Solicitors Regulation Authority v Uddin

MRS JUSTICE COX: The Solicitors Regulation Authority ("the SRA") are appealing against the decision of the Solicitors Disciplinary Tribunal ("the tribunal"), dated 3 July 2013, to order the respondent to pay a fine of £2000 for the acts of serious professional misconduct he was found to have committed. The SRA contend that the tribunal arrived at their decision on penalty without taking into account all the relevant considerations; that in any event the penalty imposed was clearly inappropriate for the purposes of maintaining public confidence in the profession; and that the respondent should have been struck off the Roll of Solicitors, or at least suspended from practising as a solicitor for an appropriate period of time.

The respondent submits that on reading the tribunal's decision in its entirety, it is clear that they took all relevant matters into account and properly had regard to all the circumstances in deciding upon the penalty to be imposed. The tribunal is particularly well placed to assess what measures are required to protect the public interest and this could should not interfere with their decision as to the appropriate penalty in this case.

There is no dispute as to the applicable legal principles, which are well established. Appeals from this tribunal are governed by section 49 of the Solicitors Act 1974, as amended by the Courts and Legal Services Act 1990. An appeal lies to this court, which has the power to make such an order on appeal as it thinks fit (sections 49 (1) and (4)).

In Salsbury v Law Society [2009] 1 WLR 1286 the Court of Appeal reconsidered the principles established in Bolton v The Law Society [1994] 1 WLR 512 in the light of the Human Rights Act 1998. Those principles were set out by Sir Thomas Bingham MR at pages 518A to 519E of the judgment:

The Master of the Rolls, with whom Rose and Waite LJJ agreed, also endorsed the principle that in relation to statutory disciplinary appeals:

In Salsbury, after reviewing the authorities since Bolton, Jackson LJ, with whom Arden LJ and Sir Mark Potter agreed, concluded as follows at paragraph 30:

The questions for this court are therefore whether the tribunal erred in law in failing to have regard to all the relevant considerations in this case when determining the penalty to be imposed; and whether, having regard to the seriousness of the misconduct as found, the imposition of a fine was clearly inappropriate.

The respondent was born in 1970 and admitted to the Roll of Solicitors in 2003. At all material times he practised as a principal or sole partner of Res Ipsa Solicitors ("the firm") from offices in Waterloo Street, Birmingham. He held a practising certificate as at the date of the tribunal hearing.

David Flavell, through his company Flavell Consultants Limited, held himself out as someone who was able to act as an expert in housing disrepair cases. From March 2007 onwards the firm engaged Mr Flavell to produce written reports on behalf of clients for use in court proceedings concerning housing disrepair.

In about April 2007 Mr Flavell introduced the respondent to Michael Vaux, and Mr Vaux was then employed by the respondent, first as a solicitor's clerk and then as a trainee solicitor until he was admitted to the Roll in 2008. On 16 June 2008, shortly after his admission to the Roll, Mr Vaux was made a partner in the firm. But the partnership was terminated in acrimonious circumstances on 16 October 2008, when the respondent and Mr Vaux parted company.

Between March 2007 and October 2008 Mr Flavell was instructed by the firm as an expert witness to produce written reports for clients in connection with their claims under section 11 Landlord and Tenant Act 1985 or sections 79-82 of the Environmental Protection Act 1980. The services rendered included property inspections and the preparation of reports assessing disrepair and, where necessary, whether the disrepair was prejudicial to the occupants' health.

On three occasions, on 14 and 17 May and then on 6 June 2007, Mr Flavell appeared at hearings before a District Judge in the Magistrates' Court as an expert witness called on behalf of clients of the firm. The claims were all dismissed in what the respondent referred to as humiliating circumstances. The judge criticised Mr Flavell's evidence and questioned his qualifications and expertise.

After the third court hearing on 6 June 2007 a meeting took place between the respondent, Mr Vaux, and Mr Flavell, to consider the way forward. At this meeting a "conditional fee arrangement" ("CFA") was agreed, whereby the firm's liability to pay Mr Flavell's fees would depend on their recovery from the opposing party. From that point on the relationship between the firm and Mr Flavell proceeded on that basis.

On 11 November 2008 Mr Flavell commenced proceedings against the firm in Birmingham County Court for fees he claimed were due to him. The respondent defended the claim stating that the firm was not liable for the fees pursuant to the CFA made on 6 June. The claim was heard over three days in July 2010 before His Honour Judge Owen QC. Mr Vaux gave evidence on behalf of Mr Flavell and the respondent gave evidence on behalf of the firm.

