JUDGMENT ON AN AGREED OUTCOME

Transcription

1 SOLICITORS DISCIPLINARY TRIBUNAL IN THE MATTER OF THE SOLICITORS ACT 1974 Case No BETWEEN: SOLICITORS REGULATION AUTHORITY Applicant and STEVEN EDWARD EVANS Respondent Before: Mr R. Nicholas (in the chair) Miss J. P. Devonish Mrs L. Barnett Date of Hearing: 20 April 2018 Appearances There were no appearances as the matter was dealt with on the papers. JUDGMENT ON AN AGREED OUTCOME

2 2 Allegations 1. The matter had a significant procedural history which was outlined in the Agreed Statement of Facts and Outcome dated 17 April The allegations in respect of which the Tribunal was considering sanction were: Allegation The firm failed to handle client money received in respect of professional disbursements in accordance with Rules 17 and 20 of the AR 2011 and used the money to fund the general expenses of the firm, resulting in a cash shortage on client account of 58, which he failed to promptly remedy. He thereby breached AR 2011 Rules 6, 7, 17 and 20, behaved in a way that did not maintain the trust the public placed in him and in the provision of legal services in breach of Principle 6, and failed to protect client money in breach of Principle 10. Allegation The Respondent failed to run the firm effectively in accordance with proper governance and sound financial and risk management principles, in breach of Principle These allegations had been remitted to the Tribunal for sanction by the Court of Appeal on 7 March Documents 3. The Tribunal had before it the following documents:- Rule 5 Statement dated 23 February 2015 Judgment of the Tribunal dated 31 March 2016 Orders of Holman J dated 21 December 2016 and 7 February 2017 Judgment of Holman J dated 21 December 2016 Judgment of Holman J on Costs dated 7 February 2017 Order of the Tribunal dated 27 March 2017 Judgment of the Tribunal dated 7 April 2017 Court of Appeal Judgment dated 7 March 2018 Order of the Court of Appeal dated 7 March 2018 Applicant s Schedule of Costs in relation to the Tribunal proceedings dated December 2015 The SRA Principles Agreed Statement of Facts and Outcome dated 17 April 2018 Letter from Russell-Cooke dated 17 April 2018 Factual Background 4. The matter was heard before the Tribunal between 7 and 11 December The Respondent in these proceedings was the Second Respondent in the original proceedings before the Tribunal. 5. In December 2015, the Respondent admitted allegation 2.3 and by a Judgment delivered on 31 March 2016 the Tribunal found that the remaining allegations against the Respondent were not proven. The Respondent was fined 3, and ordered to

3 3 pay the costs of and incidental to the application and enquiry fixed in the sum of 26,370.00, such costs to be paid on a joint and several liability basis with the First Respondent. 6. The Applicant appealed to the High Court against the Tribunal s findings. The appeal was heard by Holman J on 21 December Holman J granted the appeal, finding that allegations 2.1 and 2.4 (as set out in the Rule 5 Statement and the Agreed Statement of Facts and Outcome) had been proven in addition to the admitted allegation at 2.3 above. By a further Judgment dated 7 February 2017 Holman J remitted the issue of costs and sanction to the Tribunal. 7. The Order of the Tribunal dated 11 December 2015 was replaced with an order dated 27 March The Respondent was fined 12, and ordered to pay the costs of and incidental to the application and enquiry fixed in the sum of 27, The Tribunal had assessed the Respondent s liability for costs at 33,200 but had reduced the costs payable by him taking into account his liability to pay the appeal costs before Holman J. 8. The Respondent (and the First Respondent in the Tribunal proceedings) appealed against the findings of Holman J (except for Holman J s findings in respect of the allegations relating to the Respondents breach of Principle 8). 9. On 7 March 2018 the Court of Appeal delivered its Judgment in Wingate and Evans v Solicitors Regulation Authority [2018] EWCA Civ 366. The Court of Appeal allowed the Respondent s appeal against the decision of Holman J that, in respect of allegation 2.1, he breached Principle 6. Following appeal, the allegations found proved against the Respondent were allegations 2.3 and By Order of the Court of Appeal dated 7 March 2018, the Order of the Tribunal dated 27 March 2017 in relation to the Respondent was set aside. The case was remitted to the Tribunal to determine at a further hearing, in the light of the Court s judgment on the appeal, the sanction that should be imposed on the Respondent and the appropriate costs order against him in respect of the Tribunal proceedings (alternatively to be decided by the Tribunal on paper if the sanction and costs are agreed between the Applicant and the Respondent). As a consequence of the Order of the Court of Appeal dated 7 March 2018 the Respondent s liability in respect of appeal costs in the High Court ceased. Application for the matter to be resolved by way of Agreed Outcome 11. On 17 April 2018 the parties invited the Tribunal to deal with sanction in accordance with the Agreed Statement of Facts and Outcome annexed to this Judgment. The parties submitted that the outcome proposed was consistent with the Tribunal s Guidance Note on Sanctions. Findings of Fact and Law 12 The Tribunal had due regard to the Respondent s rights to a fair trial and to respect for his private and family life under Articles 6 and 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms.

