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You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Grunhut v Solicitors Regulation Authority Ltd [2025] EWHC 592 (Admin) (14 March 2025) URL: http://www.bailii.org/ew/cases/EWHC/Admin/2025/592.html Cite as: [2025] EWHC 592 (Admin) |
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KING'S BENCH DIVISION
ADMINISTRATIVE COURT
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
| JACK GRUNHUT |
Appellant |
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| - and - |
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| SOLICITORS REGULATION AUTHORITY LIMITED |
Respondent |
____________________
Matthew Edwards (instructed by Capsticks LLP) for the Respondent
Hearing date: 19 February 2025
____________________
Crown Copyright ©
Mrs Justice Lang :
"1. On or around 15 June 2020, in support of an application for a refund of Stamp Duty and Land Tax ("SDLT") to HMRC in respect of Property A, the Respondent drafted and obtained a Deed of Trust which he knew was false and misleading in that it purported to have been made on 17 June 2019 but was actually signed on 15 June 2020.
In doing so he:
1.1. Breached paragraph 1.4 of the SRA Code of Conduct for Solicitors, RELs and RFLs 2019 ("the SRA Code 2019"); and/or
1.2. Breached all or any of Principles 2, 4, and 5 of the SRA Principles 2019;
PROVED
2. In an email to his employer, Berlad Graham, dated 13 May 2021, the Respondent knowingly provided false and misleading information by stating that he did not have any personal or financial relationships with any clients of the firm which had not been disclosed, in circumstances where he had in fact received two personal loans from clients of the firm on or around 22 January 2021 and 25 March 2021 and these loans had not been disclosed.
In doing so he:
2.1 Breached paragraph 1.4 of the SRA Code 2019; and/or
2.2 Breached any or all of Principles 2, 4 and 5 of the SRA Principles 2019.
PROVED
3. On or around 9 September 2019, in relation to the sale of Property D, the Respondent gave an undertaking to a third party to pay funds received in excess of £290,000 to that third party upon completion without obtaining the consent of his client.
In doing so he:
3.1 Failed to achieve Outcome 1.2 of the SRA Code of Conduct 2011; and
3.2 Breached Principles 4, 5 and 6 of the SRA Principles 2011.
NOT PROVED
4. On or around 12 October 2021, the Respondent provided false and misleading information to his employer, Berlad Graham, by confirming in an email that:
4.1. He had not entered into any referral/introducer arrangements in relation to the firm's clients or matters undertaken at the firm.
4.2 He has not entered into any such arrangements without prior COLP approval. In circumstances where both these statements were untrue.
In doing so he:
4.3 breached paragraph 1.4 of the SRA Code 2019; and/or
4.4 breached either or both of Principles 2 and 5 of the SRA Principles 2019.
PROVED
5. [Withdrawn]
6. Between 1 April 2021 and 31 May 2021, and while employed as a solicitor with Berlad Graham, in relation to the purchase of Property H, the Respondent failed to comply with his employer's anti-money laundering procedures and conduct adequate Client Due Diligence.
In doing so he:
6.1 failed to comply with Regulation 28 of the Money Laundering Regulations 2017.
6.2 breached paragraph 7.1 of the SRA Code 2019; and/or
6.3 breached Principle 2 of the SRA Principles 2019.
PROVED"
Legal framework
"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."
"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."
"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 knowledgeable belief as to facts is established, the question whether his conduct was honest or dishonest is to be determined by the factfinder 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."
"As we said earlier in this judgment, the Tribunal was, in relation to all those matters and the carrying out of an evaluative judgment as to the appropriate sanction for maintaining public confidence in the profession, an expert panel, familiar with this type of adjudication …. As Lord Hope of Craighead said in Marinovich v General Medical Council [2002] UKPC 36 at [28]:
"In the appellant's case the effect of the Committee's order is that his erasure is for life. But it has been said many times that the Professional Conduct Committee is the body which is best equipped to determine questions as to the sanction that should be imposed in the public interest for serious professional misconduct. This is because the assessment of the seriousness of the misconduct is essentially a matter for the Committee in the light of its experience. It is the body which is best qualified to judge what measures are required to maintain the standards and reputation of the profession.""
