D v Law Society

In disciplinary proceedings, dishonesty requires both a subjective element and an objective standard. The solicitor must appreciate that the conduct would be regarded as dishonest by ordinary standards, but cannot avoid dishonesty by adopting personal standards of honesty. An appellate court should respect factual findings made by a tribunal that heard the evidence unless the tribunal applied the wrong legal test or reached conclusions unsupported by the evidence. A solicitor cannot properly act for an intermediary whose interest is securing a transaction while also advising the investor on that transaction. Funds paid for investment remain held on trust for the investor, even if held in an account in another person’s name, and cannot be applied without the investor’s authority.

D appealed against the Solicitors’ Disciplinary Tribunal’s decision finding him guilty of conduct unbefitting a solicitor in six respects and striking him from the Roll. The allegations concerned his involvement in allegedly fraudulent bank-instrument transactions, conflicts of interest, inadequate protection of client and third-party funds, unauthorised payment of investment money, and breaches of the Solicitors’ Accounts Rules 1991.

The central issues were whether the Tribunal had applied the correct test for dishonesty, whether its factual findings were open to it, whether it had properly identified conflicts of interest and breaches concerning client money, and whether striking-off was justified.

The appeal was dismissed. The appellant was ordered to pay the Law Society’s costs, subject to detailed assessment. Permission for a further appeal was refused.

1. Dishonesty. The Tribunal had not applied a purely objective test. Its references to the need for D to appreciate that his conduct was dishonest by the standards of honest and reasonable people, together with its citation of Twinsectra Ltd v Yardley [2002] 2 AC 164 and Royal Brunei Airlines v Tan [1995] 2 AC 378, showed that it had included the required subjective element. References to recklessness and wilful ignorance had to be read in context.
2. Factual findings. The Tribunal was entitled to rely on the repeated warnings given to D, his knowledge of Silver’s dishonesty, the suspicious features of the transactions, and his later dealings. The correction of the date on which the yellow card was received did not undermine the broader evidential basis for the decision. The weight given to the evidence was for the Tribunal.
3. Conflicts of interest. A solicitor acting for an intermediary whose interest was to secure a transaction could not properly advise the potential investor on the merits of that same transaction. The Tribunal was also entitled to find a conflict in D’s proposed recovery of money for Miller while Moreno remained his client.
4. Investment funds. Taipan’s money was held on trust for Taipan, despite being placed in an account in Contrast’s name and irrespective of whether Taipan was formally D’s client. Payment of $50,000 to Silver without Taipan’s authority therefore amounted to conduct unbefitting a solicitor. The Tribunal was also entitled to reject as merely technical D’s explanation concerning the $150,000 transaction. The intermingling of client and office money breached Rules 4, 7, 10 and 11 of the Solicitors’ Accounts Rules 1991.
5. In light of the findings, striking-off was inevitable.

1. Solicitors’ Disciplinary Tribunal: found D guilty of six allegations and ordered that he be struck off the Roll.
2. High Court (Administrative Court): dismissed the appeal, ordered D to pay the Law Society’s costs, and refused permission for a further appeal.