PETITION OF CAMERON STUART FYFE AGAINST THE COUNCIL OF THE LAW SOCIETY OF SCOTLAND AND ANOTHER
SECOND DIVISION, INNER HOUSE, COURT OF SESSION
[2017] CSIH 6
P1161/16
Lord Justice Clerk
Lord Bracadale
Lord Drummond Young
OPINION OF THE COURT
delivered by LADY DORRIAN, the LORD JUSTICE CLERK
in the Petition
of
CAMERON STUART FYFE
Petitioner
against
THE COUNCIL OF THE LAW SOCIETY OF SCOTLAND and ANOTHER
Respondents
Petitioner: Sutherland, QC; Drummond Miller LLP
First Respondent: Dunlop, QC; T C Young
31 January 2017
[1] This is an appeal in terms of section 54 of the Solicitors (Scotland) Act 1980 challenging the decision of the respondent that the petitioner’s name should be struck from the Roll of Solicitors.
Background
[2] On 27 September 2016 the Scottish Solicitors Discipline Tribunal found the petitioner guilty of professional misconduct and ordered his name to be struck from the Roll. The findings related to a period between 4 April 2008 and 6 May 2011 during which time the petitioner was a partner with the firm of Ross Harper, having been a partner thereof from 1 September 1982 until the latter date above. The firm itself was dissolved on 4 April 2012 following appointment of an interim judicial factor at the instance of the first respondent.
[3] In the discipline proceedings the petitioner accepted that in the relevant period he permitted to be operated, or acquiesced in, a policy where the business of the firm of Ross Harper was improperly funded by payments due to third parties, and that by his acquiescence he contributed to the operation of the policy, which is described in greater detail below. The petitioner also counter-signed an accounts certificate dated 10 May 2010 which he knew or ought to have known was inaccurate and from which the true financial position of the firm was not evident to the Law Society of Scotland. It is accepted that his actions were in breach of the Solicitors (Scotland) Account etc. Rules 2001, the Code of Conduct for Scottish Solicitors and the Solicitors (Scotland) (Standards of Conduct) Practice Rules 2008, and that they constituted professional misconduct. Funds received from SLAB in respect of fees and outlays due to third parties may be paid into the firm account, but unless payment is made forthwith these sums should be transferred to the client account. Retaining them within the firm account is a clear breach of the Accounts Rules.
[4] The allegations regarding the operation of the scheme were set out in a detailed complaint against the petitioner and another partner, Alan Susskind who had been the managing and cash room partner at the relevant time. In terms of a joint minute, the petitioner admitted certain of the averments in the complaint. Of particular importance were paragraphs 2.7; 2.8; and 4.2 (a) and (b).
[5] Paragraph 2.8 averred that
“The Second Respondent and members of staff under his supervision were aware of the operation of the policy known as "the drawer", and which continued to be operated by cashroom staff during the period when the Second Respondent was a Partner within the firm up until the date he resigned from said firm. “
This averment was admitted.
[6] Paragraph 2.7 explained the manner in which the policy had operated, as follows:
“The said firm operated a policy referred to as “the drawer” in order to improve the firm’s cash flow. This operation existed in legal aided cases. The funds were received from the Scottish Legal Aid Board and paid into the firm account. Cheques were printed in respect of payments due to third parties according to invoices received, but then were not signed and sent out until such time as the firm’s cash flow permitted the cheques to be issued.
A number of entries were then created on the client ledgers to show that cheques were issued in payment to third parties in respect of these outlays. These entries were then reversed in the following months to show that the cheques had not been cashed and the funds were re-credited to the client ledgers. New entries were then made to show that fresh cheques had then been issued. These entries were also then reversed in the following months to show that the cheques had not been cashed and funds re-credited to the ledger. New entries were eventually made to show that fresh cheques had been issued in respect of the outlays.