Allegation 1
i) An unsigned letter dated 15 June 2020 from Person A and Company A to HMRC authorising A to handle an SDLT refund on his behalf and for payments to be made into a Santander bank account number in A's name.
ii) An unsigned trust deed dated 17 June 2019 between Company A and Israel Lev, the agent for Person A, stating, amongst other things, that Property A was acquired by Company A on trust as nominee and bare trustee for Israel Lev.
iii) An unsigned letter from A to HMRC dated 15 June 2020 stating that A was assisting Person A in his request for a refund of SDLT as the SDLT return filed by Bude Nathan (the buyer's representative in the purchase of Property A) contained errors. The letter stated that the property was in fact purchased on trust for a first-time buyer who did not own any other property and used the property as their main residence. The letter applied for a refund of £25,650 and requested payment of the refund into A's Santander bank account.
i) A scanned copy of the letter to HMRC authorising A to handle the SDLT refund signed by Person A; and
ii) The first page of a trust deed with Israel Lev's address inserted, and the last page of the trust deed signed on behalf of Company A by Person A.
i) A single character at the very beginning of the document which had been struck through;
ii) Mr Lev's address being added by hand; and
iii) The signatures and witness details on the last page.
i) He drafted and sent the draft trust deed to Person A [C/790];
ii) He sent it as an aid to Person A to help him find the original [C/790];
iii) He accepted he should have realised that Person A may have wanted to backdate a document and present it as the original one. He suspected after the event that this is what had happened [C/791];
iv) He should have been "a lot more diligent" with Person A [C/795];
v) He should have enquired why the solicitors who had originally acted in the purchase were not applying for the SDLT refund [C/796];
vi) There had been "a big lack of judgment" on his part [C/804]; and
vii) He only intended Person A to sign the authority letter sent to him on 15 June 2020 and not the trust deed [C/805].
"The Tribunal's Findings
32.13. The Tribunal took into account Mr Grunhut's good character, both in relation to propensity and credibility when considering each of the Allegations.
32.14 The Tribunal noted that Mr Grunhut did not dispute drafting a trust deed dated 17 June 2019 on 15 June 2020. He did not deny sending this document to Person A, together with two other documents, with a covering email which said "please sign and return".
32.15 Mr Grunhut's case was that he had done so at the request of Person A on the basis that Person A had asked him to send him a document which would assist him in locating the original. Further, Mr Grunhut's case was that he only intended Person A to sign one document, namely the letter of authority, and not the trust deed. Person A's evidence was not entirely consistent in that in his written statement he stated that he had sent back the original that he claimed to have signed in June 2019. In his oral evidence he accepted that it was possible that he had sent back the version sent to him by Mr Grunhut.
32.16 The Tribunal found Mr Grunhut's evidence implausible. If he had been asked to provide a document which would help Person A find the original, there was no need to put the date on it or the details of the parties including the addresses. He could simply have sent a blank deed of trust template. Mr Grunhut could have had the word 'Draft' added in watermark across the document to ensure no confusion with the original. It made little sense to populate the document in the way Mr Grunhut did, if he did not intend that Person A would rely on that document and sign it.
32.17 This was reinforced by the email which attached three documents and said "please sign and return". As a solicitor, notwithstanding his relative inexperience, Mr Grunhut would know the importance of being clear. It would have taken no effort to have added the words 'the letter of authority' to that sentence.
32.18 The email did not contain a phrase such as 'here is a specimen trust deed to help you find the original'. It made no reference to Person A searching for the original or to the document being attached for the purposes of assisting that search.
