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You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Solicitors Regulation Authority Ltd v Dentons UK and Middle East LLP [2025] EWHC 535 (Admin) (11 March 2025) URL: http://www.bailii.org/ew/cases/EWHC/Admin/2025/535.html Cite as: [2025] EWHC 535 (Admin)

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IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		11 March 2025

This judgment was handed down remotely at 11 am on 11 March 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives. ............................. MRS JUSTICE LANG DBE

Mrs Justice Lang:

1. The Appellant ("the SRA") appeals against the decision of the Solicitors Disciplinary Tribunal ("the Tribunal"), made on 11 March 2024, to dismiss allegations 1.2 to 1.3 and to make no order against the Respondent ("the Firm").
2. The allegations made by the SRA against the Firm were that, while acting for a politically exposed person, Client A, or associated entities, between approximately 1 May 2013 and 12 June 2017, it failed at any time to take adequate measures to establish the source of his wealth and/or funds, and that, in so failing, it:

1.1. breached Regulation 14(4)(b) and/or Regulation 14(4)(c) of the Money Laundering Regulations 2007 (the "MLRs 2007");

1.2. breached all or any of Principles 6, 7 and 8 of the Solicitors Regulation Authority ("SRA") Principles 2011 ("the Principles");

1.3. failed to achieve Outcome 7.5 under the SRA Code of Conduct 2011 ("the Code").

3. The Tribunal found that the Firm failed to take adequate measures to establish the source of Client A's wealth, and thereby breached Regulation 14 of the MLRs 2007. However, the Tribunal found that the breach of the MLRs 2007 was not serious, culpable and reprehensible, such that it amounted to professional misconduct, and so it did not amount to a breach of the Principles or the Code. Therefore allegations 1.2 and 1.3 were dismissed. As allegation 1.1 was not a standalone allegation of professional misconduct, the case against the Firm was dismissed, in its entirety, with no order as to costs.
4. The SRA has appealed to this Court on the grounds that the Tribunal:

i) misdirected itself that there was an additional or threshold requirement for the SRA to prove, namely, that the Firm's breach of Regulation 14 of the MLRs 2007 was "serious, reprehensible and culpable such that it amounted to professional misconduct"; and

ii) failed to have regard, or give effect, to the wording and purpose of the MLRs 2007, Principle 7 of the Principles and Outcome 7.5 of the Code.

Facts

5. In 2013, the Firm acquired the London office of an international law firm called Salans LLP ("Salans"), as part of a merger of the international practices of the two firms. Mr Chateau of Salans became vice-chairman of the combined global practice following the merger, but he has never been a member of the Firm, and he has never been regulated by the SRA.
6. Client A had been a client of Salans since 2008, and following the merger, the Firm inherited the ongoing relationship with Client A. The client relationship partner for Client A at Salans was Mr Chateau. Following the merger, he remained the client partner who oversaw the client relationship between the Firm (and other offices of the global practice) and Client A.
7. The Firm acted for Client A or his associated entities in 38 matters, including the purchase of a property for nearly £8 million in late 2014 and an aborted purchase in 2015 of another property for €95 million (in respect of which the Firm received into and paid out of client account deposit monies totalling €1 million).
8. In 2016, Client A was sentenced in a non-EEA country to 15 years imprisonment for various crimes including embezzlement and ordered to pay $39 million to the bank of which he had been Chair. No new matters were taken on for Client A after January 2017. In February 2018, Supperstone J. made an unexplained wealth order in the High Court against Client A's wife.
9. Soon after he had become their client, the Firm identified Client A as a politically exposed person ("PEP") due to his role as Chair of a national bank. The Firm also knew Client A had substantial property assets in the UK, structured through trusts and foreign companies. The Firm identified Client A and his associated entities and his country as high risk for money laundering. Anti-Money Laundering ("AML") and risk clearance certificates for Client A, dated 25 April 2014 and 25 September 2014, stated that Client A's source of wealth was from his employment. The Firm relied on internet searches and Mr Chateau's knowledge of Client A's employment.
10. On or around 24 July 2014 the Firm obtained an "Intelligence Briefing Note" ("the Intelligence Note") from a private intelligence agency, which found that the risks associated with Client A were high. It also expressed the opinion that it was "supremely unlikely" that Client A had not benefited from the $1 billion that went missing from the bank while he was Chair. Mr Chateau strongly disagreed with the Intelligence Note.
11. The Tribunal did not accept the SRA's submissions based on the Intelligence Note, and found, at Judgment/9.370:

"9.370 The Tribunal agreed that the relevance of the KCS Report was to the Firm's duty of ongoing monitoring. The Tribunal noted the inconsistencies within the KCS Report, and the fact that, as submitted by Mr Coleman KC, there was no evidence to substantiate the assertions made therein. The Tribunal also agreed with the submission that the Firm had considered the KCS Report with care, (as was evidenced by the contemporaneous communications) and came to the conclusion that it was able to continue acting. This was a matter of professional judgment, and given the content of the Report, was a judgment that the Firm was entitled to make. To the extent that the SRA relied on the KCS Report as evidence of any breach on the Firm's part as regards its MLR obligations, those were not accepted by the Tribunal. At most, it was found, the KCS Report might have put the Firm on notice that further enquiries were appropriate. However, as detailed, the Firm considered, in reliance on Mr Chateau, that its obligations in that regard had been satisfied. Further, there was nothing in the KCS Report that cast doubt on what the Firm considered to be Client A's source of wealth or source of funds."

12. The SRA argued before the Tribunal that the Firm was obliged to obtain documentary proof of Client A's shareholding in the bank and of his salary. The Tribunal held that the MLRs 2007 did not require this: Judgment/9.372.
13. However, the Tribunal found, at Judgment/9.373, that, under the relevant guidance, the relevant person ought to ask questions of his client in order to satisfy the obligation under Regulation 14 of the MLRs 2007. Where a PEP has a higher than normal risk assessment, obtaining information from an independent source might be appropriate.
14. The Tribunal's key findings on Regulation 14 of the MLRs 2007 were as follows:

"9.374 The Firm relied upon the actions of Mr Chateau as regards establishing sources of wealth and funds. The Tribunal accepted that the Firm had, in good faith, relied on the assertions made by Mr Chateau that Client A's wealth derived from his business activities prior to the acquisition of his shareholding in the Bank, and subsequently his 30% share in the Bank. However, it was clear that Mr Chateau had failed to ask the relevant questions of Client A in order to satisfy the obligations under Regulation 14. As detailed above, Mr Chateau did not ask Client A questions about his wealth or source of funds as "it is not the culture … because we don't do that in Europe … this is not something we do".