The creation of these entries in the ledgers was made to show that cheques had been issued and funds had left the firm’s account, when the cheques were being held and had not been issued outside the firm’s premises. The client ledgers gave the impression that payments due to third parties had been made by the firm when the funds actually remained in the firm account. This was designed to show that there were sufficient funds in the firm’s account to meet all its current liabilities to clients. Payments issued by the Scottish Legal Aid Board to the firm are deemed to be clients’ funds and are utilised to pay specific outlays on behalf of specific clients and to specific third parties, including payments due to other solicitors. They were not used for this purpose but were used to improve the financial position and cash flow of the firm and to obscure the true level of the firm’s liabilities and overdraft. They created a misleading and inaccurate representation of the firm’s accounting position. The operation of this policy was a wrongful and improper use of client’s funds without the knowledge or consent of the clients to allow the said firm to continue to trade and operate within the limit of its banking facilities.”
This paragraph was admitted.
[7] Paragraph 4.2 averred:
“(a) The Second Respondent during his tenure as a partner and principal in the said former firm of Ross Harper and, in particular, during the period from 4th April 2008 to 6th May 2011 permitted to be operated or acquiesced in a policy whereby the business of the former firm was improperly funded by payments due to third parties, and that by virtue of his status as a Partner or principal of the former firm, he by his acquiescence contributed to the operation of that policy of funding and, in particular, sums received from the Scottish Legal Aid Board were deposited in the firm's bank accounts, and cheques were thereafter drawn on those accounts and the purported payment of third parties outlays made which had been incurred on behalf of the former firm's clients. Said policy resulted in sums validly due to third parties not being timeously paid. Corresponding entries were reflected in individual client ledgers but the cheques drawn on the firm's account were not issued to the appropriate parties at the relevant time with the funds thereby remaining in the firm account all in breach of the Solicitors (Scotland) Accounts etc Rules 2001, the Code of Conduct for Scottish Solicitors, and the Solicitors (Scotland) (Standards of Conduct) Practice Rules 2008.
(b) Separatim the Second Respondent submitted to the Law Society of Scotland an Accounts Certificate, dated 10 May 2010, which he knew or ought to have known was inaccurate, thereby the true financial position of the firm was not evident to the Law Society of Scotland.”
These paragraphs were admitted.
[8] It was admitted that during the relevant period payments in the region of £70,000, which should, on receipt, have been paid to the firm’s Edinburgh agents, were delayed in accordance with this policy, only being paid when an action was raised and diligence executed. The respondents’ investigation uncovered 32 files and ledgers which gave cause for concern, in respect of nineteen of which the petitioner was the nominated solicitor and partner. Payment of outlays, including fees due to professional witnesses was delayed, sometimes for lengthy periods of time.
[9] At the Tribunal hearing, it was accepted by the fiscal that the petitioner did not instigate the system and that it had been in use for many years. It was also accepted that the petitioner did not sign any of the cheques from the drawer, or see any of the ledger cards. It was not established who decided to operate the policy. It was accepted by the fiscal that the use of the drawer system became more prevalent after the petitioner resigned as partner on 6 May 2011 and that it “may have therefore spiralled somewhat out of control in the 11 months after his resignation”. The fiscal relied on certain memos in which the petitioner had asked the cash room to make payments from the drawer. He also relied on the admitted averments in paragraphs 2.7 and 2.8.
[10] It is clear that the fiscal did not seek to aver dishonesty on the part of the petitioner, but the exact detail of the concession is somewhat difficult to identify, a matter to which we will return.
[11] The part of the Tribunal’s decision which is challenged in particular occurs at p 104 of the determination and is in the following terms:
“The Tribunal considered carefully what the parties had said in mitigation on the last occasion including the several letters of support from some eminent members of the profession. The Tribunal had discussed the case at length. The Tribunal noted with care the Fiscal's concession that there was no dishonesty averred and none admitted. The Tribunal took that to mean that individually there was no immediate personal financial gain to either of the Respondents. The Tribunal however could not ignore that the Respondents did obtain a benefit through the wrongful use of the client funds which are meant to be sacrosanct. To their knowledge, third parties were denied either timeous payment or payment at all for services the firm had requested. The Tribunal had been advised that the shortfall in funds at the time the Respondents left the firm was approximately £40,000 although the action for payment by their Edinburgh agents was for £70,000. One year after they left the shortfall seems to have increased to £400,000. The Tribunal was also advised that it was left to a member of the cashroom staff to whistle blow and effectively uncover the practice. Had either Respondent brought their wrongful conduct to the attention of the Law Society by refusing to sign the accounts certificate, perhaps the shortfall would not have risen to such an extent. Theirs was a continuing course of deceitful conduct in relation to the firm's cashroom operating practices.”
