Kanthia Kangesu Pathmanathan, Pratheepan Pathmanathan, Pathmajani Chandrasekaram and Srirangan Balakumar

• Application 10628-2010
• Hearing 24-28 October 2011, 18 January 2012
• Reasons 22 February 2012

The SDT ordered that the first respondent (admitted 1987) should pay a fine of £2,000; that the second respondent (admitted 2004) should pay a fine of £2,000; and that the third respondent (admitted 2000) should pay a fine of £20,000.

The SDT made no order in respect of the fourth respondent, an unadmitted person. The third respondent had failed to take proper and adequate steps to guard against the risk of property fraud, contrary to rule 1 of the Solicitors Practice Rules 1990 and rules 1.02 and 1.06 of the Solicitors Code of Conduct 2007; and she had failed to take proper and adequate steps to guard against the risk of money laundering, contrary to rule 1 of the rules and rules 1.02 and 1.06 of the code; the first, second and third respondents had failed to account to clients for interest due to them, contrary to rule 24 of the Solicitors Accounts Rules 1998 and rule 1.06 of the code; the third respondent had used her position to take unfair advantage of clients in conveyancing transactions with regard to failing to pay interest to them, contrary to rules 1.04 and 1.06 of the code; in cases where the firm paid fees to referrers of business, the third respondent had failed to ensure compliance with the Solicitors Introduction and Referral Code 1990 and rule 9 of the 2007 code; the first, second and third respondents had provided misleading information to clients regarding search fees in conveyancing cases, contrary to rule 1 of the 1990 rules and rules 1.02, 1.03 and 1.06 of the 2007 code; they had withdrawn monies from client account other than as permitted by rule 22(1) of the 1998 rules; and they had failed to comply with note (ix) to rule 15 of the 1998 rules in that they had permitted monies to pass through their client account in relation to which there was no genuine underlying legal transaction.

The fourth respondent, being a person who was or had been involved in a legal practice but was not a solicitor, had in the opinion of the Law Society (Solicitors Regulation Authority) occasioned or been a party to, with or without the connivance of a solicitor, acts or defaults in relation to a legal practice which involved conduct on his part of such a nature that in the opinion of the Law Society (SRA) it would be undesirable for him to be involved in a legal practice in one or more of the ways mentioned in sub-section 1A of section 43 of the Solicitors Act 1974 (as amended). It was contended that his conduct was improper because he had been involved as a fee-earner in numerous transactions which bore the characteristics of property fraud and/or money laundering and had also given rise to third to sixth allegations above against the first, second and third respondents.

The SDT had found that within the meaning of section 43 the fourth respondent was involved in a legal practice and had been party to acts or defaults in relation to a legal practice but in its considered view the conduct on his part was not of such a nature that it would be undesirable for him to be involved again in legal practice. In reaching that conclusion, the SDT was mindful of the fact that the fourth respondent had not given evidence but from everything it had heard, particularly from the third respondent, it was satisfied that he had been working in an environment where those to whom he reported were all vehemently of the opinion that there was nothing wrong with what they were doing.

He was working at the express direction of the third respondent and no order was made in respect of the fourth respondent. In arriving at its decisions upon sanction for the first, second and third respondents the SDT had had regard to the evidence and the testimonials which it considered showed that generally theirs was a well-run firm. It had also noted from the mitigation that it appeared that because of the present allegations and for other reasons the partners were having a very difficult time and would probably have to close the firm. Both the first and second respondents had responsibility for the breaches found proved against them as partners in the firm.

The SDT decided that a fine was appropriate in their cases and that each should be fined the same amount, £2,000. The SDT considered three of the allegations found proved against the third respondent to be particularly serious, the first, second and eighth. It did not consider that it was any answer to those allegations to say that no one had complained or that no fraud or tax evasion had taken place. No one could really know whether or not that was so and the point of the various checks was to prevent such situations arising.

The SDT was very concerned that even with hindsight the third respondent considered that she had done nothing wrong even when it was perfectly clear that she had. It had seriously considered imposing a suspension upon her but the testimonials submitted were helpful to her position. It had been particularly noted that even individuals who had been made redundant by the firm had provided testimonials and that the file of appreciative cards and letters recognising the work of the firm’s staff had been considerable. The tenor of the testimonials was that the third respondent had set up a very efficient department that people liked working in and that clients appreciated.

The SDT had also considered whether the third respondent represented a danger to the public. Initially, in evidence she had said that she didn’t see that she had done anything wrong but the SDT had been told in mitigation that she would not do it again and now recognised that she had made mistakes. It also was satisfied that systems within the firm had been changed so that the risk to the public had diminished.

On balance, therefore, the SDT had decided to impose a fine. It had taken into account that the third respondent was apparently central to the firm having been otherwise well run. However the allegations against her were serious and the SDT had determined to impose a fine in the amount of £20,000. The third respondent was ordered to pay costs of £62,350, in respect of which sum the first and second respondents were jointly and severally liable with her to pay a contribution of £6,325 each. The costs order made against the third respondent was not to be enforced without leave of the SDT.