Newell-Austin v Solicitors Regulatory Authority

Before turning to the specific allegations of professional misconduct against the Appellant, I identify the relevant parts of the SRA Principles 2011 which the SRA alleged that the Appellant had breached. The SRA Principles provide, inter alia, as follows:

“These are mandatory Principles which apply to all.

You must:

…

2.

act with integrity;

3.

not allow your independence to be compromised;

4.

act in the best interests of each client;

…

6.

behave in a way that maintains the trust the public places in you and in the provision of legal services;

7.

comply with your legal and regulatory obligations and deal with your regulators and ombudsmen in an open, timely and cooperative manner;

8.

run your business or carry out your role in the business effectively and in accordance with proper governance and sound financial and risk management principles;

…

10.

protect client money and assets.”

There were four allegations of professional misconduct against the Appellant. In respect of each, I set out the factual allegation, the relevant Principle(s) alleged to have been breached, and the Appellant’s response.

Allegation 1.1 was “Permitting her Firm to become involved in, or acquiescing in the Firm’s involvement in, conveyancing transactions that bore the hallmarks of mortgage fraud (including failure to redeem mortgages and/or identify fraud) and in doing so breached Principles 2, 6 and 10.” In relation to this allegation the Appellant denied acquiescing in or permitting the Firm to become involved in suspicious transactions and denied acting without integrity (i.e. principle 2). However, she admitted breach of principles 6 and 10.

Allegation 1.2 was “Failing to carry out [her] role in the business effectively and in accordance with proper governance and sound financial and risk management principles. In particular:

Allegation 2.1 was “Failing to comply with undertakings to redeem mortgages in breach of Principles 4, 6, and 10”. In relation to this allegation the Appellant admitted all of the charges.

Allegation 2.2 was “Misleading the SRA by failing to provide it with accurate information to enable it to make a decision on her application to obtain authorisation for the partnership in breach of Principle 7”. In relation to this allegation the Appellant admitted all of the charges.

In addition, the SRA alleged that the Appellant had acted dishonestly in relation to Allegations 1.1 and 2.2. The Appellant denied acting dishonestly in respect of these allegations.

In the Judgment, the Tribunal made the following findings on each of these allegations. (The Appellant is referred to as “the First Respondent” in the Judgment).

In relation to Allegation 1.1 the Tribunal found that the Appellant did not act dishonestly, but that the Appellant had acted without integrity. At paragraph 89.11 the Tribunal found that the Appellant had ceded control and acquiesced in the firm’s involvement in fraudulent transactions. In relation to lack of integrity, at paragraph 89.13, the Tribunal concluded as follows:

“The First Respondent had recruited partners for the Firm in a highly unorthodox manner. They were not properly vetted and were recruited not for their skills and abilities but simply to make up the numbers so as to allow the Firm to obtain open market insurance. She failed to properly control the unadmitted members of staff and turned a blind eye to the obvious risks of her actions. When the fraud in relation to the Kingsdown Road transaction became known to her, she did little to ensure that future monies that might be received by the Firm were protected. She showed no true regard for her clients’ monies. The Tribunal found that the First Respondent’s actions were not those of a solicitor acting with integrity.” (emphasis added)

In relation to dishonesty, after identifying the combined test laid down in the Twinsectra case, at paragraph 90.10 the Tribunal held:

“The Tribunal did not find that reasonable and honest people operating ordinary standards would find the First Respondent’s actions dishonest. Wanting to have new partner so as to reduce insurance costs was not inherently dishonest, nor was wanting new partners so as to provide an exit strategy that would not involve the purchase of run-off insurance. When the fraud in the Kingsdown Road transaction was discovered, the Tribunal found that it was not clear to the First Respondent who was involved, however it was clear that she did not suspect the Third Respondent or any other members of staff (admitted or otherwise) as being involved in the fraud at that time. The fraud was reported to the Applicant by the First Respondent (albeit belatedly and in minimal terms). When she was aware that the Third Respondent was to be arrested in question, she believed that this was to eliminate him from criminal responsibility; he was the best person to be questioned as he was the one that had met the client. The action she took thereafter fell woefully short of what she ought to have done. However, whilst the First Respondent may have been careless, the Tribunal was not satisfied beyond reasonable doubt, that the ordinary honest member of the public would find her to have acted dishonestly. Given the Tribunal’s finding of a lack of objective dishonesty, it did not consider whether the First Respondent had been subjectively dishonest. Accordingly the Tribunal did not find that the First Respondent had acted dishonestly, and that allegation was dismissed.”