9.375 Whilst it might have been plain to Mr Chateau that Client A was wealthy, this was not the same as establishing the source from which that wealth arose. Equally, knowledge that Client A was in funds did not equate to establishing source of funds. And establishing the source from which that wealth and those funds arose was what was required by the MLRs.

9.376 The Firm and the other partners who worked on matters for Client A, had all relied on Mr Chateau to have established source of wealth at the outset of the retainer. That this was the case was clear from the interviews with the matter partners and others at the Firm. That erroneous belief meant, the Tribunal found, that the failure to establish source of wealth endured throughout the retainer, including in relation to the purchase of Property 1 and the aborted Purchase of Property 2.

9.377 In failing adequately (or even reasonably) to establish source of wealth, the Tribunal found that the Firm had breached Regulation 14 as alleged."

15. The Tribunal went on to consider whether the Firm had breached the Principles and the Code as alleged.
16. The Tribunal accepted the Firm's submissions and set out its conclusions as follows:

"9.379 The Tribunal considered with care the case law that it had been referred to by the parties. The Tribunal did not accept that Principle 7 and Outcome 7.5 were, in effect, strict liability. As had been submitted, if that was the case, every breach that failed to comply with applicable legislation, (no matter how trivial or inadvertent) would amount to a breach of Principle 7 and Outcome 7.5.

9.380 The test to be applied was, as had been submitted, whether the breach was serious, reprehensible and culpable such that it amounted to professional misconduct.

9.381 The Tribunal accepted that whilst the breach was enduring, it had been inadvertent. As detailed above, the Firm had relied on what it was told by Mr Chateau, in the belief that Mr Chateau had complied with Regulation 14. It was plain that the breach was not systemic, indeed, the Firm had been commended by the SRA for its AML systems and controls. Those systems and controls had been deployed by the Firm for each of the Property Transactions. It was clear that the Firm not only had relevant and responsible AML policies in place, but that it enforced those policies.

9.382 The Tribunal found that in all the circumstances, the breach did not amount to a breach of the Principles or Code as alleged; the breach was entirely inadvertent and thus fell within the small category of cases where wrongdoing did not amount to professional misconduct. Accordingly, the Tribunal dismissed allegations 1.2 and 1.3.

9.383 As allegation 1.1 was not a stand-alone allegation as regards professional misconduct, (the Tribunal therefore having no jurisdiction in that regard save for its factual findings) the Tribunal dismissed the matter."

Legal framework

Appeals to the High Court

17. The Appellant has a statutory right of appeal to the High Court against the order of the Tribunal, pursuant to section 49 of the Solicitors Act 1974. The High Court, on such an appeal, can make such order "as it may think fit" (section 49(4)).
18. The appeal is governed by CPR Pt 52 and PD 52D. Under CPR 52.21(3), the question for the Court is whether the decision of the Tribunal is "wrong" or "unjust because of a serious procedural or other irregularity in the proceedings in the lower court".
19. The appeal proceeds by way of review unless the Court considers that it would be in the interests of justice to hold a rehearing: see CPR 52.21(1), and Salsbury v Law Society [2009] 1 WLR 1286, at [30]. The scope of the Court's powers on a review in most cases renders it unnecessary to hold a re-hearing: Adesemowo v Solicitors Regulation Authority [2013] EWHC 2020 (Admin), at [9]-[12].
20. In Ali v Solicitors Regulation Authority [2021] EWHC 2709 (Admin), Morris J. summarised the authorities in this field on the meaning of "wrong", as follows:

"94. Fourthly, as regards the approach of the Court when considering whether the Tribunal was "wrong", I refer in particular to Solicitors Regulation Authority v Day [2018] EWHC 2726 (Admin) at §§61-78, Solicitors Regulation Authority v Good [2019] EWHC 817 (Admin) at §§28-32, the Naqvi Judgment at §83, citing Solicitors Regulation Authority v Siaw [2019] EWHC 2737 (Admin) at §§32-35, and most recently, Martin v Solicitors Regulation Authority [2020] EWHC 3525 (Admin) at §§30-33. From these authorities, the following propositions can be stated:

(1) A decision is wrong where there is an error of law, error of fact or an error in the exercise of discretion.

(2) The Court should exercise particular caution and restraint before interfering with either the findings of fact or evaluative judgment of a first instance and specialist tribunal, such as the Tribunal, particularly where the findings have been reached after seeing and evaluating witnesses.

(3) It does not matter, with whatever degree of certainty, that the appellate court considers that it would have reached a different conclusion. What matters is whether the decision under appeal is one that no reasonable judge would have reached. That is a high threshold. That means it must either be possible to identify a critical finding of fact which has no basis in the evidence, or a demonstrable misunderstanding of relevant evidence, or a demonstrable failure to consider relevant evidence. If there is no such identifiable error and the question is one of judgment about the weight to be given to the relevant evidence, the Court must be satisfied that the judge's conclusion cannot reasonably be explained or justified.

(4) Therefore the Court will only interfere with the findings of fact and a finding of dishonesty if it is satisfied that that the Tribunal committed an error of principle or its evaluation was wrong in the sense of falling outside the bounds of what the Tribunal could properly and reasonably decide.

(5) The Tribunal is a specialist tribunal particularly equipped to appraise what is required of a solicitor in terms of professional judgment, and an appellate court will be cautious in interfering with such an appraisal.

Finally, as regards reasons, decisions of specialist tribunals are not expected to be the product of elaborate legal drafting. Their judgments should be read as a whole; and in assessing the reasons given, unless there is a compelling reason to the contrary, it is appropriate to take it that the Tribunal has fully taken into account all the evidence and submissions: Martin, supra, §33."

21. In Martin v Solicitors Regulation Authority [2020] EWHC 3525 (Admin), the Divisional Court (Simler LJ and Picken J.) reviewed the authorities and concluded as follows:

"32. For these reasons the well-established approach is that an appellate court should not interfere with a finding of fact unless satisfied that the conclusion is "plainly wrong": see McGraddie v McGraddie (above) and Henderson v Foxworth Investments Ltd (above). That means it must either be possible to identify "a critical finding of fact which has no basis in the evidence, or a demonstrable misunderstanding of relevant evidence, or a demonstrable failure to consider relevant evidence" (Henderson v Foxworth Investments Ltd at [67] (Lord Reed)); or if there is no such identifiable error and the question is one of judgment about the weight to be given to the relevant evidence, the appellate court must be satisfied that the judge's conclusion "cannot reasonably be explained or justified" ([67]). Lord Reed made clear that, in determining whether a decision cannot reasonably be explained or justified, "It does not matter, with whatever degree of certainty, that the appellate court considers that it would have reached a different conclusion. What matters is whether the decision under appeal is one that no reasonable judge would have reached." Again, we emphasise, that is a high threshold: see to this effect, Perry v Raleys (above) at [63] (Lord Briggs).

