Akodu v Solicitors Regulation Authority [2009] EWHC 3588 (Admin)

Case No CO/5060/2009

[2009] EWHC 3588 (Admin)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

DIVISIONAL COURT

Venue Royal Courts of Justice

Date Friday, 13 November 2009

Strand

London WC2A 2LL

B e f o r e:

LORD JUSTICE MOSES

MR JUSTICE TOMLINSON

Between

AKODUClaimant

Between

SOLICITORS REGULATION AUTHORITYDefendant

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MR T NESBITT appeared for Claimant

MR D BARTON appeared for Defendant

J U D G M E N T

LORD JUSTICE MOSES:

Pending

[1]resolution of the decision of the Solicitors Disciplinary Tribunal, an authorised officer, on 10 December 2008, granted a practice certificate to this appellant, Mr Akodu, for the year 2008/2009, subject to two conditions. The first, which is not in issue in this appeal, was that he delivered half yearly accountant's report, such reports required to be delivered within 2-months of the end of the period to which they relate. The second condition, which is relevant, the subject matter of this appeal, namely:

"He may act as a solicitor only to 2(1) an employment or partnership; or 2(2) as a member office holder or share owner of an incorporated solicitor's practice. The arrangements for which had first been approved by the Solicitors Regulation Authority"

. Further, a requirement to inform anyone -- prospective employer's, partners and others identified -- of the conditions and the reasons for their imposition.

[2]Following the decision of the Tribunal to which this court has already referred in the appeal against the substance of the decision, an adjudicator refused an appeal against those conditions. He did so on the basis of what he seemed to interpret from the decision as being two allegations of failing to act in the best interests of lender clients. That is acknowledged to be an error. There was only one, which we have now quashed. The adjudicator went on however to say this:

"I consider that these circumstances give rise to a clear basis for saying that there are risks to the public of allowing Mr Akodu to practice on his own account without constraint"

. He then referred to the allegation of which he was found guilty, although he spoke about it as the fourth allegation, and continued: "I consider that that position will not be effected by any possible decision that the SDT was mistaken in its record of a finding against him on the third allegation and his decision in relation to the fourth allegation. The fact remains that he has a poor record of compliance with regulations designed to protect the public in relation to their money which is held by solicitors".

[3]He remarked that there had been a previous finding, to which I shall turn shortly, of failures in relation to accountant's reports, and commented that it was a continuing concern and that the conditions were clearly justified. He said: "That is likely to remain the case until Mr Akodu has established a record of proper compliance with the Solicitors Accounting Rules".

[4]Mr Nesbitt submits that that is a reference to the first and not the second condition imposed, but, in my judgment, the reference, albeit mistaken, to the third and fourth allegations, demonstrate that it is not confined to the accountancy requirements. But, the adjudicator continued: "It may be possible for the position in relation to that condition -- that is the condition in relation to employment or partnership -- to be considered if Mr Akodu's proposed appeal against a decision recorded in relation to the third and fourth allegations succeeds".

[5]Mr Akodu appealed to the panel of adjudicators which, without giving further reasons, upheld that decision in a decision of 9 June 2009.

[6]This appeal is brought pursuant to sections 9 and 13(4) of the Solicitors Act 1974, as amended by schedule 16 of The Legal Services Act 2007. That amendment is important. Schedule 16 came into force on 1 July 2009 and took away the right of the Master of the Rolls to hear such appeals in most respects, pursuant to the Master of the Rolls Applications and Appeals Regulations 2001. I comment that that is important, because whilst the court has the same powers as the Master of the Rolls, inevitably, the Master of the Rolls acquired far greater experience of the propriety of the conditions than, certainly at the outset of this jurisdiction, this court has acquired. We were informed that only certain nominated judges will be dealing with these issues, but even such nominated judges need time to acquire experience and feel for the propriety of the imposition of conditions in relation to practice, and the circumstances in which they are necessary. The important feature of those conditions is that they are not designed as a punishment, but are designed to ensure that any solicitor concerned will comply with rules and regulations in the public interest (see regulation 6 of the Solicitors Regulation Authority Practising Regulations 2009). It is plain that the purpose of the conditions impugned in this appeal is designed to achieve that result.

[7]The important feature of the basis upon which those conditions were imposed is that they were imposed, at least in part, because he had behaved in a manner unbefitting to a solicitor in respect of the failure to report to lenders the discrepancies between purchase price stated and price paid by a purchaser. That has now gone, as a result of the appeal we have allowed. The question therefore remains as to whether the condition that he must work in employment or in partnership with another is justified in the public interest, and necessary and proportionate in the light of the accountancy failures which he admitted.