(emphasis added)

In relation to Allegation 1.2, the Tribunal found that the Appellant had acted without integrity. Having found at paragraph 91.12 that each of the Respondents had failed to exercise appropriate supervision over the practice and that the ability of the unadmitted staff to perpetrate a number of fraudulent transactions was clear evidence of the Respondents’ ineffective management of the Firm, the Tribunal found that the Appellant and other Respondents had all breached principles 6, 8 and 10, as indeed had been admitted by the Appellant. The Tribunal continued, at paragraph 91.13, as follows:

“As regards principles 2 and 3… the Tribunal found that the First Respondent’s explanations in this regard were not credible. The Tribunal determined that the First Respondent had ceded control of the practice to the unadmitted staff, and, whilst this had not been done dishonestly, the First Respondent had acted without integrity doing so. The First Respondent’s answers lacked credibility and were, the Tribunal found, self-serving. She acted in complete disregard of her duty to her clients, and the sacrosanct nature of holding client money. In ceding control of the practice, the Tribunal found that not only had the First Respondent acted without integrity, she had also compromised independence; she could not be independent when she no longer had control of the practice and proper oversight of the transactions. Accordingly the Tribunal found beyond reasonable doubt that the First Respondent had acted without integrity and compromised independence as pleaded and alleged.” (emphasis added)

In relation to Allegation 2.2, the Tribunal found that the Appellant had acted dishonestly.

The SRA’s case here is summarised at paragraph 92.10 of the Judgment:

“Despite the RB1 application form specifically requiring that the SRA be notified of any changes to material information, and despite correspondence from the First Respondent on 7 June 2013 setting out into alia proposals for the Third Respondent’s role in the partnership, the First Respondent, it was submitted, failed to inform the SRA that: (a) one of the proposed partners, the Third Respondent, had been arrested on 31 May 2013 in connection with an apparently fraudulent transaction he had conducted whilst at the Firm; and (b) he had not returned to the Firm’s premises from that time onwards. In so doing, it was submitted that the First Respondent again failed to provide accurate information to allow the SRA to make an informed decision regarding the authorisation of Austin Law as a partnership including the participation of the Third Respondent, and in so doing so she misled the SRA.”

At paragraphs 93.1 and 93.2, the Tribunal set out the SRA’s pleaded case that in misleading the SRA in her application for authorisation the Appellant had acted dishonestly, relying upon the contents of section 12 of the RB1 application form, the arrest of the Third Respondent on 31 May 2013 and the contents of the Appellant’s email of 4 June 2013 and letter of 7 June 2013. These had failed to inform the SRA of the Third Respondent’s arrest or of his role in the Firm going forward in circumstances where he was no longer attending the office. In this regard, it is noteworthy, that the SRA’s pleaded case was that the failure to inform the SRA of the arrest was specifically in breach of the express declaration in the RB1 form set out at paragraph 9 above.

After then recording the Appellant’s case in response, the Tribunal concluded at paragraph 93.6 as follows:

“The Tribunal determined that reasonable and honest people operating standards would find the First Respondent’s conduct dishonest. She deliberately and consciously misled the Applicant. Whilst there was no duty to report the Third Respondent’s arrest, her email to the SRA of 7 June 2013, in which she asserted that the Third Respondent was “being given minimal responsibility at present” due to his lack of “any management experience”, was consciously deceitful; particularly as she had excluded him from the office due to the police investigation. The Tribunal found that the First Respondent deliberately failed to inform the authorisation department of the Third Respondent’s arrest and exclusion from the office as she was aware that this may have a detrimental effect on the application for authorisation; it was clear that, for a variety of reasons, the First Respondent was anxious for the partnership to be authorised. Thus both limbs of the Twinsectra test were satisfied. Accordingly the Tribunal found beyond reasonable doubt that the First Respondent had acted dishonestly as alleged, pleaded and submitted.”

The Appellant puts forward four grounds of appeal.

