Showing posts with label law society of scotland. Show all posts
Showing posts with label law society of scotland. Show all posts

Thursday, November 10, 2016

Questions over stalled probe of Borders solicitor Andrew Penman accused of allegations of dishonesty, missing files & funds, investigation continues two years after suspension

Probe of Andrew Penman & ruined clients continues. QUESTIONS are being asked about why investigations into a well known Borders solicitor who was suspended over two years ago have not resulted in further action by the Law Society of Scotland and Scottish Legal Complaints Commission.

Andrew Paterson Penman -  a solicitor based at the now closed firm of Stormont Darling Solicitors in Kelso – remains suspended by the Law Society of Scotland in movember 2016, yet complaints in relation to his activities at the Kelso law firm are still being investigated over two years later.

Earlier reports by SLR revealed Andrew Penman was previously accused by Law Society investigators of faking up evidence in executry files, deceiving banks including the Royal Bank of Scotland and the Inland Revenue (now HMRC).

Penman’s suspension was published in the Gazette: Notice is hereby given that the practising certificate of ANDREW PATERSON PENMAN, solicitor, Stormonth Darling, Bank of Scotland Buildings, 8/9 The Square, Kelso, TD5 7HQ was suspended under Sections 39a and 40 of the Solicitors’ (Scotland) Act 1980 with effect from 2 October 2014.

The order publishing Penman’s suspension was signed by James Ness, Deputy Registrar.

Records also reveal Ness - a partner at Austins Solicitors, Dalbeattie, Dumfries & Galloway - represented Penman at secretive Law Society complaints hearings.

An investigation concluded Ness launched personal attacks on former clients to alter a decision already taken to prosecute Andrew Penman before the Scottish Solicitors Discipline Tribunal in the 1990s.

It was also reported last year Penman was ‘signed off sick’ to protect him from ongoing investigations and court litigation.

After a period of weeks leaving clients unable to contact Mr Penman or gain control of their legal affairs, the Law Society of Scotland closed down Stormonth Darling.

The law firm’s business was then taken over by another Kelso based law firm – Cullen Kilshaw.

It was then reported the Law Society of Scotland and the Scottish Legal Complaints Commission were investigating serious complaints made by clients against Mr Penman and his former law firm.

Legal insiders claimed there were allegations of significant amounts of money “gone missing”, allegations relating to fraud and the collection or payments of rents, and allegations relating to the misuse of trusts, wills and executries – with significant sums involved.

It has also been claimed the names of a number of other firms and businesses located in the Scottish Borders have cropped up during investigations into Penman’s conduct.

These include one firm of Borders accountants who appear to have been used to conceal client’s affairs, and two other law firms, one also based in Kelso – who both appear to have facilitated “transactions unauthorised by clients”.

Allegations have also emerged clients who complained about Penman’s conduct in the past experienced personal intimidation by parties - after they had lodged complaints about Penman with the Law Society of Scotland.

One former client of Stormonth Darling described how in a previous case, Mr Penman had falsified documents in a bid to thwart an earlier investigation into allegations of fraud and missing funds.

Of the current situation, the former branded the Law Society & SLCC as protective of solicitors, telling SLR: “The Police should be brought in to investigate Penman and his activities.”

Another former client told how the wording of wills had been suspiciously altered, and how property titles “had disappeared without trace”.

During 2014, Penman was linked to a case in the Court of Session - A398/14 Ladykirk Estates Ltd v Stormonth Darling WS :

Ladykirk Estates Limited, Academy House, Shedden Park Road, Kelso, (Ledingham Chalmers Llp) Roxburghshire AG V Stormonth Darling W.S. Solicitors, Drew Penman, Terry Mcnally and Craig Wood, Bank Of Scotland Buildings, The Square, Kelso, Roxburghshire

Court staff indicated the case was one of a significant financial claim against Penman and other solicitors based at Stormonth Darling in Kelso.

Andrew Paterson Penman was employed as a Director (SOLICITOR) at LADYKIRK ESTATES LIMITED from 01 June 2007 to 17 September 2012 , Company address: LADYKIRK ESTATES LIMITED ACADEMY HOUSE, SHEDDEN PARK ROAD, KELSO, ROXBURGHSHIRE, TD5 7AL

Andrew Paterson Penman was also employed as a Director (SOLICITOR) at S.P.C. BORDERS from 31 January 2006 to 30 November 2014 Company address: S.P.C. BORDERS 27 MARKET STREET, GALASHIELS, TD1 3AF

It has also been revealed Penman and his law firm are being investigated by the Scottish Legal Complaints Commission & Law Society of Scotland in connection with a number of complaints made by clients where substantial sums of money into hundreds of thousands of pounds along with queries regarding unpaid rent and disappeared funds are alleged.

Late last year, Solicitor Craig Wood - the only remaining solicitor at Stormonth Darling ‘took ill’ leading to the Law Society closing the firm down.

Wood – who was named in a writ against the law firm at the Court of Session - has since died from his illness.

It is not known whether Mr Wood gave any statements to clients or the Law Society regarding the problems at Stormonth Darling.

In an update to the report, as of 23 October 2015, SLR has been approached by several individuals from Kelso and around the Scottish Borders who have provided documentation on their dealings with Penman and Stormonth Darling.

In one case, a client alleges he received visits from officers from the former force of Lothian & Borders Police after he raised questions with the Law Society over significant sums of missing funds & assets under the control of Stormonth Darling.

Solicitors based at Stormonth Darling and an accountant caught up in accusations of hundreds of thousands of pounds gone missing from a will – appear to have used their influence with public services based in the rural Borders backwater to cause difficulties in the lives of clients whose funds and assets were being systematically stripped by the now defunct law firm.

The names of two former LibDem politicians, one from Holyrood, another from Westminster - have also been connected to the difficulties at Stormonth Darling.

In 2009, Scottish Law Reporter covered a story relating to Ladykirk Estates & Andrew ‘Drew’ Penman – after both lost a legal challenge in Scotland’s Land Court. LadyKirk Estates objected to the transfer of a farm tenancy from an elderly tenant to his younger nephew. Ladykirk had also claimed their ECHR rights had been in breach. Full report HERE

CHEQUERED HISTORY OF BORDERS LAWYER WHO RUINED CLIENTS:

Penman – Originally from Hawick then moved to Kelso to work at Stormonth Darling Solicitors, has been subject to numerous complaints from local clients in the Scottish Borders over the years, One investigation carried out by the Law Society of Scotland issued reports finding Penman had deliberately rearranged evidence before investigating officers took possession of the files in an attempt to prevent the Law Society’s own reporter from investigating the circumstances of the losses. The Law Society investigating reporter found “there was also evidence of what appeared to be a bungled and unsuccessful attempt to put the file into order”

The Law Society investigator recommended a prosecution of Andrew Penman, saying : “In respect of the extraordinary delays and the repeated failures to respond to correspondence and the apparent, deliberate attempt to mislead the Royal Bank the reporter was of the view that the professional misconduct was such that it would warrant prosecution before the Scottish Solicitors Discipline Tribunal The reporter was or the view that there had clearly been an inadequate professional service but in the, event of a referral to the Scottish Solicitors Discipline Tribunal this would be incorporated into the complaint.”

Neither the Law Society of Scotland or Scottish Legal Complaints Commission could not be reached for comment.

Friday, September 02, 2016

Court of Session rules Legal Complaints Commission’s consideration of “hybrid” service & conduct complaints against solicitors - is improper

Hybrid service & conduct complaints ruled “improper” – Lord Malcolm THE PRACTICE of treating certain complaints against legal practitioners as "hybrid" – capable of being treated as raising issues of both inadequate professional service and professional misconduct – has been ruled improper by the Inner House of the Court of Session.

The ruling, delivered by Lord Malcolm (Colin Campbell, 62) - in a case brought against the Scottish Legal Complaints Commission (SLCC) - is certain to have a significant impact on cases under investigation by the SLCC.

The long standing practice of treating complaints cases as both service and conduct – was previously and frequently in use by the Law Society of Scotland in numerous and sometimes high profile cases of complaints involving well known solicitors over a number of years.