The Judge dismissed the claim in its entirety finding that the claim arose out of a legally objectionable arrangement, namely the CFA, which rendered the claim unenforceable and offended against public policy. In the course of his judgment he made a number of frank observations about the "unpleasant practices" which had been revealed in the course of the evidence. Mr Flavell was found to be unfit to hold himself out as an expert witness for the purposes of the Civil Procedure Rules or otherwise, and to lack the necessary understanding of the abilities and qualities of an expert witness demanded by the court. A number of criticisms were made of Mr Vaux, who was described as a "wholly unreliable witness"; and the respondent had "through his own state of ignorance put himself in breach of his code of conduct".

Having found that the case raised issues of serious concern affecting the good administration of justice the judge stated that he would be referring the respondent and Mr Vaux to the SRA.

After investigation the SRA made the following allegations against the respondent, under the Rules then in force, in a Rule 5 statement dated 9 November 2012:

Similar allegations were made against Mr Vaux, but he alone faced an additional, more serious allegation of dishonesty in respect of the evidence he had given in the Birmingham County Court proceedings before Judge Owen. Both men denied all the allegations although the respondent made some admissions in the course of his evidence to the tribunal.

Before the tribunal the SRA contended that Mr Flavell was not qualified to act as an expert or otherwise to deal with section 82 claims; that he had misrepresented his expertise and qualifications; that he lacked the necessary training and understanding of the qualities and abilities of an expert witness; and that he was neither fit nor competent to hold himself out as, or be recognised as, an expert witness. In entering into the CFA with Mr Flavell, and in continuing to instruct him when they knew this to be the case, the tribunal could be satisfied beyond reasonable doubt that the allegations against both Mr Vaux and the respondent were all made out.

Both Mr Vaux and the respondent gave evidence. Mr Vaux adopted the position that all of Judge Owen's findings were wrong. The respondent contended that, whatever had subsequently transpired, he did not know or have reason to know at the material time that Mr Flavell lacked the necessary qualifications, expertise and understanding of the role of an expert witness. Further, he sought to argue that while Mr Flavell was not an appropriate expert for section 82 claims, he could act as an "in-house" expert for section 11 claims under the Landlord and Tenant Act. Mr Flavell was not called to give evidence.

Mr Vaux was found to have been dishonest in the evidence he gave before Judge Owen concerning the CFA made on 6 June 2007, and the other allegations against him were all found to be proved. The tribunal concluded that the only proportionate and reasonable sanction in the circumstances was to order him to be struck off the Roll. We understand that Mr Vaux has himself now lodged an appeal against that decision, but that is not relevant to this appeal and we say no more about it.

In relation to the respondent, the tribunal found that while initially, in March 2007, he had no reason to doubt that Mr Flavell would be a suitable expert to instruct in housing disrepair cases, that position changed after the court hearings in May and June 2007. On the evidence they were satisfied that the respondent had continued to instruct Mr Flavell in such cases despite his knowledge of Mr Flavell's unfitness to act as an expert.

The following findings are of particular relevance in this respect. At paragraph 53 of their judgment, the tribunal said this:

In addition, the respondent accepted before the tribunal that, on the basis of the CFA he had entered into, Mr Flavell would have a financial interest in the outcome of each case, since he would only be paid if the case were successful and costs were recovered from the other party. At paragraph 69 the tribunal found:

The respondent also told the tribunal that the other party, which was often Birmingham City Council, would not be told that Mr Flavell was being paid on a contingency basis. Most of the claims for which Mr Flavell produced reports would never go to court. The majority of cases would settle if the landlord accepted that there was disrepair. Significantly, the respondent confirmed that there was no written record made of the arrangement entered into on 6 June.

I note that the respondent initially sought to maintain before the tribunal that the CFA entered into with Mr Flavell was unobjectionable, but he eventually conceded the improper nature of such an arrangement in the course of his evidence. By 6 June, the tribunal found, the "entrepreneurial aspirations" of the three parties to that arrangement to build up a housing disrepair business were "about to go up in smoke" and that "Entering into the contingency arrangement was what those involved found necessary to keep those business development aspirations alive."

The tribunal had no hesitation in concluding that the CFA made between the firm and Mr Flavell was objectionable and contrary to public policy, and that such an arrangement breached CPR 35.3 and paragraph 7.6 of the schedule to Practice Direction 35. The respondent's belief at the time, that it was acceptable to instruct an in-house expert on a contingency basis, was plainly wrong and there was no reasonable basis for that belief. Further, the tribunal rejected the respondent's evidence that he did not know at the material times that Mr Flavell was not fit to act as an expert.

In finding all the allegations against the respondent proved, they summarised their findings against him at paragraph 98.4 as follows.