In the course of argument, Dr Wilcox for the Appellant clarified that the only aspect of these grounds which involves a challenge to a finding of fact is the appeal on Ground 4. He further clarified that no case was being advanced that the Tribunal had failed to give adequate reasons for any of its conclusions.

As regards the relevant principles which apply to hearings before the Tribunal and to appeals to this Court under s.49, first, it is common ground that the SRA bears the burden of proof and the relevant standard of proof is the criminal standard.

Secondly, CPR 52.10 and 52.11 apply to an appeal under s.49 of the 1974 Act. It is an appeal by way of review and not by way of rehearing: see The Solicitors Disciplinary Tribunal: Law and Practice: West and Heley §17.5.1 and the fact that special provision for a s.49 appeal is not made in CPR Practice Direction 52D. (See, by analogy, discussion in O v Secretary of State for Education [2014] EWHC 22 (Admin) §54). However where the appeal court is being asked to reverse findings of fact based on oral evidence, there is little, if any difference, between “review” and “rehearing”: see O supra, §56 and Assicurazioni Generali SpA v Arab Insurance Group [2002] EWCA Civ 1642 §§13, 15 and 23.

Thirdly, as to appeals against findings of fact, whilst the lower court or tribunal is the primary decision maker, the High Court will correct material errors of facts on various grounds, including insufficient evidence or mistake. The degree to which the appeal court will show deference to the lower court will depend upon the nature of the issues determined by the court below. Greater deference will be shown where the conclusions are based upon the view formed of oral evidence of witnesses, than where the conclusions also involve analysis of documents or where conclusions are based on inference. Much will depend upon the extent to which the judge below has an advantage over the appellate court: see Assicurazioni supra, §§14 and 15. As regards the specific issue of findings based on preferring the account of one oral witness over that of another: see O, supra, §58. In particular, the starting point is that the lower court is in a better position to assess credibility and reliability of witnesses. Further demeanour of witnesses is a significant, but not always conclusive, factor.

Before turning specifically to Ground 1 itself, Dr Wilcox, made general submissions about the legal test for “lack of integrity” under Principle 2 and, by contrast, to the legal test for dishonesty. He submitted that what amounts to “lack of integrity” in professional regulatory proceedings has not received a definitive answer, and pointed to the approach taken in cases before the Financial Services and Markets Tribunal, including in particular Hoodless and Blackwell v FSA [2003] FSMT 007 and to cases before the Tribunal, in particular SRA v Scott SDT case 11195-2013 (on appeal to the Divisional Court[2016] EWHC 1256 (Admin)). As to the legal test for dishonesty, he referred to the clear position, laid down in Twinsectra Ltd v Yardley [2002] UKHL 12, which combined both an “objective” and a “subjective element”.

As regards the test for lack of integrity, his contention is that there is or has to be a “subjective” element within that test. His first submission appeared to be that that “subjective” element mirrors the subjective element in the Twinsectra test for dishonesty: namely that the defendant must himself realise that, by the standards of reasonable people, that his conduct “lacked integrity”. His alternative formulation appeared to be that the “subjective element” related to the defendant’s knowledge or state of mind in relation to the underlying conduct (rather than in relation to knowledge of his own lack of integrity). When turning to address Ground 1 itself, it was this latter submission which was at the forefront of the argument.

In relation to Ground 1 specifically, the Appellant submits that the Tribunal specifically excluded consideration of whether or not the Appellant had “knowingly engaged in the behaviour” that it was alleged disclosed her lack of integrity. This in practice amounted to an exclusion from its deliberations of any real or proper consideration of the Appellant’s “intentional state” in relation to the allegations of integrity against her. That failure was an error that vitiates the Tribunal’s findings in respect of those allegations in their entirety. A finding of lack of integrity cannot be arrived at in the absence of a finding that an accused was “at least reckless as to the consequences of her actions”. The required standard of knowledge is “deliberate recklessness” i.e. for example being conscious of an obligation to take action to minimise a particular risk or set of risks and choosing not to do so. In any event, there must be a careful preliminary consideration of the accused’s “intentional state”. Otherwise it is impossible for any tribunal properly to assess the gravity of the lack of integrity that such behaviour might evidence. A finding of lack of integrity premised upon deliberately assumed risks or conscious dishonesty is of an order of magnitude more serious than a finding based upon a form of objectively determined negligence. Mere incompetence is not sufficient to establish lack of integrity.