32.19 The document sent by Mr Grunhut was clearly false as it was dated 17 June 2019 when in fact it had been created on 15 June 2020. It was misleading as it purported to have been signed on a date almost a year earlier and would have given the impression to anyone looking at it, in this case HMRC, that it had been signed on 17 June 2019 when it had not been.
32.20 The Tribunal rejected Mr Grunhut's evidence that he did not know at the time that the trust deed was false and misleading. Mr Grunhut was aware that this document was being obtained in the context of an application for a refund of SDLT. He knew that the original was not in his possession, and he was aware that for the application to HMRC to be successful, HMRC would require evidence that the trust deed was signed on 17 June 2019. The Tribunal was satisfied on the balance of probabilities that Mr Grunhut had drafted and obtained the deed of trust knowing that it was false and misleading.
32.21 The Tribunal therefore found the factual basis of Allegation 1 proved. It followed from those factual findings that paragraph 1.4 of the Code had been breached in that Mr Grunhut had sought to mislead HMRC. He had also breached Principle 2 on the basis that the trust and confidence the public placed in the profession was clearly undermined by such conduct.
32.22 In considering whether Mr Grunhut had lacked integrity, the Tribunal applied the test set out in Wingate. At [100] Jackson LJ had stated:
"Integrity connotes adherence to the ethical standards of one's own profession. That involves more than mere honesty. To take one example, a solicitor conducting negotiations or a barrister making submissions to a judge or arbitrator will take particular care not to mislead. Such a professional person is expected to be even more scrupulous about accuracy than a member of the general public in daily discourse".
32.23 The Tribunal was satisfied on the balance of probabilities that Mr Grunhut had clearly lacked integrity. Knowingly drafting and obtaining a false and misleading document was the opposite of being scrupulously accurate. The Tribunal found the breach of Principle 5 proved.
32.24 In considering the allegation of dishonesty, the Tribunal applied the test in Ivey and in doing so, adopted the following approach:
• Firstly the Tribunal established the actual state of the Mr Grunhut's knowledge or belief as to the facts, noting that the belief did not have to be reasonable, merely that it had to be genuinely held.
• Secondly, once that was established, the Tribunal then considered whether that conduct was honest or dishonest by the standards of ordinary decent people.
32.25 The Tribunal had already made findings as to Mr Grunhut's state of knowledge as set out above. Mr Goodwin had correctly submitted that considering the factual basis of the Allegation required an assessment of Mr Grunhut's state of knowledge at the material time. Having found that Mr Grunhut knew that he was drafting and obtaining a false and misleading document, the Tribunal had no difficulty in also finding, on the balance of probabilities, that such conduct would be considered dishonest by the standards of ordinary, decent people. The breach of Principle 4 was proved."
A's appeal submissions
Conclusions
"Mr Grunhut had been "relatively newly qualified at the material time and as such was entitled to support and supervision, which Mr Goodwin submitted had been lacking."
"It was regrettable that Mr Grunhut had come across individuals who were less than ideal role models so early in his career."
Therefore the Tribunal had these matters – the A's state of mind at the relevant time, and inadequate supervision by SM and DZ - well in mind (see Judgment/ 32.6 and 54).
Allegation 2
| Date | Client | Amount | Outstanding as at 22/022 | Repaid |
| 16/12/2020 | Person A/Holmleigh Properties | £480,000 | nil | 09/04/2021 |
| 22/01/2021 | Moses Meisels | £50,000 | nil | 09/04/2021 |
| 25/03/2021 | Kevin Mansouri | £25,000 | £10,000 | 12/08/2021 (in part) |
| 02/06/2021 | Solomon Gluck/Riverside Estates | £75,000 | £75,000 | |
| Total | £630,000 | £85,000 |
"Please confirm that you/a close relative do not have any other personal or financial relationships with any clients of the firm (past or present) which have not been disclosed."
