Leeds: 0113 245 5866
London:
0207 1270565

Meet the Clerks

Meet the clerks Read on

The SDT and the Final Position on Integrity

One of the biggest issues that the Judges have been wrestling with is the definition of ‘lack of integrity’ at the Solicitors Disciplinary Tribunal, and other professional regulators, in particular ACCA where the charge is in regular use. See this blog 27th June 2017 and 12th April 2018.



Posted on April 3rd, 2018 by Jeremy Barnett

One of the biggest issues that the Judges have been wrestling with is the definition of ‘lack of integrity’ at the Solicitors Disciplinary Tribunal, and other professional regulators, in particular ACCA where the charge is in regular use. See this blog 27th June 2017 and 12th April 2018.

The issue has been finally decided by the Court of Appeal in the case of Wingate & Evans v SRA [2018] EWCA Civ 366, thus settling the fascinating debate.

There has been a simmering debate between a number of High Court Judges as to the definition of 'Lack of Integrity' at the Solicitors Disiplinary Tribunal which has finally been settled by the Court of Appeal in the case of Wingate Evans v SRA.

See previous blog articles dated 12th Apri 2017 l  27th June 2017. The article 12th April set out the conflict between the decisions in Newell Austin v SRA [2017] EWCA 411 where Morris J followed a line of authority which concluded that lack of integrity did not equate to dishonesty and that there is no subjective element. This was a different line to that taken by Mostyn J in Malins v SRA [2017] EWHC  835(admin) who decided that lack of integrity and dishonesty in effect amounted to the same thing.

Although Mostyn J’s logic perhaps left something to be desired, it is contended that his construction of the case law was entirely proper. The mischief here is that dishonesty was often perceived as being difficult for regulators to prove as it had both objective and subjective elements, due to the modified Ghosh test that was in regular use. Some regulators therefore realised that, as there was no objective test in lack of integrity, yet the sanction was often the same, ie strike off or erasure, then why bother with the double burden imposed by alleging dishonesty.  Mostyn J seemed intent to prevent a regulator proving dishonesty ‘by the back door’ without actually alleging that the conduct was dishonest.

The debate however became complicated or simplified, depending on your own personal view, by the landmark decision of the Supreme Court in Ivey v Genting Casinos (UK) Ltd  [2017] UKSC 67. The Supreme Court confirmed that the Ghosh test for dishonesty, used in the assessment of both criminal and professional disciplinary proceedings, is no longer the correct test. Instead, the test in Barlow Clowes, already used in civil cases, should be applied universally.  The test is now clear;

When dishonesty is in question the fact-finding tribunal must first ascertain (subjectively) the actual state of the individual’s knowledge or belief as to the facts. The reasonableness or otherwise of his belief is a matter of evidence (often in practice determinative) going to whether he held the belief, but it is not an additional requirement that his belief must be reasonable; the question is whether it is genuinely held. When once his actual state of mind as to knowledge or belief as to facts is established, the question whether his conduct was honest or dishonest is to be determined by the fact finder by applying the (objective) standards of ordinary decent people. There is no requirement that the defendant must appreciate that what he has done is, by those standards, dishonest.

Wingate and Evans

Mr Wingate and Mr Evans practised together in a small PI firm in Manchester. When the firm fell into financial difficulties, Mr Wingate learned of a fund called Axiom which specialised in funding the costs of litigation. He entered into discussions with a broker, where Richard Barnett represented Axiom [see blog article dated 5th December 2016 ]. Axiom agreed to lend £900,000 to the firm which included a £300,000 facilitation fee to Tangerine. There was a funding agreement and letter which Mr Justice Holman found bore no relationship to the true agreement between the parties. Mr Wingate understood that the agreement would be replaced by another less restrictive agreement in due course. The Tribunal accepted Mr Wingate’s evidence that he trusted the representatives of Axiom and that he genuinely believed that the funding agreement which he signed was varied by an oral agreement permitting the firm to use all of the Axiom monies for general purposes. He was acquitted of all the contested charges, and fined £3000 in respect of Solicitors Accounts Rules breaches which were admitted.