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5 Case number: IN THE SOLICITORS DISCIPLINARY TRIBUNAL IN THE MATTER OF THE SOLICITORS ACT 1974 (AS AMENDED) AND IN THE MATTER OF DAVID FENTON WINGATE (A SOLICITOR) AND IN THE MATTER OF STEVEN EDWARD EVANS (A SOLICITOR) B E T W E E N : SOLICITORS REGULATION AUTHORITY Applicant - and - (1) DAVID FENTON WINGATE (2) STEVEN EDWARD EVANS Respondents AGREED STATEMENT OF FACTS AND OUTCOME RELATING TO THE SECOND RESPONDENT Introduction 1. This statement of agreed facts and outcome relates to the allegations made against the Second Respondent, Mr Steven Edward Evans in the above matter. The matter has been remitted back to the Tribunal by the Court of Appeal by an Order of 7 March 2018 for the consideration of sanction and costs against the Second Respondent. The relevant part of the Order records: the case shall be remitted to the Solicitors Disciplinary Tribunal to determine at a further hearing, in light of the Court s judgment on the appeal, the sanction that should be imposed Page 1 of 8

6 on the Second Appellant and the appropriate costs order against the Second Appellant in respect of the proceedings before the Solicitors Disciplinary Tribunal (alternatively to be decided by the Solicitors Disciplinary Tribunal on paper if the sanction and costs are agreed between the parties. 2. The factual background to the matters in question is set out at paragraphs 20 to 85 of the Tribunal Judgment dated 31 March 2016 and is not repeated in this statement. In summary, the Respondents were partners in WE Solicitors LLP, of Ivy Mill, Crown Street, Failsworth, Manchester M35 9BG. The firm primarily undertook personal injury work (industrial disease claims, including mesothelioma and hearing loss cases). In or around the summer of 2012 the firm accepted a loan of 573,000 (net of facilitation fee and insurance premium) from the Axiom Fund. The primary allegations in these Disciplinary Proceedings against the Respondents arose in respect of the firm s use of that loan by contrast to the terms of a written loan agreement. 3. By a Statement made by Paolo Sidoli on behalf of the Solicitors Regulation Authority ( the SRA ) pursuant to Rule 5 of the Solicitors (Disciplinary Proceedings) Rules 2007 dated 23 February 2015, the SRA brought proceedings before the Tribunal making allegations of misconduct against the Respondents. Documents 4. The documents before the Tribunal are: Tab Document Date 1. Rule 5 Statement 23 February Tribunal Judgment 31 March Judgment of Holman J 21 December Judgment of Holman J on Costs 7 February Orders of the SDT 27 March SDT Sanctions Judgment 7 April Judgment of Court of Appeal 7 March Order of Court of Appeal 7 March SRA s Cost Schedule before the SDT December SRA Principles 2011 The Allegations 5. The allegations against the Second Respondent, Mr Steven Edward Evans, made in the Rule 5 Statement dated 23 February 2015 were that: 2.1 The Second Respondent caused or permitted the firm to accept, and use, 573,000 (net of facilitation fee and insurance premium) from the Axiom Fund, and personally benefitted from the money, without making adequate enquiries into whether or not the money had been properly obtained by the firm. He thereby acted without integrity, in breach of Principle 2 of Page 2 of 8