The SRA submits that, if the Appellant is suggesting that a solicitor cannot act without integrity unless he or she is conscious that what she is doing lacks integrity, that submission is misconceived. It is clearly established that the test for lack of integrity is an objective one. Moreover, this was common ground at the hearing before the Tribunal in the present case.

As regards the alternative submission that in any event the Tribunal was required to carry out a preliminary consideration of the Appellant’s intentional state, the Appellant has made no attempt to explain which particular aspects of the Appellant’s state of mind the Tribunal was required to investigate but failed to do so. The SRA accepts that a solicitor’s state of mind in relation to a particular matter might, in principle, have a bearing on whether her conduct lacked integrity. However this is not a freestanding ground of complaint. Whether or not it was open to the Tribunal to find a lack of integrity in the light of the findings that it did make is the subject of Grounds 2 and 3.

First, the legal test for dishonesty in solicitors disciplinary proceedings is the combined test established in Twinsectra: namely, the conduct in question must be found to be dishonest “by the standards of reasonable and honest people”; and the respondent must have realised that by those standards his or her conduct was dishonest. In the present case, in relation to the allegations of dishonesty, the Tribunal applied this test: see Judgment, paragraph 90.1.

Secondly, as regards what amounts to “lack of integrity”, from the cases of Hoodless supra, Scott in the Divisional Court, supra, and SRA v Chan [2015] EWHC 2569 (Admin) the following principles can be derived:

Thirdly, it is clear that, by contrast with the test of dishonesty, the test of “lack of integrity” is an objective test alone. A distinction must be drawn between subjective knowledge of the facts of the underlying conduct (which are alleged to give rise to the lack of integrity), and subjective knowledge of the fact that the conduct would be regarded by reasonable people as lacking in integrity. There is no requirement that a solicitor must “subjectively” realise that his conduct lacks integrity. In the Scott case, the Tribunal itself stated (§65.15)

“The Tribunal ... found that the transactions involving the inter ledger involved a lack of integrity on the facts. The Respondent showed no evidence of having enquired into the reasons for the transfers and payments out or to have cared at all about what he was instructed to authorise. … The test for acting with lack of integrity was an objective one and it was satisfied to the required standard”.

On appeal, the Divisional Court did not demur from this description of the test. Further, in the passage in Hoodless, approved by the Divisional Court in Scott , the FSMT said:

“A person lacks integrity if unable to appreciate the distinction between what is honest or dishonest by ordinary standards”.

It is inherent in that analysis that that there is no requirement that the person himself must have an appreciation of the lack of integrity.

Finally, as regards the Appellant’s alternate submission, the person’s state of knowledge or intention in relation to the underlying conduct (said to demonstrate lack of integrity) is a relevant consideration in assessing whether, in carrying out such conduct, a person demonstrated a lack of integrity. At one extreme, if the person is unaware of the relevant conduct, there can be no lack of integrity. At the other extreme, actual knowledge or recklessness in the sense of being aware that the conduct posed a risk and consciously taking it, will be highly likely to give rise to a finding of lack of integrity. However I accept the SRA’s submission that it is wrong to define lack of integrity as requiring recklessness. Lack of integrity does not necessarily involve risk taking. So for example, the solicitor who dips into the client account with the intention of putting the money back lacks integrity because a client account is sacrosanct and regardless of the risk of the money not being repaid.

Thus, to this extent, the premise for the Appellant’s case on Ground 1 is established. Whether in fact the Tribunal failed to take account of the Appellant’s state of knowledge is the question which arises on Grounds 2 and 3.

The Appellant’s essential submission here is that the Allegation 1.1 in relation to lack of integrity was based on exactly the same factual foundation as the allegation of dishonesty. Having found that those facts did not give rise to a finding even of objective dishonesty, the Tribunal could not properly have reached its conclusion (at paragraph 89.13) that that same conduct did amount to lack of integrity. Whilst it may be the case that lack of integrity can sometimes arise in the absence of dishonesty, the facts as disclosed in relation to Allegation 1.1 indicate that this is not one of those occasions. The findings in paragraph 89.13 go further even than recklessness and thus, implicitly, amount to dishonesty. Thus they are inconsistent with the Tribunal’s rejection of dishonesty in paragraph 90.10.

