ADMINISTRATIVE COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Before :
LORD JUSTICE BURNETT
MR JUSTICE NICOL
Between :
Solicitors Regulation Authority | Appellant |
- and - | |
Richard Spector (formerly the Third Respondent) | Respondent |
Solicitors Regulation Authority
Claimant
-and-
The Solicitors Disciplinary Tribunal
Defendant
-and-
Richard Spector (formerly the Third Respondent)
Interested Party
Timothy Dutton QC and Rupert Allen (instructed by Bevan Brittan) for the Solicitors Regulation Authority
Tim Kendal (instructed by Howard Kennedy) for Richard Spector (the Third Respondent)
Hearing date: 8th December 2015
Judgment
Mr Justice Nicol :
In 2014 and 2015 the Solicitors Disciplinary Tribunal (the ‘SDT’) heard disciplinary proceedings which had been brought against three solicitors by the Solicitors Regulation Authority (the ‘SRA’). It gave its decision in writing on 28th April 2015. The 1st Respondent to those proceedings (Joe Ezaz) was not currently on the roll of solicitors. The SDT ordered that he was prohibited from applying for restoration of his name to the roll for a period of 6 months. He was also ordered to pay £20,000 towards the SRA’s costs. The 2nd Respondent in the SDT proceedings (Darren Dale) was fined £1,000 and required to pay £8,000 towards the SRA’s costs. The Third Respondent in the SDT proceedings had been found guilty of one of 7 offences, but the SDT considered that this was a minor matter and at the lowest level. It imposed no sanction on him, nor did it require him to pay any of the SRA’s costs.
What led to the present proceedings are two further decisions of the SDT.
First, it granted an application by the Third Respondent that his name should not be used and so he should remain anonymous in the Tribunal’s decision. Furthermore it directed the SRA not to disclose the Third Respondent’s involvement in these disciplinary proceedings except where a local Law Society or enquirer was already aware of them in which case they could be told that the allegations against him had not been proved save for one technical breach for which no sanction had been imposed.
The SRA wishes to challenge this anonymity decision. It has done so by two procedural routes: it has appealed to the High Court against this part of the SDT’s decision pursuant to the Solicitors Act 1974 s.49; it has also applied for judicial review to quash the anonymity decision. It followed both routes in case there was a jurisdictional difficulty about the Court investigating the anonymity decision on an appeal. In the event, the Third Respondent raised no jurisdictional objection to this matter being considered on the appeal. We agreed at the hearing that there was none. In consequence, the judicial review application became superfluous and we gave the SRA permission to withdraw it.
I need to return to the second decision of the SDT which we were asked to consider. At the end of the proceedings, and when the substantive result had become known, the Third Respondent applied for an order that the SRA should pay all or part of his costs. The SDT refused that application. He now cross appeals against that decision. By an application notice received in the Administrative Court Office on 4th December 2015, the Third Respondent applied for specific disclosure in support of his cross appeal. At the hearing, we refused that application for reasons which we said would be given in the course of this judgment.
CPR r.52.11 limits every appeal to a review of the decision of the lower court. For present purposes that includes the SDT. Absent any procedural complaint (and there was none here), our task is to decide whether the decision of the SDT was ‘wrong’ – see r.52.11(3)(a). We therefore had to decide two matters: (i) Was the SDT wrong to make the anonymity direction? (ii) Was the SDT wrong to refuse to order the SRA to pay all or part of the Third Respondent’s costs?
Anonymity of the Third Respondent
The three Respondents to the SDT proceedings had been members of two Limited Liability Partnerships: European Legal Solutions LLP and ELS International Lawyers LLP. The allegations against each of them were different. There were 7 allegations against the Third Respondent. Some of these concerned the use of Stamp Duty Land Tax (‘SDLT’) mitigation schemes which were promoted through a company called Equity Tax Ltd with which the Third Respondent was also involved. Two particular schemes were investigated by the SRA, one called the Brawn Scheme, another called the Lazarus Scheme.
When the SRA proposes to take disciplinary action against a solicitor, it prepares a statement pursuant to Rule 5(2) of the Solicitors (Disciplinary Proceedings) Rules 2007 SI 2007 No.3588 (‘the Disciplinary Proceedings Rules’). The statement is put before a solicitor member of the SDT who certifies if there is a case for the solicitor to answer – see Rule 6. That was done here and certificates were issued confirming that all three Respondents had a case to answer in respect of each of the allegations against them.