"1. You did not advise me that Holmleigh Properties (a client …) had given you/your wife's company a loan…A client giving a loan to their solicitor (or their wife) has a huge potential for a conflict of interest and you had an obligation to notify the COLP of your personal/financial relationship with the client…
…
3. It is very shocking and concerning to note that you did not think to inform management of the loan, the relationship with the client and the background of this file…"
"The Tribunal's Findings
3.5 Mr Grunhut had accepted that he received the two loans on 22 January 2021 and 25 March 2021. It was further accepted by him that the loans were advanced by clients of the firm.
33.6 Mr Grunhut had submitted that he did not consider the term "financial relationships" to include loans. The Tribunal did not consider Mr Grunhut's evidence to be credible on this point. A loan involved an agreement to advance and repay monies. That was squarely within the definition of financial relationship and for Mr Grunhut to suggest that he thought otherwise at the time was incapable of belief.
33.7 The Tribunal considered the totality of the email sent to him on 12 May 2021, in particular question 5:
"5. Not only should the above be addressed, but please confirm and respond to the following:
a. How was the mortgage discharged? There is no evidence on file regarding contact with lenders. How a redemption statement/DS1 was obtained? - David could not see any correspondence/redemption evidence with the lenders on SOS. Please clarify and add all documents to the electronic file.
b. Why did you email the documents to Ezran law - what is their involvement with this matter?
c. What is the nature of your relationship with [Person A]? Why was he appointed as a director of your company?
d. What is going on with your company - why have you/your wife resigned and been appointed so many times?
e. Please confirm that you/a close relative do not have any other personal or financial relationships with any clients of the firm (past or present), which have not been disclosed?"
33.8 The Tribunal found that it was fanciful for Mr Grunhut to suggest that he had believed the scope of question 5e was limited by the wording of questions 5c or 5d. The word "other" in 5e clearly distinguished it from the previous questions. It was a wide-ranging question that unequivocally called for complete disclosure of anything that had not previously been disclosed by way of personal or financial relationships at the time or previously. Mr Grunhut had not emailed back and asked for clarity about the question and so there was no evidence that he was unsure or unclear.
33.9 The Tribunal was satisfied on the balance of probabilities that Mr Grunhut's reply, in which he wrote "confirmed" after question 5e, was false, because he did have two financial relationships with clients of the firm, and misleading because it purported to provide reassurance to Mr Berlad when in fact, he was not telling the truth. The Tribunal was further satisfied on the balance of probabilities that Mr Grunhut knowingly provided this false and misleading information. The Tribunal made this finding because it was simply not believable that he could have misunderstood the question or not understood the nature of a loan. The Tribunal found the factual basis of Allegation 2 proved on the balance of probabilities.
33.10 As with Allegation 1, the finding that Mr Grunhut had knowingly provided false information meant that it followed that he had breached Paragraph 1.4 of the Code. The Tribunal further found that he had breached Principle 2 on the basis that the public could not trust or have confidence in the profession if a solicitor knowingly gave false information to his employer.
33.11 In relation to Principle 4, the Tribunal again applied the Ivey test. It had already made findings as to Mr Grunhut's state of knowledge which are set out above. The Tribunal found that Mr Grunhut's actions in answering the question in the way he did, knowing it to be false and misleading, would be considered dishonest by the standards of ordinary decent people. The breach of Principle 4 was therefore proved.
33.12 It further followed from the findings made that Mr Grunhut had lacked integrity and had therefore breached Principle 5."
A's appeal submissions
Conclusions
Allegation 4
| Date | Amount | Client | Property | File Ref |
| 06/05/2020 | £200.00 | Kettering Court Ltd | 66 Kettering Court | KET001/0001 |
| 02/09/2020 | £1,140.40 | Kevin/Kaymar Mansouri | Middlemarch Lodge | MAN016/0001 |
| 18/09/2020 | £1,516.68 | Kevin/Kaymar Mansouri | 115 Daws Lane | 115001/0001 |
| 18/09/2020 | £551.25 | Naftoli Rudzinski/Nicer Estates Ltd | 68 Ethnard Road | NIC015/0001 |
"…we must disclose information pertaining to all referral and introducer agreements. You have all previously confirmed that you have not entered into any referrer/introducer arrangements in relation to BG clients/matters undertaken at BG. We further asked that you do not enter into any such arrangements without prior COLP approval… Please can you confirm that this remains correct by 4pm 15 October."