7 the 2011 Principles, and behaved in a way that did not maintain the trust the public placed in him and in the provision of legal services, in breach of Principle The Second Respondent failed to pay the money identified in allegation 2.1 into client account or, if he wrongly but honestly believed it was office money, failed to open an office account whose sole purpose was to hold the money pending its use for an authorised purpose, and failed to keep adequate records of how the money was spent, contrary to Principles 2, 6, 8 and 10 of the 2011 Principles and to Rules 1.2(a), 1.2(b) and 14.1 AR The firm failed to handle client money received in respect of professional disbursements in accordance with Rules 17 and 20 of the AR 2011 and used the money to fund the general expenses of the firm, resulting in a cash shortage on client account of 58, which he failed to promptly remedy. He thereby breached AR 2011 Rules 6, 7, 17 and 20, behaved in a way that did not maintain the trust the public placed in him and in the provision of legal services in breach of Principle 6, and failed to protect client money in breach of Principle The Second Respondent failed to run the firm effectively in accordance with proper governance and sound financial and risk management principles, in breach of Principle 8. Procedural history 6. The matter was heard before the Tribunal on 7 to 11 December 2015 inclusive. The Second Respondent admitted allegation 2.3 and by a Judgment delivered on 31 March 2016 the Tribunal found that the remaining allegations against the Second Respondent were not proven 1. In respect of the Second Respondent, the tribunal made the following order: The Tribunal Ordered that the Respondent, STEVEN EDWARD EVANS, solicitor, do pay a fine of 3,000.00, such penalty to be forfeit to Her Majesty the Queen, and it further Ordered that he do pay the costs of and incidental to this application and enquiry fixed in the sum of 26,370.00, such costs to be paid on a joint and several liability basis with the First Respondent. 7. The SRA appealed to the High Court against the Tribunal s findings and pursuant to section 49 of the Solicitors Act The appeal was heard by Holman J on 21 December By a Judgment under neutral citation number [2016] EWHC 3455 (Admin) Holman J granted the appeal, finding that allegations 2.1 and 2.4 had been proven in addition to the admitted allegation at 2.3 above 2. By a further Judgment dated 7 February 2017 Holman J remitted the issue of costs and sanction to the Tribunal. 8. Accordingly, the Order of the Tribunal set out at paragraphs 421 of the Tribunal s judgment of 31 March 2016 was replaced with an order set out in the Judgment on sanction dated 27 March 2017 at paragraph 97. The order in respect of the Second Respondent read: The Tribunal Ordered that the Respondent, STEVEN EDWARD EVANS, solicitor, do pay a fine of 12,000.00, such penalty to be forfeit to Her Majesty the Queen, and it further Ordered that he do pay the costs of and incidental to this application and enquiry fixed in the sum of 27, The First Respondent had also admitted a similar allegation with the SDT finding that all other allegations against the First Respondent had not been proven. 2 On appeal the First Respondent was found to have acted without integrity, in breach of Principle 2 of the SRA Principles Page 3 of 8

8 9. For the reasons given by the Tribunal in a sanction only judgment dated 7 April 2017 the Tribunal assessed the Second Respondent s liability for costs at 33,200 (see paragraph 87 of that Judgment). However, the Tribunal reduced the costs payable by the Second Respondent taking into account the Second Respondent s liability to pay the appeal costs before Holman J (as to which see paragraph 13 below). 10. Both Respondents appealed against the findings of Holman J (except for Holman J s findings in respect of the allegations relating to the Respondents breach of Principle 8). On 7 March 2018 the Court of Appeal delivered its Judgment in Wingate and Evans v Solicitors Regulation Authority [2018] EWCA Civ The Court of Appeal allowed the Second Respondent s appeal against the decision of Holman J that, in respect of allegation 2.1, he breached Principle 6. Following appeal, the allegations found proved against the Second Respondent as set out above were allegations 2.3 and By the Order of the Court of Appeal dated 7 March 2018, the Order of the Tribunal dated 27 March 2017 in relation to the Second Respondent (see paragraph 8 above) was set aside and the case was remitted to the Tribunal to determine at a further hearing, in the light of the Court s judgment on the appeal, the sanction that should be imposed on the Second Respondent and the appropriate costs order against him in respect of the Tribunal proceedings (alternatively to be decided by the Tribunal on paper if the sanction and costs are agreed between the Applicant and the Second Respondent). 13. As a consequence of the Order of the Court of Appeal dated 7 March 2018 the Second Respondent s liability in respect of appeal costs in the High Court ceased. The Findings 14. Allegation 2.3 Breach of Principle This allegation (see paragraph 6, above) was admitted by the Second Respondent and not considered either before the High Court or Court of Appeal. Accordingly, the relevant findings in respect of this allegation are found within the Judgment of the Tribunal at Paragraphs and to The Tribunals findings as to sanction in respect of this allegation were recorded at paragraphs of the Judgment dated 31 March The Tribunal determined that the breaches were too serious to merit either no order or simply a Reprimand. And the appropriate and proportionate sanction in this case was a fine of 3,000 for each Respondent. 15. Allegation 2.4 Breach of Principle 8 3 The Court of Appeal dismissed the First Respondent s appeal against the decision of Mr Justice Holman on 21 December 2016 that in respect of the allegations that he had breached Principles 2 and 6. Accordingly the Tribunal is not required to reconsider the costs and sanction arising in respect of the First Respondent. Page 4 of 8

