Solicitors Regulation Authority v Anderson Solicitors and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice King,Lord Justice Treacy |
| Judgment Date | 17 December 2013 |
| Neutral Citation | [2013] EWHC 4021 (Admin) |
| Docket Number | Case No: CO/4547/2013 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 17 December 2013 |
[2013] EWHC 4021 (Admin)
Lord Justice Treacy
and
Mr Justice King
Case No: CO/4547/2013
CO/10914/2013
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
DIVISIONAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Dutton QC (instructed by Penningtons Manches) for the Appellant
Mr Treverton-Jones QC (instructed by Anderson Solicitors) for the Respondents
Introduction
This appeal is concerned with an order of the Solicitors Disciplinary Tribunal dated 18 th March 2013. The Solicitors Regulation Authority (SRA) appeals against (a) the acquittal of the Respondents in relation to Rule 10 of the Solicitors Code of Conduct 2007 (SCC), and (b) the penalty of £1,000.00 which was imposed on the Second to Sixth Respondents inclusive, jointly and severally. No penalty was imposed on the First Respondent. The First to Sixth Respondents have cross-appealed the order made by the Tribunal, whereby it ordered them to pay £80,000.00 towards the costs of the SRA. For convenience, I will refer to them as Respondents throughout.
The Tribunal hearing took place over five days between 28 th January and 1 st February 2013. The Respondents faced eight allegations. They are as follows:
(1) In the period up to 5 th October 2011 the Respondents' method of providing costs information to clients in conveyancing matters failed to provide clients with adequate costs information and/or provided clients with misleading costs information which took unfair advantage of them in breach of Rules 1.02, 1.04, 1.05, 1.06, 2.03, 7.01, 7.02 and/or 10 of the SCC.
(2) From 6 th October 2011 [when a new SRA code of conduct came into being] and continuing, the Respondents' method of providing costs information to clients in conveyancing matters failed and continued to fail to provide clients with adequate costs information and/or provided and continued to provide clients with misleading costs information. This was alleged to be in breach of all or any of Principles 2, 4, 5 and/or 6 of the SRA Principles 2011. Further, or alternatively, the Respondents failed and continued to fail to achieve any of the Outcomes O(1.1), O(1.13), O(8.1), and/or O(8.2) of the SRA Code of Conduct 2011.
(3) In the period up to 5 th October 2011 the Respondents acted in breach of Rules 1.02, 1.04, 1.05, 1.06 and/or 10 of the SCC in that they overcharged conveyancing clients and/or took unfair advantage of their conveyancing clients in:
(a) making additional charges for matters such as advising on joint ownership, reporting on mortgage conditions and considering additional titles in circumstances where the amount of such charges was wholly disproportionate; and
(b) making charges in excess of the charges set out in their costs documentation.
(4) From 6 th October 2011 and continuing the Respondents had continued and did continue to overcharge conveyancing clients and/or take unfair advantage of their conveyancing clients in making additional charges for matters such as advising on joint ownership and reporting on mortgage conditions where the amount of such charges was wholly disproportionate. This was alleged to be in breach of all or any of Principles 2, 4, 5 and/or 6 of the SRA Principles 2011. Further, or alternatively, the Respondents thereby failed and continued to fail to achieve outcome O(1.1) of the SRA Code of Conduct 2011.
The conduct complained of and covered by the charges started in 2009 and was continuing at the date of the hearing. During the course of the hearing we commented on the highly complicated structure of the charges, involving multiple allegations of breaches of rules, either cumulatively or in the alternative. Mr Dutton QC, for the SRA, acknowledged the force of this criticism. We would hope that in the future consideration would be given to a significantly clearer method of framing charges.
Each of the allegations (1) to (4) was denied, but was found to be proved by the Tribunal. However, in relation to allegations (1) and (3), the Tribunal did not find that there had been a breach of Rule 1.02 (lack of integrity) or of Rule 10 (taking unfair advantage) of the SCC 2007.
Rule 10.01 is headed "not taking unfair advantage" and provides:
"You must not use your position to take unfair advantage of anyone either for your own benefit or for another person's benefit."