Ordinarily, the SRA will publish the details of the proceedings against a solicitor in advance of the SDT hearing. It took a decision to do so in the present case, but the Third Respondent threatened to bring judicial review proceedings. Publication was delayed and the issue became moot once the hearings began.
However, the SDT publishes a daily cause list and, for each day that the hearings against these three solicitors took place, their names were published in that list.
The hearings were extensive. They occupied in total 15 days between January 2014 and March 2015. All of them took place in public. The names of all the Respondents were used in the course of the hearings without disguise and with no order in place protecting the identity of any of them.
After the close of the SRA’s case, on 1st May 2014 the Respondents (including the Third Respondent) argued that there was no case to answer. The SDT rejected those submissions (except in relation to part of one of the seven allegations against the Third Respondent). The Third Respondent then gave evidence to the Tribunal.
The SDT announced its decision in public on 18th November 2014. On that date it indicated that its written findings (which were to be published at a later date) would anonymise the Third Respondent’s identity. The SRA sought further clarification in writing and at a further hearing, which took place on 10th March 2015. The Tribunal then said that the Third Respondent was not to be named by the SRA in response to any inquiries made by anyone who was not already aware of the SDT proceedings against him.
In its written decision, the SDT recorded the arguments which had been advanced by Mr Kendal for the Third Respondent. He had relied on the SDT’s Judgment Publication Policy of 3rd September 2013. This had acknowledged the importance of publishing the Tribunal’s judgments in the interests of transparency. However, the Policy also said,
‘In the case where no allegations are found proved the Tribunal will consider an application made by the respondent at the hearing for an Order that the Judgment published on the Tribunal’s website be anonymised.’
In the present case, Mr Kendal submitted, the Tribunal had found one allegation proved against the Third Respondent, but that had been a technical breach and no risk or harm had been caused thereby. In SRA v Grindrod No.11030-2012 14th November 2013 the SDT had likewise granted anonymity to the second and third respondents in that case who had been found guilty of only technical breaches.
In giving its decision, the Tribunal said at [176]
‘Whilst the Tribunal stressed it was important for judgments to be published in the interests of transparency, and normally an application for anonymity would only be considered where no allegations were found proved, the Tribunal was satisfied that the circumstances in SRA v Grindrod were very similar to the facts of this case. Accordingly, the Tribunal, taking into account consistency, was satisfied that publication of the Third Respondent’s name would be disproportionate to him in view of the negligible level of culpability the Tribunal has found and the fact that the Tribunal had decided to make No Order on sanction. The Tribunal granted the Third Respondent’s application for anonymity.’
The Tribunal elaborated on the consequences of its order when it said,
‘[179] The Tribunal’s view was that anonymity was precisely that. The Third Respondent was not to be named in the written Judgment and anonymity included not naming him to any third party enquirer or to local Law Societies who were not already aware of the Third Respondent’s involvement in these proceedings. Where any local Law Society had already been informed by the SRA of the Third Respondent’s involvement in these proceedings, as the Third Respondent did not object and indeed the Tribunal considered it would be fair to him, those local Law Societies should be informed that allegations against the Third Respondent were found not proved save for one technical breach for which no sanction was imposed.
[180] The spirit of the Tribunal’s decision on anonymity was to protect the identity of the Third Respondent so that he would not be tainted with a record of a Tribunal appearance. It would be perverse for any third parties to be informed that he had appeared before the Tribunal and this would defeat the object of the Tribunal’s Order so that information could then enter the public domain.’
In my judgment, in making this anonymity order the Tribunal erred in law. Its decision was contrary to principle and it was also not one which it could rationally make on the facts of the case.
Open justice is a fundamental principle of the common law. Scott v Scott [1913] AC 417 is one of the key twentieth century authorities that emphasised its importance, but it has been repeated on many occasions since. There are two particular aspects to the principle. The first is that the public should be free to attend court proceedings. In this case, that aspect was observed. The SDT did sit in public for each of the days that the hearing took place. We were told that, on at least some of the days, one or more members of the public did in fact attend. However, that is irrelevant. If the court hearing is open to the public, then it is treated as a public hearing, whether or not any member of the public avails himself or herself of the right to be present.
