Petition Of (1) Gerald John Robert Mcmahon, (2) Colin Harvey Mcfadyen And (3) Lawrence Strachan Rew And Against A Decision Of The Scottish Solicitors' Discipline Tribunal In A Complaint By The Council Of The Law Society Of Scotland Dated 5 September 2000 V.
| Jurisdiction | Scotland |
| Judge | Lord Caplan,Lord MacLean,Lord Justice Clerk |
| Docket Number | P1091/00 |
| Date | 12 February 2002 |
| Court | Court of Session |
| Published date | 12 February 2002 |
| SECOND DIVISION, INNER HOUSE, COURT OF SESSION | |
| Lord Justice Clerk Lord MacLean Lord Caplan
| P1091/00 P1128/00 P1125/00 OPINION OF THE COURT delivered by THE LORD JUSTICE CLERK in PETITIONS of (1) GERALD JOHN ROBERT McMAHON, (2) COLIN HARVEY McFADYEN and (3) LAWRENCE STRACHAN REW against A decision of the Scottish Solicitors' Discipline Tribunal in a complaint by the Council of the Law Society of Scotland against the petitioners dated 5 September 2000 and intimated to the petitioners on 26 October 2000 in terms of the Solicitors (Scotland) Act 1980, section 54(1) _______ |
Act: DS Williamson, WS, Sol-Adv; Brodies WS (for first petitioner)
Springham; Drummond Miller, WS (for second petitioner
Stewart QC, Wade; Aitken Nairn, WS (for third petitioner)
Alt: Dunlop; Balfour & Manson
12 February 2002
The Decision appealed against
[1]The petitioners are solicitors. They appeal by way of petition against a decision of the Scottish Solicitors' Discipline Tribunal (the Tribunal) dated 5 September 2000. The respondents are the Council of the Law Society of Scotland.
[2]On 29 March 1999 the respondents made a complaint to the Tribunal of numerous charges of professional misconduct against the petitioners.
[3]The Tribunal held a hearing on 4 and 5 September 2000. The first and second petitioners were each represented by a solicitor. The third petitioner appeared on his own behalf. The parties adjusted pleadings and made up a record. Each of the petitioners entered into a joint minute with the respondents in which he admitted much of the factual material in the complaint. The respondents led evidence. The first and the second petitioners gave evidence on their own behalf, but the third petitioner did not.
[4]The petitioners admitted most of the charges. In the case of the first and second petitioners there were significant questions of fact regarding an alleged breach of the Conflict of Interest Rules and an allegation of misappropriations in name of fees from the funds of a client company, Robbie Fowler Sports Promotions Ltd (referred to as Fowler Ltd). Otherwise, the main questions in the case concerned the degree of gravity of the petitioners' actings and the penalty that was appropriate in each case.
[5]The decision of the Tribunal was in the form of findings in fact; findings on the question of professional misconduct in relation to each petitioner; the Order made in the light of those findings, and a Note setting out the Tribunal's reasons for its decision.
[6]In view of the seriousness of this case, we quote the findings of misconduct in full.
"6.Having considered the foregoing circumstances, the Tribunal make the following findings of professional misconduct against the particular Respondents -
(1)Mr McMahon and Mr McFadyen in regard to the following breaches
of the Solicitors (Scotland) Accounts Rules 1995, 1996 and 1997 -
(a)Rule 4(1) of the 1995 Rules in respect of the shortage of funds
in the client bank account as at 29th February 1996.
(b)Rule 4(1) of the 1996 Rules in respect of the shortages of funds
in the client bank account as at 30th September 1996 and other occasions in or about that date, and as at 28th February and 30th May 1997.
(c)Rules 4(1) of the 1997 Rules in respect of the shortage of funds
in the client bank account as at 31st July 1998.
(d)Rule 6(1)(a) of the 1995 and 1997 Rules in respect of their
failure to obtain written authority to transfer funds from one client of the firm to another.
(e)Rule 6(1)(d) of the 1995, 1996 and 1997 Rules in respect of
their failure to render accounts to clients in respect of fees received by the firm.
(f)Rule 6(3) of the 1996 and 1997 Rules in respect of their failure
to specify on cheques drawn in favour of a bank or building society the name or the account number of the person whose account was to be credited.
(g)Rule 7(g) of the 1996 Rules in respect of their failure to narrate
in the client ledger - the payment of a deposit, the value of another property involved in the transaction, and other outlays.
(h)Rule 12(1) of the 1995, 1996 and 1997 Rules in respect of their
failure to ensure adequate narrative of entries and generally to keep properly written up records.
(i)Rule 12(3) of the 1995 and 1996 Rules in respect of their
failure to ensure that entries for clients were properly recorded in accordance with that Rule.