33. The effect of these authorities in the context of an appeal against a decision of the Solicitors Disciplinary Tribunal ("the SDT") was summarised in SRA v Day [2018] EWHC 2726, where, in addition to what we have said above, a number of additional considerations specific to appeals from decisions of the SDT were identified. First, the SDT is a specialist tribunal particularly equipped to appraise what is required of a solicitor in terms of professional judgment, and an appellate court will be cautious in interfering with such an appraisal. Secondly, decisions of specialist tribunals are not expected to be the product of elaborate legal drafting. Their judgments should be read as a whole; and, in assessing the reasons given, unless there is a compelling reason to the contrary, it is appropriate to take it that the tribunal has fully taken into account all the evidence and submissions. That does not mean that a decision which has failed in its basic task to cover the correct ground and answer the right questions will be upheld. A patently deficient decision cannot be converted by argument into an acceptable one."

The regulatory scheme

22. The Firm is a recognised body authorised to conduct reserved legal services, including litigation, pursuant to section 9 of the Administration of Justice Act 1985.
23. The Law Society has the power to make rules for the conduct of solicitors (section 31 of the Solicitors Act 1974) and of the authorised bodies through which they practise (sections 9 and 9A of the Administration of Justice Act 1985, and section 83 of the Legal Services Act 2007).
24. The Law Society has delegated its regulatory functions to the SRA, in accordance with the Legal Service Board's Internal Governance Rules, in order to ensure that its regulatory functions are performed independently from its representative functions.
25. The Tribunal has jurisdiction to hear and determine any complaint that a recognised body has failed to comply with any rules made by the SRA under the Administration of Justice Act 1985 and may, if it thinks fit, impose one or more of the following sanctions: (a) an order revoking the body's recognition; (b) a penalty; and (c) a costs order (paragraphs 16 and 18 of Schedule 2 to the Administration of Justice Act 1985).
26. The Firm was subject to the Principles and the Code in the SRA Handbook during the relevant period. Together they form a single ethical framework that applies to solicitors and the authorised bodies through which they practise. They were made pursuant to sections 31, 79 and 80 of the Solicitors Act 1974, sections 9(1)(d) and 9A of the Administration of Justice Act 1985 and section 83(5)(c) of the Legal Services Act 2007. The Legal Services Board approved them under paragraph 19 of Schedule 4 to the Legal Services Act 2007. They have since been replaced by new conduct rules with effect from 25 November 2019 but, for the purposes of this judgment, they are referred to as the applicable provisions, in the present tense.
27. The Principles define the "fundamental ethical and professional standards" of law firms and individuals regulated by the SRA involved in the provision of legal services (see paragraph 3 of the Introduction to the SRA Handbook and paragraph 2.1 of the SRA's notes in Part 2 of the Principles).
28. The SRA relied upon the following mandatory Principles before the Tribunal:

"6. You must …. behave in a way that maintains the trust the public places in you and in the provision of legal services;

7. You must …. comply with your legal and regulatory obligations and deal with your regulators and ombudsmen in an open, timely and cooperative manner;

8. You must …. run your business or carry out your role in the business effectively and in accordance with proper governance and sound financial and risk management principles."

29. The Code is based on what the SRA termed in the SRA Handbook "outcomes-focused regulation". It is said to be underpinned by "effective, risk-based supervision and enforcement". According to the Introduction to the Code, "the outcomes describe what firms and individuals are expected to achieve in order to comply with the relevant Principles in the context of the relevant chapter".
30. Chapter 7 of the Code is concerned with the management and supervision of a firm's or solicitor's business. It states that the outcomes in the chapter show how the Principles apply in the context of the management of the business.
31. The SRA relied on mandatory Outcome 7.5 before the Tribunal, which provides:

"You must achieve these outcomes:

….

you comply with legislation applicable to your business, including anti-money laundering and data protection legislation."

MLRs 2007

32. Regulation 14 of the MLRs 2007 provides:

"14.— Enhanced customer due diligence and ongoing monitoring

(1) A relevant person must apply on a risk-sensitive basis enhanced customer due diligence measures and enhanced ongoing monitoring—

(a) in accordance with paragraphs (2) to (4);

(b) in any other situation which by its nature can present a higher risk of money laundering or terrorist financing.

…

(4) A relevant person who proposes to have a business relationship or carry out an occasional transaction with a politically exposed person must—

(a) have approval from senior management for establishing the business relationship with that person;

(b) take adequate measures to establish the source of wealth and source of funds which are involved in the proposed business relationship or occasional transaction; and

(c) where the business relationship is entered into, conduct enhanced ongoing monitoring of the relationship.

(5) In paragraph (4), "a politically exposed person" means a person who is—

(a) an individual who is or has, at any time in the preceding year, been entrusted with a prominent public function by—

(i) a state other than the United Kingdom…

including a person who falls in any of the categories listed in paragraph 4(1)(a) of Schedule 2…"

33. Regulations 2 and 3(9) of the MLRs 2007 define "relevant person" to include an "independent legal professional", which is defined as:

"a firm or sole practitioner who by way of business provides legal or notarial services to other persons, when participating in financial or real property transactions concerning—

(a)  the buying and selling of real property or business entities;

…

and, for this purpose, a person participates in a transaction by assisting in the planning or execution of the transaction or otherwise acting for or on behalf of a client in the transaction."

Grounds of challenge

34. It is convenient to address the two grounds of challenge together because of the overlap between them.

The SRA's submissions

35. The SRA submitted that the Tribunal's decision to dismiss the allegations against the Firm was wrong because the Tribunal misdirected itself:

i) by holding that there was an additional or threshold requirement for the SRA to prove, namely, that the Firm's breach of Regulation 14 of the MLRs 2007 was "serious, reprehensible and culpable such that it amounted to professional misconduct" (Judgment/9.380); and

ii) by failing to have regard, or give effect, to the wording and purpose of the MLRs 2007, Principle 7 and Outcome 7.5.

