Petition Of Cameron Stuart Fyfe Against The Council Of The Law Society Of Scotland And Another
| Jurisdiction | Scotland |
| Judge | Lord Drummond Young,Lord Justice Clerk,Lord Bracadale |
| Judgment Date | 31 January 2017 |
| Neutral Citation | [2017] CSIH 6 |
| Docket Number | P1161/16 |
| Published date | 31 January 2017 |
| Court | Court of Session |
| Date | 31 January 2017 |
SECOND DIVISION, INNER HOUSE, COURT OF SESSION
[2017] CSIH 6
P1161/16
Lord Justice Clerk
Lord Bracadale
Lord Drummond Young
OPINION OF THE COURT
delivered by LADY DORRIAN, the LORD JUSTICE CLERK
in the Petition
of
CAMERON STUART FYFE
Petitioner
against
THE COUNCIL OF THE LAW SOCIETY OF SCOTLAND and ANOTHER
Respondents
Petitioner: Sutherland, QC; Drummond Miller LLP
First Respondent: Dunlop, QC; T C Young
31 January 2017
[1] This is an appeal in terms of section 54 of the Solicitors (Scotland) Act 1980 challenging the decision of the respondent that the petitioner’s name should be struck from the Roll of Solicitors.
Background
[2] On 27 September 2016 the Scottish Solicitors Discipline Tribunal found the petitioner guilty of professional misconduct and ordered his name to be struck from the Roll. The findings related to a period between 4 April 2008 and 6 May 2011 during which time the petitioner was a partner with the firm of Ross Harper, having been a partner thereof from 1 September 1982 until the latter date above. The firm itself was dissolved on 4 April 2012 following appointment of an interim judicial factor at the instance of the first respondent.
[3] In the discipline proceedings the petitioner accepted that in the relevant period he permitted to be operated, or acquiesced in, a policy where the business of the firm of Ross Harper was improperly funded by payments due to third parties, and that by his acquiescence he contributed to the operation of the policy, which is described in greater detail below. The petitioner also counter-signed an accounts certificate dated 10 May 2010 which he knew or ought to have known was inaccurate and from which the true financial position of the firm was not evident to the Law Society of Scotland. It is accepted that his actions were in breach of the Solicitors (Scotland) Account etc. Rules 2001, the Code of Conduct for Scottish Solicitors and the Solicitors (Scotland) (Standards of Conduct) Practice Rules 2008, and that they constituted professional misconduct. Funds received from SLAB in respect of fees and outlays due to third parties may be paid into the firm account, but unless payment is made forthwith these sums should be transferred to the client account. Retaining them within the firm account is a clear breach of the Accounts Rules.
[4] The allegations regarding the operation of the scheme were set out in a detailed complaint against the petitioner and another partner, Alan Susskind who had been the managing and cash room partner at the relevant time. In terms of a joint minute, the petitioner admitted certain of the averments in the complaint. Of particular importance were paragraphs 2.7; 2.8; and 4.2 (a) and (b).
[5] Paragraph 2.8 averred that
“The Second Respondent and members of staff under his supervision were aware of the operation of the policy known as "the drawer", and which continued to be operated by cashroom staff during the period when the Second Respondent was a Partner within the firm up until the date he resigned from said firm. “
This averment was admitted.
[6] Paragraph 2.7 explained the manner in which the policy had operated, as follows:
“The said firm operated a policy referred to as “the drawer” in order to improve the firm’s cash flow. This operation existed in legal aided cases. The funds were received from the Scottish Legal Aid Board and paid into the firm account. Cheques were printed in respect of payments due to third parties according to invoices received, but then were not signed and sent out until such time as the firm’s cash flow permitted the cheques to be issued.
A number of entries were then created on the client ledgers to show that cheques were issued in payment to third parties in respect of these outlays. These entries were then reversed in the following months to show that the cheques had not been cashed and the funds were re-credited to the client ledgers. New entries were then made to show that fresh cheques had then been issued. These entries were also then reversed in the following months to show that the cheques had not been cashed and funds re-credited to the ledger. New entries were eventually made to show that fresh cheques had been issued in respect of the outlays.