The remaining allegations, (5) to (8) were as follows:
(5) The Respondents failed to obtain their clients informed consent before retaining commissions, in breach of Rules 1.04, 1.06, and 2.06 of the SCC.
(6) In the period up to 5 th October 2011 the Respondents' publicity contained inaccurate references to the Law Society (as the Regulator) and to the Solicitors Complaints Bureau, and failed to show the words "regulated by the Solicitors Regulation Authority" and the firms registered SRA number in breach of Rules 7.01 and/or 7.07 of the SCC.
(7) From 6 th October 2011 and continuing the Respondents' publicity contained and/or continued to contain inaccurate references to the Law Society (as the Regulator) in breach of all or any of Principles 4, 5 and/or 7 of the SRA Principles 2011. Further, or alternatively, the Respondents thereby failed and continued to fail to achieve all or any of the Outcomes O(1.7), O(8.1), and/or O(8.4) of the SRA Code of Conduct 2011.
(8) The Respondents allowed residual balances to remain on client account ledgers in breach of Rule 15(3) of the Solicitors Accounts Rules 1998, and failed to remedy this upon discovery in breach of Rule 7 of the Solicitors Accounts Rules 1998.
Allegation (5) was denied, but was found proved. The issue in allegation (5) related to a construction of the relevant rules. Allegations (6) to (8) were admitted. It was accepted before us by the SRA that breaches of (5) to (8) inclusive were not serious, although they tended to demonstrate a lax attitude towards proper regulatory standards.
In the circumstances, therefore, the issues before us have focused around allegations (1) to (4).
The Tribunal Proceedings
The case advanced in relation to allegations (1) to (4) was in essence that the Respondents had operated a complex system of charging in a way which meant that clients initially received a quotation for conveyancing services at a relatively low price which had the purpose and/or effect of luring clients in. However, many additional charges were included in the Respondents' Terms and Conditions booklet, provided later, with charges for mortgagee costs and joint purchaser advice only appearing from the client's viewpoint when a final account was sent to them at the conclusion of the transaction. In consequence, clients were faced with conveyancing charges often very significantly higher than the initial price quoted, and in circumstances where an accurate estimate of costs could have been provided at the outset.
The essence of the Respondents' defence to allegations (1) and (2) was that the Respondents had provided a sufficient level of costs information to their domestic conveyancing clients, and that even if they had not, any failure was of insufficient gravity to justify a finding of professional misconduct.
In relation to allegations (3) and (4) there was a denial of overcharging or taking unfair advantage of clients. If in any case there had been overcharging, that was due to human error and did not amount to professional misconduct.
Part of the defence put forward by the Respondents referred to previous proceedings which had taken place in 2005 involving allegations with a degree of similarity. In those proceedings the Second and Fourth Respondents had been acquitted. In the light of those proceedings and subsequent adjudications undertaken internally by the SRA in two other cases where the adjudicators had held that the firm's contractual documentation was clear and that there was no cause for complaint, there were good grounds for the Respondents to believe that its conveyancing pricing information was satisfactory.
It was, however, conceded that, in the interim, terms had changed and charges had increased. The Respondents' submissions also included an attack on what it characterised as a heavy-handed and unnecessary approach taken by the SRA.
The Tribunal's Findings
In relation to the 2005 proceedings, the Tribunal was satisfied that there were significant differences between the scheme which led to the 2005 proceedings and those leading to the current proceedings. For example, the earlier scheme involved two documents setting out costs information sent together by post. The current scheme involved initial costs information by email, giving the headline quote in two documents, followed by Terms and Conditions and a Client Care Code sent by post. Thus there were four documents to be considered, not all provided simultaneously, and without clarity for the client that they all formed part of the charging structure.
The firm's additional charges had been significantly fewer and lower in 2001–2002 than in 2009. The current proceedings involved ten additional charges as against those potentially chargeable in 2001–2002. In the earlier proceedings the majority of clients paid the headline fee with very few additional charges, whereas that was not now the case, and additional charges had significantly increased the costs ultimately payable.
The Terms and Conditions contained several statements that could have led...
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