The tribunal stated, after considering the points made in mitigation, that they had had regard to all the circumstances of the case and the findings made against the respondent. Their starting point (at paragraph 108) was the objectionable contingency arrangement with Mr Flavell. In this respect they stated that they accepted the respondent's evidence that he had been motivated by the desire to provide his clients with access to justice by allowing them to avoid any risk of paying costs which were not subsequently recovered. However, they found that the respondent had shown no real insight into his conduct until the hearing before them, initially contending that the CFA was not improper when it clearly was. At paragraphs 109-110 they concluded as follows.

Mr Coleman QC, on behalf of the SRA, submits that in the light of all the evidence and the tribunal's findings on the allegations, their finding that "the allegations were limited to the effects of one improper agreement; there had not been multiple failings" was arrived at in error. The respondent failed in his professional duties not only when he entered into the contingency arrangement, but on each occasion after 6 June 2007 when he instructed Mr Flavell to prepare a report and sent it to a landlord for the purposes of securing a settlement of a claim for disrepair. There were in truth multiple failings by this respondent. Further, the tribunal's assessment of the seriousness of his conduct focused only on the contingency arrangement and not on his continued instruction, as an expert, of someone whom he knew to be unqualified and unfit for that role. Their decision that the respondent's misconduct merited a financial penalty was based upon this reasoning and was therefore flawed.

In my judgment, and notwithstanding the respect that is due to the sentencing decisions of disciplinary tribunals in such cases, there is considerable force in these submissions. The reasoning underpinning their decision on sanction, at paragraphs 108-110, cannot easily be reconciled with their earlier findings of professional misconduct against this respondent. The focus in these passages is solely on the contingency arrangement entered into with Mr Flavell. There is no reference to their other findings summarised at paragraph 98.4, and nothing to indicate that they had regard to those findings at the point when they were considering the appropriate sanction.

Their findings that the respondent knew, when he continued to instruct Mr Flavell after 6 June, that Mr Flavell was not competent, qualified or fit to act as an expert witness; that he was willing to profess to expertise that he did not have; and that the contingency basis upon which he was instructed would not be disclosed to the opposing parties, were all highly relevant to sanction in this case and significantly increased the overall seriousness of the respondent's misconduct. Significant as the CFA agreement was when considered on its own, the failure to refer, at the point of sanction, to these important aspects of the respondent's misconduct indicates, in my view, that they were not taken into account.

In his written and oral submissions Mr Rogers, appearing for the respondent, submits that on a careful reading of the decision as a whole the tribunal did take these findings into account. Further, he suggests that they were entitled, given the way in which the allegations were framed, to refer to them globally as "the effects of one improper agreement".

I reject that submission. First, there is nothing in the decision to indicate that the findings were taken into account at the point of sanction, which is where all the factors regarded as relevant to their assessment of the gravity of the misconduct and of the appropriate penalty should appear. Secondly, if the tribunal were indicating that they regarded these matters merely as "the effects of one improper agreement," then paragraph 109 conflicts with the clear findings of misconduct summarised at paragraph 98.4. The respondent's misconduct in these respects cannot sensibly be categorised as merely the unavoidable effects of the CFA. Each time the respondent instructed Mr Flavell to prepare a report in a housing claim, over the 15 month period found, he was committing a discrete act of serious professional misconduct. The allegations clearly identified the wrongdoing in question and referred to contingency fee arrangements in the plural. In my view the finding that there were not multiple failings in this case was arrived at in error.

Further, as Mr Coleman rightly submits, absent altogether from the tribunal's consideration of sanction in these passages is any reference to the overriding objective of sanction, namely the need to maintain public confidence in the integrity of the profession. The finding that the respondent was not a danger to the public does not satisfy the requirement for this tribunal to assess what measures were required to maintain public confidence in the profession, having regard to all the serious acts of misconduct found. The tribunal appear to have given no consideration to this important aspect of sanction. They do not explain why it is, in the light of that principle, that "the seriousness of the matters proved merited a financial penalty rather than a greater or lesser sanction".

In my judgment, these errors entitle this Court to interfere with the tribunal's decision on sanction in this case and to consider the appropriate penalty, having regard to all the findings of the tribunal and to the wider public interest.

Mr Coleman submitted, in the alternative, that even if the tribunal did not err in the way I have found that they did, the imposition of a financial penalty was in any event clearly inappropriate in this case given the serious nature of the misconduct found. He contends that the respondent should, at the very least, be suspended from practice for a period of time.