The SRA submits that there is nothing inconsistent between the Tribunal’s findings in relation to dishonesty and those in relation to lack of integrity. The fact that the Appellant did not actually suspect the Third Respondent of fraud does not alter the fact that she had acted without integrity by recruiting partners for the Firm in a highly unorthodox manner, ceding control of the Firm to them, failing to properly control the unadmitted members of staff, turning a blind eye to the obvious risks of her actions and/or acquiescing in the Firm’s involvement in the suspicious transactions. In all of those circumstances the finding of a lack of integrity at paragraph 89.13 was plainly a sound one and there is no basis for interfering with it on appeal.

Allegation 1.1 concerned directly the Firm’s involvement in the fraudulent conveyancing transactions. At first blush, particularly given the Tribunal’s finding at paragraph 90.10 that the Appellant’s conduct was not dishonest by the ordinary standards of reasonable people, the Appellant’s case of an inconsistency seems attractive. Further, as the SRA accepted in argument, the description, in paragraph 90.10, of the Appellant’s conduct as “careless” (rather than wilful or reckless) appears to support that case.

However, I am satisfied that there is no such inconsistency. I make two preliminary observations. First, and importantly, as stated above, “lack of integrity” and “dishonesty” are not synonymous, even by the objective standards of reasonable people: see the example above where taking money from a client account, intending to pay it back some time will lack integrity, but may not, depending on the facts, be dishonest. Secondly, in the Judgment, at paragraphs 89.10 to 89.13, the Tribunal carried out a detailed assessment of the facts underlying Allegation 1.1, leading to its finding of lack of integrity. I accept Mr Levey’s submission here that it is important to consider that analysis as a whole, and not to seek to reinterpret it by reference to what the Tribunal subsequently went on to say about dishonesty.

In relation to Allegation 1.1, the Tribunal found the following facts (variously at paragraphs 89.10, 89.11, 89.13 and 91.13).

In my judgment, these findings are more than a sufficient foundation for the Tribunal’s conclusion that the Appellant’s conduct lacked integrity. Further, the Tribunal plainly took account of the Appellant’s state of knowledge. It cannot be said that she was unaware of the primary facts found. What is more the Tribunal made express findings, that the risks of her actions (in recruiting partners in the way she did and for the purpose she did, and in failing to control unadmitted members of staff) were obvious and that she turned a blind eye to those risks. This was a finding of recklessness on her part, and sufficient basis for a finding of lack of integrity. In addition, she failed to consider the risks to client monies, once she became aware of the Kingsdown Road fraud.

As regards the alleged inconsistency with paragraph 90.10, the reference there to her conduct being “careless” has to be read in the light of the previous sentence in that paragraph that her actions, after becoming aware of the Third Respondent’s arrest, “fell woefully short of what she ought to have done”: see paragraph 30 above. For reasons explained above, I do not consider that in principle even if conduct could only be characterised as “grossly negligent”, that does not mean that it cannot be lacking in integrity. In my judgment, the ultimate finding on dishonesty in paragraph 90.10 is not inconsistent with the Tribunal’s finding on lack of integrity at paragraph 89.13.

For these reasons, this ground of appeal is rejected.

The Appellant submits that the finding (at paragraph 91.13) of lack of integrity in relation to Allegation 1.2 was wrong because the Tribunal failed to consider whether the Appellant had knowingly engaged in the relevant behaviour. In particular the Appellant submits that the term “acquiesced”, as employed in the sub-paragraph 1.2.2 of Allegation 1.2 in relation to improper withdrawals, carried with it the connotation of some degree of “intentional deliberation” on the part of the Appellant. However, first, the Tribunal could not properly have concluded that such “intentional deliberation” was present on the evidence before it, and secondly even if the Tribunal could properly have so concluded it would have been necessary for the basis of that conclusion to be set out in the clearest terms. The Tribunal did not make clear whether the “disregard” it found was deliberate or reckless; incompetent disregard is not sufficient. However, in oral argument, Dr Wilcox disavowed any intention to base this challenge on breach of the duty to give reasons.

The SRA submits that in paragraph 91.13 there is a sufficient finding of knowledge on the part of the Appellant in relation to the conduct complained of and that the allegation of aquiescence in Allegation 1.2.2 forms part only of the conduct found to have lacked integrity.