The creation of these entries in the ledgers was made to show that cheques had been issued and funds had left the firm’s account, when the cheques were being held and had not been issued outside the firm’s premises. The client ledgers gave the impression that payments due to third parties had been made by the firm when the funds actually remained in the firm account. This was designed to show that there were sufficient funds in the firm’s account to meet all its current liabilities to clients. Payments issued by the Scottish Legal Aid Board to the firm are deemed to be clients’ funds and are utilised to pay specific outlays on behalf of specific clients and to specific third parties, including payments due to other solicitors. They were not used for this purpose but were used to improve the financial position and cash flow of the firm and to obscure the true level of the firm’s liabilities and overdraft. They created a misleading and inaccurate representation of the firm’s accounting position. The operation of this policy was a wrongful and improper use of client’s funds without the knowledge or consent of the clients to allow the said firm to continue to trade and operate within the limit of its banking facilities.”
This paragraph was admitted.
[7] Paragraph 4.2 averred:
“(a) The Second Respondent during his tenure as a partner and principal in the said former firm of Ross Harper and, in particular, during the period from 4th April 2008 to 6th May 2011 permitted to be operated or acquiesced in a policy whereby the business of the former firm was improperly funded by payments due to third parties, and that by virtue of his status as a Partner or principal of the former firm, he by his acquiescence contributed to the operation of that policy of funding and, in particular, sums received from the Scottish Legal Aid Board were deposited in the firm's bank accounts, and cheques were thereafter drawn on those accounts and the purported payment of third parties outlays made which had been incurred on behalf of the former firm's clients. Said policy resulted in sums validly due to third parties not being timeously paid. Corresponding entries were reflected in individual client ledgers but the cheques drawn on the firm's account were not issued to the appropriate parties at the relevant time with the funds thereby remaining in the firm account all in breach of the Solicitors (Scotland) Accounts etc Rules 2001, the Code of Conduct for Scottish Solicitors, and the Solicitors (Scotland) (Standards of Conduct) Practice Rules 2008.
(b) Separatim the Second Respondent submitted to the Law Society of Scotland an Accounts Certificate, dated 10 May 2010, which he knew or ought to have known was inaccurate, thereby the true financial position of the firm was not evident to the Law Society of Scotland.”
These paragraphs were admitted.
[8] It was admitted that during the relevant period payments in the region of £70,000, which should, on receipt, have been paid to the firm’s Edinburgh agents, were delayed in accordance with this policy, only being paid when an action was raised and diligence executed. The respondents’ investigation uncovered 32 files and ledgers which gave cause for concern, in respect of nineteen of which the petitioner was the nominated solicitor and partner. Payment of outlays, including fees due to professional witnesses was delayed, sometimes for lengthy periods of time.
[9] At the Tribunal hearing, it was accepted by the fiscal that the petitioner did not instigate the system and that it had been in use for many years. It was also accepted that the petitioner did not sign any of the cheques from the drawer, or see any of the ledger cards. It was not established who decided to operate the policy. It was accepted by the fiscal that the use of the drawer system became more prevalent after the petitioner resigned as partner on 6 May 2011 and that it “may have therefore spiralled somewhat out of control in the 11 months after his resignation”. The fiscal relied on certain memos in which the petitioner had asked the cash room to make payments from the drawer. He also relied on the admitted averments in paragraphs 2.7 and 2.8.
[10] It is clear that the fiscal did not seek to aver dishonesty on the part of the petitioner, but the exact detail of the concession is somewhat difficult to identify, a matter to which we will return.
[11] The part of the Tribunal’s decision which is challenged in particular occurs at p 104 of the determination and is in the following terms:
“The Tribunal considered carefully what the parties had said in mitigation on the last occasion including the several letters of support from some eminent members of the profession. The Tribunal had discussed the case at length. The Tribunal noted with care the Fiscal's concession that there was no dishonesty averred and none admitted. The Tribunal took that to mean that individually there was no immediate personal financial gain to either of the Respondents. The Tribunal however could not ignore that the Respondents did obtain a benefit through the wrongful use of the client funds which are meant to be sacrosanct. To their knowledge, third parties were denied either timeous payment or payment at all for services the firm had requested. The Tribunal had been advised that the shortfall in funds at the time the Respondents left the firm was approximately £40,000 although the action for payment by their Edinburgh agents was for £70,000. One year after they left the shortfall seems to have increased to £400,000. The Tribunal was also advised that it was left to a member of the cashroom staff to whistle blow and effectively uncover the practice. Had either...
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