[8]Those failures were set out in the statement made pursuant to rule 5(2). They alleged a failure to maintain an office account cash book, in breach of 32(1)c) of the Solicitors Account Rules 1998; a failure to maintain an office column of a client ledger, in breach of rule 32(4); and giving misleading costs information to clients, in breach of the Solicitors Costs Information and Client Care Code 1999. The failures to maintain an office column and an office account cash book may be described as technical, but, we accept, are important for the safeguard of the public. Apparently there were computer records but they did not comply with the rules.

[9]Further, it is not said that any member of the public actually lost money as a result of those failures. In addition, the Forensic Investigation Unit discovered that misleading costs information had been given to clients, describing as disbursements, items which should properly have been described as fees. It is not suggested that any particular client did, as a result, pay too much, but, nonetheless, it requires no emphasis from me to underline the importance of a distinction being drawn between the two.

[10]Those admitted failures have to be viewed in the context of the record of the Tribunal, which records that this solicitor had previously appeared before the Tribunal in May 2004 and had been found guilty on five occasions of conduct unbefitting a solicitor in relation to accounts; a failure to carry out a client account reconciliation; a cash shortage; delayed payment of client's money into a client account; paying an office expense from a client account; and failing to identify funds from a lender account on a ledger account.

[11]In addition, Mr Barton, justifiably, pointed out that there had been failures in relation to a poor record of delivering reports to the Law Society, with 13 applications for time extensions and three breaches of section 34 of the Solicitors Act for late delivery. This Mr Barton described as serious failings in a solicitor of 11 years. In particular, that is a high number of applications for time extensions.

[12]The difficulty I face is two fold: firstly, in judging the extent to which the continuing failures are similar to the failures of which he had been found guilty in the past, in 2004. Secondly, the impact of this requirement will undoubtedly be severe on Mr Akodu acting as a sole practitioner in the current climate. I readily accept that there is a real risk that he will not be able to continue in practice at all. Of course, such a risk always arises where such a condition is imposed and may nonetheless be necessary in the public interest.

[13]There are strong arguments for thinking that, having regard to the whole history of this matter, the public interest does require that Mr Akodu be supervised, in the sense of having to work either in employment or in another partnership so as to avoid similar defects in the way he conducts his practice occurring in the future. However, it does seem to me necessary that those experts in the field who are best able to judge how that public interest can be achieved should look at the matter again, having regard to the fact that the condition was imposed in part because of conduct of which this appellant has now been acquitted.

[14]It is for that reason, reluctantly, that I would order that the appeal be allowed and that the question of conditions be reconsidered by an adjudicator who will be better placed to see what the public interest demands. I would, for my part, underline that which Mr Barton urged, namely, that in the normal case, this court should deal with these questions rather than remitting them. No doubt, as the body of experience expands, confined as it will be to a number of nominated judges as we were told, it will not be necessary to adopt the course I have reluctantly decided should be adopted. For those reasons, I shall make that order and allow the appeal.

MR JUSTICE TOMLINSON: I too would make the order proposed by my Lord, for the reasons he has given.

LORD JUSTICE MOSES: So, the appeal will be allowed. What would happen in the interim?

[17]MR NESBITT: Can I be clear, is my Lord intending that the existing condition two be revoked and the issue of it be reconsidered by an adjudicator? Because I think the order should probably make that clear.

LORD JUSTICE MOSES: The position is, he is being allowed to act on his own at the moment is he?

[19]MR NESBITT: Well, only because the appeal was extant. Once the appeal was not extant, it needs to be revoked.

MR JUSTICE TOMLINSON: What is the time scale in which this could be dealt with?

LORD JUSTICE MOSES: We are reluctant to let it drag on with him acting on his own.

[22]MR BARTON: Yes. One would hope very quickly. An adjudicator may well want to take a decision reflecting on your Lordship's judgment in the Tribunal appeal decision. I can say no more than that. I hope that is not being unhelpful.

LORD JUSTICE MOSES: What should happen in the interim? We have allowed the appeal.

[24]MR BARTON: Yes, so that means --

LORD JUSTICE MOSES: But we could make an interim order setting a time limit on this, could we not?

[26]MR BARTON: If the appeal is allowed, does it follow that condition two has now fallen away?

LORD JUSTICE MOSES: Well, it must do. But we would be entitled to make an interim order.