Full Court of Session ruling:

SECOND DIVISION, INNER HOUSE, COURT OF SESSION [2016] CSIH 71 XA16/15

Lord Justice Clerk, Lady Clark of Calton, Lord Malcolm

OPINION OF THE COURT

delivered by LORD MALCOLM

in appeal under section 21 of the Legal Profession and Legal Aid (Scotland) Act 2007

by

ANDERSON STRATHERN LLP and ANOTHER Appellants;

against A DECISION OF THE SCOTTISH LEGAL COMPLAINTS COMMISSION DATED 30 JANUARY 2015

Act:  Dunlop QC; Anderson Strathern LLP

Alt:  Ross; Brodies LLP

Interested Party:  McConnell; Maclay Murray & Spens

31 August 2016

[1]        This appeal against decisions made by the Scottish Legal Complaints Commission (the Commission) raises an important issue as to how it should classify complaints.  In Bartos v Scottish Legal Complaints Commission 2015 SC 690, at its own instance the court raised a question as to the proper approach to certain provisions in the Legal Profession and Legal Aid (Scotland) Act 2007 (the Act).  The court made certain comments which were “provisional” in nature.  They had no bearing upon the outcome of that appeal.  The court stated that it considered it proper to raise the matter to allow reflection on the part of the Commission and the professional bodies.  The court continued “If appropriate, and if so advised, it can be raised as a live issue for determination in a future case.”  This appeal by Anderson Strathern LLP and the particular solicitor concerned against certain decisions of the Commission dated 30 January 2015 has now raised the same question as a live issue and the court therefore requires to reach a concluded view.  The point is a matter of general principle concerning the proper construction of the legislation.  It is convenient to discuss it with reference to the relatively short and straightforward circumstances in the case of Bartos.  The context of the present appeal will be mentioned in due course; however the correct outcome will be determined in large measure by our decision on the question of principle, which can be described as follows.

[2]        In Bartos, an advocate acted for a party whose Court of Session action was dismissed after a legal debate.  The detailed circumstances are set out in the court’s opinion.  For present purposes it is sufficient to note that subsequently the Commission received a complaint as follows:

“Mr Bartos falsely stated during the hearing on 7 October 2010 that it was my wish that the case be dismissed, despite having no instructions to do so.”

It is obvious that the complaint raised a conduct issue.  However, in a preliminary ruling the Commission held that it also raised a question of inadequate professional services and proceeded to classify it as a “hybrid complaint”.  The result of this classification, which is not an uncommon practice on the part of the Commission, was that both the professional body and the Commission independently investigated exactly the same allegation, one with a view to determining whether it constituted either professional misconduct or unsatisfactory professional conduct, and the other whether it amounted to inadequate professional services.

[3]        While it was clear that the complaint raised a conduct issue, in a general sense one can also understand that if an advocate invites a court to dismiss an action raised by the party instructing him on the basis of purported instructions which do not exist, then the individual concerned receives an inadequate professional service.  The same could be said of many, though not all, instances of alleged professional misconduct or unsatisfactory professional conduct.  The question is whether, in terms of the relevant legislation, the Commission can classify a single issue complaint of the kind made in Bartos as “hybrid”, in the sense of amounting to both a conduct complaint and a services complaint;  or whether the Commission, after appropriate consultation with the relevant professional body, must reach a decision to categorise it as one or the other, but not both.

[4]        The full circumstances of the lengthy history of what happened in respect of the complaint against Mr Bartos are fully described in the report of the court’s decision in that case.  They provide a good example of what can happen when a single issue complaint is treated as hybrid and separately sent to both the professional body and to the Commission for discrete determinations.  However, whether this course is open to the Commission is not a matter to be determined primarily by the consequences, but by a proper construction of the relevant statutory provisions in the Act.  It is therefore necessary to consider those provisions in some detail.  Recently, for wholly different reasons, some of the provisions were revised and rearranged, but at present the key question will be discussed under reference to the legislation as originally enacted.  It was not suggested that the recent alterations provide any indication of an alteration in parliamentary intention regarding the classification of complaints.

The relevant statutory provisions
[5]        By way of a brief preamble, the Act established a new body, independent of the professional organisations, and containing significant lay involvement, to handle complaints of inadequate professional services and oversee the investigation of conduct complaints by the profession.  That body, the Commission, would be a single gateway for all unresolved complaints against legal practitioners. The office of Scottish Legal Services Ombudsman was abolished.  The professional bodies retained jurisdiction in respect of conduct issues and expulsion from the profession.

[6]        As seen in section 2 of the Act, a distinction is drawn between two types of complaint.  The first is one suggesting professional misconduct or unsatisfactory professional conduct, which is described as a “conduct complaint”;  the second is a complaint which suggests that a client received inadequate professional services, described as a “services complaint”.  In terms of section 2(2), only a limited class of persons can bring a services complaint, whereas any person can raise a conduct complaint.  Still in terms of section 2, subject to any provision in rules made under section 32 of the Act as to eligibility for making complaints, for example regarding time bar, the Commission requires to address whether a complaint is “frivolous, vexatious or totally without merit”.  A positive finding would result in rejection of the complaint.

[7]        The Scottish Government’s explanatory notes to the bill for the Act stated in paragraph 6:

“Section 2 sets out the preliminary steps which the Commission must take on receipt of a complaint.  The Commission may receive complaints about either the conduct of a legal practitioner which may involve either professional misconduct or the new concept of unsatisfactory professional conduct on the one hand or the adequacy of the professional services provided by a legal practitioner on the other (referred to, respectively, as ‘conduct complaints’ or ‘service complaints’).  On receipt of the complaints, the Commission’s initial function is (a) to determine whether or not they are eligible and (b) to reject those which it determines to be frivolous, vexatious, totally without merit or otherwise ineligible in terms of the Commission’s rules.”

Paragraph 8 explained that complaints of inadequate professional services would only be accepted from those directly affected by the services which were the subject of the complaint, other than the limited class of persons outlined in section 2(2), which include the Lord Advocate, any judge and a relevant professional organisation.  Before leaving section 2, it can be noted that conduct complaints have to  relate to individual practitioners, whereas services complaints can be raised against, amongst others, a firm of solicitors.

[8]        The annotator to the Act in Current Law Statutes was Michael Clancy, the then Director of Law Reform at the Law Society of Scotland.  He was closely involved in the various discussions and procedures in the lead up to and the development of the legislation.  He notes that the intention was to ensure that the jurisdictions of the Commission and the professional bodies were kept distinct.  This had been the subject of a “great deal of debate” but the executive was “steadfast” in its adherence to the proposals in the consultation paper that the new body should deal only with service matters, and that conduct issues should be referred to the professional organisations, albeit under the scrutiny of the Commission.

[9]        Section 3 of the Act introduces the notion that a complaint may consist of a number of “elements”, one or more of which may be outside the jurisdiction of the Commission.  However, for present purposes section 5 of the Act as originally enacted (now section 2) is the key provision.  It is headed “Determining nature of complaint”.  Section 5(1) states:

“Where the Commission proceeds to determine under section 2(4) whether a complaint is frivolous, vexatious or totally without merit and determines that it is none of these things, it must determine whether the complaint constitutes –

(a)        a conduct complaint;

(b)        a services complaint;

including whether (and if so to what extent) the complaint constitutes separate complaints falling within more than one of these categories and if so which of the categories.”

Thus if a complaint constitutes “separate complaints”, some of which fall into the category of conduct complaint and some into the category of services complaint, the Commission must specify into which category the separate complaints fall.  This suggests that a separate complaint cannot fall into both categories.

Section 5(2) provides:

“Where it appears to the Commission that the complaint may constitute both –

(a)        a conduct complaint; and

(b)        a separate services complaint,

it must consult, co-operate and liaise with the relevant professional organisation and have regard to any views expressed by the organisation on the matter before making a determination under subsection (1) as respects the complaint.”

This subsection addresses the proper procedure when, on the face of it, a complaint may contain a conduct complaint and a separate services complaint.  For present purposes it is of note that the subsection envisages a services complaint which is “separate” from the conduct complaint.

