the fact that earlier leading counsel had been instructed to draft the original grounds, I was then instructed to draft the amended grounds. So one would expect the appellant's costs to be, to some extent, higher in a case of this sort.

My Lord, the other point that I should just bring to your Lordship's attention is that in the Tribunal below Mr Sohal was ordered to pay costs but those costs not to be enforced without further order of the Tribunal. That is because his financial position was such that the Tribunal considered that it would not be right to ensure the immediate enforcement of the order. Now, the funds for this appeal have come from his family, they have not come from him, but I wonder whether your Lordship might consider making a similar order, that the costs ought not to be enforced without further order of the Solicitors' Disciplinary Tribunal. I appreciate my client has, as it were, voluntarily brought this appeal but his financial position remains personally as bleak as it was when he was before the Tribunal. He has not been working for the last year, indeed, he not worked for about three years.

My Lord, those are my submissions.

MR JUSTICE JEREMY BAKER: Thank you very much indeed.

Mr Williams?

MR WILLIAMS: My Lord, taking the points in order, I think it is perfectly --

MR JUSTICE JEREMY BAKER: You need not trouble me about the first or, indeed, the second.

MR WILLIAMS: I am grateful. With respect to football pools orders, if I can use the term that the Tribunal made in this case, different considerations should apply at first instance where the solicitor has no choice but to come to the proceedings. This appeal was the choice of Mr Sohal, apparently on the advice of two leading counsel. He has incurred considerable costs, however he has funded them, which ultimately he will have to pay and the SRA will be sensitive with respect to enforcement, it is understood that you cannot get blood out of a stone, but, in my submission, the profession should be given the opportunity to attempt to recover its costs from Mr Sohal, either now or at some stage in the future when his circumstances improve, but I would argue respectfully against the situation where this court would have to be further troubled with respect to costs.

That is the only matter, I think, on which my Lord wished to have my help and those are my submissions.

MR JUSTICE JEREMY BAKER: Thank you very much indeed. The successful respondent to this appeal applies for an order of costs against the unsuccessful appellant.

On behalf of the appellant Mr Treverton-Jones, quite properly, does not seek to argue that in principle such costs should not be payable but he asks me to consider, firstly, whether or not it was appropriate for the respondent to instruct leading counsel, secondly, as to whether or not the hours expended are proportionate and, thirdly, to take note of the fact that the schedule of costs which had been prepared on behalf of the appellant should he have been successful did include costs which have clearly not been incurred on behalf of the respondent, namely, the payment of medical reports, transcripts and the like.

I am quite satisfied that this was a matter of considerable significance, not only for the appellant but also for the respondent. The respondent was well aware that leading counsel had been instructed on behalf of the appellant and in those circumstances I consider that the respondent was justified in instructing Mr Williams.

So far as the hours expended are concerned, there was a significant volume of material here and required consideration of the further medical reports and, indeed, the transcript, which was obviously provided since the hearing before the Disciplinary Tribunal.

I note that, in fact, even regardless of the costs such as medical reports and the like, the appellant, had he been successful, was seeking a significantly larger amount by way of fees than that claimed by the respondent.

None of those matters, however, are conclusive and I have had to consider whether or not the amount of costs that have been properly expended are proportionate. I have come to the conclusion that they are and make an award in the sum of £29,444.81.

In so far as to whether or not that award should be made subject to “non-enforcement except with leave of the Disciplinary Tribunal”, in my experience of these matters the Solicitors' Regulation Authority are a body who, although, of course, acting in the interests of the profession as a whole, are appropriately sympathetic and realistic as to the ability of a solicitor in the circumstances that the appellant has found himself to meet any order for costs and I leave it to their good judgment. I do not consider that any further bar should be placed on their ability to seek payment of those costs as and when it is considered appropriate.

MR WILLIAMS: I am much obliged, my Lord.

MR JUSTICE JEREMY BAKER: Thank you very much indeed.

Mr Williams, Mr Treverton-Jones, thank you very much indeed for your assistance. Very clear and cogent submissions on both behalves. Thank you very much indeed.