Submissions for the petitioner
[12] Senior counsel for the petitioner submitted that the decision to remove his name from the Roll of Solicitors was grossly disproportionate to the circumstances of the case. Although there were several grounds of appeal, some were not insisted in. Those which remained largely fell into three categories of alleged error: (1) either incorrectly finding that there was dishonesty, or at least failing to recognise that this was not a case in which dishonesty was averred; (2) failing adequately to distinguish between the role of the petitioner and Mr Susskind in relation to their relative culpability; and (3) adopting an erroneous approach to the question of sanction.
(1) dishonesty and deceitfulness
[13] The Tribunal’s finding that the petitioner’s conduct was deceitful was not consistent with the concession that no dishonesty was averred or admitted. In stating that they took this concession to mean only that there was no personal immediate financial gain, the Tribunal erred, there being no basis for such a restriction. The plea had been agreed very carefully on the basis that it was accepted that there was no dishonesty. Had it been otherwise, the petitioner would have been likely to have taken a different approach.
[14] Furthermore, the case proceeded on the basis that the petitioner’s degree of knowledge of the scheme was a limited one, restricted to the practice of delaying payment by writing cheques but not issuing them. This is what was intended by his acknowledgement of the existence of the “drawer” policy. The petitioner knew nothing about what counsel described as the “write back”, the practice of issuing cheques, making an entry in the ledger, cancelling the cheque, and reissuing it with a fresh entry, perhaps repeatedly. She maintained that there was a clear agreement with the fiscal that this was accepted to be the basis upon which the plea had been tendered, and insofar as the Tribunal had proceeded on any other basis it had erred.
[15] So far as the account certificate is concerned, the primary signatory to this was the cash room partner. The petitioner counter-signed this. This was the only certificate he signed. The petitioner avers that signing such certificates was not part of his normal duties, that he had no cash room training, that he was required to sign the certificate as it required to go out urgently, and that he signed it in the belief that it was accurate.
[16] An allegation of dishonesty against a professional individual is a matter which requires to be very clearly alleged and established. In disciplinary proceedings, for dishonesty to be established requires proof of both an objective and a subjective element, as would be the case in a criminal allegation, all as set out in Bryant & Another v The Law Society [2007] EWHC 3043 (Admin). In the present case no subjective element of dishonesty could be found, and the Tribunal erred in concluding that there had been any dishonesty.
[17] The Tribunal had before it many testimonials relating to the petitioner. These were relevant not only in mitigation, but in considering the petitioner’s propensity for dishonesty, should that be a matter which it was open to the Tribunal to consider. It was not possible to read the Tribunal’s finding of deceitfulness as primarily relating to a lack of integrity, no such matter having been raised before the Tribunal.
(2) The relative positions of the petitioner and Mr Susskind
[18] The Tribunal failed to distinguish the case of the petitioner, and his level of culpability, from that of the cash room partner against whom similar complaints had been established, but, in the case of that partner on the basis that he had in fact managed the policy, and knowingly contributed to the operation of it. The petitioner had no managerial role during the relevant period, and no involvement in the management or running of the cash room. His role was one of omission compared to the active participation of the cash room partner. The Tribunal erred in failing to recognise this.
(3) Sanction
[19] The Tribunal erred in concluding that its only choice was between suspension and removal from the Roll. It has never been suggested that the petitioner presented any risk to any member of the public. He has been permitted to practice since the initiation of the investigation in 2012. Removal from the Register of Practitioners normally arises in cases of serious dishonesty linked to professional activities in circumstances where it is the only means of protection available for the benefit of the public. The Tribunal was critical of the petitioner for not “blowing the whistle” when he left the firm. This was unjustified.