The second aspect of open justice is that the proceedings are freely reportable – Attorney-General v Leveller Magazine Ltd [1979] AC 440, 450. For the overwhelming majority of the public physical attendance at a court hearing is not a practical option. If they are to learn about what took place, it will be at second hand, often through the media, but sometimes via other sources. Once again, the authorities establish beyond dispute that this is a key component of the open justice principle.
Free reporting of court proceedings includes being able to identify the persons involved, whether as parties or witnesses. In In Re Guardian News and Media Ltd [2010] 2 AC 697 at [63] Lord Rodger said,
‘What’s in a name? “A lot”, the press would answer. This is because stories about particular individuals are simply much more attractive to readers than stories about unidentified people. It is just human nature.’
But the importance of being able to identify those involved in court proceedings is not confined to the writers and readers of human interest stories. Take the present context. Any report of the present Tribunal would lose much of its force if it has to be neutered by anonymity. As Cranston J. said in Yassin v GMC [2015] EWHC 2955 (Admin) at [59],
‘There is a general interest in the public being able to know the identities of those who have been subject to disciplinary proceedings.’
Since open justice is a principle of the common law, it may be abrogated or varied by statute and in many contexts Parliament has done just that. Sometimes legislation prohibits public access. Sometimes, it is only reporting of the proceedings which is restricted. There is no relevant legislative restriction on reporting the present SDT proceedings and, as I have already said, there was no restriction imposed on the public’s right to attend.
Rule 12 of the Disciplinary Proceedings Rules does address the issue of public access. So far as relevant, it says,
‘(3) Subject to (4) and (5) every hearing shall take place in public.
Any party to an application and any person who claims to be affected by it may seek an order from the Tribunal that the hearing or part of it be conducted in private on the grounds of –
exceptional hardship; or
exceptional prejudice,
to a party, a witness or any person affected by the application.
If it is satisfied that these grounds are met, the Tribunal shall conduct the hearing or part of it in private and make such order as shall appear to it to be just and proper.
The Tribunal may, before or during a hearing, direct that the hearing or part of it be held in private if –
the Tribunal is satisfied that it would have granted an application under paragraph (4) had one been made; or
in the Tribunal’s view a hearing in public would prejudice the interests of justice.’
I accept that, where a Court or Tribunal has the power to sit in private it has, inferentially, the power to adopt a procedure which is less intrusive on the principle of open justice and so, if the circumstances require, it may allow a witness or a party to be referred to by a pseudonym or cipher – see Attorney-General v Leveller Magazine Ltd (above at p.451). However, even then, the Court must proceed with caution.
In the Leveller case the House of Lords recognised that the open justice principle was intended to advance the administration of justice and if, in particular circumstances, the administration of justice would be hampered rather than assisted by full openness, then the common law itself allowed a departure (Leveller at p.450). Nonetheless, the starting point is full openness and it is only if an exception (even a limited exception, such as allowing a witness to be anonymous) is required in the interests of the administration of justice that some limitation is justified. In some contexts at least, curtailment of open justice may also be necessary to avoid a violation of a person’s rights under the European Convention on Human Rights - see Re S (A Child) (Identification Restrictions on Publication) [2005] 1 AC 593. Either way, I agree with Simler J who in BBC v Roden [2015] ICR 985 said at [34] that what was required was a judgment between these competing demands, not the exercise of a discretion.
I have spoken of the importance of the open justice principle in the courts. The principle applies just as much to the proceedings of the SDT – see L v Law Society [2008] EWCA Civ 811 at [41] and Andersons, Solicitors and others v SRA [2012] EWHC 3659 (Admin) at [79].
I return to the Tribunal’s decision in the present case to explain why I consider that its anonymity order was wrong in principle and was not one which it could rationally make.
The Tribunal failed to recognise the importance of the open justice principle, any departure from which had to be justified. There were no competing ECHR rights. There was no requirement of the administration of justice which obliged the Tribunal to anonymise the Third Respondent.
I cannot see how the outcome of the proceedings could justify anonymisation. As Lord Steyn said in Re S (above) at [30],
‘Moreover, the public interest may be as much involved in the circumstances of a remarkable acquittal as in a surprising conviction.’
