Scottish Solicitors Discipline Tribunal

Keith Guy William Armstrong

A complaint was made by the Council of the Law Society of Scotland, on behalf of a firm X, against Keith Guy William Armstrong, formerly of Dundas & Wilson, Edinburgh. The Tribunal found the respondent guilty of professional misconduct in respect of his having accessed confidential information belonging to another firm of solicitors in relation to a project, having copied and thereafter used part of that firm’s tender document in his own firm’s tender, and his fraudulently and/or deceitfully having allowed it to be submitted as his own firm’s work, bringing his integrity into question; his actions being deliberate and wholly inconsistent with the requirements to maintain mutual trust and confidence with his fellow solicitors in allowing a tender to be submitted, part of which had been plagiarised from another firm’s tender which he knew or ought to have known was not only confidential but was of a commercially sensitive nature and his actions drawing the profession at large into disrepute. The Tribunal struck the respondent’s name from the Roll of Solicitors in Scotland.

The facts and the averments of professional misconduct were admitted by the respondent. The Tribunal had no hesitation in finding him guilty of professional misconduct. He had taken information from another professional’s confidential, commercially sensitive document and had used it in a document for his own firm, a direct competitor in a tender process. This was a deliberate, fraudulent and deceitful act which breached the trust of his own partners, partners in another firm and his personal partner. The tender concerned was worth in excess of £500,000. The Tribunal accepted that this conduct was out of character, that the respondent was working under pressure at the time, that he fully co-operated with proceedings and had shown remorse. However, the incident was of such a serious nature that the Tribunal had no alternative to striking the respondent’s name from the roll, in order to give the public and profession the appropriate message. The respondent’s conduct was seriously damaging to the reputation of the legal profession. The Tribunal ordered that publicity should include the name of the respondent but not the name of firm X, taking into account the damage already done to its reputation.

Alan John Baillie

A complaint was made by the Council of the Law Society of Scotland against Alan John Baillie, Baillies Law Ltd, Dundee. The Tribunal found the respondent guilty of professional misconduct in respect of his breach of the Code of Conduct 2002 and Practice Rules 2008 in respect of a number of transactions including numerous breaches of the CML Handbook, his failure to communicate effectively with clients and misleading lender clients, his acting in conflict or potential conflict of interest situations, his breach of the Solicitors (Scotland) Accounts, Accounts Certificate, Professional Practice and Guarantee Fund Rules 2001 in respect of his failure to comply with the Money Laundering Regulations, his failure to comply with the Proceeds of Crime Act 2002 in respect of transaction 8 and his failure to comply with the Solicitors (Scotland) Practice Rules 1996. The Tribunal censured the respondent and fined him in the sum of £10,000.

The Tribunal has emphasised repeatedly that solicitors must always act in the best interests of their clients including their lender clients. The respondent breached his obligations in terms of the CML Handbook and the Money Laundering Regulations in 10 different transactions. In nine of these he did not meet the clients face to face. As an experienced conveyancing solicitor the respondent must have been aware of the obligations in question. He had seriously let down his clients, the lenders. There were numerous signs that should have alerted him to the fact that further checks required to be carried out. The Tribunal noted that the respondent did advise the building society that back-to-back transactions were involved in four of the transactions and did receive some identification documents for some of the transactions, but he did not look behind these and do the checks he should have done. The Tribunal seriously considered imposing a restriction on the respondent’s practising certificate for the protection of the public, but took into account that these matters arose as result of a Society inspection and that apart from these 10 files which were cluster files, introduced by the same source, there did not appear to be further problems with the respondent’s practice. It also took into account that the respondent had since brought in Professor Brymer to look at his firm’s systems and train his staff to ensure that nothing similar happened again. This appeared to have worked, as a further inspection in 2012 highlighted no concerns. Given the number of transactions and breaches of duty involved, the Tribunal considered it necessary to impose the maximum fine, in addition to a censure, to show the seriousness with which it viewed the respondent’s conduct.

Stephen Gerard Fagan

A complaint was made by the Council of the Law Society of Scotland against Stephen Gerard Fagan, Fagan’s Solicitors, Airdrie. The Tribunal found the respondent guilty of professional misconduct in respect that he delayed unreasonably to respond to the reasonable enquiries of the Society, that between 15 December 2010 and July 2013 he delayed unreasonably and/or failed to respond to requests, both written and verbal, from the SLCC or its agent, both as a solicitor and separately as the designated client relations manager; and that he failed and/or delayed in paying the complaints levy in breach of the Legal Profession and Legal Aid (Scotland) Act 2007, s 28(4). The Tribunal censured the respondent and fined him in the sum of £5,000.