In contrast to Allegation 1.1, Allegation 1.2 is a general allegation relating to the conduct and supervision of the Firm over the relevant period. That general allegation is then particularised by two examples: failure to supervise the unadmitted staff and allowing improper withdrawals from client account.

This finding of lack of integrity is based upon the following findings of fact: failure to supervise the practice; the ceding of control to the unadmitted staff – that finding had in turn been made in relation to Allegation 1.1 (at paragraph 89.11); failing to safeguard client money and in addition an express finding that the Appellant’s explanations lacked credibility and were self-serving; and acting “in complete disregard of her duty to her clients and the sacrosanct nature of holding client money”.

In so far as these were findings based on the Tribunal’s assessment of the Appellant’s oral evidence, absent any grounds put forward in this appeal as to why that assessment was mistaken, there is no basis upon which I am able to find that the findings of fact were wrong: see paragraph 40 above. Secondly, the reference to acting “in complete disregard” of her duty, is a finding as to the Appellant’s state of mind and one of recklessness. Thirdly, the finding of “ceding control to the unadmitted staff”, in my judgment, implies conscious action on the part of the Appellant and further has to be read in the light of the findings already made in paragraphs 89.11 and 89.13 that that conduct amounted to “turning a blind eye to the obvious risks” of those actions. Those findings were findings in relation to the Appellant’s state of knowledge as to her conduct and its consequences.

Finally, the Appellant’s specific point relating to the allegation of “acquiescing in” (as opposed to permitting or failing to prevent) the improper withdrawals, is not capable of undermining the Tribunal’s conclusions on lack of integrity under Allegation 1.2. First, in fact in paragraph 91.13 the Tribunal itself makes no express finding in relation to Allegation 1.2.2. Secondly, and in any event, the facts relied upon in Allegation 1.2 go much wider that the specific allegation of acquiescence, and even if there is no, or no adequate, finding in relation to acquiescence, there is no basis for overturning the findings in paragraph 91.13 on the remaining allegations comprised within Allegation 1.2 (for which there was no need for any determination in relation to acquiescence).

For these reasons this ground of appeal is not established.

Ground 4 relates to the finding of dishonesty in relation to Allegation 2.2. The key conclusion is found at paragraph 93.6 of the Judgment (set out at paragraph 35 above).

Here the Appellant challenges the Tribunal’s finding that she deliberately and consciously misled the SRA, being a finding of fact. Dr Wilcox disavowed a challenge based on failure to provide adequate reasons. The Appellant makes three main points.

First, the Tribunal’s conclusion of dishonesty based on the Appellant deliberately choosing not to inform the SRA of the Third Respondent’s arrest is directly contradicted by the Tribunal’s own conclusion that there had been no duty to report that arrest. Paragraph 93.6, first, accepts that the Appellant was not under a duty to report the Third Respondents arrest to the SRA but then subsequently suggests that she deliberately chose not to inform the SRA of the arrest. If she was under no obligation to report the arrest, it is difficult to see how she could be held to be dishonest for failing to do so.

Secondly, the Tribunal’s conclusion that the Appellant’s statement that the “restricted access to the office” of the Third Respondent has been based on lack of management experience was deceitful is contradicted by the Appellant’s own witness statement evidence in paragraph 57. In that paragraph she had given a plausible account of the reasons for the Third Respondent’s exclusion from the office, and the Tribunal had failed to grapple with that evidence, namely that the Third Respondent had not been banned from the office but had been asked to stay away until the situation had been rectified and the police have concluded their investigations. In the course of the hearing, the SRA’s case was that the Third Respondent had remained excluded at least in part because the Appellant was concerned about his honesty. The Appellant did not accept this and was adamant that she did not at any stage suspect the Third Respondent of dishonesty. The Appellant’s account was plausible given the Tribunal’s own finding at paragraph 90.10 that the Appellant did not suspect the Third Respondent at the time.

Further, being “given minimal responsibility” is not inconsistent with having been excluded from the office, and in this way the SRA had effectively been informed of the exclusion.

Thirdly, the Appellant challenges the Tribunal’s findings of fact in its conclusion that the Appellant had deliberately failed to inform the SRA of the arrest and exclusion from the office because of her concern about the effect on the application for authorisation. This finding was wrong because it failed to take account of the Appellant’s own evidence at paragraph 57 as to why she had not informed the SRA.