To the extent that the SDT’s Publication Policy led the Tribunal to have regard to the outcome, I respectfully consider the Policy was misconceived. Its premise seems to be that there is something discreditable in having been acquitted by the Tribunal of all (or all serious) charges. But that cannot be right. Since the SRA’s allegations against the Third Respondent were not made out, his professional reputation has, in that sense, been vindicated. To the extent that the Tribunal thought that the very bringing of charges by the SRA imputed some kind of taint on the Third Respondent’s character, that cannot possibly be sufficient justification for departing from the principle of open justice.
If the SDT’s Publication Policy is not a good reason for the anonymity direction, the Tribunal’s wish to act consistently with Grindrod (which, it seems, was also influenced by the Policy) provides no support for its decision.
The Tribunal’s order put the SRA in a wholly invidious position. How were they to reply if they received an inquiry from someone who did not know of the existing proceedings, but wished to know whether the Third Respondent had ever been the subject of disciplinary proceedings? Clearly they could not lie. But neither, consistent with the anonymity direction, could they tell the truth. It seems they could only give the wholly unhelpful response, ‘we can neither confirm nor deny whether there have been any such proceedings’, or something similar. It would, moreover, inhibit the performance of its statutory duty to have regard to the principles under which regulatory activities should be transparent – see Legal Services Act 2007 s.28(3)(a).
In his skeleton argument, Mr Dutton said that the SRA assumed that the anonymity order meant that the identity of the Third Respondent should not be revealed by any third party (e.g. a newspaper) and that the direction was not confined to the SRA. It is not necessary for us to resolve this, but the assumption may well be incorrect. At common law, the courts did not have the power to direct third parties (such as the media) not to disclose the identity of a party or a witness – see Leveller (above). They were subsequently given such a power by the Contempt of Court Act 1981 s.11. That is of no relevance in the present circumstances since the power is dependent on the information having been withheld from the public in the proceedings. That was not so in the present case.
I have so far considered the issue on the basis that there was a secret to be preserved, but that was not in fact so. As I have already said, the hearings took place in public. The Third Respondent was identified in those public proceedings. His identity was no secret. Furthermore, the Court hearing lists which named him were, and are still, available on the SDT’s website. There are other clues to his identity in the written reasons which are also publicly available on the SDT’s website. No great IT sophistication is necessary to work out who ‘The Third Respondent’ is. Mr Kendal conceded in the course of argument that the Third Respondent would have had no basis for arguing that r.12(4) or (6) was applicable in his case. But if that is so, and a member of the public who came to the hearing could have learnt his identity, there can be no rational reason for preventing the SRA from giving the same information to a member of the public who made inquiry of them.
Mr Kendal argued that the SDT would have been aware of the Tribunal’s own practice of listing a judgment with an extremely brief thumb nail sketch of the parties and the outcome. The summary was so brief that the outcomes were given globally without being linked to particular respondents. Thus someone who looked at the sketch for this case would have seen that the Tribunal had imposed sanctions of prohibition on seeking restoration to the roll and a fine and would not know, unless they took the trouble to read the full reasons, that neither of those sanctions had been imposed on the Third Respondent. Mr Kendal submitted that this would have been a taint on the Third Respondent’s reputation and the Tribunal was entitled to see that he did not suffer it. The Tribunal did not spell this line of reasoning out in their decision, but if Mr Kendal is right to attribute it to them, the anonymity order would still not be justified. It puts the cart before the horse. If the format of the thumb nail sketch is capable of misleading, the solution is to change (at least for this case) the format of the sketch, not to give the Third Respondent anonymity.
Mr Kendal also argued that the SRA’s reliance on Articles 6 and 10 of the European Convention on Human Rights was misplaced. It was a core public authority. The Convention did not give such an authority any rights – see Aston Cantlow PCC v Wallbank [2004] 1 AC 546. Whether he is right about this or not does not matter. That is for two reasons. First, as I have made clear, the anonymity decision was wrong as a matter of common law. Secondly, even if the SRA did not have a right under Article 10 to communicate the identity of the Third Respondent, the public had a right to receive such information unless the strict conditions of Article 10(2) were satisfied and in my judgment they were not. This is, therefore, another example of a situation where the same outcome is achieved whether viewed through the spectacles of the Convention or the common law. As Lord Reed said in A v BBC [2014] 2 WLR 1243 at [56] ‘the common law principle of open justice remains in vigour even when Convention rights are also applicable.’