"I can confirm that I have not entered into any referral/ introducer arrangements in relation to BG clients/ matters undertaken at BG. I can also confirm that I have not/ will not enter into any such arrangement without prior COLP approval".
"I hereby confirm that A notified me on 02/09/2020 of a payment of £1140.40 from Fortys Capital as a token of their appreciation of his referral of me to them for the finance of the purchase of [address]. At the time I confirmed to him that I was happy for him to keep the full amount of the payment."
"The Tribunal's Findings
35.5 The Tribunal examined the invoices generated by Mr Grunhut that matched the payments received. In each case the narrative used the words "referral fee" and "brokers fee". At the bottom of the invoice Mr Grunhut had written "Thank you for your business. It was a pleasure doing business with you." The payment terms were specified as three days.
35.6 This was consistent with Mr Grunhut's email to the SRA of 22 October 2021 in which he described the payments made on 2 September 2020 and 18 September 2020 as:
"referral fees",
albeit stating that there was no arrangement for such a fee to be paid.
35.7 The letters from the clients were all dated 19 October 2021, a week after the reply sent to Ms Khan's email. The subject heading in each case referred to:
"Commission received from Fortys Capital".
The letters themselves described the payments as a "token of their appreciation".
35.8 The Tribunal found that the payments were not simply tokens of appreciation. A token of appreciation did not require an invoice to be generated. Further, the sums involved ranged from £200 to over £2000. This went beyond what could reasonably be considered a token of appreciation, particularly as the payments were supported by invoices and made on more than one occasion, including three in a 16-day period.
35.9 The Tribunal found on the balance of probabilities that Mr Grunhut had entered into a referral/introducer arrangement. It may not have been a formal arrangement set out in a written agreement, but the reality of the situation was that Mr Grunhut was receiving financial payment having introduced a client of the firm.
35.10 The Tribunal considered what it was that Mr Grunhut had been asked to confirm by his employers. The Tribunal noted that the email of 12 October 2021, sent by Ms Khan, was sent in the context of a number of previous emails on this topic, sent at approximately six-monthly intervals. These emails had made specific reference to the SRA Code of Conduct and the firm's own policy.
35.11 Ms Khan's email of 12 October 2020 asked for confirmation as to "any" referral/introducer "arrangements". This was a wide-ranging enquiry and was not open to the narrow interpretation that Mr Grunhut claimed to have adopted. The Tribunal was satisfied on the balance of probabilities that the response provided to this question, which was unequivocal, was false and misleading. It was false because Mr Grunhut did have an arrangement with Fortys Capital which he had entered into without the approval of the COLP. It was misleading, therefore, because it would have provided a false sense of reassurance to Berlad Graham as to Mr Grunhut's working arrangements in this regard.
35.12 The Tribunal rejected Mr Grunhut's evidence that he did not consider the information to be disclosable. It was inherently improbable that he could have misunderstood the nature of the question. At the very least, Mr Grunhut should have sought clarification before providing the categorical answer that he did.
35.13 The Tribunal found the factual basis of Allegation 4, together with the breach of Paragraph 1.4 of the Code, proved on the balance of probabilities.
Principle 5
35.14 The Tribunal found that providing this false and misleading answer to his employers was a clear case of lack of integrity. Wingate made specific reference to the need for solicitors to be "scrupulously accurate" and this was the opposite of that. The Tribunal found the breach of Principle 5 proved on the balance of probabilities.