[20] Counsel referred to the Scottish Solicitors’ Discipline Tribunal “Indicative Outcomes Guidance” as illustrating the powers of the Tribunal and the factors which might be relevant to any particular kind of disposal. She referred to Censure & Fine; Suspension and Striking Off. The reputation of the profession in the eyes of the pubic would be adequately met by a restriction on the petitioner’s practising certificate: striking off was neither appropriate nor necessary. There was a public interest in not depriving the public of the services of a valuable professional who had been a crusading solicitor engaging in a great deal of pro bono work: Giele v General Medical Council [2011] 1 WLR 942. The Tribunal failed to take account of the references vouching the petitioner’s good character, and the fact that no complaint had been made against him in his prior years of practice.
Submissions for the respondent
[21] Senior Counsel for the respondent began by referring to the test which applied before this court would be justified in interfering with the decision of a specialist Tribunal, under reference to Molubi v Nursing Midwifery Council [2016] CSIH 95 paragraph 16 (Lord Malcolm, delivering the opinion of the court):
“It is well settled that the court must afford respect to the decisions of specialist professional tribunals, whose primary concern is the public interest, not the individual circumstances of the person concerned, nor with notions of punishment. As was observed in Dad v General Dental Council [2010] CSIH 75: ‘The court should be slow to interfere with a decision of a professional conduct tribunal as to what is necessary for the protection of the reputation of the profession’ (paragraph 13). The court will only act in cases of clear error, or where an order is excessive or disproportionate. It is sometimes said that the decision must be ‘plainly wrong’”
In General Pharmaceutical Council v Khan [2016] UKSC 64 the United Kingdom Supreme Court had reiterated that test (para 36):
“36 An appellate court must approach a challenge to the sanction imposed by a professional disciplinary committee with diffidence. In a case such as the present, the committee's concern is for the damage already done or likely to be done to the reputation of the profession and it is best qualified to judge the measures required to address it: Marinovich v General Medical Council [2002] UKPC 36, para 28.”
The question is whether the Tribunal has gone outside the wide ambit available to it, bearing in mind that its primary aim is the protection of the reputation of the profession (Bolton v Law Society [1994] 1 WLR 512 at p 518).
[22] In all of this it was important to bear in mind the central importance of the client account which was described in Bolton as “sacrosanct”, a description echoed in McMahon v Law Society of Scotland 2002 SC 475. The whole purpose of a client account is that funds are “ring fenced” from creditors either by attachment or insolvency. As soon as money which is not the firm’s is allowed to rest in the firm account the whole principle of the client account is destroyed, and the funds exposed to risk. The offsetting of the firm’s overdraft against client funds exposed that money to a very real risk of being lost.
[23] The effect of the drawer scheme was two-fold. First, it meant that the operation of the firm was funded via illicit use of third party funds. Second, it meant that those funds – by being kept in the firm account rather than in the client account – were exposed to the risk of attachment or an insolvency event. The latter did in fact eventuate, since when the firm was duly dissolved, there was a shortfall of £400,000 resulting from the operation of the scheme with the result of a substantial claim on the guarantee fund. Although the petitioner was not involved in the inception of the scheme, he was aware of it, and acquiesced in its operation for a period of over three years and signed an accounting certificate which he knew or ought to have known was false. The petitioner’s submissions failed to acknowledge the gravity of the offences.
[24] The Tribunal was entitled to find that the petitioner’s involvement in the system, and his knowledge thereof, demonstrated a serious lapse of integrity on his part. The explanation now advanced, of lack of knowledge on the part of the petitioner of part of the scheme, is impossible to reconcile with his plea of guilty or with the joint minute of admissions. Counsel for the petitioner cannot ask the court to look behind these.
[25] The petitioner was aware that cheques were printed and then, instead of being sent out to the intended recipient, placed in a drawer. It is impossible to dispute his involvement in conduct which was deceitful. The whole scheme was designed, as the petitioner well knew, to withhold money from the intended recipients in order to benefit the firm. In any event, even on the basis of knowledge contended for by the petitioner, the conduct was deceitful. The whole point was to create an impression that money which had been paid into the firm account, and which could only properly be paid into that account if immediately disbursed, had been so disbursed when it had not – that is the deceit.
