Law Society v Adcock & Anor

On an appeal under Solicitors Act 1974, the High Court may determine summarily whether disciplinary allegations disclose a case to answer, provided factual issues are treated with appropriate care. A rule concerning solicitors’ receipt of commission does not justify retaining a rebate or discount on the cost of services supplied by a third party and charged to the client as a disbursement. The proper construction of the rule is distinct from whether reliance on an erroneous interpretation was conduct unbefitting a solicitor. Costs principles applicable to public regulators require consideration of all the circumstances. They do not create a presumption that a regulator should avoid paying costs merely because it acted honestly and in the public interest.

The Law Society appealed under section 49 of the Solicitors Act 1974 against the Solicitors’ Disciplinary Tribunal’s dismissal of disciplinary proceedings against two partners of Adcocks. The respondents had charged clients the full cost of local authority searches while receiving payments from the search provider described as commission, without disclosing the arrangement.

The Tribunal held that the arrangement fell within Rule 10 of the Solicitors’ Practice Rules 1990 and dismissed the allegations. It awarded the respondents half their costs. The central issues were whether the Tribunal had been entitled to dismiss the disciplinary case summarily, whether Rule 10 applied to the payments, whether the matter should be remitted, and whether the costs order was correct.

1. Summary disposal. The Tribunal had jurisdiction under the Solicitors (Disciplinary Proceedings) Rules 1994 to regulate its own procedure and consider summarily whether there was a case to answer. It had to exercise care where factual issues required determination, but cross-examination was not automatically necessary before deciding whether the allegations could succeed.
2. Construction of Rule 10. Rule 10 concerned commission received from a third party, such as payment for introducing a client to that third party. The respondents’ arrangement was materially different. They effectively received a discount or rebate from the search provider’s price, dressed up as commission. Rule 10 therefore provided no answer to the allegation that the arrangement involved an undisclosed financial benefit.
3. Remittal. Although the Tribunal had misconstrued Rule 10, the matter should not be remitted. The Law Society’s own inconsistent guidance and internal decisions made it inconceivable that the respondents could properly be found dishonest. The respondents were unaware of the later change in guidance, and it would be unlikely and unfair for the Tribunal to impose a significant disciplinary penalty in the circumstances.
4. Abuse of process. The additional allegations that the Law Society knew it had no case, or that its resistance to disclosure amounted to misconduct justifying dismissal as an abuse of process, were rejected.
5. Costs. The court disapproved the suggestion in Baxendale Walker v The Law Society that, absent dishonesty or bad faith, costs should not be awarded against a regulator unless there was a further good reason. The principles in City of Bradford Metropolitan District Council v Booth required the court to consider all relevant circumstances, including the financial prejudice to the complainant and the need to protect honest public decision-making. The Tribunal had failed to account adequately for the improper allegation of dishonesty and the burden imposed on the respondents. The costs discretion was therefore exercised afresh.
6. The Law Society’s appeal was dismissed. The respondents’ cross-appeal on costs was allowed to the limited extent that the Law Society was ordered to pay the respondents’ costs incurred after referral to the Tribunal, but not the costs of the investigation. The Law Society was ordered to pay the costs of the appeal.

• High Court (Administrative Court): The Law Society’s appeal from the Solicitors’ Disciplinary Tribunal was dismissed. The respondents’ costs cross-appeal was allowed to the limited extent stated.
• Solicitors’ Disciplinary Tribunal: On 4 July 2006, the Tribunal dismissed the disciplinary proceedings and awarded the respondents half their costs.