• Application 10999-2012

• Hearing 9, 10 August and 2 September 2016

• Reasons 6 October 2016

Judgment in sanctions hearing in respect of SDT findings upheld by the High Court on appeal

The SDT ordered that the first respondent (admitted 1981), and the second respondent (admitted 2006) should both be struck off the roll.

The following findings (the upheld findings) had been remitted by the High Court for sanction:

‘The findings of dishonesty and other misconduct made by the SDT in its judgment dated 29 April 2013 against each of the first and second respondents in so far as they related to:

(a) the findings of dishonesty against each of the first and second respondents in relation to the first respondent’s eighth affidavit dated 8 July 2010 made in paragraph 156.79 of the SDT judgment; and

(b) the finding of misconduct against the first and second respondents in relation to the misuse of confidential information made in paragraph 156.77 of the SDT judgment.’

Misuse of confidential material

If misuse of confidential information had been the only allegation before it, the SDT would have imposed a modest fine on the first respondent.

The SDT would at most have imposed a reprimand on the second respondent.

Dishonesty

The SDT had regard to the fact that the original sanction against both respondents had emerged at the conclusion of the hearing in which a large number of other allegations including dishonesty against the first respondent had been found proved, whereas the present tribunal was looking at only two upheld findings.

The SDT could not find that the conduct of either respondent fell into the small residual category of cases where strike-off was not a reasonable and proportionate sanction for dishonesty. The first respondent was ordered to pay costs of £24,000; the second respondent, £12,000.

Earlier hearing:

  • Application 1099-2012

  • Hearing 4-8, 11 and 14 February 2013

  • Reasons 29 April 2013

The SDT ordered that the first respondent (admitted 1981) and the second respondent (admitted 2006) should both be struck off the roll.

[The proceedings arose out of US litigation between L and the CEO of a number of US companies with which L had been involved. The US companies filed for relief under Chapter 11 of the US Bankruptcy Code and a Liquidating Trust was set up. The respondents’ firm SL represented the Liquidating Trust and CPC Group Limited, a property development company founded by C, who had concerns about allegations made against L in the US proceedings.]

1. Disclosures regarding the New York Apartment at the Without Notice Hearing on 29 April 2010

The respondents had provided misleading information to the court; had suppressed information; and had failed to disclose other relevant information.

That constituted dishonesty by the first respondent, and a breach of rules 1.01, 1.02, 1.03, 1.06 and 11.01 of the Solicitors Code of Conduct 2007 by both respondents.

2. Disclosures regarding the involvement of C/CPC at the Without Notice Hearing

The failure to put certain matters before the court constituted a breach of the obligation of full and frank disclosure of material facts owed to the court by the respondents, on the basis that those matters reasonably could be taken into account by the court in deciding whether to grant the freezing order; dishonest conduct by the first respondent; and a breach of rules 1.01, 1.02, 1.03, 1.06 and 11.01 of the 2007 Code by both respondents.

3. Disclosures regarding the merits of the US proceedings at the Without Notice Hearing

There had been a further breach of the obligation of full and frank disclosure of material facts owed to the court by both respondents on the basis that certain matters reasonably could be taken into account by the court in deciding whether there was a good arguable case in the US proceedings and a risk of dissipation, and a breach of their duty not to mislead the court; dishonest conduct by the first respondent; and a breach of rules 1.01, 1.02, 1.03, 1.06 or 11.01 of the 2007 Code by both respondents.

4. Use of confidential information regarding L’s assets

The transmission of certain information constituted a breach of an implied obligation of confidence and/or implied undertaking to the court; and a transmission other than for the purpose of the proceedings, and thus a breach by both respondents of CPR 31.22.

The first respondent had shown a reckless disregard for his duty as an officer of the court, and there had been a breach of rules 1.01, 1.02 , 1.03, 1.06 and 10.05 of the 2007 Rules by both respondents.

5. Disclosures regarding the Liquidating Trust’s funding at the Fortification Hearing

There had been a breach of the obligation of both respondents to provide full and frank disclosure and of their duty not to mislead the court; the first respondent had dishonestly permitted Mr Onions QC to give certain statements to the court; both respondents had failed to correct any incorrect or misleading statement made by Mr Onions QC as soon as they should have done; the first respondent had dishonestly prepared misleading evidence for the Fortification Hearing; and both respondents had breached rules 1.01, 1.02, 1.03, 1.06 and 11.01 of the 2007 Code.

6. Disclosures regarding the New York Apartment subsequent to the Without Notice Hearing

Both respondents had provided misleading information to the court subsequent to the Without Notice Hearing and certain statements constituted a breach of the respondents’ duty of full and frank disclosure and their duty not to mislead the court.

That had been done dishonestly by both respondents; and constituted a breach by both respondents of rules 1.01, 1.02, 1.03, 1.06 and 11.01 of the 2007 Code.

7. The prospects of the default in the US proceedings being vacated

The respondents had inappropriately downplayed to the court the prospects of L getting the default in the US proceedings vacated. That conduct was dishonest on the part of the first respondent; and was a breach by both respondents of rules 1.01, 1.02, 1.03, 1.06 and 11.01 of the 2007 Rules.

8. HM Land Registry searches exhibited to Mr Evans’ first affidavit

The first respondent had given an incorrect explanation as to why HM Land Registry searches had been added to an affidavit after it had been sworn; that was a breach of rules 1.01, 1.02, 1.03, 1.06 and 11.01 by the first respondent, and by the second respondent to the extent that he would have known that the information that had been given to the court was incorrect.

The first respondent had engaged in a dishonest course of conduct which had continued over a period of time.

The second respondent should have had the strength of character to refuse to do something which he knew to be wrong.

There were no exceptional circumstances that would justify a penalty other than a striking off for either respondent.

Costs were to be assessed if not agreed, the first respondent to pay 80% thereof, and the second respondent 20%.