[26] The Tribunal accepted the concession that there had been no dishonesty in a criminal sense, in that the mens rea to commit an offence was not established (although it was submitted that on the basis of McMahon they might have been able to do so). It was clear that the Tribunal proceeded not on the basis of dishonesty, but on the basis that the conduct, involving deceit, constituted a want of integrity. A finding of dishonesty is not a prerequisite for such a finding: Scott v Solicitors Regulatory Authority [2016] EWHC 1256 (Admin), where Sharp LJ observed (para 48):
“The fact that the appellant was, in the event, found not to have been dishonest, plainly did not mean that it was not open to the SDT to conclude that he lacked integrity. There is an obvious distinction between the two concepts, … A person can lack integrity without being dishonest. One example which applied here, was by being reckless as to the use of various client accounts.”
[27] The Tribunal had regard to the different roles played by the petitioner and the cash room partner, the weight to be accorded to each being a matter for the Tribunal. The Tribunal recognised that it would be easy to lay more blame on Mr Susskind but gave cogent reasons for not doing so. Over several years the petitioner acquiesced in a scheme in plain breach of the Accounts Rules, involving deception and a clear lack of integrity. The benefit to the petitioner, referred to by the Tribunal, came in the form of a “free” overdraft created by the operation of the drawer creating a benefit to the firm and all of its partners.
[28] The Tribunal was entitled to take the view that the only realistic choice was between suspension and striking off. As a specialist body it was best placed to assess what it considered necessary for the reputation of the profession. Restriction on his practising certificate would have little practical impact on the petitioner who is currently working in an equivalent capacity (ie not as a principal) for his current firm. The Tribunal was entitled to conclude that such a disposal would not suffice to maintain the reputation of the profession whilst sustaining public confidence in its integrity. It is not necessary for dishonesty to be established before striking off is the appropriate sanction. For a clear lapse in integrity with the client account knowingly left permanently in deficit, striking off is plainly appropriate.
[29] The Indicative Guidance is just that: guidance. It does not involve a mere “box ticking” exercise. However, if one has regard to the guidance in relation to Striking Off, Counsel submitted that all but the element of dishonesty had been established in this case. In McMahon v Law Society of Scotland para 21, the court had observed that where client account was repeatedly and persistently in deficit it was difficult to see how the result could be anything other than suspension: here the scheme operated to leave the client account permanently in deficit.
[30] The fact that the skills of a solicitor will be lost to the profession, and the public, is of limited relevance. There will be circumstances in which nothing less than erasure would be appropriate, whatever the skill of the practitioner (Giele, para 30).
Analysis
[31] We do not repeat the test which applies in cases such as this, which we consider to have been correctly set out by counsel for the respondent, adding merely that in Khan the UKSC added a rider to the passage quoted in three respects: that following Ghosh v General Medical Council [2001] UKPC 29 the court’s power may be less inhibited than it once was; that on an appeal against sanction the question is whether it was “appropriate and necessary in the public interest or was excessive and disproportionate”; and that the court may more readily depart from the assessment of the professional body on the effect on public confidence where the case does not relate to professional performance than in cases such as the present, where it does.
Absence of dishonesty
Knowledge of the system
[32] The argument that his knowledge was limited in the way advanced by senior counsel on his behalf is one which is contrary to the admitted material which was placed before the Tribunal, and the terms of the misconduct which he admitted. Acquiescence requires knowledge. In our view the argument that the Tribunal was not entitled to proceed on the basis that the petitioner’s knowledge extended to the general operation of the scheme and its consequences is not tenable. Paragraphs 2.7 and 2.8 of the complaint were admitted in their entirety, and unequivocally. The misconduct of which the petitioner was guilty was set out in paragraphs 4.2(a) and (b), both of which were also admitted unequivocally. Apart from the admissions noted above, it was accepted on the petitioner’s behalf that “the memos and letters do demonstrate a knowledge of the system”, page 101. It is true that despite these admissions senior counsel for the petitioner submitted to the Tribunal in written submissions (p 85 of the determination) that it not suggested that he wrote any cheques or made any ledger entries (which position would not be inconsistent with knowledge of the system) nor that he “knew of the system described in para 2.7 ....where entries were created in client ledgers to show cheques were issued in payment and reversed. I understand it is accepted by the fiscal that it cannot be shown he knew anything of the system.”