36. The case of Solicitors Regulation Authority v Leigh Day & Ors [2018] EWHC 2726 (Admin) is to be interpreted in accordance with Beckwith v Solicitors Regulation Authority [2020] EWHC 3231 (Admin), as holding that solicitors' professional disciplinary rules involve a seriousness and culpability requirement only where that is inherent in the standard promoted by the particular rule in question. The correct approach is to identify whether culpability and seriousness is inherent in the breach of the standard in question by a proper construction of the rule in question.
37. Applying that approach, Principle 7 and Outcome 7.5 do not involve any seriousness or culpability requirement, other than that which is "baked in" to a determination that there has been a failure to comply with the legal/regulatory requirements. Under both standards there is a simple binary question of whether or not legal/regulatory requirements have been breached.
38. Breach of the standards is dependent upon an anterior finding of a failure to comply with a legal/regulatory obligation. They are satisfied by proof of the anterior finding, and in that sense, they have the character of strict liability standards. This is a legitimate way of achieving proper regulatory objectives.
39. In the SRA's skeleton argument drafted by previous counsel, at paragraphs 33 – 35, the SRA submitted that Principle 7 and Outcome 7.5 were not offences of strict liability because they were only breached if the requirements of Regulation 14 of the MLRs 2007 were breached.
40. The SRA relied upon the analysis in Gould: The Law of Legal Services and Practice' 2^nd ed. (2019), chapter 4, paragraphs 4.9 to 4.26, for the following propositions:

i) Rules may be expressed as capable of being breached without the need for fault on the part of the entity or person responsible for compliance with them (e.g. breaches of Account Rules), in order to maintain public confidence (4.9 – 4.20).

ii) At the sanction stage, all of the conventional factors pertaining to the seriousness of the matter may be prayed in aid as relevant. For large corporate entities, substantial financial penalties may be required (4.22 – 4.26).

41. The Tribunal erred in its construction of Principle 7 and Outcome 7.5, by adding a requirement that the breach of the MLRs 2007 must be serious, reprehensible and culpable. This added an impermissible gloss to the natural language and meaning of these provisions. It created uncertainty in the test to be applied.
42. The Tribunal failed to have regard to the purpose of the provisions, namely, to detect and prevent money laundering and terrorist financing. Regulations 2 and 3(9) of the MLRs 2007 expressly made provision for firms providing legal services to be "relevant persons" and therefore subject to the obligations of the MLRs 2007. That purpose was undermined by the Tribunal effectively exonerating the Firm on the basis that it was not culpable.

The Firm's submissions

43. The judgment of the Divisional Court in Leigh Day is authority for the proposition that professional conduct rules generally require an assessment of whether the conduct alleged to be in breach of the rules is sufficiently serious, culpable and reprehensible to warrant a finding of professional misconduct. An alternative formulation of essentially the same point is that an allegation of a rule breach should be upheld only if any breach is sufficiently serious, culpable and reprehensible to warrant a finding of professional misconduct.
44. In his oral submissions Mr Coleman KC labelled these propositions as Approach 1 and Approach 2, submitting that Approach 2 would only arise if the Court rejected Approach 1, and held that the Tribunal was bound to find that Principle 7 and Outcome 7.5 had been breached. In those circumstances, under Approach 2, the Tribunal's decision could be supported on the basis that it was entitled, in the exercise of its jurisdiction under the Administration of Justice Act 1985, to decline to uphold allegations based on rule breaches that were not, in the Tribunal's expert judgment, sufficiently serious, culpable and reprehensible to support findings of professional conduct.
45. In support of that submission, Mr Coleman KC relied upon a decision of the Solicitors Disciplinary Tribunal ("the SDT") - In the matter of Pabla and Others No. 10376-2009 (24 September 2010) - where the SDT dismissed allegations of breach of Rule 9 of the Solicitors Code of Conduct 2010, concerning introducers. Counsel for the respondents submitted that the three allegations fell at the very bottom of the scale of regulatory non-compliances and were not sufficiently grave to merit a finding. Furthermore, the salaried partner respondent had not been involved at all. The SDT held that the matters could and should have been dealt with by the SRA without a reference to the SDT. It was also concerned that the SRA had not distinguished the position of the salaried partner.
46. Returning to this case, the Tribunal found that the Firm's breach of Regulation 14 of the MLRs 2007 was not serious, culpable and reprehensible, with the consequence that the Firm was not in breach of Principle 7 or Outcome 7.5. The SRA has not challenged the finding that the breach was not serious, culpable and reprehensible.
47. The Tribunal gave effect to the wording and purpose of Principle 7 and Outcome 7.5. Its approach reflects the purpose of the rules and the legislative intention, as settled by Leigh Day. Principle 7 and Outcome 7.5 are ethical rules of professional conduct. Properly construed in accordance with the principles of statutory interpretation, they require an assessment of the seriousness, culpability and reprehensibility of the conduct in question in light of the relevant conduct rules and the material facts in order to determine whether they have been breached. To construe the conduct rules otherwise would give rise to unsatisfactory consequences, including that findings of professional misconduct could be made in respect of conduct that does not merit disciplining. The SRA's own guidance on the MLRs 2007 advises that only serious breaches of the MLRs must be reported, thus recognising that some breaches of the MLRs 2007 do not warrant regulatory action.
48. Contrary to the SRA's assertion, the Tribunal did not characterise the breach of the MLRs 2007 as trivial; rather it found that it was not serious. The Tribunal had regard to the purpose of the MLRs 2007: see Judgment/9.368 and the submissions made and recorded at Judgment/9.54 – 9.78.
49. The judgment in Beckwith can and should be read consistently with the judgment in Leigh Day, as the Divisional Court in Beckwith intended. Leigh Day does not treat the concept of professional misconduct as a free-standing requirement to be considered independently of the relevant rule of professional misconduct. Leigh Day requires an assessment by reference to the relevant rule of whether the conduct is sufficiently serious, culpable and reprehensible as to amount to professional misconduct.

