Moosavi v The Law Society (Solicitors Regulation Authority)

Conditions on a solicitor’s practising certificate are regulatory, not punitive. They may be imposed only where necessary in the public interest and the interests of the profession, and must be reasonable, proportionate and targeted at a specific risk. The risk may remain even where the solicitor has stopped practising or no longer intends to practise in the restricted capacity. A solicitor’s client account must not be used as banking facilities. Drafting template agreements does not, without more, establish sufficient involvement in an underlying legal transaction to justify receiving substantial funds into client account. On appeal, the High Court gives appropriate weight to the specialist regulator’s assessment, provided the decision is procedurally fair and lawful.

The claimant, a solicitor and former sole practitioner, appealed under section 13A(6) of the Solicitors Act 1974 against conditions imposed on his practising certificate by an SRA adjudication panel.

The conditions prevented him from acting as a sole practitioner, manager or owner of an authorised body, or as its COLP or COFA. They followed his involvement in investment transactions promoted by Castle Corporate Services Ltd and Colonial Capital Ltd, under which substantial sums were paid into his client account. The SRA considered that his involvement created risks concerning misuse of client account facilities, money laundering and fraud.

The appeal challenged procedural fairness, the application of Patel v SRA, factual findings, the consideration of material matters, and the necessity, reasonableness and proportionality of the conditions.

1. Appeal dismissed. The SRA appeal panel had acted lawfully in imposing the conditions.
2. The statutory purpose of practising-certificate conditions is regulatory rather than punitive. Conditions must be necessary in the interests of the public and the reputation of the profession, and must also be reasonable and proportionate. They must be directed to a specific risk. The High Court must give weight to the decision of the primary decision-maker, particularly where the regulator has relevant specialist expertise. The court reviewed those principles by reference to Brandon [2008] EWCA Civ 967, Odunlami v Law Society [2008] EWCA Civ 1598, F Razeen [2008] EWCA Civ 1220 and Lebow [2008] EWCA Civ 411.
3. The appeal panel correctly applied Patel v SRA. Although underlying transactions existed, the claimant’s involvement appeared limited to drafting template terms, and there was little evidence of legal work connected with the payments. That created a real risk that the client account had been used as a bank account, contrary to rule 14.5 of the Solicitors Accounts Rules 2011. The panel made no final finding of breach; it identified a regulatory risk.
4. The claimant had been given the gist of the allegations and a proper opportunity to make representations. The appeal was a rehearing, and earlier errors had been corrected or superseded. The panel made no material error of fact and considered the relevant matters, including the warning concerning high-yield investment fraud, the claimant’s contacts with Professional Ethics, the freezing of his HSBC client account and his subsequent conduct.
5. The lapse of time did not invalidate the decision. The panel was entitled to conclude that the future risk remained notwithstanding the claimant’s withdrawal from the relevant businesses and his cessation of sole practice. Applying Lebow, a present absence of practice did not remove the need for safeguards against future practice in the restricted capacities.
6. The conditions were the minimum practical safeguards against the identified risks. They did not prohibit practice altogether, since the claimant could work as an employed solicitor. The evidence did not establish that their personal impact amounted to an effective prohibition on practising. The conditions were therefore necessary, reasonable and proportionate.

• Solicitors Regulation Authority adjudication panel: on 11 January 2016, dismissed the claimant’s internal appeal and imposed conditions on his practising certificate.
• High Court (Administrative Court): dismissed the appeal against that decision. The court held that the conditions were necessary, reasonable and proportionate.