Deidre Newell-Austin v Solicitors Regulatory Authority
| Jurisdiction | England & Wales |
| Judge | Mr Justice Morris |
| Judgment Date | 03 March 2017 |
| Neutral Citation | [2017] EWHC 411 (Admin) |
| Docket Number | Case No: CO/5557/2016 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 03 March 2017 |
[2017] EWHC 411 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Morris
Case No: CO/5557/2016
Russell Wilcox, by direct access, for the Appellant
Edward Levey (instructed by Bevan Britten LLP) for the Respondent
Hearing date: 22 February 2017
Approved Judgment
Introduction
This is an appeal by Deidre Newell-Austin ("the Appellant"), pursuant to section 49 of the Solicitors Act 1974, ("the 1974 Act") against an order of the Solicitors Disciplinary Tribunal ("the Tribunal") dated 14 September 2016. By that order the Appellant was struck off the Roll of Solicitors and ordered to pay the costs of the Solicitors Regulation Authority ("the SRA") in the sum of £85,000. The reasons for the Tribunal's decision are set out in the Tribunal's judgment dated 11 October 2016 ("the Judgment"). The SRA is the respondent to this appeal.
The decision to strike the Appellant off the Roll was made following a substantive hearing which took place between 12 and 14 September 2016. At that hearing, the Appellant was represented by counsel and gave detailed oral evidence for approximately five hours.
The Appellant was the first respondent to the disciplinary proceedings. There were two other respondents. The second respondent, Najma Nahid Assroundi ("Ms Assroundi") was a solicitor. The third respondent, Rashad Ahsan ("Mr Ahsan") was a Registered Foreign Lawyer ("RFL"). For ease of reference, I refer to Miss Assroundi as the Second Respondent and to Mr Ahsan as the Third Respondent. The Second and Third Respondents did not appear at the substantive hearing and were not represented. Both were struck off the Roll and ordered to pay the SRA's costs.
Background to the Allegations
The charges of professional misconduct arose out of the involvement of the Appellant and the Second and Third Respondents in a firm of solicitors, Austin Law at 244 Edgware Road, London W2 ("the Firm").
Up until 26 June 2013, the Appellant was the sole principal of the Firm. In early 2013 she had wanted to cease practice but could not afford to pay the run-off insurance associated with the closure of her practice and so she brought in the Second and Third Respondents to work for the Firm. The Third Respondent commenced work on 1 March 2013. The Second Respondent commenced work on 15 April 2013.
On a Sunday morning, 7 April 2013 the Appellant and the Second Respondent met each other for the first time, in a café at a railway station.
On the next day 8 April 2013, the Respondents submitted to the SRA an RB1 application form, signed by the Appellant, for permission for the Firm to practice as a partnership with each of them as partners ("Partnership Application"). The application was made on the express basis that each of the Appellant and the Second and Third Respondents would be a partner in the firm, once the partnership had been approved by the SRA. The covering letter asked for the application to be expedited, explaining that the matter was very urgent due to the insurance issue.
As noted above, at this point in time, whilst the Third Respondent had been working for the Firm since 1 March 2013, the Second Respondent had not started working for the firm. This coupled with the circumstances in which the Appellant had first met the Second Respondent forms the background to the Tribunal's subsequent finding that the recruitment had been "highly unorthodox": see paragraph 29 below.
Section 12 of the RB1 application form required the completion of the suitability test in respect of the proposed partners who were RFLs; in this case the Third Respondent. In answer to the specific standard form question "is the candidate currently facing any criminal charges?", the Appellant ticked the box marked No. The form included, at the end, a number of declarations, including a declaration that "The SRA will be notified as soon as any information provided in this application has changed".
In the course of May and June 2013, there was extensive correspondence between the Firm and the SRA, addressing in particular questions as to how the Firm was going to operate. The Appellant was keen to move the process along as quickly as possible. All along the application was put on the basis that there were going to be three working partners in the Firm. In the course of that correspondence, the Appellant told the SRA on 22 May 2013 that she could not predict her future plans, but that her immediate intention was to travel to see her family and that she was considering a longer break from practice. Once the Partnership was approved she would be away from the office for at least 4 weeks.
