Levy v Solicitors Regulation Authority

A disciplinary tribunal has primary responsibility for assessing the seriousness of professional misconduct and the appropriate sanction. The High Court should intervene only where, despite according considerable respect to the tribunal, its decision is clearly inappropriate. Suspension may be justified for serious breaches of solicitors’ accounts rules even where dishonesty is not proved. Client money is subject to strict safeguards, including proper systems, prompt correction of errors and transfers only after a bill has been rendered. Before sanction, disputed matters materially affecting penalty must be resolved fairly and the solicitor must have an opportunity to address the sanction. Costs in disciplinary proceedings are discretionary; costs do not automatically follow the event.

The appellant appealed against the Solicitors Disciplinary Tribunal’s decision imposing a nine-month suspension and ordering him to pay £26,000 in costs. He admitted breaches involving transfers from the client account, failure to provide bills before transferring costs, failure promptly to rectify breaches and failure to comply with practising-certificate conditions. The allegation that the conduct was dishonest was rejected.

The appeal challenged the proportionality of the suspension, the Tribunal’s reliance on an earlier disciplinary decision concerning supervision of a struck-off employee, the fairness of the sanctioning procedure and the costs order. The central issues were whether suspension was open to the Tribunal despite the absence of dishonesty and whether the Tribunal had erred in declining to discount costs after the dishonesty allegation failed.

1. Appeal dismissed. The nine-month suspension and costs order were upheld.
2. The High Court’s jurisdiction under Solicitors Act 1974, section 49, ordinarily proceeds by way of review. Applying Law Society v Salsbury [2008] EWCA Civ 1285 and Bolton v Law Society [1994] 1 WLR 512, considerable respect must be given to the expert Tribunal. Intervention is justified only where the sanction is clearly inappropriate.
3. Under Weston v Law Society (The Times, July 15, 1998), absence of dishonesty does not prevent suspension for serious accounts-rule breaches. Client money is sacrosanct. Solicitors must maintain effective systems and controls, use client money only for the relevant client’s matter, remedy breaches promptly and transfer money to the office account only when properly required for costs and after the client has been notified by bill or written notification.
4. The appellant’s conduct involved reckless and repeated transfers, a defective batch-transfer system and delayed correction of the KL error. The breaches were serious even though no client ultimately suffered loss. The earlier disciplinary findings were relevant because they indicated a broader disregard of basic professional obligations and justified the Tribunal’s reduced confidence in the appellant’s management of accounts.
5. Procedural fairness required the Tribunal to determine and announce disputed matters materially affecting sanction before inviting mitigation. The principle was analogous to a Newton hearing: R v Newton (1982) 4 Cr App R(S) 388. It was unnecessary to identify the precise sanction contemplated where suspension was reasonably within contemplation. That requirement was satisfied here when the Tribunal rejected dishonesty and then heard mitigation.
6. Under rule 18 of the Solicitors (Disciplinary Proceedings) Rules 2007, costs were discretionary. The ordinary civil rule that costs follow the event did not apply. Baxendale-Walker v The Law Society [2007] EWCA Civ 233 permitted a discount for partial success but did not require one. The Tribunal was entitled to order all the costs where it considered that the dishonesty allegation had reasonably been investigated. An appellate court should reopen such a costs decision only if plainly wrong, applying Beresford v Solicitors Regulation Authority [2009] EWHC 3155 (Admin).

• Solicitors Disciplinary Tribunal: imposed a nine-month suspension and ordered the appellant to pay £26,000 in costs.
• High Court (Administrative Court): dismissed the appeal and upheld the Tribunal’s sanction and costs order.