Both Mr Wingate and Mr Evans were aggrieved by the judge’s decision and accordingly appealed to the Court of Appeal, who also considered the case of Malins v SRA , where Mr Justice Mostyn allowed an appeal in a case where the SRA had pleaded dishonesty and found that honesty and integrity (or the lack of either) have the same meaning, and that Mr Justice Holman’s view of the law in Wingate was wrong, so the SRA appealed to the Court of Appeal.

 

Decision of Lord Justice Rupert Jackson

The Court of Appeal decided to hear both appeals at the same time. The court reviewed the conflicting decisions of the High Court in the light of the Supreme Court decision on dishonesty in Ivey v Genting Casions (UK) Ltd, (trading as Crockfords Club) [2017] UKSC 67. They approved the decision in Newell-Austin v SRA [2017] EWHC 411 (Admin) where Morris J derived the following principles from the authorities:

Lack of integrity and dishonesty are not synonymous. A person may lack integrity even though not established as being dishonest.

Integrity connotes moral soundness, rectitude and steady adherence to an ethical code

No purpose is served by seeking to expatiate on the meaning of the term

Morris J explained that the test for lack of integrity was objective but a person’s state of mind was nevertheless relevant to the issue.  In Williams v SRA  [2017] EWHC 1478 (Admin) Mrs Justice Carr and Sir Brian Leveson did not support Mr Justice Mostyn’s analysis of the law.  

Rupert Jackson L J explained that Honesty is a basic moral quality which is expected of all members of society, it involves being truthful about important matters and respecting the property rights of others. Telling lies about things that matter or committing fraud or stealing are generally regarded as dishonest conduct. Integrity is more nebulous, it is,

‘a useful shorthand to express the higher standards which society expects from professional persons and which the professions expect from their members’.

It is not possible to formulate an all- purpose comprehensive definition of integrity. The broad contours however connote adherence to the ethical standards of one’s own profession. This involves more than mere honesty. For example lawyers have to be careful not to mislead. A number of examples were taken from the authorities including:

A sole practitioner giving the appearance of being a partnership and deliberately flouting the conduct rules

Recklessly but not dishonestly allowing a court to be misled

Subordinating the interests of the clients to the solicitor’s own financial interests

Making improper payments out of the client account

Allowing the firm to become involved in conveyancing transactions that have the hallmark of fraud.

Making false representations on behalf of a client.

The Judge went on to make it clear that ‘manifest incompetence’ ( which goes beyond mere professional negligence) contravenes Principle 6 which is directed to preserving the reputation of and public confidence in the legal profession. He went on to find that Mr Wingate knew that the agreement was a sham as it was ‘highly dubious’. Even though he was honest, Mr Wingate must have been manifestly incompetent. Mr Justice Holman had complied with the later decision in Ivey v Genting without having the advantage of understanding the reasoning in that case. The objective test for lack of integrity is the same as for dishonesty -it involves having regard to the state of mind of the actor. Mr Wingate was ordered to pay costs of the hearing in the Administrative Court.

The Court went on to allow the appeal of Mr Evans against the judgment of Mr Justice Holman and also allow the appeal of the SRA against the decision of Mr Justice Mostyn on narrow grounds.

Conclusion

This decision would seem to represent the final chapter in the story of conflicting High Court decisions in relation to the definitions of both dishonesty and lack of integrity at the Solicitors Disciplinary Tribunal. Of more interest to practitioners however is probably the issue of sanction, which has been skilfully avoided by the Courts. Will the SRA continue to allege dishonesty to achieve strike off, or will they simply allege lack of integrity to achieve their objective in so called 'bad cases'?

The line of cases on lack of integrity are, many observers believe, the result of a decision by the SRA to charge lack of integrity as a simple route towards achieving ‘a strike off’ without having to jump through all the hoops of alleging dishonesty. The decision on the facts of Wingate seems to indicate that lack of integrity warrants a lesser sanction – ie here a 3 month suspension order coupled with a costs order. What is perhaps now required is an update to the 2016 'Guidance Note on Sanctions' issued to tribunals, to set out the proper approach to be taken where lack of integrity is alleged.

 

 

 



All rights reserved. Design & Development by ATB Creative