Conclusions

50. In Leigh Day, the Divisional Court (Davis LJ, Foskett and Holgate JJ) upheld a decision of the Solicitors Disciplinary Tribunal dismissing allegations of breach of professional misconduct rules by solicitors in the firm of Leigh Day. The case was concerned with the following rules:

i) Rule 1.01 of the Code of Conduct 2007: "You must uphold the rule of law and the proper administration of justice." (at [113]).

ii) Rule 1.03 of the Code of Conduct 2007: "You must not allow your independence to be compromised." (at [81]).

iii) Rule 1.06 of the Code of Conduct 2007: "You must not behave in a way that is likely to diminish the trust the public places in you or the legal profession." (at [81]).

iv) Rules 8 and 9 of the Code of Conduct 2007, which restricted the persons and businesses with whom a solicitor could share his professional fees and pay referral fees, operated as a prohibition on fee-sharing save in the specific circumstances identified, and required certain disclosures to be made to the client. (at [171] to [176]).

v) Principle 5 of the Principles: "You must provide a proper standard of service to your clients." (at [146]).

vi) Principle 6 of the Principles: "You must…behave in a way that maintains the trust the public places in you and in the provision of legal services." (at [146]).

51. The Divisional Court rejected the SRA's submission that the Tribunal applied the wrong test, stating in relation to Rule 1.06, at [102]:

"102. [Counsel for the SRA] submitted that the majority erred by applying the wrong test in relation to whether Rule 1.06 was breached: in particular, by asking themselves whether MD's conduct was "so unreasonable" that it amounted to professional misconduct. He said that was an unwarranted gloss on Rule 1.06. That, in our judgment, is an unsustainable criticism (a criticism we also further discuss below). The majority expressly directed themselves at paragraph 141.91 by reference to Rule 1.06; and in so far as they imported notions of reasonableness that plainly was justifiable, given that this was an issue of professional judgment and professional conduct. In this respect, we also found untenable [the SRA's] criticism that reference to "misconduct" distracted attention away from the wording of Rule 1.06. But what, we ask, was this allegation then doing before the Tribunal if it was not an issue of misconduct? It is, overall, plain that issues of seriousness and culpability are relevant to the assessment of whether there had been a breach of Rule 1.03 or Rule 1.06."

52. When addressing a similar argument by the SRA in relation to Principle 5, the Divisional Court stated at [153] to [158]:

"153. [Counsel for the SRA] submitted that the majority erred in their approach to Principle 5 and thereby erred in principle. He said…. that the majority had wrongly introduced considerations of professional misconduct instead of simply focusing on whether or not there had been a breach of Principle 5.

…..

155. Given the context of this case, and given the finding that there was no negligence, we found this debate to be somewhat arid – indeed, although argued below, it seemed, with all respect, to have become before us on appeal little more than a means adopted for seeking to generate a purported point of law with the aim of overcoming the conventional difficulties in challenging an evaluative judgment, based on the evidence, of a specialist tribunal.

156. As we have had cause to ask rhetorically before in this judgment: what was this particular allegation doing before the Tribunal if it was not a matter of professional misconduct? In truth, if such an allegation under Principle 5 is to be pursued before a tribunal then it ordinarily needs to have some inherent seriousness and culpability. It no doubt can be accepted that negligence may be capable of constituting a failure to provide a proper standard of service to clients. But even so, questions of relative culpability and relative seriousness surely still come into the equation under this Principle if the matter is to be the subject of disciplinary proceedings before a tribunal. We do not, we emphasise, say that there is a set standard of seriousness or culpability for the purposes of assessing breaches of the core principles in tribunal proceedings. It is a question of fact and degree in each case. Whether the default in question is sufficiently serious and culpable thus will depend on the particular core principle in issue and on the evaluation of the circumstances of the particular case as applied to that principle. But an evaluation of seriousness remains a concomitant of such an allegation.

157. If authority be needed for such an approach, then it can be found not only in the observations of Jackson LJ (in the specific context of Principle 6) in Wingate and Evans (cited above) but also in the decision of the Court of Session in Sharp v The Law Society of Scotland [1984] SC 129. There, by reference to the applicable Scottish legislation and rules, it was among other things held that whether a breach of the rules should be treated as professional misconduct depended on whether it would be regarded as serious and reprehensible by competent and responsible solicitors and on the degree of culpability: see the opinion of the court delivered by the Lord President (Lord Emslie) at page 134.

158. We consider that, though the statutory schemes are by no means the same, the like approach is generally appropriate and required for the English legislative and regulatory regime in the treatment of alleged breaches of the core principles. We appreciate that there may be some breaches of some rules - for instance, accounts rules: see, for example, Holden v Solicitors Regulation Authority [2012] EWHC 2067 (Admin) - which can involve strict liability. But that cannot be said generally with regard to all alleged breaches of the core principles coming before the Tribunal; which in our view ordinarily will involve an evaluative judgment and an assessment of seriousness to be made. All that said, in the present case, we repeat that this debate under Principle 5 is particularly sterile, given that the evaluation of the majority was that AC had not even been proved to be personally negligent, let alone that the negligence was such that it constituted professional misconduct (paragraph 145.34)."

53. In support of its approach, the Divisional Court referred to the judgment of the Court of Appeal in Wingate & Evans v Solicitors Regulation Authority [2018] EWCA Civ 366, per Jackson LJ at [105] - [106]:

"105. Principle 6 is aimed at a different target from that of principle 2. Principle 6 is directed to preserving the reputation of, and public confidence in, the legal profession. It is possible to think of many forms of conduct which would undermine public confidence in the legal profession. Manifest incompetence is one example. A solicitor acting carelessly, but with integrity, will breach principle 6 if his careless conduct goes beyond mere professional negligence and constitutes "manifest incompetence": see Iqbal v Solicitors Regulation Authority [2012] EWHC 3251 (Admin) and Solicitors Regulation Authority v Libby [2017] ACD 81.

106. In applying principle 6 it is important not to characterise run of the mill professional negligence as manifest incompetence. All professional people are human and will from time to time make slips which a court would characterise as negligent. Fortunately, no loss results from most such slips. But acts of manifest incompetence engaging the principles of professional conduct are of a different order."

54. The Divisional Court also found support for its approach in the decision of the Court of Session in Sharp v The Law Society of Scotland [1984] SC 129, whilst noting that it related to a different legislative scheme. The issue there was whether breaches of the Accounts Rules amounted, on the particular facts, to professional misconduct. The Lord President (Lord Emslie) observed at pp 134 to 135:

"whether such a failure [a breach of the accounts rules] should be treated as professional misconduct must depend upon the gravity of the failure and a consideration of the whole circumstances in which the failure occurred including the part played by the individual solicitor in question … There are certain standards of conduct to be expected of competent and reputable solicitors. A departure from these standards which would be regarded by competent and reputable solicitors as serious and reprehensible may properly be categorised as professional misconduct. Whether or not the conduct complained of is a breach of rules or some other actings or omissions the same question falls to be asked and answered and in every case it will be essential to consider the whole circumstances and the degree of culpability which ought properly to be attached to the individual against whom the complaint is made."