[33] Not surprisingly, that submission led to an exchange with the Tribunal (p 101 of the determination):
“The chairman clarified with Miss Sutherland whether the second respondent accepted knowledge of the drawer. She indicated that he did. The chairman clarified with her whether the second respondent knew in consequence therefore that third parties were not being paid timeously. She indicated that this was the case. The chairman clarified that the second respondent knew or ought to have known that in consequence there was utilisation of funds by the partnership to help the overdraft position. Miss Sutherland said that this was factually correct. However the second respondent did not ‘know’ that.”
In fact, contrary to the submission made by counsel, the fiscal had made the following submission relating to the petitioner (p 78):
“Statement 2.7 of the Complaint, at pages 42 to 44 of the Complaint narrate the process by which the policy operated and Statement 2.8 on pages 44 and 45 narrate circumstances in which the Second Respondent was aware of the operation of the policy and also its consequences.”
In our view the Tribunal was entitled to proceed on the basis that the extent of the petitioner’s knowledge was as specified in paragraphs 2.7, 2.8, 4.2(a) and 4.2 (b).
Deceit/dishonesty
[34] It seems clear that the fiscal accepted that this was not a case in which dishonesty was averred. This was noted by the Tribunal but the terms of that concession are not easily identified. It is not referred to in either the written or oral submissions of the fiscal. Indeed, we were informed by senior counsel for the petitioner that the concession was in fact made at the opening of the Tribunal hearing by the fiscal in the case of Mr Susskind. That submission was that whilst it was not averred he had acted dishonestly, the fiscal was content to leave the assessment of his conduct to the Tribunal. He added that in light of the authorities and the facts the Tribunal could undoubtedly and reasonably form a view of the first respondent’s propriety. We understood from counsel that the concession regarding the petitioner was in similar terms. That would be consistent with the submissions on his behalf (p97): “I understand the fiscal does not suggest dishonesty”; (p101) “there is no dishonesty alleged; and (p99): “She noted that there was no averment of dishonesty. She accepted that this was for the Tribunal to determine.”
[35] We set these matters out not to suggest that there was a suggestion of dishonesty, but to show the context in which the Tribunal’s findings must be put. In our view the Tribunal’s approach reflects that it understood, and was entitled to understand, that there was no suggestion of dishonesty in any criminal sense. That accords with the reference to the absence of personal gain, namely that there was no question of individual misappropriation of property for personal financial benefit. However, the Tribunal found that the petitioner had taken part in a deceitful course of conduct over a period of years.
[36] We are satisfied that the facts as known and admitted by the petitioner justified such findings. Acquiescing in the practice in question could not in our view be described as anything but deceitful. The fact that the Tribunal did not make, and were not asked to make, a finding of dishonesty does not prevent a conclusion that the conduct was deceitful. Effectively, the Tribunal concluded that the actions of the petitioner, whilst not dishonest, lacked integrity. As was noted in McMahon v Law Society of Scotland 2002 SC 475:
“It is a fundamental principle of professional life that the client account is sacrosanct.”
A lack of integrity may arise where a solicitor, without dishonesty, has shown disregard for his obligations to protect client money (Scott v Solicitors Regulatory Authority [2016] EWHC 1256 (Admin), paras 12, 35): it is not inconsistent with a finding that the conduct was not dishonest. In that case, Sharp LJ, quoting other authority, noted (paras 39 & 40) that:
“… a person lacks integrity if he/she acts in a way which, although falling short of dishonesty, lacks moral soundness, rectitude and steady adherence to an ethical code. For this purpose a person may lack integrity even though it is not established that he/she has been dishonest.”
“Want of integrity is capable of being identified as present or not, as the case may be, by an informed tribunal or court by reference to the facts of a particular case.”(Scott v Solicitors Regulatory Authority [2016] EWHC 1269 (Admin).
