Baxendale-Walker v Law Society
| Jurisdiction | England & Wales |
| Judge | THE LORD CHIEF JUSTICE,President of the Queen's Bench Division |
| Judgment Date | 19 July 2007 |
| Neutral Citation | [2007] EWCA Civ 233,[2007] EWCA Civ 820 |
| Docket Number | No: 8 of 2005,Case No: C1/2006/0961 and 0963 |
| Court | Court of Appeal (Civil Division) |
| Date | 19 July 2007 |
[2007] EWCA Civ 233
President of the Queen's Bench Division
Lord Justice Laws and
Lord Justice Scott Baker
Case No: C1/2006/0961 and 0963
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE DIVISIONAL COURT
(MOSES LJ AND BURNTON J)
Royal Courts of Justice
Strand, London, WC2A 2LL
Roger Stewart QC (instructed by Messrs Irwin Mitchell) for the Appellant
Timothy Dutton QC and Chloe Carpenter (instructed by Messrs. Russell Cooke) or the Respondent
Hearing dates: 20 th February 2007
This is the judgment of the court.
These proceedings arise from the decision of the Solicitor's Disciplinary Tribunal dated 5 April 2005, with reasons handed down on 14 July 2005. The Law Society complained that the appellant's conduct was “unbefitting a solicitor” in two separate respects. It was alleged, first, 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”. This allegation was dismissed. It was further alleged that the appellant “provided a reference in circumstances which he knew or ought to have known were improper and/or unprofessional”. This allegation was admitted, but the precise ambit of the admission proved uncertain. The Tribunal found the appellant guilty of conduct unbefitting a solicitor, and suspended him from practice for three years. The Tribunal further decided that the Law Society (the Applicant before the Tribunal and the Respondent to the current appeal) should pay 30% of the appellant's costs of the proceedings.
The Divisional Court (Moses LJ and Burnton J) dismissed the appellant's appeal against the Tribunal's decision to suspend him from practice. The cross appeal by the Law Society against the Tribunal's decision on costs was allowed, and the appellant was ordered to pay 60% of the Law Society's costs of the disciplinary proceedings.
Moses LJ identified three issues for decision by the Divisional Court:
(a) whether the Tribunal was functus officio once it had announced its order on 5 April 2005. This issue was not pursued before us.
(b) whether the penalty imposed by the Tribunal was wrong in principle, on the basis that it was excessive and disproportionate? (the sentence issue)
(c) whether the Tribunal erred in law when it ordered the Law Society to pay 30% of the appellant's costs of the disciplinary proceedings? (the costs issue)
The Facts
This summary is largely drawn from Moses LJ's detailed analysis which we gratefully adopt.
The appellant was born in 1964. He was admitted as a solicitor in 1990. From 1994 he was in sole practice. During 1994, and in particular May and July 1994, he provided advice on the setting up of arrangements for loans from a pension fund. The precise details are irrelevant for present purposes. However, in accordance with a memorandum drafted by the appellant in July 1994 pension fund monies were paid into his client account, and in September 1994 were distributed by way of a loan for £2.135m out of the pension fund to a company called Kesking Limited and 19 subsidiaries. Security was provided for the loan agreement, but the document proved worthless. After the loan transaction was completed, the appellant attempted to find a new replacement administrator for the pension scheme, and in October 1994, the administration of the scheme was vested in Independent Financial Partnership Limited, one of whose directors was a Mr Brian Smyth. He was the principal point of contact with the appellant. He made extensive inquiries about the loan arrangements, and expressed his own considerable concern about its propriety.
At the disciplinary hearing the appellant asserted that a Mr Xavier, a Malaysian solicitor whom he had met in London in July 1994, had informed him that a Mr Nurkiman was one of the two owners of Kesking Limited. After the distribution of loans from the pension fund, it became urgent to ensure that pensioners received outstanding payments from the balance of the funds. By then Mr Nurkiman was the 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 to effect the transfer and enable authority to be given to the bank to accept two signatories, Independent Financial Partnership Limited and well known solicitors in this country, Russell Jones and Walker. A letter dated 28 November 1994, to that effect, was sent to Mr Nurkiman.
On 30 th November Mr Smyth wrote to the appellant explaining that no signature had been received from Mr Nurkiman, and pointing out that “well before Christmas” the administrators would need the trustee's address, proof of identity in the form of a passport, and that Barclays Bank would need to take out bank references. An attendance note from Mr Smyth, dated 30 November 1994, forms a minute of a telephone conversation on that date with the appellant. 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”. The note includes a further reference to a discussion about payments to pensioners “…which may or may not happen”, and Mr Smyth raised the question whether it was certain that money laundering was not involved. The note further recalled that a previous administrator had told the appellant that he was “playing with dynamite”. The accuracy of this note was never denied by the appellant.
By letter dated 1 December 1994 from Mr Smyth for the administrators, to the solicitors, Russell Jones & Walker, it was recorded that “Barclays had insisted that they find out more about Mr Nurkiman and we believe that they have been in touch with you direct”. A note on the letter records that the appellant would deal with the matter, and refers to matters such as passport, birth certificate and identification of signatures by a solicitor. This letter was not addressed to the appellant himself. However during the course of the hearing before Etherton J it emerged that he had indeed written a reference for Mr Nurkiman dated 2 December 1994, in answer to a request from the manager of Barclays Bank PLC in Harrogate. In addition to this reference, the appellant wrote a further 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 reference, which formed the basis for the second allegation against the appellant, reads:
“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 1994. We are further pleased to confirm that he a person of integrity and good standing.
We nevertheless disclaim all and any responsibility for any loss or damage consequent upon any actions you may take.”
The trustee took proceedings against a number of defendants, claiming that the £2.135 million paid out by way of loans to Kesking and its subsidiaries constituted a dishonest breach of trust. The present appellant was the third defendant. At the end of the lengthy hearing before Etherton J, he concluded that he should view the appellant's evidence with “considerable caution”. He was left in “considerable doubt” whether the appellant was giving “honest evidence as to his actual recollection, as opposed to reconstructing what he believed or would like to believe…“.
The judgment went on to record that there were “some particular incontrovertible matters” casting doubt on the appellant's honesty, and his credibility as a witness, and on the “truthfulness and reliability of his oral evidence”. The judge identified his evidence in relation to a memorandum as “manifestly untrue”. The appellant's explanation about events surrounding the memorandum was “ridiculous”, and although the particular issue was of relatively minor importance in the overall context of the issues before the judge, it provided “very grave concern” about the appellant's overall credibility on more important matters.
Another matter that cast doubt on the appellant's honesty and the reliability of his evidence, related to a telephone conference in August 1994 with a barrister specialising in company law work. The details of the transaction are unimportant, but the judge concluded that either the appellant's note of the telephone conference was “entirely inaccurate, and deliberately so”, or the alternative account, given by another witness, was equally inaccurate, “and deliberately so”, and that the appellant connived in the creation of the false account. The note of the telephone conversation, written by the appellant, was intended “for future use in case it should transpire that a breach of trust was committed, and was worded with that in mind”.
There were a number of additional factors which provided support for what Etherton J described as a “compelling argument” that the appellant was dishonestly participating in, or dishonestly reckless whether a breach of trust was involved. In the end, however, he decided that the trustee had failed to establish that the appellant was acting dishonestly as an accessory to the breach of trust when the loans were made. It was a “difficult and finely balanced exercise”. The appellant's lack of professional judgment...
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