The SRA submits that, against the factual background described previously in the Judgment, the Tribunal had found (at paragraph 93.6) that the Appellant had “deliberately and consciously misled the SRA”; that the email of 7 June 2013 referring to “minimal responsibility at present” was “consciously deceitful” and that the Appellant had “deliberately failed to inform the authorisation department of the Third Respondent’s arrest and exclusion from the office as she was aware that this may have a detrimental effect on the authorisation”.

As to the Appellant’s three specific submissions, first, there is no contradiction in paragraph 93.6 between a finding of no duty to report and the finding of deliberate choice not to inform the SRA. The former relates only to the specific issue arising from the wording of the RB1 form. Secondly, whilst the SRA accepts that at paragraph 90.10, the Tribunal came close to accepting the Appellant’s evidence that she did not believe the Third Respondent to be a fraudster, nevertheless the underlying reason for the Appellant excluding the Third Respondent from the Firm was not relevant to the Tribunal’s finding that the statement in the 7 June 2013 email was consciously deceitful. Even if the Appellant had not suspected the Third Respondent of dishonesty at that time, she failed to mention that he had been arrested and that he had been excluded altogether. Thirdly, the Tribunal’s finding of fact that the failure to inform the SRA of the arrest and exclusion had been deliberate and so as to avoid a detrimental effect upon the application for authorisation was one which the Tribunal was entitled to make and indeed was correct on the basis of the evidence and facts found.

Allegation 2.2 was concerned specifically with the provision of information by the Appellant for the purposes of the authorisation for partnership. The allegation was that the Appellant misled the SRA by failing to provide it with accurate information to enable it to make a decision on her application for authorisation for the partnership. The matters of which the Appellant had failed to inform the SRA were (a) that the Third Respondent had been arrested and (b) that the Third Respondent had been excluded from the office and had not returned since his arrest.

As to the Appellant’s first submission, I do not accept that there is an inconsistency (within paragraph 93.6) between a finding of “no duty to report” and the finding of a deliberate failure to report. In the context of the background facts, the SRA’s pleaded case before the Tribunal, and the structure of the Judgment itself, the finding of “no duty to report” is to, and can only be understood as, a reference to the issue of whether or not the specific requirement to update, arising from the express declaration in the RB1 form (set out in paragraph 9 above) gave rise to an obligation upon the Appellant to inform the SRA of the Third Respondent’s arrest. Mr Levey accepted that if the finding of “no duty to report” is not read as a reference to the specific RB1 form issue, then paragraph 93.6 might not make sense, and thus, to make sense of paragraph 93.6, it must be so read.

The SRA’s initial case had included the contention that the declaration in the RB1 form did give rise to such an obligation (see Judgment, paragraph 93.2 first bullet). By contrast, the Appellant had argued before the Tribunal that “the form did not require the reporting of an arrest” (Judgment, paragraph 93.4). The Tribunal did not accept the SRA’s case on this point: the updating requirement in the RB1 form related to the question of the bringing of criminal charges rather than arrest. To find that the duty to update arising from the form RB1 did not impose a duty to inform the SRA of the arrest (as opposed to charges) did not mean that the failure otherwise to inform could not constitute a deliberate and conscious deception. It was the Tribunal’s view that, whatever the strict position in relation to the duty to update arising from the RB1 form declaration, the Appellant made a conscious and deceitful decision to withhold material information from the SRA when she sent her email on 7 June 2013. That information concerned not just the arrest, but also the exclusion from the office.

The SRA’s case was also based on the fact that the exchanges in June 2013 were positively misleading because they proceeded on the entirely false basis that the Third Respondent was present at the Firm whereas in fact he had been excluded from the Firm. In my judgment, the finding of deliberate failure in paragraph 93.6 goes wider than the subject matter of the “no duty to report”, as it covers not just the arrest, but also the exclusion from the office.