55. The Divisional Court went on in its judgment, at [228], to uphold the Tribunal's conclusion, at [216(iii)], that breaches of Rule 9 of the Code in relation to a referral fee of £25,000 paid to an introducer were not so serious as to amount to professional misconduct, and therefore the Tribunal was entitled to dismiss various allegations that Rule 9 had been breached (at [216] to [220], [225], [228], [236], and [237]). This is significant because Rule 9 includes specific and detailed prohibitions and requirements, without any express requirement of seriousness.
56. The SRA submitted that the Tribunal's judgment, and the submissions made by the Firm, were inconsistent with the judgment of the Divisional Court in Beckwith v Solicitors Regulation Authority [2020] EWHC 3231 (Admin) which allowed an appeal against the Solicitors Disciplinary Tribunal's finding that the appellant initiated and/or engaged in sexual activity with a colleague in circumstances that constituted a breach of Principle 2 and 6 of the Principles.
57. In the judgment of the Divisional Court (President of the Queen's Bench Division, Dame Victoria Sharp P and Swift J.), rejected the appellant's submission that the Tribunal erred by not first considering, as a threshold requirement, whether the allegation amounted to professional misconduct. The Divisional Court said, at [16], that whether or not a notion of "professional misconduct" has any part to play in any particular regulatory scheme will depend on the terms in which that scheme has been made. The Divisional Court went on to say, at [17] - [18]:

"17. So far as concerns this appeal, the scope of regulation by the SRA and the Tribunal must depend on the proper interpretation of the standards set out in the Handbook (i.e. the relevant rules made pursuant to section 31 of the 1974 Act), applied in accordance with the procedural rules made for that purpose. At the relevant time, the material parts of the Handbook for the purposes of the Appellant's case were the 2011 Principles and the 2011 Code of Conduct (which explains the application of the 2011 Principles); and the relevant procedural rules were the SRA Disciplinary Procedure Rules 2011. The standards in the Handbook were not (and are not now) formulated by reference to any defined notion of "professional misconduct", whether as a threshold requirement for disciplinary action before the Tribunal or otherwise. Whether misconduct alleged is sufficient to engage the jurisdiction of the Tribunal is addressed by Rule 10 of the Disciplinary Procedure Rules. Under that Rule the SRA is permitted to refer a matter to the Tribunal ("make an application to the Tribunal") only if it is satisfied, among other matters, that the allegation is sufficiently serious that the Tribunal is likely to make an order striking the solicitor from the role, suspending him from practise, or requiring him to pay a penalty greater than the maximum the SRA has the power to impose.

18. It is not for this court either to add to that approach or otherwise to reformulate the statutory scheme which has been made under the 1974 Act. There is no basis in law to interpose any additional requirement into the Handbook to the effect that before the Tribunal could act it had to be satisfied that the conduct which amounted to a breach of one or other of the 2011 Principles also amounted to professional misconduct. And even if that were not so, adding such a requirement would only serve to insert unnecessary uncertainty and complexity….."

58. Although those observations could be read as a departure from the approach taken by the Divisional Court in Leigh Day, the Divisional Court in Beckwith expressly confirmed that was not the case, at [23]:

"23. This conclusion is supported by the decision of the Divisional Court in Solicitors Regulation Authority v Day [2018] EWHC 2726 (Admin). The Appellant relies on the judgment in that case as supporting his submission that a discrete requirement that the conduct complained of had to amount to "professional misconduct". …. The submission for the SRA in Day was that in dismissing complaints made variously under the Solicitors Code of Conduct 2007 and the Handbook, the Tribunal had, when it came to two of those allegations, incorrectly considered whether or not the conduct complained of amounted to professional misconduct. As to the first relevant allegation (under Principle 6 of the 2011 Principles), the court concluded that the Tribunal's use of the phrase "professional misconduct" had been no more than a proxy turn of phrase for whether or not the relevant principle had been breached (see the judgment of the court at §102). On the second relevant allegation (under Principle 5 of the 2011 Principles – the obligation to "provide a proper standard of service to your clients") the court said as follows at §§153, 155, and 156 of the judgment

….."

59. The Divisional Court then concluded, at [24]:

"Thus, the judgment in Day lends no support for the Appellant's first two grounds of appeal in this case. Rather, as that judgment makes clear, the requirement on the Tribunal is to apply the substantive rules ….In the present case, the Tribunal made no error by not adding the gloss for which the Appellant contends, and not asking, as a free-standing question, whether what the Appellant had done amounted to professional misconduct."

60. The Divisional Court went on to allow the appeal, on the basis that the facts found by the Tribunal did not amount to a breach of Principle 2 (the requirement to act with integrity) or Principle 6 (the requirement to behave in a way that maintains the trust the public places in you and in the provision of legal services).
61. Before me, the primary submission made by both the SRA and the Firm was that Leigh Day and Beckwith were not in conflict because Beckwith was addressing the argument that there was a threshold requirement of professional misconduct. The Divisional Court in Leigh Day did not treat the concept of professional misconduct as a free-standing requirement to be considered independently of the relevant rule of professional misconduct. I agree with this submission.
62. Mr Coleman KC accepted that parts of the Beckwith judgment could be read in isolation to suggest that the concept of professional misconduct had no role at all to play in determining whether the conduct rules had been breached. However, he submitted that that reading of Beckwith should be rejected, as it would give rise to a direct conflict with Leigh Day, which was undesirable and clearly not what the Divisional Court in Beckwith intended. Beckwith should be read consistently with Leigh Day if reasonably possible. I accept that submission.
63. In the light of this conclusion, it is not necessary for me to determine whether or not a Divisional Court hearing an appeal from the Solicitors Disciplinary Tribunal (as opposed to an appeal by way of case stated) is bound by the ratio of a prior judgment of the Divisional Court (see Cross and Harris: Precedent in English Law (4^th ed.) 1991 at pp. 119-121). However, it is uncontroversial that, at the very least, a Divisional Court will follow a prior judgment of the Divisional Court, as a matter of judicial comity, unless it is convinced that it is wrong. The Divisional Court in Beckwith clearly intended to apply Leigh Day and did not consider that the judgment in Leigh Day was wrong.
64. In construing the SRA rules, the starting point is the natural and ordinary meaning of the words, in their statutory context. There is a presumption in favour of the grammatical meaning, which may be outweighed by other interpretative criteria.
65. Mr Coleman KC referred me to Bennion, Bailey and Norbury on Statutory Interpretation (8^th ed.) in support of the following interpretative criteria:

i) The legal context in which the legislative instrument was enacted including the relevant common law. There may be instances where the general law operating in a particular area will impliedly qualify the operation of an enactment in absolute terms.

ii) The consequences of adopting a particular construction and whether it will give rise to anomalous results and unjustifiable inconvenience to the persons affected.

iii) The legal policies that the law should be just and that the status or reputation of a person should not be impaired except under clear authority of law.