Mr Kendal submitted that, as an expert tribunal, the SDT’s decisions (whether viewed as the exercise of discretion or the making of a judgment) should be accorded respect. As a bald proposition, that is undoubtedly correct. But on this occasion, the SDT failed to have regard to the correct legal principles and, in those circumstances, in my judgment, its decision has to be quashed.
For all of these reasons I would allow the SRA’s appeal and quash the SDT’s anonymity decision. There is no reason why Richard Spector should not be identified as the Third Respondent.
The cross appeal: Was the SDT wrong not to order the SRA to pay all or part of the Third Respondent’s costs?
The Solicitors Act 1974 s.47(2) confers on the Tribunal a discretion to make orders as to costs. It says,
‘… on the hearing of any application or complaint made to the tribunal under this act…the tribunal shall have power to make such order as it may think fit, and any such order may in particular include provision for any of the following matters…(i) the payment by any party of costs or a contribution towards costs of such amount as the tribunal may consider reasonable.’
It is quite clear, however, that the starting position in ordinary civil litigation, that the loser pays the successful party’s costs (see CPR r.44.2(2)(a)) is inapplicable. The Court of Appeal in Baxendale-Walker v Law Society [2008] 1 WLR 426 CA spelt out the principles at a time when the Law Society performed the task now carried on by the SRA. The Court said at [34],
‘An order that the Law Society itself should pay the costs of another party is neither prohibited not expressly discouraged by s.47(2)(i). That said, however, it is self-evident that when the Law Society is addressing the question whether to investigate possible professional misconduct, or whether there is sufficient evidence to justify a formal complaint to the tribunal, the ambit of its responsibility is far greater than it would be for a litigant deciding whether to bring civil proceedings. Disciplinary proceedings supervise the proper discharge by solicitors of their professional obligations, and guard the public interest as the judgment in Bolton’s case [1994] 1 WLR 512, makes clear, by ensuring that high professional standards are maintained, and, when necessary, vindicated… The normal approach to costs decisions in such litigation – dealing with it very broadly, that such properly incurred costs should follow the “event” and be paid by the unsuccessful party – would appear to have no direct application to disciplinary proceedings against a solicitor.’
At [39] the Court repeated the point. It said,
‘… Unless the complaint is improperly brought, or, for example, proceeds as it did in Gorlov’s case [2001] ACD 393, as a “shambles from start to finish”, when the Law Society is discharging its responsibilities as a regulator of the profession, an order for costs should not ordinarily be made against it on the basis that costs follow the event….For the Law Society to be exposed to the risk of an adverse costs order simply because properly brought proceedings were unsuccessful might have a chilling effect on the exercise of its regulatory obligations, to the public disadvantage.’
The proper approach of the Court when hearing an appeal against a costs decision of the Tribunal was considered in Law Society v Adcock [2007] 1 WLR 1096 DC. At [41] Waller LJ (with whom Treacy J agreed) said,
‘This court should only disturb an order for costs in rare circumstances and only if, in the exercise of its discretion, the tribunal has misdirected itself or reached a conclusion which this court would not have reached, and where the solution preferred by the tribunal has exceeded its general ambit within which a reasonable disagreement is possible.’
In the present case, Mr Kendal accepts that the Tribunal was bound to, and did, follow Baxendale-Walker. He did not (with a limited exception) allege any impropriety on the part of the SRA and his challenge to the decision of the SDT does not rest on any continuing allegation of impropriety. He accepts that in deciding whether the Tribunal was ‘wrong’ in relation to its refusal to order the SRA to pay any part of the Third Respondent’s costs, we should follow Adcock. He does argue, though, that the case against the Third Respondent was a shambles from start to finish and, by not acknowledging this, the Tribunal reached an unreasonable decision.
The Tribunal gave close and detailed reasons for rejecting the Third Respondent’s costs application –see [248] – [259]. I can summarise its arguments in this way:
One issue had concerned whether the Third Respondent was responsible for breaches of the Solicitors Accounts Rules before he became a member of the firm. He had admitted that he backdated his partnership agreement. In those circumstances, there was proper cause to investigate his degree of responsibility. Whilst it may have been helpful to have statements from the directors of the companies involved, there had been evidence of movement of client funds between various accounts and between different clients which needed to be investigated.
