No. 10515-2010 SOLICITORS DISCIPLINARY TRIBUNAL SOLICITORS ACT 1974 IN THE MATTER OF ELIZABETH MARGARET WARD, solicitor (The Respondent) Upon the application of Shirley Ann Bothroyd Appearances Mr K W Duncan (in the chair) Mrs K Thompson Mr M C Baughan Date of Hearing: 26th January 2011 FINDINGS & DECISION Margaret Bromley, solicitor, of Bevan Brittan, Kings Orchard, 1 Queen Street, Bristol, BS2 0HQ, appeared on behalf of the Applicant, Shirley Ann Bothroyd, who was not present. The Respondent appeared in person. The application to the Tribunal, together with a statement expressed to be pursuant to Rule 4(2) of the Solicitors (Disciplinary Proceedings) Rules 1994 had been made on 27 April 2010. The Tribunal had certified there was a case to answer on 23 June 2010. Preliminary Matters On behalf of the Applicant Mrs Bromley applied to amend the statement in this matter so that it was expressed to be pursuant to Rule 5 of the Solicitors (Disciplinary Proceedings) Rules 2007 and so that it referred to breaches of Rules 1.02 and 1.06 of the Solicitors Code of Conduct 2007 ( SCC ), rather than to alleging Conduct unbefitting a solicitor pursuant to the Solicitors Practice Rules 1990 ( SPR ). The Respondent indicated that she consented to the amendment requested. The Tribunal gave permission for the Applicant s statement to be amended to the extent necessary, so that it now referred to the current Rules of the Tribunal and the SCC. The Tribunal noted that as part of the application the Lay Applicant, a barrister, sought an Order that the Respondent should pay Counsel s outstanding fees which the Tribunal was informed were 9,351.68, including interest, as at the date of the Tribunal hearing.
2 The Tribunal noted that under the SPR non-payment of Counsel s fees was, almost automatically, conduct unbefitting a solicitor. It was confirmed that under the SCC there is no equivalent provision and the allegations were now made on the basis of breaches of Rules 1.02 and 1.06 of the SCC. Rule 1.02 is the duty to act with integrity and Rule 1.06 is the duty not to behave in a way that is likely to diminish the trust the public places in the solicitor or the profession. Allegations The allegation against the Respondent was that she had been guilty of a breach of Rule 1.02 and 1.06 of the Solicitors Code of Conduct 2007 in that: (i) (ii) (iii) (iv) She failed to promptly pay Counsel s fees for which she was liable; She failed to comply with the Decision of the Joint Tribunal received under cover of a letter dated 16 March 2010, whereby she was found to owe the Applicant 16,108.23 plus VAT and interest, making a total award of 19,192.61; She failed to comply with the Joint Tribunal s Standing Orders, Regulation 10, which states that, Payment of any sum found to be due shall be made within 14 days of the date of notification of any determination by the Joint Tribunal ; and In correspondence she gave as her reason for refusal to pay: I note what Regulation 10 says but the facts of the matter are that I don t have the money to pay this amount.... Accordingly the Respondent and her firm, Virtuoso Legal, were continuing to practise/operate when they are unable to pay their debts. Factual Background 1. The Respondent was admitted as a solicitor in 1996. Her name remained on the Roll of Solicitors at the date of the hearing. At all material times the Respondent practised as the sole principal of the firm Virtuoso Legal, Solicitors, of 31, Harrogate Road, Leeds, LS7 3PD, a firm which dealt primarily with intellectual property and information technology law. 2. In early 2008 the Respondent was instructed by a company, SHR, and Ms MS, a Director of SHR. The Respondent s clients were the Second and Third Defendants in litigation instigated by a company, ELAS. The matter proceeded swiftly from its initial stages when an injunction was obtained against the Respondent s clients in January/February 2008 to a trial date set for April 2008. 3. The Respondent instructed three Counsel in relation to the matter. The Applicant was the Senior Counsel, a junior carried out other work and a third barrister dealt with a particular aspect of the case. 4. The Applicant rendered fee notes to the Respondent in April 2008. Payment of the fees was not made in full and in November 2008 a costs assessment hearing took place before Master Gordon-Saker. As a result of that hearing the Respondent s overall costs were reduced to the level estimated to the client, some 85,000, which figure was to include Counsel s fees. There was no clear apportionment in the
3 Master s decision between the costs payable to Counsel and those payable to the Respondent. 5. The matter was referred to the Joint Tribunal of the Law Society and the Bar Council, with the agreement of both the Applicant and Respondent. By an Order made on 17 February 2010, later corrected due to a miscalculation on 16 March 2010, the Joint Tribunal determined that the Respondent should pay the Applicant the sum of 19,192.61, such payment to be made within 14 days. The Joint Tribunal had determined that interest should be payable on the outstanding fees. 6. It remained the case that Counsel were not able to sue for unpaid fees. Witnesses 7. The Respondent gave oral evidence, having chosen to submit herself to giving evidence under oath and be cross-examined. 8. The Applicant did not attend the hearing and relied on a bundle of documents provided with the application. Findings as to Fact and Law 9. The Respondent had admitted, and the Tribunal found, that she had not paid in full counsel s fees for which she was liable. Further, she had not complied with the decision of the Joint Tribunal of 16 March 2010 in that she had not paid the Counsel s fees determined by the Joint Tribunal in full. Further, the Respondent had admitted and the Tribunal found that the sum due had not been paid within 14 days of the notification of the determination, as required by the Joint Tribunal s Standing Orders (Regulation 10). Further, the Respondent had admitted, and the Tribunal found, that the Respondent had not paid the sums due because of financial difficulties. The issues the Tribunal had to determine were whether, in the circumstances, the Respondent was in breach of Rule 1.02 and/or Rule 1.06 of SCC. 10. The Applicant s solicitor had submitted that the admitted facts all gave rise to the allegation that the Respondent had behaved in a way that was likely to diminish the trust the public placed in her or the profession. The Applicant s solicitor had further submitted that in failing to comply with the Joint Tribunal s Decision, and in failing to make the payment due within 14 days, the Respondent had failed to behave with integrity, in breach of Rule 1.02. 