Mr Rogers submits that it cannot be said, reading the tribunal's decision as a whole, that the fine imposed on the respondent was excessively lenient in all the circumstances of this case, and he invites this court not to impose any greater sanction. He points, in particular, to the following: the respondent's unfortunate association with Messrs Vaux and Flavell and their influence over him; the fact that Judge Owen regarded the respondent's evidence as honest and reliable, and the respondent as someone who lacked competence and expertise and would benefit from additional guidance and training, rather than someone who had sought actively to mislead or to act in bad faith; the fact that the SRA relied upon much of the respondent's evidence before the tribunal; the finding as to the respondent's motivation for entering into the CFA in the first place; and the finding that the respondent had learned some lessons since October 2008. He submits that any greater sanction imposed now would simply be punitive and that such a sanction is not warranted, having regard to the public interest.

I cannot accept Mr Rogers' submissions. I should say that I do not consider it helpful to the respondent to rely on selected passages in the judgment of Judge Owen. In other passages the judge was more critical of the respondent, for example in finding that he continued to instruct Mr Flavell when he "must have known or closed his eyes to" Mr Flavell's obvious lack of expertise; or in referring to the "unhealthy relationship" between them. This Court is concerned, rather, with the findings of the tribunal after a full investigation into the respondent's conduct.

These were undoubtedly serious matters, as the tribunal found, and the misconduct, which was deliberate, had persisted over a 15 month period, there being over 30 occasions when the respondent instructed as an expert witness someone he knew was not fit to act in that capacity. The respondent is a member of a profession whose reputation depends on trust. The courts and the public rely on the proper discharge by solicitors of their professional duties and the respondent's conduct in this case clearly undermined the good administration of justice.

While the respondent may have been motivated by the desire to afford access to justice to his clients, I agree with Mr Coleman that, in this case, the instruction of Mr Flavell could not be said to afford access to justice to anyone. His motive may explain, but cannot justify the instruction of someone known to lack appropriate expertise on the basis of this CFA.

The respondent's misconduct was also aggravated by his lack of candour before the tribunal in maintaining, at the start, that the CFA was not improper. and in failing to accept that he knew or ought to have known at the time of Mr Flavell's lack of expertise. There was a significant lack of insight in this case. The tribunal also acknowledged that the reputation of the profession had been damaged and that the respondent had compromised his integrity. He had plainly acted in a manner likely to diminish the trust the public placed in his as a solicitor.

Having regard to the principles established in Bolton and Salsbury this was not, in my judgment, a venial case. In all the circumstances I consider that the imposition of a financial penalty was clearly inappropriate and that the appropriate sanction in this case was one of suspension. I note that the Guidance Note on Sanctions (August 2012) to which the tribunal referred states as follows at paragraphs 30-31:

The Rules make provision for suspension for a fixed term or for an indefinite period. In my judgment, having regard to all the findings of the tribunal but having regard, in addition, to the passage of time since the tribunal's decision, I consider a fixed period of suspension of 12 months is now appropriate. For these reasons, I would allow this appeal, quash that part of the order which imposed the fine of £2,000, and substitute a period of suspension of 12 months.

LORD JUSTICE PITCHFORD: I wish to contribute only by reason of the seriousness of the sanction to which my Lady has referred. As to the impropriety of Mr Flavell's retainer under the undisclosed contingency agreement the respondent was, as the tribunal found, motivated by a desire to provide access for his clients to evidence they would not otherwise be able to obtain. However, as the tribunal also found, the respondent has his own commercial motivation, namely to build his practice in the field of landlord and tenant disrepair claims. As to the impropriety of the retainer as an expert of a person who was known to be unfit to be an expert, there was no satisfactory explanation let alone any excuse. In both respects the arrangements made had the obvious tendency to undermine due administration of justice and the trust of the public in the profession of solicitor.

In all these respects the tribunal made findings that are not challenged. However, in reaching its decision as to sanction the tribunal treated the respondent's misconduct as though it was the result of a single misjudgement as to the propriety of the CFA. The tribunal in assessing the seriousness of the respondent's misconduct appeared altogether to have left out of account their finding that the respondent knew Mr Flavell was unfit to be an expert witness at all and, contrary to their earlier finding, proceeded on the factual basis that there had not thereafter been multiple subsequent failings by employing Mr Flavell under the agreement.

I agree with my Lady that in its judgment upon sanction the tribunal made a material error of law in that it failed to have regard to matters relevant to the adjudication of seriousness upon which it had already made findings. For the reasons my Lady has identified I also agree that the least appropriate sanction was suspension from practice. I would also allow the appeal and make the order my Lady proposes.