66. Mr Coleman KC relied on the following considerations in support of his submission that Principle 7 and Outcome 7.5 are only engaged by conduct that is serious, culpable and reprehensible:

i) Principle 7 and Outcome 7.5 are part of a set of ethical rules regulating the profession. The Court sanctions professional misconduct in order to maintain public trust in the profession (see Bolton v Law Society [1994] 1 WLR 5112, at 518G-H, per Lord Bingham). It is inherent in the purpose of the rules of professional conduct that they should only be engaged by conduct that is serious, culpable and reprehensible.

ii) At common law, the Court's inherent jurisdiction to discipline solicitors is engaged by misconduct (see the annex to the Firm's skeleton argument):

a) Only serious misconduct ought to be stigmatised as professional misconduct and sanctioned accordingly (see Briggs v Law Society [2005] EWHC 1830 (Admin), at [29], Walker v Bar Standards Board Visitors to the Inns of Court, PC 2011/0219, at [10], [11], [16]).

b) The approach to professional misconduct at common law is reflected in the principle that professional negligence will not amount to misconduct unless it is excusable and regarded as deplorable by fellow solicitors: see: Re A Solicitor [1972] 1 WLR 869, 873A; SRA v Wingate and Evans [2018] 1 WLR 3969, at [105] - [106].

c) The honest decision of a solicitor on a question of professional judgment does not usually give rise to a disciplinary offence: Connolly v The Law Society [2007] EWHC 1175 (Admin) at [62].

iii) Conflating the grammatical meaning of Principle 7 and Outcome 7.5 with the legal meaning would give rise to undesirable consequences, in particular, solicitors and firms would suffer the reputational stigma attaching to findings of professional misconduct, even for trivial offences e.g. road traffic offences.

iv) The Tribunal's approach is consistent with the obligations in section 28(3) of the Legal Services Act 2007:

"The approved regulator must have regard to (a) the principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed, and (b) any other principle appearing to it to represent the best regulatory practice."

67. Mr Coleman KC submitted that the SRA's approach to Principle 7 and Outcome 7.5 conflicts with the SRA's own guidance to the profession on the Money Laundering Regulations 2017 to the effect that only serious breaches of the MLRs 2007 needed to be reported, and potentially investigated. The relevant passages of the guidance and Mr Coleman KC's submissions were set out at Judgment/9.338 – 9.341:

"9.338 ….The SRA's position in the present case was impossible to reconcile with its own position that only serious breaches of the MLRs need to be reported, and even then, they were only "potentially" investigated. In response to the question, "Am I required to report breaches of the Money Laundering Regulations?" the SRA counselled as follows:

"You must report serious breaches of the money laundering regulations to us. Schedule 4(12) of the regulations state that supervisors must collect information regarding 'the number of contraventions of these Regulations committed by supervised persons'.

o Serious breaches are where there are:

o serious or persistent compliance failures involving safeguards designed to prevent money laundering

o clear risks of money-laundering activity taking place, or

o where there has been potential loss or harm to businesses or individuals."

9.339 In answer to the question "What sort of breaches should be reported?" the SRA's position was that:

"The principles of what could constitute serious breaches of the MLRs are as follows (this is not an exhaustive list):

o Intentional or reckless breaches of legal requirements in relation to applicable anti money laundering legislation or regulation

o Systemic regulatory breaches associated with a failure of AML-related policies, controls or procedures

o The facilitation of business activities which bear the hallmarks of money-laundering activity (this does not replace the legal requirement to file a SAR where appropriate)

o You do not need to report one-off breaches of the regulations which are limited in scope and impact."

9.340 Mr Coleman KC noted that there was no allegation of intentional or reckless breaches, systemic breaches or facilitation of activities which bore the hallmarks of money laundering.

9.341 Accordingly, the SRA's considered position in the guidance it provided to the profession was that there may be breaches of the money laundering regulations that were not sufficiently serious, reprehensible and culpable to warrant disciplinary action or disciplinary findings. The SRA, it was submitted, could not properly depart from that position for the purposes of securing any conviction against the Firm in this case. Further, the SRA's position, as expressed in that guidance, was correct."

68. In my judgment, following Leigh Day and Beckwith, there is no universal requirement that breaches of the Principles and the Outcomes can only be established where the requirements of seriousness, culpability and reprehensible conduct are met. Such requirements only arise where they are inherent in the rule in question.
69. The natural and ordinary meaning of the relevant words in Principle 7, in their statutory context, is that legal and regulatory obligations must be complied with, and there will be a breach of Principle 7 if they are not complied with. Similarly, the natural and ordinary meaning of the relevant words in Outcome 7.5 is that legislation applicable to a business, including anti-money laundering legislation, must be complied with, and there will be a breach of Outcome 7.5 if it is not complied with.
70. In this case, for the purposes of establishing a breach of Principle 7 and Outcome 7.5, the only evaluation that was required was whether or not the Firm had complied with Regulation 14 of the MLRs 2007. That required consideration as to whether the Firm had "taken adequate measures to establish the source of wealth and source of funds" (Regulation 14(4)(b)) and whether it had conducted "enhanced ongoing monitoring of the relationship" (Regulation 14(4)(c)). The Tribunal undertook this evaluation and concluded that the Firm was in breach of Regulation 14 because it had failed "adequately or even reasonably" to establish Client A's source of wealth (Judgment/9.377).
71. As Mr Ozin KC correctly submitted, breach of the standards in Principle 7 and Outcome 7.5 was established once the Tribunal made the anterior finding that a legal/regulatory obligation or legislation appliable to the business had not been complied with. The Tribunal erred in proceeding to ask itself the further question, under the sub-heading of "Misconduct":

"9.378 Having determined that the Firm had breached regulation 14, the Tribunal considered whether the Firm had breached the Principles and the Code as alleged."

It could not properly be inferred from the language of Principle 7 and Outcome 7.5, in the statutory context, that an additional requirement of seriousness, culpability and reprehensible conduct had to be met. In my judgment, if I were to adopt Mr Coleman KC's construction, I would be re-writing the conduct rules and departing from the Divisional Court's judgment in Beckwith. A single High Court Judge ought not to depart from a decision of a Divisional Court: see R v Greater Manchester Coroner ex parte Tal [1985] 1 QB 67, per Robert Goff LJ, at 81DA.