At para 59 of that case Holroyde LJ gave a hypothetical example which appears to us to be very much in line with the circumstances of the present case:
“To take a hypothetical example, suppose a solicitor had repeatedly taken monies from the client account, used them for his own purposes, and from time to time made good the deficiency when he found it convenient to do so. Suppose that when challenged by his professional body, his response was that he knew he was not supposed to treat the client account in that way, but did not think that it really mattered as long as the monies were repaid, and did not think that anyone would regard him as dishonest. He might on that basis be acquitted of subjective dishonesty; but it surely could not be suggested that he had not shown a lack of integrity.”
[40] We are unpersuaded that the observations in Bryant, which to some extent appear to hinge on ensuring that the approach in disciplinary proceedings mirrors the particular requirements of English criminal law where “dishonesty” is a specified ingredient of the offence, for example theft, and where the law within the two jurisdictions may differ significantly in relation to (a) the significance of appropriation and (b) the importance of inferences which may be drawn from objectively identified facts. No attempt was made by senior counsel for the petitioner to “translate” the conclusions in Bryant into concepts which would be meaningful in a domestic context. However, since we have concluded that the Tribunal did not in fact reach the conclusion that the petitioner had been criminally dishonest, and in the absence of full argument, we say no more on this issue.
[41] Senior counsel submitted that there had not been any suggestion of a lack of integrity or deceit. We disagree. In respect of the drawer system, the matter is clearly one from which an inference of deceit arises. Furthermore, in relation to the signing of a certificate which he must have known did not represent the firm’s true accounting position, (because the drawer system meant that it could not do so) there was also an element of deceit which was specifically alluded to by the fiscal:
“The Tribunal has on many occasions stated that the Accounts Rules set down by the Complainers are in place to protect the public, and solicitors who breach them undermine public confidence in the profession. That is exacerbated when solicitors attempt to conceal the breaches of the Accounts Rules from the Complainers and that is the position here insofar as the Accounts Certificates are concerned.” (pp 81/82).
“The position here is that the Second Respondent knew or at least had sufficient knowledge and ought to have known that the Statements within the Accounts Certificate was inaccurate and therefore concealed the true financial position of the firm from the Complainers” (p 82).
The suggestion that deceit was never in issue at the Tribunal cannot be supported.
Relative role of the petitioner
[42] As to the role of the petitioner, it is true that he did not have a managerial role in the firm at the relevant time and that he did not initiate the system. The fact that the petitioner did not personally sign any cheques or examine the ledgers is of no real moment, given his admission of knowledge and acquiescence in the operation of the scheme. Although the other solicitor involved was the managing and cash room partner, he too was operating a system devised by others. He was also responsible for two false certificates, rather than one. However, the petitioner’s involvement in operating the drawer system continued over a longer period of time, by about 13 months.
[43] As the respondent’s counsel submitted, the purpose of the system of accounts certificates is to have two partners accepting responsibility for stating to the Law Society that the accounts of the firm are in order. The primary responsibility for the discharge of this duty may lie with the cash room partner, but all partners have the responsibility for ensuring that the accounts are kept in order. The petitioner, knowing of the scheme in operation, took no steps to satisfy himself on the matter. The Tribunal considered whether greater blame lay with the cash room partner by virtue of his having occupied that office and been managing partner. However, given that the petitioner was also aware of the system and knew of the benefit to the firm, the Tribunal considered each of them to be equally responsible. It has to be remembered that the Tribunal was assessing the conduct not primarily with the aim of punishing culpability, but with addressing the need to protect the public, to uphold the reputation of the profession and maintain public confidence therein. We are not persuaded that the Tribunal erred in any way its assessment of the relative roles of the two partners.
Penalty
[44] The Tribunal noted that this was a case which involved the improper use of client funds. It noted that in holding such funds solicitors are in a privileged position of trust, and in order to maintain public confidence in that trust it is imperative that solicitors comply with the Accounts Rules. The essential qualities of a solicitor are honesty, truthfulness and integrity. In acquiescing in a deceitful course of conduct designed to conceal the true financial situation of the firm, the petitioner seriously compromised his integrity.