My Lord, my Lady, I apply for an order costs. I don't know if your Lordships have the cost schedule which I understand has been lodged, but I seek an order in the amount of the schedule. I have additional copies with me, dated 22 October.

LORD JUSTICE PITCHFORD: No, I am afraid I don't have that.

MRS JUSTICE COX: Nor do I.

MR COLEMAN: By way of explanation, the amount sought including VAT is the figure at the end of £31,540. That is broken down as solicitors' costs of £4,280 plus VAT. Most of the amount claimed relates to my own fees. As to that, you know, I came into the case fresh. There were five or six bundles below. They do include advising on the prospects of appeal and a second skeleton argument. Those are the incurred fees and then there is the brief fee.

LORD JUSTICE PITCHFORD: Thank you for the moment. Mr Rogers, do you have anything to say about the make-up of this bill?

MR ROGERS: It does seem rather excessive; that's about all I can say really. One is loath to criticise my learned friend's fees but the best part of £22,000 is rather a lot in this matter, my Lord. I do have something further to say. Before the tribunal the costs were awarded, of course, but they were not to be enforced without leave of the Solicitors Regulation Authority for the tribunal itself, if I remember. And I would ask that this court continue in that vein. There is no reason why it should be any different now, I would suggest, than then. And Mr Uddin and his partner are currently in receipt of working tax credits in any event. He is on a low salary at the moment. Do you want me to make the submissions in more detail after my Lord has assessed the schedule or?

LORD JUSTICE PITCHFORD: Let me ask Mr Coleman first. Are you content that the award of costs that we make should be subject to the same reservation as made by the tribunal?

MR COLEMAN: My Lord, no, on the basis that we don't have evidence as to means. At the tribunal, which was some time ago, these applications were supported by evidence and the tribunal have issued some fairly stringent directions about the need to do that. That logic has to apply equally on appeal.

LORD JUSTICE PITCHFORD: Yes.

MRS JUSTICE COX: Mm.

LORD JUSTICE PITCHFORD: Mr Rogers, do you want to put forward any evidence of means?

MR ROGERS: What I have got is evidence of his tax credit award from the 6th of the 4th of this year.

LORD JUSTICE PITCHFORD: What is that going to tell us in real terms?

MR ROGERS: It is going to tell you that his income, it appears, is limited to the point that to support his family he is getting a top-up, effectively. It will tell you that he has got very very little money, in effect. And the receipt of working tax credits, it is a means tested benefit.

LORD JUSTICE PITCHFORD: Has Mr Coleman seen it?

MR ROGERS: No, he hasn't. I am so sorry, I was about to give it to him.

LORD JUSTICE PITCHFORD: Could you pass it to him.

MR ROGERS: Might I add, while Mr Coleman is reading that, if it is appropriate --

LORD JUSTICE PITCHFORD: Give Mr Coleman the opportunity to read that document first.

MR ROGERS: I will, of course, my Lord.

LORD JUSTICE PITCHFORD: Have you had the opportunity to consider it?

MR COLEMAN: Sufficient for our purposes. What it does on the face of it establish is that Mr Uddin's income -- I emphasise income -- is such as to justify a tax credit. That is all one can say. But in my submission it does not constitute sufficient to justify the order that is being sought by my learned friend. We don't know about assets. These things have to be dealt with by way of proper evidence in advance. The hearing has been listed for some time. What I can say by way of comfort if you were minded to make an unqualified order is that I am instructed the regulator has its costs recovery team who do consult with the regulated person about means. And they take a realistic view as regards enforcement. That is as much as I can say.

LORD JUSTICE PITCHFORD: Thank you. Is there anything else that you want to say before we retire?

MR ROGERS: Yes. Mr Uddin has only just been released from an insolvency order, a bankruptcy order. I am instructed he has no assets and it would be strange, following a bankruptcy order, that he would immediately have some assets. It would be quite unusual. That is the point I make.

LORD JUSTICE PITCHFORD: All right. Thank you very much. We will retire for a minute.

LORD JUSTICE PITCHFORD: We make an order for costs in favour of the appellant which we summarily assess in the sum of £25,000 inclusive of VAT, the underlying reason for which is that while we have been assisted by a Rolls Royce service on both sides, we agree with Mr Rogers that the Respondent should not have to bear the cost of the instruction of leading counsel in this appeal. We express no reservation upon the enforcement of the order for costs knowing of the extremely limited means of the Respondent and, being assured that the appellant is realistic in its assessment of the prospects of recovery, we do not think it would be appropriate to make enforcement subject to the judgment of this court or indeed the tribunal.

We would like to express our thanks to both counsel for the assistance we have been given.