Principle 2
35.15 It followed from the Tribunal's findings above that the trust the public placed in the profession would be undermined by a solicitor giving false and misleading answers to questions put to him by their employer. The Tribunal found the breach of Principle 5 proved on the balance of probabilities."
A's appeal submissions
Conclusions
Allegation 6
i) First Time buyer's relief from SDLT applied to this transaction;
ii) Prior to the SDLT return being filed he checked with the client over the telephone that the nominee, Mr Bard, did not own any other property;
iii) He found out after completion that the property was bought on trust for Mr Bard;
iv) He did not know about the relationship between Mr Bard and Person F but accepts he should have checked;
v) No client due diligence was conducted on Mr Bard;
vi) He had discussed Mr Bard's involvement with the lender. He accepted he should have made a note.
Sanction
A's appeal submissions
Conclusions
"6. As to the approach of the court to findings of dishonesty against the solicitors, the starting point is again Bolton. At page 518 Sir Thomas Bingham said this:
"Any solicitor who is shown to have discharged his professional duties with anything less than complete integrity, probity and trustworthiness must expect severe sanctions to be imposed upon him by the Solicitors Disciplinary Tribunal. Lapses from the required high standard may of course take different forms and be of varying degrees. The most serious involves proven dishonesty, whether or not leading to criminal proceedings or penalties. In such cases the Tribunal has almost invariably, no matter how strong the mitigation advanced by the solicitor, order that he be struck off the role of solicitors….""
"13. It seems to me, therefore, that looking at the authorities in the round, that the following impartial points of principle can be identified: (a) Save in exceptional circumstances, a finding of dishonesty will lead to the solicitor being struck off the roll, see Bolton and Salisbury. That is the normal and necessary penalty in cases of dishonesty, see Bultitude. (b) There will be a small residual category where striking off will be a disproportionate sentence in all the circumstances, see Salisbury. (c) In deciding whether or not a particular case falls into that category, relevant factors will include the nature, scope and extent of the dishonesty itself; whether it was momentary, such as Burrowes, or other a lengthy period of time, such as Bultitude; whether it was a benefit to the solicitor (Burrowes), and whether it had an adverse effect on others."
"First, although it is well-established that what may amount to exceptional circumstances is in no sense prescribed and depends upon the various factors and circumstances of each individual case, it is clear from the decisions in Sharma, Imran and Shaw, that the most significant factor carrying most weight and which must therefore be the primary focus in the evaluation is the nature and extent of the dishonesty, in other words the exceptional circumstances must relate in some way to the dishonesty."
"53. The Tribunal considered whether the circumstances in this case were exceptional, having regard to James and the factors identified in Sharma. The Tribunal had found that the misconduct had continued over a period of time, that Mr Grunhut had caused a high level of the reputational harm and had risked individual harm by his actions. This was not a single, isolated moment of poor judgment but a course of actions that included dishonesty in different fields of his working life. The common theme across Allegations 1, 2 and 4 was a lack of transparency on the part of Mr Grunhut.
54. The matters advanced by Mr Goodwin as exceptional circumstances were considered by the Tribunal. The issue of supervision was not one that the Tribunal considered was of relevance in these matters. The Tribunal was not required to make a finding on that issue, on the basis that, as with the question of Mr Grunhut's experience, a solicitor did not need supervision or file reviews to know that they must not create false documents or lie to their employers.
55. The Tribunal was sympathetic to Mr Grunhut's personal circumstances during the period in question, but no link had been established between those matters and the misconduct.
56. The Tribunal found no exceptional circumstances in this case and accordingly the only appropriate sanction was that Mr Grunhut be struck-off the Roll."