11. The Tribunal had heard from the Respondent, who had been cross-examined and asked questions by the Tribunal, about the circumstances which had led to the nonpayment of Counsel s fees promptly and her intentions and attempts to pay those fees. The Tribunal accepted the Respondent s evidence that she had at all times intended to pay the fees properly due to Counsel. At the time she had agreed to have the matter referred to the Joint Tribunal, and had accepted the Joint Tribunal s Standing Orders, the Respondent had believed that she would be able to borrow funds in order to pay whatever sum was found due promptly, and in accordance with the Standing Orders. The Tribunal had further heard from the Respondent, and accepted, that due to ongoing divorce/ancillary relief proceedings, the Respondent was unable to raise funds by way of secured borrowing. Unsecured borrowing had not been possible for
4 her in the current economic situation. The Respondent had, in fact, been able to borrow 8,000 from a friend which she had used to discharge Counsel s fees in part, rather than using those funds within her own practice. The Respondent had frankly admitted that she had business debts, but her largest single creditor was the Applicant. The Respondent s evidence that she had been unable to borrow further, either by way of secured or unsecured loans, was accepted by the Tribunal. The Tribunal further accepted that the Respondent had made offers to pay Counsel s fees by instalments, which offers had not been accepted by the Applicant. 12. In that the Respondent had believed at the time of her submission to the jurisdiction of the Joint Tribunal, that she would be able to pay the sum awarded by the Tribunal promptly, and in compliance with that Tribunal s Standing Orders, the Tribunal did not find any lack of integrity on the part of the Respondent, so the alleged breach of Rule 1.02 had not been made out. 13. With regard to the alleged breach of Rule 1.06, the Tribunal was not satisfied on the facts of the case that the Respondent s behaviour was such as to be likely to diminish the trust the public would place in her or the profession. The fact that a solicitor was unable, for a period, to pay a debt (especially as here, where there had been a rather fraught dispute between the Applicant and Respondent about the sums payable), should not undermine the confidence of the public in the profession. Accordingly, the alleged breaches of Rule 1.06 SCC had not been proved. 14. The Tribunal had accepted the Respondent s evidence that she had intended to pay the sum due and that she would in fact pay Counsel s fees, as required, as soon as she was in a position financially to do so. Determination of Application for an Order for Payment 15. The Tribunal accepted that at the date of the hearing the sum which the Respondent should pay to the Applicant was correctly calculated at 9,351.68. The Tribunal noted and accepted that the Respondent had stated that she would pay a further 1,000 towards the outstanding sum by the end of January 2011. 16. The Applicant had applied under Section 47 of the Solicitors Act 1974 (as amended) for an Order of the Tribunal that the Respondent should pay Counsel s fees. Under Section 47(2) of that Act it was stated that the Tribunal shall have power to make such order as it may think fit. The section contains a list of the orders the Tribunal may make. It was accepted that the list is not exhaustive, and the Tribunal could make orders which were not listed, eg for a solicitor to file accounts. 17. The Tribunal noted that in The Solicitors Handbook 2011, which was stated to be up to date to a date in 2010, there appeared to be provision under sub-section (3B) of s.47 which stated, For the avoidance of doubt, nothing in this section permits the Tribunal to make an order requiring redress to be made in respect of any act or omission of any person. After enquiry, the Tribunal was satisfied that the part of the Legal Services Act 2007 which provided for this amendment had not come into force. In any event, the Tribunal noted that it was arguable whether redress would cover an order for payment of a debt. The Tribunal did not have to determine this point, but considered it possible that the section was meant to deal with compensation which could be awarded by the Legal Services Ombudsman.
5 18. The Tribunal noted that under Schedule 1A, Section 5 of the Solicitors Act 1974, it could make orders making a direction of a SRA Adjudicator enforceable as if contained in an order made by the High Court. It did not appear to the Tribunal that that particular power extended to the enforcement of an order made under Section 47(2) of the Act for payment of Counsel s fees or the like. 19. The Tribunal was satisfied that it had the power to make an order for payment of the Applicant s fees, albeit not an order to make payment subject to enforcement in the same way as a High Court order. 20. The Tribunal then considered under Section 47(2) whether such an order should be made, given that it had the power to make such order as it may think fit. 21. Given that the allegations against the Respondent had been dismissed, and that the Respondent had made it clear that she intended to pay the sums due to the Applicant, the Tribunal did not consider it appropriate to make an order for payment under Section 47(2). Costs 22. In the light of the dismissal of the allegations, and refusal of an order under Section 47(2), the Applicant s solicitor was not in a position to apply for an order that the Respondent should pay the Applicant s costs. In this instance the Applicant was a private individual, and the position was not the same as for the SRA which had a regulatory duty to investigate and prosecute appropriate cases. 23. The Respondent informed the Tribunal that she was not prepared to make an application for costs against the Applicant. However, she was in any event content with the Tribunal s decision and would not seek costs. 24. Accordingly, the application was dismissed, with no order for costs. Order 25. None. Dated this 2 nd day of March 2011 On behalf of the Tribunal K W Duncan Chairman