[28]MR BARTON: In effect, if that is so, your Lordship has actually made a decision.

LORD JUSTICE MOSES: Why could we not allow the appeal; quash condition two in the interim, but only for a period of, say, 1 month, which would then put the ball back in your court, and in his court, to make sure it got back in front of an adjudicator within 4 weeks, before Christmas. We could do it the other way around, we could make an order imposing that condition. Surely if we quash condition two, kept condition one because that is not appealed against, and condition three, and you could go back next week and get an interim order could you not?

[30]MR BARTON: My Lord, if your Lordship allows the appeal, it means that condition two falls away. It means that, as a consequence, the practising certificate for the year 08/09 now stands subject to one condition only.

LORD JUSTICE MOSES: Yes. But you would be entitled, in the light of what you have said in the appeal, to go back next week to the adjudicator, would you not, and say we want to you reimpose condition two?

[32]MR BARTON: And then he will say that my appeal has already been allowed, and the decision of this court is final.

LORD JUSTICE MOSES: No, because we have remitted it for consideration of the -- we have allowed the appeal to the extent that we have remitted the question of the conditions to be imposed in the practising certificate to be reconsidered by the adjudicator.

[34]MR BARTON: My Lord, yes I follow that entirely.

LORD JUSTICE MOSES: All I am concerned about is what happens until he is reconsidered.

[36]MR BARTON: Might I just say, in addition, in allowing the appeal, your Lordship has gone beyond saying it goes back to the adjudicator to be reconsidered in the light of the facts. You have allowed the appeal which means --

LORD JUSTICE MOSES: No we have not. All we have done is order a reconsideration.

[38]MR BARTON: But you quashed condition two.

[39]MR JUSTICE TOMLINSON: Without prejudice to its possible reimposition. If that needs to be made clear, let us make it entirely clear.

LORD JUSTICE MOSES: You can draw up the order to make that clear. Otherwise it makes no sense to order the reconsideration.

[41]MR BARTON: Yes. I understand, I am sorry.

[42]MR JUSTICE TOMLINSON: The adjudicator has a completely free hand. Obviously he must at in accordance with all the usual principles.

[43]MR BARTON: My Lord, yes I follow. As long as he will not feel constrained.

LORD JUSTICE MOSES: No. I will make that clear now.

[45]MR NESBITT: Yes, I entirely understand.

LORD JUSTICE MOSES: Then you can get a move on, and we would courage it. If there is some temporary problem then --

[47]MR BARTON: If your Lordship's judgments are out reasonably swiftly -- I know it is not in your hands.

LORD JUSTICE MOSES: It is partly, but you have heard what we have said, it would not stop you going next week.

[49]MR BARTON: No. I heard everything very carefully.

LORD JUSTICE MOSES: I shall say something now.

[51]MR NESBITT: As I understand it, the condition has been quashed and the normal procedures which are in my learned friend's clients' hands --

LORD JUSTICE MOSES: I shall make it clear.

[53]A point has arisen as a result of our quashing of the decision to impose the second condition, that making it clear that we are not substituting any view but ordering the matter it be reconsidered by the adjudicator. The point that concerns the Law Society is that, having allowed the appeal, any future adjudicator or panel, should there be a hearing before a panel, might feel inhibited about imposing the second condition again. There is no such inhibition on a reconsideration. The matter must be considered afresh in the light of the Disciplinary Tribunal's findings that stand, and the history of the matter as identified to us by Mr Barton on behalf of the Law Society. The only effect of allowing the appeal is to allow the adjudicator to reconsider the matter in the light of the circumstances that the allegation under (6)d)is no longer extant. There is no basis upon which it can be said that there is any inhibition as a result of the appeal on him reimposing condition two. The effect of allowing the appeal is only that Mr Akodu can continue to act as a sole practitioner, but only until such time as the adjudicator decides to reimpose the condition that we have quashed, should he do so.

[54]MR NESBITT: My Lord, the only remaining matter is the costs I am afraid. I have an application for the costs of both appeals. In the ordinary way costs would follow the event, I therefore ask for that order. I would ask the court to invite the costs to be the subject of a detailed assessment.

LORD JUSTICE MOSES: What do you want to say about costs?

[56]MR BARTON: My Lord, nothing to say on the SDT appeal itself, would your Lordships consider in relation to the certificate making no order.

LORD JUSTICE MOSES: We think that the appellant had to come and get his costs in relation to both his appeals and should have costs for both of his appeals, to be assessed if not agreed.