[10]      The Current Law annotations to the section are in the following terms:

“This section relates to one of the thorny issues raised by the decision to reject the existing model of complaint handling, and that proposed by the Justice One Committee, (whereby conduct and service complaints which arise from the same behaviour of a lawyer are dealt with by the same body and procedure) in favour of dividing service and conduct complaints between an independent Commission and the professional bodies.  The issue is how to deal with the significant group of conduct cases which also contain service elements.  The section provides that the decision as to whether the complaint is a service one, a conduct one or a hybrid of service and conduct parts, is for the Commission.  However, if the Commission considers that a complaint is a hybrid one, this section requires the Commission to consult, co-operate and liaise with the professional body and have regard to their views before determining if the complaint is a service, conduct or hybrid complaint.”

It can be noted that the annotator uses the term “hybrid complaint”, and though the matter is not addressed directly, in the context it is reasonable to assume that this refers to a complaint adjudged to raise separate elements falling into more than one category of complaint.  It is clear that a matter categorised as a conduct complaint should be referred to the relevant professional body, and that the Commission has no jurisdiction to resolve a conduct complaint.  In these circumstances one can understand sections 5(1) and (2) as allowing a complaint to be sent down the two different tracks, one conduct and one services, if and when it can be subdivided into separate complaints or, to use the section 3 phraseology, separate elements, some of which relate to conduct, and some to services.  In that event, the professional body is required to resolve the issues categorised by the Commission as conduct complaints, and only the remainder fall within the jurisdiction of the Commission.

[11]      Pausing here, it is useful to remember the terms of the complaint in Bartos, which was treated by the Commission as a hybrid complaint.  It consisted of one sentence: “Mr Bartos falsely stated during the hearing on 7 October 2010 that it was my wish that the case be dismissed, despite having no instructions to do so.”  That complaint cannot be analysed as having separate elements, or containing discrete complaints.  The Commission explained that it was remitted to both the Faculty of Advocates and to itself for determination on the basis that it could be categorised as both a conduct and a services complaint:  the former because it was a complaint of an advocate deliberately misleading the court, the latter because if an advocate is providing services of the quality expected of a competent advocate, he would not tell a judge that the party he acted for wanted his case dismissed, unless he knew that to be the case.  The result was that both bodies investigated whether counsel had falsely stated to the court that the pursuer wished the case to be dismissed.  In the event the Faculty rejected the complaint, while the Commission upheld it.  So the outcome was that the Faculty held that counsel had not committed an act of misconduct, while, albeit in the context of a complaint categorised as a services complaint, the Commission found that Mr Bartos had misled the court in the manner alleged, which is clearly a matter of conduct, something which Parliament intended to be within the sole jurisdiction of the professional body.

[12]      All of this highlights the issue of statutory construction now raised for determination.  Is it enough for “hybridity” if a single complaint can be seen as a conduct complaint, and can also be treated as a services complaint?  The contrary argument is that, unless one can identify separate strands or elements within the complaint, a decision must be made as to whether to classify it as a conduct or a services matter;  and that decision must respect the prohibition on the Commission dealing with complaints as to professional misconduct or unsatisfactory professional conduct.  On that approach, for a single issue complaint, such as that lodged against Mr Bartos, after due consultation the Commission must decide whether the complaint is to be treated as one of conduct or services.

[13]      Section 6 is headed “Complaint determined to be conduct complaint”.  It provides as follows:

“Where, or to the extent that, the Commission determines under section 5(1) that a complaint is a conduct complaint, it must –

(a)        remit the complaint to the relevant professional organisation to deal with (and give to the organisation any material which accompanies the conduct complaint); …”

The section also provides for written notice to the complainer and the practitioner of, amongst other things, the reasons for the determination.  The annotator to Current Law Statutes states:

“This section sets out the duties which the Commission must fulfil when it determines that the complaint is wholly or in part a conduct complaint” (emphasis added).

So the Commission can refer part of a complaint to a professional body, and the rest to itself.  But can it refer a part of the complaint to both?  In the case of a single issue complaint, such as in Bartos, can it refer all of the complaint to the professional body and also to itself?

[14]      Section 7 is an equivalent provision to section 6 covering the situation where, or to the extent that, the Commission determines that a complaint is a services complaint.  Section 10(4) provides that if and when the Commission is upholding a services complaint, it can take into account, amongst other things, other compensation ordered (whether by determination, direction or otherwise) by a tribunal or other professional body to be paid to the complainer in relation to the subject matter of the complaint.

[15]      Section 15(1) allows a professional body to remit a complaint back to the Commission if it considers it reasonably likely that the complaint, “or any element of it,” constitutes a services complaint.  Section 15(2) sets out an equivalent provision for the Commission if it considers it reasonably likely that a complaint before it, or any element of it, may instead constitute a conduct complaint.  In such circumstances, after liaison with the professional body, the Commission can confirm the original decision, or change it.  Where it decides that a complaint, or any element of it, which was originally classified as a services complaint, constitutes instead a conduct complaint, it must remit it to the relevant professional body.  In the event of the opposite occurring, namely a conduct issue being reclassified as a services matter, the Commission then proceeds to determine the complaint in accordance with sections 8-12 of the Act.

[16]      Section 38 makes provision for “efficient and effective working” of the procedures under the Act.  For example, in relation to any investigation or report undertaken by the Commission, it must liaise with the relevant professional organisation with a view to minimising any unnecessary duplication in relation to any investigation or report undertaken by the relevant professional organisation, and equivalent provisions apply for the reverse situation.  The annotator stated as follows:

“The objective of this provision is to minimise any unnecessary duplication in relation to any investigation or report.  However, this provision has to be read in conjunction with the overall thrust of the Act which is to encourage the swift resolution of service disputes.  Accordingly, the Clementi Review argued strongly that the overlap between service and conduct complaints should not lead to the service elements of complaints being left in limbo for months on end while conduct elements are dealt with by the professional bodies.  It follows that parallel investigation of service and conduct complaints is not ruled out by section 38”.

[17]      Section 46 contains the interpretation provisions for part 1 of the Act.  “Unsatisfactory professional conduct” means, for example in respect of a solicitor,

“professional conduct which is not of the standard which could reasonably be expected of a competent and reputable solicitor, but which does not amount to professional misconduct and which does not comprise merely inadequate professional services…”.

“Inadequate professional services” means, as respects a practitioner who is, for example, a solicitor, “professional services which are in any respect not of the quality which could reasonably be expected of a competent solicitor”, and includes any element of negligence in respect of or in connection with the services.  Professional misconduct is not the subject of a statutory definition, however reference is often made to Sharp v Council of the Law Society of Scotland 1984 SC 129, and in particular to the remarks of Lord President Emslie that

“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”.

The submissions of parties on the question of hybrid complaints

The appellants

[18]      The appellants adopted the concerns of the court as expressed in Bartos.  In particular, the statutory regime did not contemplate “double jeopardy” in the sense of a practitioner having to defend both a services complaint and a conduct complaint on the same factual narrative.  The relevant statutory provisions envisage that, whilst a complaint can constitute a conduct complaint and a services complaint, this can only occur if the services complaint is separate from the conduct complaint.  Where precisely the same issue is involved, the Commission must categorise it either as a conduct complaint or as a services complaint, otherwise the professional complained of is subject to two separate investigations by two separate bodies with the possibility of two separate decisions, sanctions and appeal procedures.  It was submitted that the hybrid categorisation of complaints 2, 3 and 5 (being a reference to three of the complaints made in the present case, to be discussed in more detail below) is erroneous in law and should be quashed.