(j)Rule 12(4) of the 1995 Rules in respect of their failure to keep
properly written up books so as to balance the firm's books monthly.
(k)Rule 13 of the 1996 Rules in respect of their failure to carry out
a proper reconciliation of the client bank account.
(l)Rule 14 of the 1996 Rules in respect of their failure to carry out
a proper reconciliation of funds invested on behalf of clients.
(m)Rule 15 of the 1997 Rules by their failure to invest funds
lodged in the firm's bank account on behalf of clients in a separate interest bearing client account.
(n)Rule 16 of the 1996 and 1997 Rules by their failure to comply
with the Money Laundering Regulations.
(2)Mr McMahon and Mr McFadyen in respect of their failure to inform
Fowler Ltd of their intromissions with the funds received for that company and the position regarding the earning of interest on said funds.
(3)Mr McMahon in respect of his failure to stamp a Disposition and to
record the Disposition and Standard Security timeously.
(4)Mr McFadyen in respect of his failure to stamp a Disposition and to
record the Disposition and Standard Security timeously.
(5)Mr Rew in regard to the following breaches of the Solicitors (Scotland)
Accounts Rules 1997
(a)Rule 4(1) in respect of the shortage of funds in the client bank
account as at 3rd June and 31st July 1999.
(b)Rule 6(1)(d) in respect of his failure to render accounts to
clients in four separate matters where fees had been taken by him.
(c)Rule 6(1) by reason of withdrawing the sum of £11,200 from
the client bank account without the written authority of any client or any other valid reason.
(6)Mr Rew in respect of the following
(i)His failure to stamp a Disposition and to record the Disposition
and the relative Standard Security timeously.
(ii)His failure to implement an undertaking given by him to the
Law Society and to respond to the Law Society.
(iii)His failure to respond to the Law Society and to ensure that
there were adequate funds in his client bank account to enable him to make a payment to a beneficiary which he was obliged to make.
(iv)His failure to be candid with his client in relation to the extent
of a personal liability to a third party in circumstances where he was seeking financial assistance from his client with regard to payment.
(v)His failure to obtain the instructions of his client to make a
payment to a third party using funds belonging to his client.
(vi)His failure to complete an application form in connection with
a loan in which he had a direct interest prior to having his client sign the application form."
[7]Having heard the petitioners in mitigation, the Tribunal suspended both the first and the second petitioners for a period of five years; and ordered that the name of the third petitioner should be struck off the Roll of Solicitors in Scotland.
[8]The petitioners do not challenge the findings of misconduct, but each contends that the penalty imposed on him was excessive.
The statutory framework
[9]Section 53 of the Solicitors (Scotland) Act 1980 (the 1980 Act) sets out the powers exerciseable by the Tribunal when they make a finding of professional misconduct. These include the power to order that the solicitor be struck off, or suspended, or censured or fined (s. 53(2)). In the last two cases, they may restrict the practising certificate (s. 53(5)). Section 54 provides a general and unfettered right of appeal to this court from a decision of the Tribunal. Section 55 confers on this court similar but not identical powers to those of the Tribunal. We need not quote these provisions.
[10]In addition to the penalty of suspension under sections 53 and 55, there is also a power vested in the respondents to withdraw a solicitor's practising certificate, and therefore to suspend him from practice, under section 40(1) where, inter alia, he has been in breach of the Accounts Rules. This is a protective rather than a punitive measure. It may be followed in due course, as in this case, by disciplinary proceedings. The suspension may be terminated at any time if the solicitor satisfies the respondents that he is able and willing to comply with the Rules (s. 40(2)). The first and second petitioners were suspended under section 40 in this case. They applied under section 40(3) to have the suspensions terminated, but it appears that for various reasons their applications were not pursued to a conclusion. In due course their sequestrations gave further grounds for the suspension of their certificates (s. 18(1)).
[11]Section 53 of the 1980 Act raises a practical question that has arisen in the present case. Section 53(6) provides as follows:
"(6)Where the Tribunal order that the name of a solicitor be struck off the roll, or that the solicitor be suspended from practice as a solicitor, ... the Tribunal may direct that the order shall take effect on the date on which it is intimated to the solicitor; and if any such direction is given the order shall take effect accordingly."
Section 53(7) provides as follows:
"(7)Where in relation to any such order as is mentioned in subsection (6) ... the Tribunal give a direction under subsection (6) ... and an appeal against the order is taken to the court under section 54, the order shall continue to have effect pending the determination or abandonment of the appeal unless, on an application under subsection (2) of section 54, the court otherwise directs."
Paragraph 16 of Schedule 4 to the 1980 Act provides as follows:
"16.In the case of a decision by the Tribunal-
...
(b)ordering a solicitor to be suspended from practice;...
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