The Appellant’s second and third submissions refer to paragraph 57 of the Appellant’s witness statement, which read, so far as material, as follows:

“It was not so much that Rashad was banned from the office. I asked him to stay away until the matter was rectified and the police concluded their investigation of the file. I did not want him working on any other files as due to what had happened I realised he needed more supervision and I just did not have the time and energy to do that at that particular time. Rashad also appeared upset by the matter and it was distracting the rest of the office. I had a duty to investigate the file internally and needed to do this independently without interference in order properly to fulfil my duties as the compliance officer and felt I would be better able to achieve this with him out of the office while I do my checks. However, I did not suspect he was involved and if he had insisted on being in the office I most probably would have allowed him to sit quietly in another room so as not to let him feel excluded but he agreed not to come in. I simply did not think to inform the SRA at that point as my head was all over the place trying to prevent anything else going wrong.” (emphasis added)

In his second submission, the Appellant contends that the Tribunal failed, adequately or at all, at paragraph 93.6, to address this evidence from the Appellant as to the reason why the Appellant had “restricted the Third Respondent’s access to” the office. I do not accept this contention. First, the Appellant makes clear at paragraph 57 that in fact the Third Respondent had been excluded from the office, and not merely given minimal responsibility as stated in the 7 June email. Secondly, the Tribunal’s finding that he had been excluded “due to the police investigation” is entirely consistent with the first sentence of the Appellant’s own witness statement at paragraph 57. For both these reasons, the email of 7 June was misleading, as found by the Tribunal. Thirdly, and more importantly, in my judgment the reason for the exclusion of the Third Respondent from the office was not directly relevant to the conduct on the part of the Appellant ultimately found by the Tribunal to be deliberately misleading. What was found to be deliberately misleading and dishonest was the failure to inform the authorisation Department of (a) the arrest and (b) the exclusion from the office (as opposed to being given minimal responsibility), in the context of the ongoing application and whatever the precise reason for that exclusion. Even if the Appellant intended to allow the Third Respondent back to the Firm and did not suspect him of dishonesty, the Tribunal took the view that the Appellant had been “consciously deceitful” in dealing with the SRA by giving the false impression that the Third Respondent was working at the firm at a time when he had been arrested and released on bail, and excluded from the firm. The Tribunal was satisfied that the Appellant had acted deceitfully, by not informing the SRA that he had been excluded from the Firm.

As to the Appellant’s third submission, this challenged the key finding of fact in paragraph 93.6 as to the reason why the Appellant had not informed the SRA of the Third Respondent’s exclusion and arrest. The Appellant contends that the Tribunal ignored the Appellant’s evidence in the final sentence of paragraph 57 where she gave an explanation of the reason why she failed to inform the authorisation department of the fact that he had been asked to stay away.

However the Tribunal did not accept that explanation. The conclusion in paragraph 93.6 was that the reason for the failure to inform was that “she was aware that this may have a detrimental effect on the application for authorisation; it was clear that, for a variety of reasons, the First Respondent was anxious for the partnership to be authorised”. In my judgement, that reasoning was cogent and justified in the light of the following factual context. First the Appellant was keen for the authorisation application to go through quickly. Secondly, disclosure of the arrest was very likely to have had a detrimental effect on the application. Thirdly, as the Tribunal expressly found, the Applicant was aware of that detrimental effect. Accordingly, the Tribunal found, that was the reason why she had failed to disclose the arrest and the exclusion.

Further, the Tribunal was entitled not to accept the Appellant’s alternative explanation. First, in fact it was not true that that she had not thought to inform the SRA, since in fact the Appellant did positively inform the SRA of something (i.e. that he had been given minimal responsibility). Secondly, the Tribunal had heard the Appellant give oral evidence, during which she was cross-examined for a substantial period. It had found that her evidence was not credible in general. Whilst, as stated above, that does not prevent this Court from considering whether such a credibility finding was justified, no reasons have been advanced in the course of this appeal to explain why that credibility finding was mistaken. Absent such reason, there is no basis upon which this Court can properly interfere with that finding: see paragraph 40 above.

For these reasons, I do not accept the Appellant’s submissions in relation to the finding of dishonesty concerning Allegation 2.2. This ground of appeal is not established.

In the light of my conclusions at paragraphs 51, 59, 66 and 84 none of the Appellant’s grounds of appeal are established and accordingly this appeal is dismissed.

I will hear submissions as to the appropriate orders to be made consequential upon these conclusions. I propose dealing with consequential matters immediately following the handing down of this judgment, unless either party requests that they be dealt with subsequently and in which event, I will give further directions as to the procedure to be followed, including for the service of written submissions.