On 29 May 2013 the SRA sent a letter seeking further detailed information. The letter asked specifically which responsibilities would be shared by each of the three partners and further asked "Please provide details of management experience of Mr Ahsan as I note that this was not confirmed. Please also confirm what responsibilities will he have as a partner".
On 31 May 2013 the Third Respondent was arrested and released on police bail in connection with a fraudulent mortgage transaction relating to a property at 64 Kingsdown Road, London N19 (where the Firm had acted for the vendors). He was not charged with any offence. He explained to the SRA that he did not attend the Firm from then on.
The Appellant denied that at that time she suspected him of wrongdoing, but accepted that the Third Respondent was excluded from the Firm following his arrest and that he never returned. In the period following the Third Respondent's arrest, further fraudulent mortgage transactions occurred.
On 4 June 2013 the Appellant sent an email to the SRA stating that:
"It has come to my attention recently that the office has handled a transaction that is now the subject of a Fraud. I am in the process of filing a detailed Summary of Events together with the measures of how to prevent similar event occurring again. Please could you let me know what is required in addition to this summary and measures and to which address should I forward the report"
On 6 June the SRA responded, by indicating where the Summary of Events should be sent.
As recorded in paragraph 40 of the Judgment, " no details were provided in the email; no mention was made of the Third Respondent's arrest; and the "Summary of Events … was never received by the SRA."
On 7 June 2013 the Appellant wrote to the authorisation team at the SRA in response to the matters raised in its letter of 29 May 2013 as to how the partnership would operate. In direct answer to the specific questions referred to in paragraph 11 above, the Appellant responded:
"[the Third Respondent] will be allowed minimal management task because of his locks of experience. However he will continue to casework and supervision and promote the firm by networking and advertising. … [the Third Respondent] do not have any management experiences hence the reason why he is being given minimal responsibility at present".
She failed to mention in that email that the Third Respondent was no longer attending the office nor that he had been arrested. The SRA maintains that this email continued to proceed on the basis that the application was going ahead on the basis of three partners and gave the misleading impression to the SRA that the Third Respondent was present and still working at the firm. On 20 June 2013 the SRA wrote to the Firm stating that the application was still proceeding on the basis that there were going to be three partners.
On 26 June 2013 the SRA granted the Firm permission to operate as a partnership. The Appellant resigned as a partner almost immediately on 2 July 2013. At no point prior to that approval by the SRA did the Appellant inform the SRA that the Third Respondent had been arrested and bailed on suspicion of fraud or that he had been excluded from the office.
On 5 July 2013, following reports of the Kingsdown Road transaction, the SRA commenced an investigation into the Firm, and on 29 July 2013 the SRA intervened into the Firm on the grounds of suspected dishonesty. It transpired that the Firm had been involved in a number of fraudulent mortgage transactions. Claims were subsequently made against the Firm in respect of those transactions but the Firm's insurers declined cover on the grounds that the claims arose out of dishonest conduct which the partners had committed or condoned. None of the partners challenge the insurers' decision to decline cover. As at 16 February 2015 the statutory compensation fund had paid out in excess of £2.8 million in respect of six particular mortgage frauds, with other claims against the fund still outstanding.
The Tribunal Proceedings
The allegations against the Appellant
Before turning to the specific allegations of professional misconduct against the Appellant, I identify the relevant parts of the SRA Principles 2011 which the SRA alleged that the Appellant had breached. The SRA Principles provide, inter alia, as follows:
"These are mandatory Principles which apply to all.
You must:
…
2. act with integrity;
3. not allow your independence to be compromised;
4. act in the best interests of each client;
…
6. behave in a way that maintains the trust the public places in you and in the provision of legal services;
7. comply with your legal and regulatory obligations and deal with your regulators and ombudsmen in an open, timely and cooperative manner;
8. run your business or carry out your role in the business effectively and in accordance with proper governance and sound financial and risk management principles;
…
10....
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