9 15.1. This allegation was found not proven by the Tribunal but subsequently found proven in a Judgment of Homan J dated 21 December The findings in respect of this allegation were not the subject of appeal to the Court of Appeal and accordingly the findings of Holman J at paragraphs 130 to 139 record the position: Ground six 130. This ground applies to both respondents Allegations 1.7 and 2.4 of the original allegations allege against each respondent respectively that he: "failed to run the firm effectively in accordance with proper governance and sound financial and risk management principles, in breach of Principle 8." 132. In order to understand the true thrust of this very generalised allegation, it is necessary to quote from allegations 1.6 and 2.3. These allegations allege that the First and Second Respondents respectively failed to handle client money received in respect of professional disbursements in accordance with specified Accounts Rules, resulting in a cash shortage on client account of 58,786.74, which they respectively failed promptly to remedy. This allegation was admitted by each respondent and was found proved and each respondent was fined 3,000 in respect of it The facts, which the tribunal had described at paragraphs 81 to 85, were that after the firm had received payment for professional disbursements (such as counsel's fees) they wrote cheques in settlement of those disbursements which were then entered in the accounting records of the firm as having been paid. In fact, the cheques were not promptly sent to the payees, but were retained, sometimes for many months, so that ultimately fresh updated cheques had to be issued. In this way, the firm represented in its books that a payment had been made when, in truth, it had not been. In the meantime, the money was used for the general purposes of the firm Allegations 1.6 and 2.3 related to professional disbursements and totalled 58,786.74, as stated in the allegation. However, the practice of issuing a cheque, entering it in the books or records as having been paid, but then retaining the cheque, metaphorically or actually, "in a drawer" was more widespread. It was described by the tribunal at paragraph as follows: "The Respondents caused or permitted the Firm to adopt the practice described in relation to allegation 1.6 in relation to the use of payments received from defendants in relation to both non-professional disbursements (namely after the event insurance premiums) and professional disbursements. The Firm would write a cheque for payment of the disbursement and make the corresponding office entry on the office side of the client ledger, but would retain the cheque. As at 31 October 2012 the Firm had written a total of 173 cheques on 84 client matters, to the value of 155, which were not sent to the payee. Some of the payments had been retained in the office account for over 12 months. It was submitted that the Firm's purpose in retaining the cheques was to use the monies received in respect of disbursements to fund the expenses of the Firm." 135. Although they there set out the alleged facts of allegation 1.7, the tribunal appear to have given no reasons at all as to why this particular allegation (which each respondent had admitted) had not been proved against them. Page 5 of 8