[45] The Rules relating to the maintenance of the client account are so fundamental to the profession that every solicitor must be taken to know that any funds held for or received on behalf of a client must be paid without delay (usually interpreted as meaning on the same day) into the client account. Other than in certain very limited circumstances which do not apply here, such funds may only be paid into the firm account if they are to be disbursed without delay for payment to third parties in respect of fees or outlays to which they relate. The rules relating to the maintenance and operation of the client account exist for the benefit of the client, to protect the funds held by solicitors on their behalf, and to maintain the profession’s reputation for probity in the eyes of the public. The requirement that funds held on behalf of clients be sequestered in this way provides not only a degree of protection against misappropriation, deliberate or inadvertent, but provides important protection against attachment in the event of insolvency of the firm. As has been repeatedly pointed out, the client account is sacrosanct, and improper dealings with client funds - dishonest or otherwise - must always be treated as a matter of the utmost gravity.
[46] The petitioner’s personal circumstances as well as several character references were placed before the Tribunal, together with one from his current employers who happen to be his former Edinburgh correspondents to whom reference was made above, all in support of a submission that there was a public interest in not ending the career of a valued professional, under reference to Giele v General Medical Council. However, in that case the court also noted that (para 20):
“…testimonials can in the case of doctors be accorded greater weight than in the case of solicitors. The requirement of absolute honesty so that there can be absolute trust in a solicitor is obviously of paramount importance. That he may be a good solicitor is obviously something to be taken into account, but the public interest in him being able to continue to practise is not so important.”
In Bolton v Law Society Sir Thomas Bingham, MR observed, (p 519) in a passage which was quoted in full to the Tribunal, that:
“Because orders made by the tribunal are not primarily punitive, it follows that considerations which would ordinarily weigh in mitigation of punishment have less effect on the exercise of this jurisdiction than on the ordinary run of sentences imposed in criminal cases. It often happens that a solicitor appearing before the tribunal can adduce a wealth of glowing tributes from his professional brethren. He can often show that for him and his family the consequences of striking off or suspension would be little short of tragic. Often he will say, convincingly, that he has learned his lesson and will not offend again. … All these matters are relevant and should be considered. But none of them touches the essential issue, which is the need to maintain among members of the public a well-founded confidence that any solicitor whom they instruct will be a person of unquestionable integrity, probity and trustworthiness. The reputation of the profession is more important than the fortunes of any individual member. Membership of a profession brings many benefits, but that is a part of the price.”
[47] The Tribunal indicated that it had considered carefully the mitigation and the testimonials but had nevertheless reached the conclusion that striking off was the only suitable method of protecting the reputation of the profession and enabling public confidence therein to be maintained. This is an area in which the views of the Tribunal require to be given the utmost respect, and we are unable to say that the disposal was one which was not commensurate with the conduct or was one which was not reasonably open to the Tribunal on all the facts before it. We do not agree that the Tribunal unduly restricted the options available to it in terms of sanction. It would not have been appropriate for the Tribunal to have considered censure and fine as being an option this case. The Tribunal did consider the question whether restriction of the petitioner’s practising certificate would be sufficient to meet the facts of the case, but reasonably concluded that the only viable options were suspension or removal from the Roll. In McMahon v Council of the Law Society of Scotland (a case which was placed before the Tribunal) the court noted (para 21) that:
“…where the client account is persistently and repeatedly in deficit, we find it difficult to see how the penalty can be anything less than suspension”.
[48] As the fiscal in the present case had observed, here the client account was permanently in deficit. The Tribunal noted that the essential qualities of a solicitor are honesty, truthfulness and integrity. It is imperative if the public is to have confidence in the legal profession that solicitors comply with the accounts and professional practice rules. In holding funds for clients, a solicitor is in a privileged position of trust and breaches of the accounts rules had to be viewed as serious.
[49] In our opinion the Tribunal was entitled to consider that the range of options was restricted to suspension or removal, and on the facts of the case its conclusion that removal was the appropriate sanction is not one which we could describe as inappropriate or disproportionate. In these circumstances the appeal will be refused.