The Commission

[19]      For the Commission it was submitted that there are circumstances in which it may be appropriate to classify the same factual issue as being potentially both a conduct matter and a services matter.  Such dual categorisations are not unknown, for example, a teacher who assaults a pupil may be guilty of a criminal offence, liable to dismissal, and also likely to face disciplinary proceedings before the General Teaching Council.  A driver in a fatal road traffic accident may be prosecuted, or may be questioned at a Fatal Accident Inquiry, and in either case may be the subject of a damages claim.  All of these may involve different court processes and different standards of proof.  It was submitted that the Act provides for a complaint being classified as both a services and a conduct complaint.  This hybrid classification was previously used by the Law Society of Scotland.  In Bartos the court recognised that “many conduct complaints could be viewed as raising inadequate professional services issues”, and mentioned the example of an advocate acting when under a conflict of interest.  The court also observed that

“a complaint could be seen as having at least two separate strands or elements, which fell into two different camps.  An example might be that of a solicitor who falsely represented that he was a specialist in a certain area (a conduct matter) and be criticised for the quality of his work (a services issue)”.

It was suggested that such examples undermine the contention that it is not possible for a single act or omission to amount to both a services and a conduct offence.

[20]      Counsel explained that, by a hybrid complaint, what is meant is that the complaint is both a conduct matter and a services matter.  The submission was that section 5 allowed a complaint to be categorised as both.  The Commission required to have regard to the interests of the consumer, not least given the much larger amount of compensation (£20,000 as opposed to £5,000) which could be ordered by the Commission.  From the consumer’s perspective, a services complaint offers greater relief and in that sense “is more important for the consumer”.  Thus it was all the more important to maintain the possibility of categorisation of a complaint as hybrid.  Otherwise the consumer, who may feel “railroaded”, is deprived of the opportunity to have the services aspect investigated.  Counsel explained that there are complaints which raise only conduct matters;  complaints which raise only services issues;  and complaints which raise both.  Emphasis was placed on the use of the term “merely” in the definition of unsatisfactory professional conduct in section 46.  That, it was said, indicated a “not only but also” approach.   

[21]      The word “hybrid” may be somewhat inelegant but it provides a functional description of a legitimate process which has operated through liaison with the relevant professional organisations who have indicated no difficulty with the process.  It is efficient, logical and avoids duplication of effort.  One complaint might raise several issues, some of which are conduct related and some of which are services related.  This is anticipated in section 5(2) of the Act.  No question of double jeopardy arises.  That rule guards against a second prosecution for the same offence.  The relevant professional organisations and the Commission have separate responsibilities and separate investigative functions.  Different standards and tests are applied, with different standards of proof.  Hybrid complaints are investigated in sequence not in parallel, the respective order being addressed at the liaison stage.

The interested party

[22]      On the hybrid question, the interested party, namely the complainer, adopted a neutral stance.

Discussion and decision on the hybrid issue
[23]      At the outset it may be helpful to reflect on some of the background to part 1 of the Act.  For various reasons it was decided that the professional bodies should no longer have sole control over the resolution of complaints against practitioners.  The Commission was set up as an independent body with significant lay involvement to act as a single gateway for all unresolved complaints.  The concept of inadequate professional services was introduced, at least in part, because of a concern that the professional bodies were too ready to reject complaints as matters concerning negligence, not misconduct, and so requiring to be determined through court proceedings.  This, it was thought, deterred the pursuit and determination of such complaints.  The Commission was given jurisdiction to adjudicate upon all complaints of inadequate professional services (which could include issues of negligence) and also limited powers to order compensation and other relief.  There was a view, held strongly by some, that the Commission should be given responsibility for the handling and determination of all complaints, including those suggesting professional misconduct.  However, the government of the day adhered to the approach ultimately set out in the Act, namely that complaints suggesting misconduct should remain within the sole jurisdiction of the professional bodies, subject to the procedural oversight of the Commission.

[24]      It was recognised that this would create demarcation issues.  For example, there could be complaints which lay within a borderline or grey area, particularly given the relatively open-ended definitions of the two types of complaint.  The Commission was given the responsibility, after consultation with the professional bodies, to decide as to how a complaint was to be classified and therefore which body should address it.  For this purpose the Act expressly requires the focus to be on what it is that is suggested by the complaint.  Does it suggest professional misconduct or unsatisfactory professional misconduct, or the lesser (hence the term “merely”) concern of inadequate professional services?  It was predicted that the decision to reject the notion of a single decision-making body addressing all complaints would create uncertainties.  Nonetheless, it was decided that conduct matters should remain in the hands of the profession, something which was seen as being in the public interest – though many disagreed.  Section 15 of the Act recognises that once a classification decision has been made, it might come to be regarded as erroneous, and hence a procedure is laid down for, in an appropriate case, setting the complaint on the appropriate track.

[25]      At the heart of the issue raised by the Bartos case, and now by this appeal, is whether the legislation allows the Commission to investigate and determine an issue which it has categorised as a matter of professional conduct, and this on the basis that it would not have occurred had a proper service been provided.  This is on the thinking that a competent practitioner will not be guilty of misconduct.  The principled argument against the proposition is that it contradicts the legislative intention to leave the investigation and determination of conduct issues within the sole jurisdiction of the professional bodies.  Once the Commission decides that a complaint suggests that the practitioner was guilty of either professional misconduct or unsatisfactory professional conduct, the expectation was that it would remit the complaint to the professional body and content itself with its supervisory role.  However, in Bartos, the result was that the Faculty, after investigation, held that counsel did not mislead the court, while the Commission, after a separate investigation, reached the view that he had.  The Commission’s decision was described as a finding of inadequate professional services, but clearly it was also a finding of at least unsatisfactory professional conduct.  It could not reasonably be seen as anything else, the Commission having already sent the allegation to the Faculty on the basis that it raised a matter concerning conduct.  This exemplifies the problematic consequences when a complaint which raises one sharp issue of alleged fact is sent down both the conduct and services tracks.

[26]      Turning to the terms of the Act, there is no mention of a “hybrid” complaint.  There is, for understandable reasons, recognition that a complainer might lodge a complaint which consists of separate parts or elements, one or more of which raises conduct issues, and one or more of which raises services concerns.  It is envisaged that such a complaint could be subdivided and dealt with according to the proper classification of its constituent parts.  No doubt such a complaint might be called a hybrid complaint – but it differs materially from the complaint so categorised in Bartos.  That complaint did not have separate elements, therefore it could only be categorised as hybrid on the basis that a suggestion of professional misconduct could also be seen as a suggestion that an inadequate professional service had been provided, in that if a service is adequate, the client’s interests will not be damaged in the way alleged by the complainer.

[27]      We have come to the view that the Act does not give the Commission power to proceed in this manner.  To a large extent we have explained our thinking on this when commenting on the detailed statutory provisions.  We would adopt the concerns expressed at paragraphs 2-8 of the decision in Bartos.  Reference was made there to a hypothesised complaint of an advocate allegedly acting when under a conflict of interest.  Such a complaint might be viewed as raising both conduct and services issues, but this does not allow the Commission to adjudicate on whether the advocate did or did not act under such a conflict;  and though perhaps, depending on the specific terms of the complaint, theoretically possible, it would seem undesirable to have separate inquiries by different bodies into (a) whether there was a conflict of interest, and (b) the impact it had on the quality of the service provided, especially since the latter could be relevant to the proper sanction for any finding of misconduct.  In short we are of the opinion that if a complaint, or a part of a complaint, suggests a failure in proper professional conduct, a view taken by the Commission that it could also be seen as raising a services issue does not justify the course taken in Bartos.  Instead the Commission must decide whether to classify it as a conduct or a services complaint.  The real mischief, which may need addressing, is the disparity between the compensation powers available to, on the one hand the professional organisations, and, on the other hand, to the Commission.

[28]      While the matter has been resolved primarily by reference to the specific terms of the relevant statutory provisions, this outcome is consistent with the parliamentary intention to limit the Commission’s decision-making jurisdiction to services complaints.  It is also in line with rules made under part 1 of the Act, which again make no mention of hybrid complaints, and have different time bar tests for the two types of complaint.  The rules appear to contemplate a single issue complaint being on a single track.

[29]      As mentioned earlier, the statutory provisions have been modified, namely by the Scottish Legal Complaints Commission (Modification of Duties and Powers) Regulations SSI 2014/232, but not in any respect which trenches upon the considerations mentioned above (though the key section changes from section 5 to the new section 2).  The critical wording remains, namely that a complaint can be sent down more than one route only when it can be treated as constituting both a conduct complaint (or complaints) and a separate services complaint (or complaints) – see the new subsections  2(2A) and (2B) (emphasis added).