72. There is a clear contrast between Principle 7 and Outcome 7.5 on the one hand, and Principles 6 and 8 on the other. The SRA rightly conceded in its Reply to the Respondent's Answer, paragraph 12, that considerations of seriousness were relevant to Principle 6 (public trust) and Principle 8 (effective performance of role). It was inherent in the language and content of Principles 6 and 8 that the Tribunal were able to consider the additional requirements of seriousness, culpability and reprehensible conduct.
73. In Leigh Day, the Divisional Court said, at [158], that there may be some breaches of some rules, for instance Accounts Rules, which can involve strict liability. The Accounts Rules 2019 are made pursuant to specific rule-making powers concerning accounts (sections 32, 33A, 34 and 37 of the Solicitors Act 1974, section 9 of the Administration of Justice Act 1985, and section 83(5)(h) of, and paragraph 20 of Schedule 11 to, the Legal Services Act 2007). They are not conduct rules. All of the principals in a firm have joint liability for breaches of the Accounts Rules in order to provide the public with maximum protection in respect of money held by solicitors and firms (see The Professional Conduct and Etiquette of Solicitors (1960), Weston v Law Society, unreported, 29 June 1998, and Holden v Law Society [2012] EWHC 2067 (Admin) at [16] to [20]).
74. In disciplinary proceedings, the effect of a breach of Regulation 14 of the MLRs 2007 is comparable to the effect of a breach of the Accounts Rules. The MLRs 2007 were also made pursuant to specific rule-making powers and they are not conduct rules. Whilst Regulation 14 does not create an offence of strict liability, a breach of Regulation 14 is contrary to the professional standards of the profession, without the requirement of any further fault on the part of a firm, and in that sense it applies a strict liability standard. In my view, the MLRs 2007 are another example of the type of rule referred to in Leigh Day at [158] which are an exception to the general rule.
75. The rationale of a regulatory provision of this type is helpfully explained by Gould, in Chapter 4. He sets out his overall view in the introduction at 4.1 – 4.2, that a rule breach may justify a significant penalty for the purposes of deterrence and public confidence without the need to show that any individual is culpable or that systems are inadequate. Although he accepts at 4.9 that most rules are drafted in terms which require misconduct in order to be breached, he states as a general proposition that some rules may be breached without the need for fault on the part of the entity or person responsible for compliance with them. He cites Hazelhurst v Solicitors Regulation Authority [2011] EWHC 462 (Admin) which was an appeal against sanctions imposed for breach of the Accounts Rules, in which it was common ground that they were strict liability offences, per Nicola Davies J. at [29], [43]. It was cited with approval in Bass v Solicitors Regulation Authority [2012] EWHC 2012 (Admin). Then at 4.16 to 4.21, Gould argues that a firm's liability may arise from the breach of rules by an employee, without fault on the part of the firm or its principals, and refers to breaches of the Accounts Rules in support of this view, at 4.16 and 4.17.
76. I do not consider that the results of the SRA's interpretation of Principle 7 and Outcome 7.5 are anomalous or unfair or disproportionate, as Mr Coleman KC submits, but if that is the view of the profession and the regulator, then the solution lies in an amendment to these rules which limits their application to conduct which is considered to be serious, culpable and reprehensible.
77. I agree with Mr Coleman KC that the stigma of an adverse disciplinary finding is a serious matter, in addition to a finding of a breach of anti-money laundering legislation. However, the SRA guidance, set out above, indicates that only serious breaches of the anti-money laundering legislation will progress to disciplinary proceedings which is a safeguard against over-zealous enforcement. Trivial breaches will not be prosecuted.
78. Mr Coleman KC relies upon the Tribunal's findings that the Firm's breach of the MLRs 2007 was inadvertent and committed in good faith. It had mistakenly believed that prior to the merger Mr Chateau had already asked Client A about the source of his wealth (as he ought to have done) when in fact he had not. The Tribunal found that the breach was not systemic; that the SRA had commended the Firm for its anti-money laundering systems and controls which had been deployed for each of the property transactions in issue; and that the Firm not only had relevant and responsible anti-money laundering policies in place, but it also enforced them.
79. I agree that these were important considerations but in my judgment, they were factors properly to be taken into account by way of mitigation, when determining sanction. They did not justify dismissal of the allegations when there was a clear breach of the MLRs 2007.
80. For the reasons I have given above, I also reject Mr Coleman KC's alternative formulation of his case (Approach 2), namely, that an allegation of a rule breach should be upheld only if the breach is sufficiently serious, culpable and reprehensible. In my view, the case of Pabla does not disclose any legal foundation for a jurisdiction to dismiss allegations on the grounds of insufficient gravity. No authorities were cited in Pabla, and of course the decision pre-dates Leigh and Beckwith. Plainly, the allegations in Pabla were very different to the allegations in this case.
81. For these reasons, the appeal is allowed.

Relief and costs

82. I have carefully considered the submissions made by the parties on relief. In the light of my conclusions, I consider that the Tribunal's decision must be quashed and the case remitted to a freshly-constituted panel for re-consideration. This is a contentious case which requires the specialist experience and expertise of members of the Solicitors Disciplinary Tribunal. Understandably the SRA considers that it should be a fresh panel, given the errors identified in my judgment.
83. It is not possible to preserve some parts of the Tribunal's decision and not others because of the way in which the decision was drafted, and the extent to which the mistaken approach of the Tribunal influenced the decision as a whole. Therefore the decision will be quashed in its entirety. I note that the SRA may wish to rely on the Tribunal's factual findings, to avoid unnecessary repetition. It is open to the parties to invite the new panel to proceed on an agreed set of facts, and those can be the facts found by the Tribunal, amended as necessary. The SRA's Grounds of Appeal to this Court did not include a challenge to the Tribunal's decision that there was no breach of Principles 6 and 8, and that issue was not argued before me. If these allegations are pursued by the SRA, they will have to be determined by the new panel. Clearly, the issue of sanction will also have to be re-determined by the new panel, in the light of my judgment and any conclusions on Principles 6 and 8.
84. The SRA has been successful in its appeal and costs should follow the event. In my view, the SRA is also entitled to the reasonable costs of the Tribunal hearing. The Tribunal's decision to make no order for costs was based on conclusions which have been successfully challenged.