Baxendale-Walker v Law Society
| Jurisdiction | England & Wales |
| Judge | Lord Justice Moses,LORD JUSTICE MOSES |
| Judgment Date | 30 March 2006 |
| Neutral Citation | [2006] EWHC 643 (Admin) |
| Date | 30 March 2006 |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | Case No: CO/5264 &5503/2005 |
[2006] EWHC 643 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
LORD JUSTICE MOSES AND MR. JUSTICE STANLEY BURNTON
Case No: CO/5264 &5503/2005
Roger Stewart QC (instructed by Irwin Mitchell) for the Claimant/Defendant
Timothy Dutton QC & Chloe Carpenter (instructed by Russell-Cooke) for the Defendant/Claimant
Andrew Hopper QC (instructed by the Solicitors Disciplinary Tribunal) as an Intervener
Lord Justice Moses:
Introduction
This is an appeal by a solicitor against an order of the Solicitors' Disciplinary Tribunal. On 5 April 2005 the Solicitors' Disciplinary Tribunal ordered that the appellant be suspended from practice for a period of three years, commencing on 4 May 2005. The appellant appeals against that order, contending that no such onerous punishment should have been imposed.
The appellant also contends that the Tribunal erred in failing to take account of representations which he made following the order of 5 April 2005. The Tribunal held that having made that order it was functus officio.
The appellant was charged with conduct "unbefitting a solicitor". One of the allegations related to a reference which he provided to a bank in 1994. The statement, pursuant to Rule 4(2) of the Solicitors' (Disciplinary Proceedings) Rules 1994 ("the 1994 Rules") read:-
"That he provided a reference in circumstances in which he knew or ought to have known, were improper and/or unprofessional."
The appellant admitted that allegation but the precise extent of that admission provoked both confusion and submission; I shall deal with it later.
There was a further allegation, the first allegation, under the same rubric of "conduct unbefitting", which read:-
"That between 4 February 2002 and 5 March 2002, he gave evidence in High Court proceedings before Etherton J. which the court found to be manifestly untrue."
That allegation was dismissed. It was the subject-matter of a cross-appeal by the Law Society. Its dismissal led to an order that the Law Society pay 30% of the appellant's costs.
There were further cross-appeals by the Law Society against interlocutory orders made by the Tribunal on 4 April 2005 refusing amendment of the allegations. Those cross-appeals were not pursued so the court was not required to rule as to whether it had jurisdiction to hear any appeal against an interlocutory order, contrary to a previous decision of the Court of Appeal (Re. a Solicitor 27 April 1994, The Times 4 May 1994, 138 SJLB 100).
The Law Society did not pursue its cross-appeals once we had indicated that we would refuse the appeal against suspension. Thus, the issues which fall for determination are:-
i) Was the tribunal functus officio once it had announced its order, dated 5 April 2005?
ii) Was the order of suspension plainly wrong?
iii) Did the Tribunal err in law in ordering the Law Society to pay 30% of the appellant's costs?
The outline facts
The appellant was born in 1964 and admitted as a solicitor in 1990. In 1994 he was in sole practice. During the course of that year and, particularly, in memoranda he drafted in May and July 1994, he gave advice in relation to setting up arrangements for loans from a pension fund in a manner which would not infringe the statutory limitations on employer related investment and which would, in addition, avoid liability to United Kingdom tax on any sums withdrawn. In accordance with a second memorandum, drafted by the appellant in July 1994, pension fund monies were paid into his client account and then distributed. They were lost to the fund and to the pensioners, who were retired employees and their families. Those involved in the abstraction of that money were sued by the trustees of the pension scheme in proceedings in the Chancery Division heard by Etherton J. in 2002. He gave judgment on 17 April 2002.
The appellant was found not to have knowingly assisted in breaches of trust but was ordered to repay his fee of £50,000.
During the course of the hearing before Etherton J. it emerged that the appellant had written a reference, dated 2 December 1994, to the manager of Barclays Bank plc, Harrogate, in relation to someone who was alleged to be a Mr. Nurkiman. He wrote:-
" Re: Mr. Nurkiman
We are pleased to confirm that Mr. Nurkiman is known to this firm and has satisfied our identification requirements in relation to Money Laundering Regulations 1993. We are further pleased to confirm that he is a person of integrity and good standing.