The circumstances of the present appeal
[30]      So far nothing has been said as to the circumstances which have given rise to the present appeal.  Various complaints (8 in total) were made by Glencairn Whisky Company Limited (Glencairn), former clients of Anderson Strathern LLP (the appellants).  The solicitors acted for Glencairn in proceedings raised on their behalf in the Court of Session.  Following an initial eligibility assessment the Commission determined that issues 1, 2, 3, 5, 6 and 7 were totally without merit in terms of section 2 of the Act.  (Issues 4 and 8 were remitted for investigation as services complaints.)  The eligibility decision was appealed by Glencairn, and by interlocutor of the Inner House dated 4 March 2014 the complaint was remitted back to the Commission.  The interlocutor did not interfere with the Commission’s decision on issue 7, but made findings that issues 1, 2, 3, 5 and 6 were not totally without merit, frivolous or vexatious.  In due course the Commission categorised them as services complaints.  Once again Glencairn appealed, and by interlocutor of 25 September 2014, the Commission was again required to reconsider the classification of issues 1, 2, 3, 5 and 6.  This was against the background that the Commission accepted the contention that it had not provided adequate reasons for its decisions.  The court was not making a finding that the services categorisation was wrong.

[31]      By letter dated 30 January 2015 (which is the decision now the subject of appeal) the Commission intimated that it had decided that issues 2, 3 and 5 would be accepted as hybrid complaints:  that is to say, complaints that may be viewed as either services or conduct complaints, though later information from the Commission indicated that the decision was that they may be viewed as either services “and/or” conduct complaints.  Issues 1, 4, 6 and 8 were deemed to be services complaints.

[32]      The present appeal relates only to issues 2, 3 and 5, namely those determined to be hybrid complaints.  Issue 2 was a complaint that the solicitor concerned

“failed and/or delayed to procure a note from counsel in relation to the prospects for success in the actions despite such a note having been suggested by counsel and despite having been instructed to obtain such a note in December 2011 and again in January 2012.”

Issue 3 was a complaint that the solicitor

“failed and/or delayed in providing a copy of senior counsel’s opinion dated 2 January 2012 (or otherwise effectively communicating the terms of the same).”

Issue 5 was a complaint that the solicitor

“failed to implement her client’s specific instructions relative to the erroneously uplifted funds of around £108,000 (which were consigned to the court as security for the expenses of Chivas Brothers Limited (the party on the other side of the litigation)) following settlement of the actions, namely to pay said sums to her clients and, instead, moved the court to order payment of said funds to be paid into the account of Anderson Strathern LLP, whilst erroneously representing to the court that said motion was made on behalf of, and with the instructions of, her clients.”

[33]      The submission on behalf of the appellants was that each issue raised a discrete point and thus the concerns expressed by the court in Bartos were equally applicable.  Each complaint contained a single allegation.  It was implicitly recognised by Mr Dunlop QC that one consequence of hybridity would be that a single allegation could be sent to the professional body for, in an extreme case, the expulsion of the practitioner from the professional body, and also sent to the Commission, so that the Commission could exercise its power to award greater compensation than that currently available to the professional body.  However the submission was that this course of action is not competent.  It was noted that,  though a complaint may be treated as a conduct matter, the complainer retained the right to seek damages in court proceedings.

[34]      Counsel recognised that if the court upheld his submission that a hybrid categorisation was unavailable to the Commission, the question would then arise as to the proper order for the court to make.  In the particular circumstances, it was only the finding of hybridity which allowed the Commission to determine that issues 2 and 3 were not time-barred in respect of conduct issues, since it was accepted that, having regard to the relevant rules, if viewed solely as conduct matters, the complaints contained in issues 2 and 3 had been raised too late.  The same submission could not be made in respect of issue 5;  however counsel submitted that, on any reasonable view, none of the three complaints could be viewed as raising matters of professional misconduct or unsatisfactory professional conduct.   

[35]      The background to all of this is that the relevant time-bar rule made under section 4 of the Act distinguishes between conduct issues and services issues to the general effect that a conduct complaint must be raised within one year of the conduct complained of, whereas a services complaint must be lodged within one year of the date when the practitioner stopped providing services to the complainer.  If viewed solely as a conduct matter, both issues 2 and 3 were raised after the expiry of the one year limit, but timeously if viewed as services complaints.  Having categorised them as hybrid complaints, the Commission felt able to treat the complaints as timeous in respect of both conduct and services.  It was one of counsel’s submissions that, in effect, the hybrid categorisation allowed the Commission to purport to waive the rules in relation to the timeous lodging of conduct complaints.  Whatever else, given the rules on time-bar, and notwithstanding the hybrid categorisation, issues 2 and 3 should only proceed as services complaints.  No time-bar issue arose in relation to complaint 5, but for the appellants it was submitted that, since the course adopted by the solicitor had been approved in advance by an official of the Law Society of Scotland, no conduct issue could properly arise.  As to issues 2 and 3 it was submitted that they are classic services issues.

[36]      In summarising his submissions Mr Dunlop QC stated (1) there is no such thing as a hybrid complaint;  (2) issues 2 and 3 are time-barred regarding any conduct element;  and (3) no conduct element can be attributed to issue 5.

[37]      In her submissions on behalf of the Commission Ms Ross began with an observation that, given the long history of the case and the number of times it had been remitted for reconsideration, there might not be enough personnel in the Commission to allow the matter to be reviewed by a new panel.  The court was urged to exercise its powers under sections 21 and 22 of the Act and resolve the classification of issues 2, 3 and 5.  In so far as it might be thought that this interfered with the interlocutor of September 2014, it was explained that it proceeded on the basis of a joint minute of parties in the context of an appeal based upon a failure of the Commission to provide adequate reasons for its decisions; the proper classification of the complaints was not the key issue.  Counsel accepted that if the Commission was in error on the question of hybridity, then it was also wrong in relation to time-bar so far as issues 2 and 3 are concerned.

[38]      As to characterisation of the complaints raised in issues 2, 3 and 5, issues 2 and 3 were seen as potential breaches of both conduct and service standards.  On the question of advice from the Law Society in respect of issue 5, the Commission could not be certain that the information before it was true and accurate.  The Commission also had representations from the complainer.  The court was urged to cut the Gordian knot and determine the proper classification of these complaints.

[39]      Glencairn, as an interested party, was represented.  Counsel explained that he had nothing to say on issues 2 and 3.  Issue 5 plainly raised a matter of conduct.  Hence the solicitor consulted the conduct department of the Law Society.  In any event, nothing said by the Law Society sanctioned the alleged misleading of the court.  Counsel expanded upon the interested party’s concerns raised in issue 5, however it is neither necessary nor appropriate to dwell upon them.  It was suggested that the Law Society may not have been given full and proper information.

Decision on the appeal

[40]      The categorisation of issues 2, 3 and 5 as hybrid complaints will be quashed.  The court accepts the invitation to make an appropriate classification order at its own hand.  There are compelling reasons to avoid a further remit to the Commission, especially when the court is well placed to determine the matter.  The time-bar concerns do not apply to issue 5.  It raises what, on any view, is a conduct matter.  The Commission seems to have been tempted into a degree of deliberation upon the merits of the complaint.  That will be a matter for the professional body.  Issues 2 and 3 suggest no more than concerns as to the level of service provided to Glencairn.  On that basis, no time-bar issues arise.

[41]      The court will pronounce an order to the effect that issues 2 and 3 are services complaints, and that issue 5 is a conduct complaint.  We do not consider that this conflicts with either of the earlier interlocutors of the court.  Neither of them arose from contested proceedings, and neither involved a decision by the court on the proper classification of the complaints.  In any event section 22 of the Act gives the court power to “make such order as it thinks fit”, and this must be determined on the basis of the particular circumstances at the time when the order is being made. 