Costs
i) SRA investigation costs: £38,132.81.
ii) Capsticks Solicitors legal costs: £21,892.80
i) a reduction in the forensic investigation costs relating to the Taylor Rose report from £22,092.35 to £1,673.20 (a reduction of £20,419.15).
ii) a reduction in Capstick's legal fees of approximately 1/6 (to the value of £3,040.64).
i) the entirety of the investigation costs relating to the Taylor Rose report (£22,092.35) should be removed from the total figure, to reflect the fact that Allegation 3 was found not proved and Allegation 5 was withdrawn; and
ii) there should be a more substantial reduction in respect of Capsticks' fees.
"The Tribunal agreed with Mr Goodwin's submission that all matters arising out of the FI report prepared by Ms Bartlett should be deducted from the costs, in circumstances where Allegation 5 had been withdrawn and Allegation 3 had not been proved. The Tribunal also decided to deduct a further 1/6 from the total costs in relation to Allegation 3"
i) applying a further 1/6 reduction to all of the remaining costs incurred, after the removal of the remaining costs of the Taylor Rose report (£1,673.20), results in a figure of £28,569.982 (based on a calculation of £35,957.18 - £1,673.20 x 83.3%);
ii) alternatively, applying a further 1/6 reduction to Capsticks' fees (£2,952.203) after the removal of the remaining costs of the Taylor Rose report (£1,673.20), results in a figure of £31,331.78 (based on a calculation of 1/6 of £17,713.20).
Final conclusion
Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017
Regulation 28(1): This regulation applies when a relevant person is required by regulation 27 to apply customer due diligence measures.
Regulation 28(2): The relevant person must –
(a) identify the customer unless the identity of that customer is known to, and has been verified by, the relevant person;
(b) verify the customer's identity unless the customer's identity has already been verified by the relevant person; and
(c) assess, and where appropriate obtain information on, the purpose and intended nature of the business relationship or occasional transaction.
Regulation 28(3): Where the customer is a body corporate –
(a) the relevant person must obtain and verify -
(i) the name of the body corporate;
(ii) its company number or other registration number;
(iii) the address of its registered office, and if different, its principal place of business;
(b) subject to paragraph (5), the relevant person must take reasonable measures to determine and verify –
(i) the law to which the body corporate is subject, and its constitution (whether set out in its articles of association or other governing documents);
(ii) the full names of the board of directors (or if there is no board, the members of the equivalent management body) and the senior persons responsible for the operations of the body corporate.
Regulation 28(4): Subject to paragraph (5), where the customer is beneficially owned by another person, the relevant person must –
(a) identify the beneficial owner;
(b) take reasonable measures to verify the identity of the beneficial owner so that the relevant person is satisfied that it knows who the beneficial owner is; and
(c) if the beneficial owner is a legal person, trust, company, foundation or similar legal arrangement take reasonable measures to understand the ownership and control structure of that legal person, trust, company, foundation or similar legal arrangement.
Regulation 28(5): Paragraphs (3)(b) and (4) do not apply where the customer is a company which is listed on a regulated market.
SRA Principles 2011
You must:
Principle 2 act with integrity;
Principle 5 provide a proper standard of service to your clients;
Principle 6 behave in a way that maintains the trust the public places in you and in the provision of legal services;
Principle 7 comply with your legal and regulatory obligations and deal with your regulators and ombudsmen in an open, timely and co-operative manner; and
Principle 8 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.
SRA Code of Conduct 2011
Outcome 1.2 you provide services to your clients in a manner which protects their interests in their matter, subject to the proper administration of justice;
Outcome 7.5 you comply with legislation applicable to your business, including anti-money laundering and data protection legislation.
SRA Principles 2019
You act:
Principle 2 in a way that upholds public trust and confidence in the solicitors' profession and in legal services provided by authorised persons;
Principle 4 with honesty;
Principle 5 with integrity.
SRA Code of Conduct for Solicitors, RELs and RFLs 2019
Paragraph 1.4 You do not mislead or attempt to mislead your clients, the court or others, either by your own acts or omissions or allowing or being complicit in the acts or omissions of others (including your client).
Paragraph 7.1 You keep up to date with and follow the law and regulation governing the way you work.