At the hearing the respondent admitted all of the averments of fact and professional misconduct. Nonetheless, the Tribunal required to consider whether the test of professional misconduct was met. On the basis that the respondent’s failure in relation to the SLCC had continued for in excess of two and a half years and had involved 15 pieces of correspondence, that the failure in relation to the Society had persisted for over a year and involved approximately 13 pieces of correspondence, and that the respondent had not paid the complaint levy until he had been served with a charge for payment following a court decree, the Tribunal had little hesitation in finding him guilty. It was satisfied that this case fell towards the higher end of the scale of such misconduct, having regard to the protracted and deliberate nature of the conduct, the damage to public confidence in the profession, and that the conduct had had a detrimental effect to a client, the SLCC and the Society. The Tribunal gave careful consideration to a number of testimonials produced on behalf of the respondent, and recognised that he had an otherwise unblemished record of 25 years. However, there appeared to be little practical evidence of any remorse for or insight into the misconduct. It was necessary to emphasise and reinforce the importance of the regulation of the profession. Accordingly, the censure and fine were appropriate.

Section 42ZA appeal – Fife Council

An appeal was made under s 42ZA(10) of the Solicitors (Scotland) Act 1980 by Iain Matheson, chief legal officer, Fife Council, against the determination by the Council of the Law Society of Scotland (“the first respondent”) dated 28 November 2013 not to uphold a complaint of unsatisfactory professional conduct in respect of two heads of complaint against Robert Vaughan, solicitor of RS Vaughan & Co, Glasgow (“the second respondent”). The Tribunal confirmed the determination of the first respondent, and made an award of expenses in favour of the first and second respondents.

The facts were not in dispute. The Tribunal required to decide whether a complaint of unsatisfactory professional conduct against the second respondent should be upheld in relation to (a) his charging fees which were found to be unfair and unreasonable by the Auditor of the Court of Session; and (b) his failing to comply with the outcome of a taxation report dated 25 February 2011. There was no challenge to the fairness of the Society’s procedures and the Tribunal saw no defects in the detailed reasoned decision of the subcommittee. The Tribunal had some sympathy for Mr Matheson, given the uncertainty surrounding the whole issue of the taxation procedure in this case. It considered that there were questions about the fairness of the procedure, and that there were similarities with the case of Firm A v Council of the Law Society of Scotland [2013] CSIH 30. The Tribunal considered that this was an area where more firm guidance in relation to the appropriate procedure would be helpful. In this case there was doubt about the correct procedure, and disagreement between competent and reputable solicitors about whether a binding taxation had taken place. The Tribunal accordingly could not find on the balance of probabilities that the second respondent’s conduct was conduct which was not of the standard which could reasonably be expected of a competent and reputable solicitor, and confirmed the determination of the Society.

Christopher William Hales

A complaint was made by the Council of the Law Society of Scotland against Christopher William Hales, solicitor, Edinburgh. The Tribunal found the respondent guilty of professional misconduct in respect of his failure to comply with the requirements of the CML Handbook in respect of 13 different transactions, his failure to satisfy his common law duties when acting for a purchaser and a lender, his failure to act with utmost propriety towards his lender clients, his failure to comply with para 3 of the Solicitors (Scotland) (Standards of Conduct) Practice Rules 2008 and his failure to comply with rule 6(1) of the Accounts etc Rules 2001. The Tribunal struck the respondent’s name from the Roll of Solicitors in Scotland.

The Tribunal had no hesitation in making a finding of professional misconduct. There were numerous breaches of the CML Handbook in respect of 13 different transactions involving an ongoing course of conduct for a period of over one year. The Tribunal has made it clear on numerous occasions that institutional lenders are clients in the same way as any other clients and are owed the same duties of care. The CML Handbook has been instituted to help prevent mortgage fraud and emphasise the reporting duties on the part of solicitors. In this case the respondent had a clear duty to report the back-to-back transactions, cashbacks, increases in prices, and deposits being provided by a third party to the lender. These matters would have been very likely to have had a material effect on the lender’s decision to lend. They were such that the respondent must have been aware that there was a possibility that he was facilitating mortgage fraud, whether or not this actually occurred. He generated fees on the basis of allowing this to occur. The Tribunal considered that not only did the respondent fail to act in the best interests of his lender clients; he failed to act with the utmost propriety towards these clients. This is extremely damaging to the reputation of the legal profession. The Tribunal considered that it had no option other than to strike the respondent’s name from the roll.