Friday, November 06, 2015

CLUB TIE JUDGES: Diversity in judiciary proposals dubbed ‘window dressing’ as Law Society recommend back to school approach for angry old white male club tie judiciary

Scotland’s judiciary - elderly, white, rich and male. CALLS to promote diversity within Scotland’s predominantly elderly, white, wealthy judiciary will not be significantly advanced by today’s publication of recommendations by the Law Society of Scotland to widen the club class ranks of Senators of the Court of Session, Sheriffs & even the occasional JP.

Scotland’s judiciary - many of whom share the same private school backgrounds and jealously guard their secretive earnings & business interests need fear not for any impending change to their club class ranks and tap on the shoulder techniques for recruitment.

The latest instalment on judicial diversity, in which the Law Society promotes outreach work in schools, mentoring and reviewing the current skill set for sheriffs and judges as a method of creating a more diverse judiciary means current ways will be preserved for a few pounds years more – much to the relief of the many ermine clad ranks of Scotland’s current judicial fraternity.

Law Society publishes recommendations to improve diversity in Scotland’s judiciary

The Law Society of Scotland has published a series of recommendations in a paper responding to a judicial appointments diversity steering group (DSG) report on its conference ‘Merit and diversity – Compatible aspirations in judicial appointments?’.

The Law Society, a member of the DSG, believes that while good progress has been made in increasing diversity within the judiciary, more can be done to bring about further improvement.

Rob Marrs, head of education at the Law Society, said: “There have been great strides made since the inception of the Judicial Appointments Board for Scotland in improving transparency in the appointments process and other more recent changes resulting from the conference held last year on merit and diversity within the judiciary, including a review of its application process to make it more accessible and increased engagement and outreach work with interested parties.

“However it’s undeniable that there is currently a lack of diversity in our judiciary and, with men making up more than 70% of judicial posts, it is not representative of the legal profession or of the population at large.

“Our key recommendations include reviewing the existing criteria for judicial appointments and examining if there are unnecessary barriers which prevent potential candidates from applying. It’s important that as well as considering those recommended for appointment, we look at what can be done to broaden the pool of potential candidates.

“We also think there should be more consideration given to career development and ensuring that judicial appointment is an attractive option for a range of would-be candidates. This could include developing a distinct judicial career path– a model adopted in several European jurisdictions – with specific training for advocates and solicitors who are interested in a career on the bench.

“Informing and engaging groups who may be interested in becoming a sheriff or a judge should start at the earliest opportunity and there could be outreach work done in schools, during university and at the early stages of people’s legal careers. Providing shadowing and mentoring opportunities for less well represented groups has also worked well in England and Wales, where there has been a lot of work done on this, and could easily be adopted here to encourage those who may not previously have considered applying for judicial appointment.”

The Law Society has also recommended a review of the current criteria and eligibility for those who can apply for a judicial appointment.

Marrs said: “It’s important that we consider the attributes needed by those on the bench. For example, at the moment a key part of the criteria to become a sheriff is experience in court work and case presentation skills. This means that more court practitioners will apply as they can more easily provide evidence to meet the required competencies for the role. However, while this type of experience may be highly desirable, it is important to consider the full range of skills required to prevent any artificial barrier to potential appointment.

“In our view the relevant competencies for a judicial appointment are the ability to make good reasoned decisions within a reasonable time frame, knowledge of the law, knowledge of the rule of law and court procedure. These sit alongside the ability to deal with and understand those appearing before them and to be able to communicate complicated concepts in straightforward language – something which could become increasingly important if more people choose to represent themselves in court if they are unable to access legal aid.”

The Law Society has also recommended having specialist judges who have an in depth knowledge of certain areas of law and a review of the current barriers in place which prevent tribunal judges, who are experienced in dealing with highly complex cases, from moving to judicial posts in Scotland’s courts.

“Our paper sets out several areas where we think there are opportunities to improve diversity within our judiciary. Instigating change will take a coordinated approach from all the organisations which are involved or have an interest in judicial appointments and I look forward to discussing our ideas in more detail with them.”

The Judicial Appointments Diversity Steering Group (DSG) is a collaborative group of organisations with an interest in diversity in the judiciary. Its diversity conference report is available to read on the Judicial Appointments Board website: Judicial Appointments Diversity Steering Group report.

Friday, October 16, 2015

Allegations of dishonesty, missing files & funds - Investigations by SLCC & Law Society into Borders solicitor Andrew Penman stall after rogue lawyer is ‘signed off sick’ to protect from court & complaints

Andrew Penman – ‘signed off sick as protection from litigation - Law Society. A SOLICITOR from a now defunct law firm in the Scottish Borders - who was accused by Law Society of faking up evidence, deceiving banks and the Inland Revenue is now ‘signed off sick’ to protect him from ongoing investigations and court litigation – claim legal sources.

Andrew Paterson Penman, solicitor from the now closed down law firm of Stormonth Darling Solicitors  - based in Kelso, Scottish Borders - was suspended in October 2014 without any action before the Scottish Solicitors Discipline Tribunal.

After a period of weeks were clients were unable to contact Mr Penman or gain control of their legal affairs, the Law Society of Scotland closed down Stormonth Darling. The law firm’s business was then taken over by another Kelso based law firm – Cullen Kilshaw.

It has now transpired both the Law Society of Scotland and the Scottish Legal Complaints Commission are investigating serious complaints made by clients against Mr Penman and his former law firm.

Legal insiders claim there are allegations of significant amounts of money “gone missing”, allegations relating to fraud and the collection or payments of rents, and allegations relating to the misuse of trusts, wills and executries – with significant sums involved.

It has also been claimed the names of a number of other firms located in the Scottish Borders have cropped up during investigations into Penman’s conduct.

These include one firm of Borders accountants who appear to have been used to conceal client’s affairs, and two other law firms, one also based in Kelso – who both appear to have facilitated “transactions unauthorised by clients”.

One former client of Stormonth Darling described how in a previous case, Mr Penman had falsified documents in a bid to thwart an earlier investigation into allegations of fraud and missing funds.

Of the current situation, the former branded the Law Society & SLCC as protective of solicitors, telling SLR: “The Police should be brought in to investigate Penman and his activities.”

Another former client told how the wording of wills had been suspiciously altered, and how property titles “had disappeared without trace”.

Penman’s suspension was published in the Gazette: Notice is hereby given that the practising certificate of ANDREW PATERSON PENMAN, solicitor, Stormonth Darling, Bank of Scotland Buildings, 8/9 The Square, Kelso, TD5 7HQ was suspended under Sections 39a and 40 of the Solicitors’ (Scotland) Act 1980 with effect from 2 October 2014.

The order publishing Penman’s suspension was signed by James Ness, Deputy Registrar – the same solicitor who once defended Penman at Law Society Complaints Committees.

Ness - a partner at Austins Solicitors, Dalbeattie, Dumfries & Galloway - represented Penman at Law Society complaints hearings.

In one case, James Ness gave a submission on behalf of the suspended solicitor - demanding the Complaints Committee alter its decision to prosecute Penman before the Scottish Solicitors Disciplinary Tribunal.

The move was controversial and heavily reported in the national and local press at the time.

Earlier this year, Penman was linked to a case in the Court of Session - A398/14 Ladykirk Estates Ltd v Stormonth Darling WS :

Ladykirk Estates Limited, Academy House, Shedden Park Road, Kelso, (Ledingham Chalmers Llp) Roxburghshire AG V Stormonth Darling W.S. Solicitors, Drew Penman, Terry Mcnally and Craig Wood, Bank Of Scotland Buildings, The Square, Kelso, Roxburghshire

Court staff indicated the case was one of a significant financial claim against Penman and other solicitors based at Stormonth Darling in Kelso.

Andrew Paterson Penman was employed as a Director (SOLICITOR) at LADYKIRK ESTATES LIMITED from 01 June 2007 to 17 September 2012 , Company address: LADYKIRK ESTATES LIMITED ACADEMY HOUSE, SHEDDEN PARK ROAD, KELSO, ROXBURGHSHIRE, TD5 7AL

Andrew Paterson Penman was also employed as a Director (SOLICITOR) at S.P.C. BORDERS from 31 January 2006 to 30 November 2014 Company address: S.P.C. BORDERS 27 MARKET STREET, GALASHIELS, TD1 3AF

It has also been revealed Penman and his law firm are being investigated by the Scottish Legal Complaints Commission & Law Society of Scotland in connection with a number of complaints made by clients where substantial sums of money into hundreds of thousands of pounds along with queries regarding unpaid rent and disappeared funds are alleged.

