Conlon v Simms
| Jurisdiction | England & Wales |
| Judge | Mr Justice Lawrence Collins |
| Judgment Date | 09 March 2006 |
| Neutral Citation | [2006] EWHC 401 (Ch) |
| Docket Number | Case No: HC 04 C 00495 (TLC 113/05) |
| Court | Chancery Division |
| Date | 09 March 2006 |
[2006] EWHC 401 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand
London WC2A 2LL
Mr Justice Lawrence Collins
Case No: HC 04 C 00495 (TLC 113/05)
Mr Philip Engelman (instructed by Bower Cotton Partnership) for the Claimants
The Defendant appeared in person
APPROVED JUDGMENT
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of
this judgment and that copies of this version as handed down may be treated as authentic.
()
I Introduction: Bower Cotton
The solicitors' firm of Bower Cotton and Bower was founded in 1818. It changed its name to Bower Cotton in 1997. By that time it consisted of 8 partners. Mr Paul Simms, the defendant, was the senior partner. The other partners were Guy Vincent (the managing partner), Michael Conlon (the first claimant), Andrew Couch, Michael Parker, Bob Perrin, Paul Shaerf, and Andrew Smith. Mr Conlon had been a partner since 1974, and Mr Simms had been a partner since 1978.
Mr Simms' primary area of practice was commercial litigation, but he also had a commercial practice, which included project finance work. He and his department were the largest profit centre of the firm. Mr Conlon had, primarily, a matrimonial practice, but he had introduced commercial clients to the firm.
The partnership agreement of June 3, 1997 (only a draft of which is in the papers before the court) provided that the partners would at all times conform to the rules and regulations of the Law Society (clause 2.2); and that each partner would be just and faithful to the other partners in all matters relating to the partnership, and conduct himself in a proper and responsible manner (clauses 18.1.1. and 18.1.3).
By mid-1998 Mr Simms and Mr Vincent had plans for a bolt-on or merger with another firm. They were concerned to generate more cash and the capital and equity structure of the firm to ensure greater fairness, in the light of the fact that the firm had not grown organically in 15 years, and had contracted in partner numbers. Their view was that it was an ageing partnership. In the next few years Mr Simms and Mr Conlon would be thinking of retirement and they had no one with whom to replace them.
There were approaches to, or from, several firms, and after discussions starting in the spring of 1999 Bircham & Co. (shortly to become Bircham Dyson Bell) ("Birchams") made proposals which led eventually to six of the Bower Cotton partners joining Birchams.
Mr Simms and Mr Conlon decided not to join Birchams. On March 24, 2000 all the partners of Bower Cotton executed a deed of dissolution, confirming that on April 30, 2000 Bower Cotton would be dissolved and that on May 1, 2000 Mr Simms and Mr Conlon would enter into partnership and would practise as "The Bower Cotton Partnership."
The Bower Cotton Partnership's premises were the former Bower Cotton premises at 36 Whitefriars Street, London EC4. The equity partners were Mr Simms and Mr Conlon, with Christopher Richardson (who had been recruited in January 2000) as a salaried partner. From June 2000 Mr Conlon and Mr Simms negotiated the entry of Roger Harris (the second claimant) to the partnership as an equity partner. Mr Harris was a specialist in conveyancing and was at that time a sole practitioner. He joined the partnership as from September 1, 2000. Later, in addition to Mr Richardson, Philip d'Costa and Mark Boardman became salaried partners.
II Law Society: Solicitors Disciplinary Tribunal ("SDT") findings and appeal to the Divisional Court
In August 1998 the Office for the Supervision of Solicitors ("OSS") commenced an inspection of the books of the firm. On February 25, 1999, Mr James, acting head of the Monitoring and Investigation Unit, reported on the inspection of the firm's books. No action was recommended by the Law Society in relation to issues concerning compliance with the Solicitors' Accounts Rules, but attention was drawn to matters relating to what were described as "Banking Instrument Transactions," in view of the "warning card" issued by the Fraud Intelligence Office of the Law Society in relation to the need for solicitors to exercise extreme caution if approached by individuals seeking to promote transactions in banking instruments such as, inter alia, prime bank guarantees. The report drew attention to the firm's involvement in banking instrument transactions, and pointed out that during the period from December 1997 to September 1998 the firm had received more than $50 million (in sums varying between about $1 million and $10 million) into its client bank account.