We nevertheless disclaim all and any responsibility for any loss or damage consequent upon any actions that you may take."
As part of the structure in relation to the loan arrangements, a company called Kesking Ltd. was to be formed. The solicitor for Kesking was a man called Xavier, a Malaysian lawyer, whom Mr. Baxendale-Walker had met in London in July 1994. Mr. Nurkiman was alleged to be a director of that company. In fact, as Etherton J. recorded, no such person existed. It was a name used by a Canadian fraudsman.
On 22 September 1994 a loan of £2.135 million was made out of the pension fund to Kesking and nineteen subsidiaries. The security for that agreement was a document called the "Boesen Agreement", which proved to be worthless.
As Etherton J. recorded, following completion of the transaction on 22 September 1994, the appellant attempted to find a new replacement administrator for the pension scheme. In October 1994 Independent Financial Partnership Ltd., a director of which was Mr. Brian Smyth, took over as the Scheme administrator. He was their principal point of contact with the appellant. He made extensive enquiries about the loan transaction and expressed considerable concern about its propriety (see judgment paragraph 117).
Before the Tribunal, and before this court, the appellant attempted to put the reference into what he described as "its proper historical context". Firstly, he said that Mr. Xavier, the Malaysian solicitor whom he had met in London in July 1994, had told him that Mr. Nurkiman was one of the two owners of Kesking Ltd. After distribution of the loans, of which the pension fund was the source, it became a matter of urgency to ensure that pensioners received outstanding payments from the balance of the funds. By that time Mr. Nurkiman was sole trustee. It was necessary to transfer the balance of the pension fund from the Royal Bank of Scotland, Guernsey, to Barclays Bank in Harrogate. Mr. Nurkiman's signature was required for that purpose and also to enable authority to be given to the Bank to accept two signatories, that of IFP and solicitors within the United Kingdom, Russell Jones and Walker. A letter to that effect was sent to Mr. Nurkiman, dated 28 November 1994. Matters were growing urgent. Mr. Smyth wrote to the appellant on 30 November 1994 explaining that no signature had been received from Mr. Nurkiman. Mr. Smyth pointed out that "well before Christmas" the administrators would need the trustee's address, proof of identity in the form of a passport, and Barclays would need to take up bank references. An attendance note from Mr. Smyth, dated 30 November 1994, records a telephone conversation with the appellant. The appellant never denied the accuracy of that note. It records that Mr. Smyth reminded the appellant that:-
"£2 million had been put into a less than liquid investment, with no security for the fund and that the agreement to do this pre-dated the sale of the company and hence had been signed by individuals who were not actually in office."
There is a further reference to a discussion as to payments to the pensioners:-
"…which may or may not happen."
and Mr. Smyth then raised the issue as to whether it was certain there was no money laundering involved.
The note further recalled that a previous administrator told the appellant that he was "playing with dynamite" and there was a reference to an investigative journalist.
A letter, dated 1 December 1994, from Mr. Smyth, for the administrators, to the solicitors, Russell Jones and Walker, records that:-
"Barclays have insisted that they find out more about Mr Nurkiman and I believe they have been in touch with you direct."
A note on that letter records that that matter is to be dealt with by the appellant as well as matters concerning passport, birth certificate and recognition of signatures by a solicitor.
Although the letter was not addressed to the appellant, it is plain that he was aware of it because, on 2 December 1994, he wrote not only the reference to which I have already referred but also another letter confirming that signatures on attached documents to Barclays Bank corresponded to signatures:-
"that we have seen from those same persons as on other documents."
The appellant contended before this court, as he contended before the Tribunal, that he was under pressure to write the reference. He had received documents signed by Mr. Nurkiman in response to requests and asserted that receipt of those documents was:-
"a genuine and clear indication of Mr. Nurkiman's existence and that he was playing his proper role in the transaction."
He said he believed Mr. Nurkiman was personally known to Mr. Xavier. He took the view that he was justified in writing references to integrity and good standing because:-
"He had been dealing with a client, through another lawyer who apparently knew the client well, who was involved in a high value transaction and had been so involved for several...
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