10 20. Paragraph 2 of the Tribunal s directions for the remitted appeal proceedings dated 14 March 2018 required the parties to submit an agreed outcome to the Tribunal no later Page 6 of The short submission of Mr Coleman under ground six is that the findings of the tribunal in this regard should not be confined to the 58, which was the subject of allegations 1.6 and 2.3, but should encompass, by findings also under allegations 1.7 and 2.4, the full extent of the practice, namely 155, Mr Treverton-Jones submits that this ground of appeal is "completely pointless". The respondents have already been fined 3,000 each in relation to the retention of professional disbursement cheques in the sum of 58,786.74, and he appropriately cautions against any double accounting or double penalty As the full extent of the practice is admitted, and as the greater the scale upon which a malpractice is committed, the more serious it becomes, I should, in my view, allow the appeal under ground six, but the order must be drafted in such a way as to avoid the double accounting against which Mr Treverton-Jones very rightly cautioned me To retain cheques to the tune of 155,878 is plainly even more serious than to retain them to the tune of 58,786, and I will have to consider this afternoon what additional sanction or substituted sanction should be imposed additional to, or in substitution for, the fines of 3,000 against each respondent which have already been paid. I will take great care not to impose a double penalty; nor will I fall into the crude trap of saying that as the total sum involved is roughly three times greater, so the fines should be three times greater Under ground six, findings must be recorded against both Mr Wingate and Mr Evans that they respectively failed to run the firm effectively and in accordance with proper governance and sound financial and risk management principles in breach of Principle Relevant emphasis has been added above in respect of Holman J s finding that the fine against the [Second] Respondent in respect of the breach of Principle 8 should take into account the fine already imposed in respect of the breach of Principle 10 and should not merely be a multiple of that fine base on the total sums involved. Previous Disciplinary Matters 17. The Second Respondent has not been the subject of any prior disciplinary proceedings. Agreed outcome 18. Following the Court of Appeal s Order of 7 March 2018 and in light of the findings of the Tribunal in respect of allegation 2.3 and the findings of Holman J in respect of allegation 2.4 the Second Respondent agrees to pay: a fine of 5,000; and costs to the SRA of 20, Paragraph 2(e) of the Order of the Court of Appeal dated 7 March 2018 records that the Tribunal may decide the sanction and appropriate costs order against the Second Respondent on paper if the sanction and costs are agreed between the parties.

11 than 28 days before the date fixed for the substantive hearing of the Application (unless the Tribunal directs otherwise). Accordingly, the parties respectfully request that in light of recent agreement as to the outcome that the Tribunal makes such direction as will enable it to consider this statement of facts and the outcome sought by the parties. 21. It is agreed between the parties that the SRA will not enforce the order immediately and that those costs pertaining the SDT hearing alone and agreed at 20,000 will be set off against any High Court and Court of Appeal Costs payable to the Second Respondent pursuant to the Order of the Court of Appeal dated 7 March 2018 (such costs will be subject to detailed assessment in those proceedings if not agreed). 22. The Parties submit that in light of the admissions set out above, the proposed outcome represents an appropriate and proportionate resolution of the matter, consistent with the Tribunal s Guidance Note on Sanctions 5th Edition. Pursuant to paragraph 2.1(b) of the Tribunal s directions dated 14 March 2018, the reasons as to why such an order would be in accordance with the Tribunal s sanctions guidance are: The Second Respondent has admitted allegation 2.3 and the High Court has determined the Second Respondent s breach in respect of allegation 2.4. The facts in relation to both allegations are not in dispute having been the subject of findings of fact set out in paragraphs 14 and 15 above The level of fine has been reduced from Level 3 (conduct assessed as more serious) to Level 2 (conduct assessed as moderately serious) and the costs having been reduced from 33,000 to 20, The Tribunal has previously determined that the Respondents should pay a reasonable proportion of the SRA s legal costs of 113, (see paragraph 85 of the Judgment of 31 March 2016) The Tribunal s initial fine of 3,000 was assessed on the basis of allegation 2.3 only. The Tribunal s fine of 12,000 was assessed on the basis of that allegations 2.1, 2.3 and 2.4 had been upheld. Now that the most serious allegation, allegation 2.1 (principle 6) has fallen away as a result of the Court of Appeal s Judgment and Order of 7 March 2018, the parties agree that a fine of 5,000 in respect of allegations 2.3 and 2.4 is both proportionate to the breaches that have now been upheld and consistent with the tribunal s previous decisions on sanction Finally, the agreed sanction and costs takes into account the comments of Holman J at paragraph 139 of his Judgment (see paragraph 15 above). Agreed by the parties on 17 April 2018 Page 7 of 8

12 Signed: RUSSELL COOKE LLP Russell-Cooke LLP On behalf of the Solicitors Regulation Authority Date: 17 APRIL 2018 Signed: S E EVANS Mr Steven Edward Evans Date: 17 APRIL 2018 Page 8 of 8