Baxendale-Walker v The Law Society

A solicitor may receive a substantial suspension for an exceptionally reckless breach of professional duty even where dishonesty was not alleged and no loss was caused. Disciplinary sanctions protect the profession’s collective reputation and the public’s confidence that solicitors are trustworthy.

In disciplinary proceedings, a regulator’s costs are not governed by the ordinary rule that costs follow the event. When it brings a properly justified complaint in the public interest, the tribunal must consider both the solicitor’s financial prejudice and the need to avoid discouraging the regulator from maintaining professional standards. A successful defence to one allegation is relevant, but does not by itself justify an adverse costs order against the regulator.

The Solicitors Disciplinary Tribunal found that the appellant had provided an improper and unprofessional reference to a bank for a person whose integrity and standing he had no proper basis to confirm. It suspended him from practice for three years. The Tribunal dismissed a separate allegation concerning evidence given in High Court proceedings and ordered the Law Society to pay 30% of the appellant’s costs.

The Divisional Court dismissed the appellant’s challenge to the suspension. It allowed the Law Society’s cross-appeal on costs and instead ordered the appellant to pay 60% of the Law Society’s disciplinary costs. The appellant pursued a renewed second-appeal application on sanction and appealed the costs ruling.

1. The appeal was dismissed. The renewed application concerning the three-year suspension disclosed no basis for a second appeal, and the appeal against the costs decision also failed.

2. The Tribunal was entitled to regard the unsupported reference given to a bank as an extraordinarily reckless and serious breach of professional duty. A solicitor knew that the bank would rely on the reference because it came from a solicitor and in a money-laundering context. The absence of an allegation of dishonesty or of proved loss did not prevent a substantial suspension. Consistently with Bolton v Law Society [1994] 1 WLR 512, disciplinary sanctions protect public confidence and the profession’s collective reputation as well as punishing and deterring misconduct.

3. Under Solicitors Act 1974, section 47(2), the Tribunal had a wide costs discretion. The Law Society acted as a professional regulator performing a public function, not as an ordinary civil litigant. The usual costs-follow-the-event approach therefore had no direct application. The Tribunal had to weigh the solicitor’s financial prejudice against the public interest in allowing the regulator to investigate and bring properly justified complaints without an undue chilling effect.

4. The principles in City of Bradford Metropolitan District Council v Booth [2000] COD 338 and Gorlov v Institute of Chartered Accountants [2001] EWHC Admin 220 supported that approach. The fact that one allegation had failed was a relevant circumstance, but not the starting point or an automatic ground for costs against the Law Society.

5. The Tribunal had misdirected itself by awarding the appellant 30% of his costs merely because he had defeated the first allegation. It failed to account for the Law Society’s regulatory role and for its successful pursuit of the admitted second allegation. The Divisional Court’s substituted order requiring the appellant to pay 60% of the Law Society’s costs fairly reflected the overall justice of the disciplinary proceedings and was not disturbed.

• Court of Appeal (Civil Division): In [2007] EWCA Civ 233, dismissed the appellant’s renewed application concerning suspension and dismissed his appeal on costs.
• Divisional Court: Moses LJ and Burnton J dismissed the appellant’s appeal against the three-year suspension. They allowed the Law Society’s cross-appeal on costs and ordered the appellant to pay 60% of the Law Society’s costs of the disciplinary proceedings.
• Solicitors Disciplinary Tribunal: Found the appellant guilty of conduct unbefitting a solicitor in providing an improper reference, suspended him from practice for three years, and ordered the Law Society to pay 30% of his costs.