The Third Respondent’s expert witness had said that there was a sustainable argument that there should have been disclosure of the Brawn SDLT scheme to the lender and, if a particular course was taken in the Lazarus scheme, there should be disclosure to the new lender. Counsel instructed by the Third Respondent had referred to the mitigation schemes as being ‘aggressive’, that they might be inquired into by HMRC and suggested that clients should be advised of this. The Tribunal had considered the matter and been influenced by the evidence which the Third Respondent had given to find in his favour.
It had been proper for the SRA to investigate the SDLT schemes being used by the Third Respondent. It could have, but was not obliged to, instruct its own expert.
No criticism of Mr Babra (the SRA’s investigator) rendered the proceedings improper. A document had been disclosed after he had concluded his evidence in January 2014, but this had merely suggested a draft amendment which was not effective at the material time. Mr Babra had later been recalled and given further evidence about this. All of the other allegations were properly brought by the SRA and, in relation to at least some of them, the Tribunal was only able to reach a conclusion favourable to the Third Respondent after it had heard him give evidence.
The Third Respondent had been aware that he was dealing with unusual matters which contained a high element of risk. He had to expect in consequence that these would attract the attention of the SRA and may need investigation before the Tribunal.
While there could be some criticism of the SRA, on no interpretation could the case against the Third Respondent be described as ‘complete nonsense’ or ‘mistake piled upon mistake’. It was unfortunate that the investigation and hearings against the Third Respondent had been expensive for him, but the reputation of the profession was more important than the fortunes of an individual member. He was aware that the SDLT mitigation schemes were fraught with risk, yet he chose to proceed to offer them to clients. That was a risk he took and the financial costs of an investigation by his regulator was one of the consequences he would have to bear. ‘Disciplinary action was needed in this case which could in no way be described as a “shambles” from start to finish.’
The Tribunal concluded by saying at [259],
‘Any order for costs against the SRA would infer criticism of the SRA who had legitimately brought proceedings in the wider public interest. The Tribunal stressed the regulator must not fear exposure to undue financial pressure if allegations are successfully challenged. The Tribunal was satisfied the Applicant [i.e. the SRA] had acted, reasonably, properly and on grounds that reasonably appeared to be sound in the exercise of its public duty.’
By his cross appeal the Third Respondent argues that the Tribunal, in effect, could only have rationally concluded that the SRA’s case was a shambles from start to finish. Mr Kendal submits that it ought to have acknowledged this at an earlier stage in the proceedings and acceded to the Third Respondent’s submission that there was no case for him to answer in relation to any of the allegations. So far as his responsibility for what happened before he joined the partnership was concerned, the Tribunal should have given greater weight to the fact that it was he who had reported anomalous transactions. Regarding the SDLT schemes, the critical issue was whether there were matters which should have been disclosed to the lenders. The only evidence on this matter came from Ms Silverman (the Third Respondent’s expert). Her report was exhibited to the complaint and was, therefore, before the Tribunal when it considered the ‘no case to answer’ submission. At that stage, the Tribunal had to ask itself the same question as would a Crown Court Judge hearing a similar submission at the close of the prosecution’s case and apply R v Galbraith [1981] 1 WLR 1039 CA. In other words, the SDT had to ask itself whether a Tribunal properly instructing itself could conclude that the SRA had made out its allegations on the basis of the evidence which was then before it. The SRA was entitled to rely on inferences which could be drawn from primary facts, but only if alternative inferences (consistent with the solicitor’s innocence of the allegations) could be safely excluded – see for instance R v Hedgecock [2007] EWCA Crim 3486. In the present case, that was not so. It was striking that the SDT, in dismissing the allegations against the Third Respondent at the conclusion of the hearings, had relied substantially on the report of Ms Silverman. She was not called to give evidence and her report was the same as had been before the Tribunal when it rejected the ‘no case to answer’ submission.
It is convenient at this stage to deal with the Third Respondent’s application for disclosure, before returning to consider the submissions summarised in the preceding paragraph. Mr Kendal explained that it was only after the SDT’s proceedings were concluded that the Third Respondent appreciated that the SRA had been represented by the same solicitor advocate in this and other proceedings against solicitors who had taken part in SDLT schemes. The purpose of the disclosure application was to find out more about the SRA’s state of knowledge as to the position of the Council of Mortgage Lenders and whether they would regard facts relating to SDLT as material. Mr Kendal accepted that if disclosure produced something in support of the Third Respondent’s case that the proceedings against him were a shambles, he would wish to apply to adduce it as fresh evidence in his appeal, but he submitted this would only be fair. He was not seeking disclosure in support of any allegation that the SRA had acted in bad faith or otherwise improperly.