Late last year, Solicitor Craig Wood - the only remaining solicitor at Stormonth Darling ‘took ill’ leading to the Law Society closing the firm down.

Wood – who was named in a writ against the law firm at the Court of Session - has since died from his illness.

It is not known whether Mr Wood gave any statements to clients or the Law Society regarding the problems at Stormonth Darling.

In an update to the report, as of 23 October 2015, SLR has been approached by several individuals from Kelso and around the Scottish Borders who have provided documentation on their dealings with Penman and Stormonth Darling.

In one case, a client alleges he received visits from officers from the former force of Lothian & Borders Police after he raised questions with the Law Society over significant sums of missing funds & assets under the control of Stormonth Darling.

Solicitors based at Stormonth Darling and an accountant caught up in accusations of hundreds of thousands of pounds gone missing from a will – appear to have used their influence with public services based in the rural Borders backwater to cause difficulties in the lives of clients whose funds and assets were being systematically stripped by the now defunct law firm.

The names of two former LibDem politicians, one from Holyrood, another from Westminster - have also been connected to the difficulties at Stormonth Darling.

In 2009, Scottish Law Reporter covered a story relating to Ladykirk Estates & Andrew ‘Drew’ Penman – after both lost a legal challenge in Scotland’s Land Court. LadyKirk Estates objected to the transfer of a farm tenancy from an elderly tenant to his younger nephew. Ladykirk had also claimed their ECHR rights had been in breach. Full report HERE

CHEQUERED HISTORY OF BORDERS LAWYER WHO RUINED CLIENTS:

Penman – Originally from Hawick then moved to Kelso to work at Stormonth Darling Solicitors, has been subject to numerous complaints from local clients in the Scottish Borders over the years, One investigation carried out by the Law Society of Scotland issued reports finding Penman had deliberately rearranged evidence before investigating officers took possession of the files in an attempt to prevent the Law Society’s own reporter from investigating the circumstances of the losses. The Law Society investigating reporter found “there was also evidence of what appeared to be a bungled and unsuccessful attempt to put the file into order”

The Law Society investigator recommended a prosecution of Andrew Penman, saying : “In respect of the extraordinary delays and the repeated failures to respond to correspondence and the apparent, deliberate attempt to mislead the Royal Bank the reporter was of the view that the professional misconduct was such that it would warrant prosecution before the Scottish Solicitors Discipline Tribunal The reporter was or the view that there had clearly been an inadequate professional service but in the, event of a referral to the Scottish Solicitors Discipline Tribunal this would be incorporated into the complaint.”

Neither the Law Society of Scotland or Scottish Legal Complaints Commission could not be reached for comment.

Thursday, October 01, 2015

Conflict of Interest accusations hit Law Society of Scotland as employee who sat in on decision to refer SNP MP’s struck off solicitor to Crown Office is linked to pro-indy lawyer group

Sheila Kirkwood, a founding member of Lawyers for Yes. AN EMPLOYEE of the Law Society of Scotland who sat on a committee considering the case of a solicitor linked to SNP MP Michelle Thomson’s property dealings - was also a leading pro-independence activist.

And, papers reporting brief details of the meeting feature no declarations of interest by Kirkwood or any other members of the Committee which then decided to refer the matter to prosecutors.

Sheila Kirkwood, secretary of the same Guarantee Fund Sub-Committee which eventually took the decision to refer the matter of Christopher Hales to the Crown Office in July 2015 – four years after the event – has since been identified as a founding member of Lawyers for Yes – a pro-independence group set up ahead of the Scottish independence referendum held last September 2014.

Kirkwood also endorsed Michelle Thomson on her Facebook page.

Within the minute of the meeting in which Kirkwood was present as secretary of the Guarantee Fund Sub-Committee, there is no mention of any declarations of interests by members of the committee - including Kirkwood.

Facing calls to explain a significant & potential conflict of interest, Lorna Jack, Chief Executive of the Law Society of Scotland, said she was “confident there was no conflict of interest”.

Chief Executive of the Law Society of Scotland, Lorna Jack, issued the following statement at a press conference held at 3.15pm, 1 October 2015:

“The Law Society’s number one regulatory priority is to protect the public from any wrong doing by solicitors. As I have previously commented, following a routine inspection of the accounts of law firm Grigor Hales of Gorgie Road, Edinburgh in July 2011, we believed Christopher Hales had not met the required standards of professional conduct.

“We therefore took action to protect the public by suspending Mr Hale’s practising certificate in September 2011. There is a duty on us as a regulator to report suspicious activity quickly to the appropriate authorities. Such reports and timings or information about the report are confidential by law.

“I want to stress that Law Society employee Sheila Kirkwood has not acted unprofessionally or inappropriately at any time. Sheila is a hard-working, dedicated colleague. She had no involvement in taking papers on the Christopher Hales case to the Law Society Guarantee Fund sub-committee and in no way delayed these papers being taken to the committee. Sheila’s role as secretary to the committee is to write the minute.

“The names of Christopher Hales’s clients were not included in any Law Society papers that Sheila handled.  The first time Sheila realised Michelle Thomson was involved in the Christopher Hales case was from recent media reports.

“Sheila is entitled to her personal political views. The Law Society is a non-partisan organisation. However, we do not stop our staff from holding or expressing their own views in their personal lives.  People in Scotland are legally entitled to express their personal opinions.”

“I am confident there was no conflict of interest in relation to Sheila’s role at the Law Society.”

However – Lorna Jack could not explain why the minute of the meeting released by the Law Society (published below) contains no recusal or declaration of interest of those in attendance.

GUARANTEE FUND SUB COMMITTEE:

Minute of Meeting of the Guarantee Fund Society of Scotland held at 26 2 July 2015 at 9.30am

GRIGOR HALES, EDINBURGH - 20732

Date Considered 2 July 2015

Sub-Committee Members Present 6 solicitors; 5 non-solicitors

Papers considered by Sub-Committee None. This matter was the subject of a verbal report.

Background

The Sub Committee reminded itself that it had previously withdrawn the Practising Certificate of Mr Christopher Hales and that he had subsequently been struck off by the Scottish Solicitors Discipline Tribunal (SSDT). Mr Hales had been the sole partner at the firm which had also ceased. The Sub Committee were asked to consider whether comments made by the SSDT justified a referral of the matter by the Law Society of Scotland to the Crown Office.

Sub Committee's Deliberations

It was noted that the SSDT decision states that "Mr Hales must have been aware that there was a possibility that he was facilitating mortgage fraud" and that "it must have been glaringly obvious to the Respondent that something was amiss when cash backs of £27,000 or £28,000 from the seller to the purchaser were involved".

Sub Committee's Decision

The Sub Committee decided that given the statements made by the SSDT following a complaint arising from a Financial Compliance inspection, that the matter should be referred to the Crown Office for investigation.

Delegated Powers..

To refer the above matter to the Crown Office for investigation

The Guardian newspaper reported: The row over the official handling of the case deepened further after the Law Society confirmed that its head of investigations, Ian Messer, had received a detailed report from the Scottish Solicitors’ Discipline Tribunal (SSDT) naming Thomson, her husband Peter and Thomson’s business partner Frank Gilbride in July 2014.

Messer first informally told the Crown Office in December 2014 that Hales had been struck off by the SSDT for suspected mortgage fraud, during a routine quarterly meeting between the two organisations. Crown Office lawyers asked Messer to provide them with detailed case files but failed to get them.

At the next meeting on 28 April 2015 – a week before Thomson was elected as MP for Edinburgh West – the Crown Office asked again for the Hales case files. They were not submitted to the Crown Office until 3 July 2015; six days later, the Crown Office alerted fraud officers at Police Scotland, who launched a formal investigation.