In response to the report, in a letter of April 22, 1999 on behalf of the firm, Mr Simms said that the firm's reputation for financial probity was undoubted, and it had never knowingly put any funds of clients at risk or misapplied them in any way. Mr Simms said:
"We have decided that the amount of time involved in acting for parties to schemes of the type described in the report is disproportionate to the reward and that we will not accept instructions in respect of the schemes involving the use of our client account for the proposed investment monies."
The OSS enquiries continued, and in a letter of November 15, 1999 the OSS wrote to Mr Simms to advise that Mr James had been appointed to inspect the books of account of the firm.
On February 19, 2002 the Law Society's Adjudication Panel resolved to intervene into Mr Simms' practice on the grounds of suspected dishonesty. The intervention was based on an OSS Report of Forensic Investigations dated January 31, 2002 which was supplied to all the partners of The Bower Cotton Partnership on February 19, 2002. The Report stated (para. 14) that, notwithstanding Mr Simms' assurance of April 22, 1999 that he would not accept instructions in respect of schemes affecting the firm's client account for proposed investment money, funds continued to be received and paid after that date.
As a result of the intervention Mr Simms' practising certificate was suspended, but was reinstated on March 19, 2002 subject to conditions.
On February 27, 2002, all of the then partners (including the 3 salaried partners) in The Bower Cotton Partnership applied to the court to set aside the intervention.
On September 17, 2002 disciplinary proceedings were commenced against Mr Simms by the Law Society.
The disciplinary proceedings were heard in November and December 2003 over about 14 days. On February 2, 2004 the SDT concluded that on the basis of the allegations found proved against Mr Simms he be struck from the Roll of Solicitors. The reasons were given in April 2004.
The SDT concluded in a lengthy decision (at paras. 537 to 544):
"The Tribunal is satisfied beyond any reasonable doubt that relevant evidence placed before it does establish that except for allegations 4 and 6 all the allegations are established and are found proven against [Mr Simms].
…
The Tribunal finds that the schemes themselves involved promises of returns which no reasonable or competent solicitor could have regarded as obtainable without one or other party being involved in transactions which were likely to be fraudulent, illegal or otherwise improper. The involvement of Mr Simms, and often as someone who might benefit from such transactions, and the association that he had with Intermediaries and others who were promoting such transactions, made it impossible for him to give independent advice to all his clients. The Tribunal is satisfied that no such independent advice was given.
The Tribunal finds that Mr Simms acted for or was in a business association with most if not all of the companies and individuals involved in the various transactions and as such he had serious conflicts of interest and duty. This was aggravated by the fact that he had a personal interest through success fees, shareholding interests and as a director of some of the companies. This was in addition to professional fees. The acute conflicts made it quite impossible for him to give independent advice to any of those who were said to be his clients or those to whom he owed duties as a solicitor.
…
The Tribunal was wholly persuaded that Mr Simms was the legal adviser and often the promoter or organiser in respect of the various schemes from which he expected substantial personal benefit and which promised benefits to certain of his clients. The Tribunal has no doubt it was incumbent on him to examine the various schemes and advise independently of any interest of his own or others on likely success or propriety. He lamentably failed to do so. The Tribunal has no doubt that Mr Simms' willingness to be involved on behalf of so many parties in each transaction contributed to the facilitation of bogus schemes.
…
The Tribunal has no doubt that a transaction which on the face of it promises fantastic and incredible returns for no risk does not have the quality of a likely lawful and honest transaction. Mr Simms did not establish the veracity of the transactions he encouraged nor the bona fides or honesty of those with whom he was dealing. He made no proper enquiry and he took on trust extravagant and unlikely claims. This was not the conduct of an honest solicitor and he put his and the Profession's reputation for prudence, integrity, honesty and trustworthiness at serious risk. This is all the more so where (as the Tribunal has found) he acted in circumstances of acute conflicts of interest, ignored warnings from responsible third parties, eg banks or professional colleagues, and where he had an actual or potential financial interest beyond any proper legal fees."
On March 17, 2005 the Divisional Court (Latham LJ and...
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