In my judgment, this application was made far too late. There is no evidence explaining why it was made only a few days before the hearing of this appeal and cross appeal. Furthermore, to some extent, the disclosure sought appears to relate to Mr Babra’s dealings with the Council of Mortgage Lenders. As I have mentioned, he was recalled during the hearing before the SDT to give further evidence on this topic. If the Third Respondent considered that the SRA’s disclosure on this matter had been inadequate, he should have raised the issue before the Tribunal.
Mr Kendal disavowed any intention to amend his grounds of the cross appeal to plead that the SRA had acted in bad faith or improperly in taking proceedings against the Third Respondent (although his skeleton argument in support of the cross appeal had hinted at such a possibility). The relevance of the disclosure to his existing grounds was far from obvious. It was very wide-ranging and would have involved difficult issues as to litigation and legal advice privilege. Quite apart from the timing of the application, I was not therefore persuaded that the disclosure he sought was necessary for the fair disposal of the appeal.
On the substance of the cross appeal, in my judgment the Third Respondent cannot show that the Tribunal’s refusal to order the SRA to pay his costs had any of the flaws identified in Adcock. It is accepted that the Tribunal applied the correct principles. It is not suggested that it took into account any immaterial matter or failed to take into account anything which it should have done. The allegation is simply that its decision that the SRA’s case was not a shambles from start to finish was irrational.
Irrationality is a high bar to cross. The Tribunal is an expert body to whose judgments the Court will normally give great respect. This Tribunal had heard the proceedings against the three Respondents over 15 days. Its lengthy decision shows clearly the care and consideration which it gave to all of the evidence and submissions that had been put before it. I have summarised the Tribunal’s reasons for refusing the Third Respondent’s costs application. Each of the arguments put forward was addressed by the Tribunal which gave detailed reasons as to why it did not agree with them.
I do not accept that its ultimate decision in favour of the Third Respondent should also have led it to find that there was no case to answer. At the close of the SRA’s case the question for the Tribunal was, as I have said, whether a properly instructed Tribunal could find the Third Respondent guilty of the allegations against him. In a trial on indictment, the judge to whom a ‘no case to answer’ submission is made asks himself or herself whether the jury could find the defendant guilty. Rightly in my view, Mr Kendal accepted that the Tribunal had also to ask itself the hypothetical question as to whether there could be a finding adverse to the Third Respondent on the evidence presently produced, even though, at the conclusion of the case, the Tribunal itself, rather than a separate body, would have to find the facts. There was no inconsistency in the Tribunal ruling that there was a case for the Third Respondent to answer but then finding at the conclusion of the hearing, that the allegations against him were not proved. It was asking itself different questions at the two stages. Furthermore, as it explained in its decision, after it rejected the ‘no case to answer’ submission, the Third Respondent had given evidence and that was influential.
Mr Kendal’s written and oral submissions expanded at length on why the Tribunal should have accepted that there was no case for the Third Respondent to answer. I have considered those with care, but in my judgment he came nowhere near to showing that the Tribunal reached an irrational conclusion.
In part Mr Kendal criticised the Tribunal for accepting that there was a case for the Third Respondent to answer in relation to alleged non-disclosure that certain transactions were part of an SDLT scheme, although there was no evidence that the mortgage lenders would have regarded this as material. I agree with Mr Dutton’s response. In deciding whether a particular factual situation required a solicitor to make a disclosure, the Tribunal was, in part at least, entitled to make its own expert assessment of what the professional obligations of the solicitor required in that situation. There was nothing inconsistent between the Tribunal considering that there was a case for the Third Respondent to answer and then deciding, at the conclusion of all the evidence, that the allegation had not been substantiated.
For these reasons I would dismiss the cross appeal.
Lord Justice Burnett
I agree that the appeal of the SRA against the anonymity order made by the SDT to protect the identity of the Third Respondent, Richard Spector, should be allowed and that the cross appeal on costs should be dismissed, for the reasons given by Nicol J.