Those fresh details emerged when the Law Society’s chief executive, Lorna Jack, took the unusual step of arranging a hurried press conference to defend her organisation’s handling of the affair, and the conduct of Sheila Kirkwood, who is secretary to the society guarantee fund sub-committee which handled the Hales case but had delayed handing the papers over to the Crown Office.

It emerged that Kirkwood was, with her husband and fellow solicitor Paul Kirkwood, a founder of the pro-independence campaign Lawyers for Yes, and as an active nationalist had attended dinners for Thomson’s pro-independence campaign Business for Scotland. Kirkwood had also “liked” Thomson on her Facebook page.

Jack insisted that Kirkwood had had no direct say over the Law Society’s handling of the case against Hales, but she admitted that no independent investigation had yet taken place into whether Kirkwood was aware that Thomson was linked to Hales’s property dealings.

Jack said she had taken Kirkwood at her word that she first became aware of that link when Thomson was named in the media earlier in September.

“I want to stress that Law Society employee Sheila Kirkwood has not acted unprofessionally or inappropriately at any time,” Jack said. “Shelia is a hard-working, dedicated colleague. [I] am confident there was no conflict of interest in relation to Sheila’s role at the Law Society.”

Although it took until July 2015 before the Crown Office and police were handed the case files against Hales, Jack confirmed that the Law Society first became alerted to Hales’s mortgage dealings with Thomson in July 2011 during a routine inspection of his firm’s books.

He was suspended in September 2011 “to protect the public”, she said. “The Law Society’s No 1 regulatory priority is to protect the public from any wrongdoing by solicitors,” she added.

Jack implied too that the Law Society would also have alerted the police to any suspicions because of its legal duties under the Proceeds of Crime Act, but she repeatedly refused to elaborate on whether and when that had been done with the Hales case.

“Under the Proceeds of Crime Act, there is a duty on us as a regulator to report suspicious activity quickly to the appropriate authorities. Such reports and timings or information about the report are confidential by law,” she said.

The “Guarantee Fund” of the Law Society of Scotland is possibly one of the murkiest self protection mechanisms operated by the legal profession’s in-house self regulator.

The Guarantee Fund is tasked with paying out compensation to victims of corrupt or rogue solicitors.

However, the Guarantee Fund has racked up numerous accusations of obstructive tactics and deliberate falsification of facts to prevent financially ruined clients securing full compensation for their losses to rogue Scottish solicitors.

Claims against the Guarantee Fund are known to be in the millions of pounds annually.

Shockingly, the percentage of compensation eventually secured as a payment from the fund where some cases can take 5-10 years to be heard - can be as little as 5% to 10% of a client’s total financial losses to rogue solicitors.

The ‘aims’ and functions of the Guarantee Fund sub-Committee as claimed by the Law Society of Scotland, but rarely fulfilled in reality, are:

  • oversee the fulfilment of the statutory obligations of the Law Society of Scotland regarding the Guarantee Fund and financial compliance
  • ensure that risks to the Guarantee Fund are managed to an agreed and acceptable level
  • ensure that Guarantee Fund operations are in accordance with stated Guarantee Fund policy
  • protect the Guarantee Fund, the profession and the public interest by dealing properly and promptly with significant cases of non-compliance with accepted financial compliance standards (eg accounts rules/money laundering regulations)
  • influence strategic developments regarding financial compliance and the Guarantee Fund to ensure that processes remain up to date and fit for purpose
  • enable effective communications with the profession, public and other stakeholders  regarding financial compliance standards and Guarantee Fund claims
  • benefit the Guarantee Find/financial compliance processes by acting as a source of expertise on relevant working practices and issues within the legal profession
  • monitor financial compliance activity (planning, progress, quality & approach)
  • review outputs from financial compliance activity (including the conducting of interviews) and where appropriate (eg as a result of breaches in accounts rules or money laundering regulations), refer matters of professional conduct to the Scottish Legal Complaints Commission and Complaints Investigation Team for investigation or recommend other actions (eg interventions, judicial factories etc) in accordance with the scheme of delegation
  • monitor the consistency and quality of Guarantee Fund claims and intimations processing
  • decide upon Guarantee Fund claims (as detailed in the delegated powers) or refer to the Professional Conduct Committee, as appropriate.
  • consider and approve strategic policy matters related to financial compliance and Guarantee Fund matters
  • consider the continuing adequacy of accounts rules and other guidance to protect the Guarantee Fund, the profession and the public, monitor the development of new or amended rules and recommend these for approval.
  • review financial compliance activity to inform and influence the profession, public and other stakeholders about relevant financial standards, compliance requirements and claims issues
  • monitor Guarantee Fund risk management procedures and approve
  • key policies related to insurance arrangements, financial reserve levels, investment decisions and firms which pose a risk to the fund
  • monitor the financial position of the Guarantee Fund and recommend approval of the annual budget and annual subscriptions to the Council
  • be made aware of operational developments in the workings of the financial compliance and Guarantee Fund functions

Wednesday, September 30, 2015

The struck off solicitor, and the MP who ‘took advantage’ of homeowners - Michelle Thomson - the SNP Member of Parliament with 17 homes

Lawyer involved in property deals with Michelle Thomson - was struck off by tribunal. A SOLICITOR - Christopher Hales, who acted for Edinburgh West MP Michelle Thomson and her husband in multiple property deals, has been struck off for professional misconduct over his part in 13 deals involving Ms Thomson or M&F Property Solutions, of which she was a partner.

Michelle Thomson, the party’s shadow minister for business, innovation and skills, has been accused of taking advantage of vulnerable families by building a property portfolio worth about £1.7 million by buying homes at knockdown prices from families struggling to pay their mortgages.

Hales, who once listed his occupation as “Police Constable” – and is now struck off by the Scottish Solicitors Discipline Tribunal from working as a solicitor - handled numerous property deals for his client – SNP MP Michelle Thomson. Mr Hales acted for Ms Thomson before she was elected as an SNP MP.

According to a ruling by the Scottish Solicitors’ Discipline Tribunal, a full version of which has been published by the Sunday Times, Mr Hales failed to provide key information to mortgage lenders in breach of guidelines designed to prevent fraud in numerous cases.

The decision to strike off Christopher Hales came to a view “the solicitor must have been aware there was a possibility he was facilitating mortgage fraud.”

The decision stated: “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 which continued for a period of over one year. The Tribunal has made it clear on numerous occasions that institutional lenders are clients of Respondents 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, cash backs, 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. The Tribunal consider that the features of these transactions 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. It must have been glaringly obvious to the Respondent that something was amiss when cash backs of £27,000 or £28,000 from the seller to the purchaser were involved.”

“There were so many breaches of the CML Handbook in these cases that the Respondent would have known that he did not have his client's authority to draw down the funds and accordingly the Tribunal also found it a breach of Rule 6 of the Accounts Rules. The Tribunal considered that not only did the Respondent fail to act in the best interests of his lender clients but he failed to act with the utmost propriety towards these lender clients. This is extremely damaging to the reputation of the legal profession.”

“The Tribunal took account of the Respondent's responses contained in the Executive Summary Report but did not consider that these provided any satisfactory explanation for what had happened. The Tribunal note that the Respondent has ceased practice and took account of the fact that the Respondent had cooperated by admitting the averments of fact, duty and misconduct. The Respondent however did not attend at the Tribunal to provide any mitigation in person.”

“In the whole circumstances, given the ongoing course of conduct, the large number of transactions involved, the Respondent's knowledge of the central role of Mrs A and Company 3, which should have set alarm bells ringing and the fact that this type of conduct is likely to bring the profession into disrepute, the Tribunal considered that it had no option other than to strike the Respondent's name from the Roll of Solicitors in Scotland.”

 Solicitor in Thomson's house deals struck off

Sunday Times 27/09/2015

Mark Macaskill ; Jon Ungoed-Thomas

NICOLA STURGEON'S frontbench spokeswoman on business has been involved in a series of property deals exposed as possible mortgage fraud, according to a public ruling.

Michelle Thomson, the Edinburgh West MP and Scottish National party's shadow minister for business, innovation and skills, was involved in the suspect deals in 2010 and 2011. Many of the vendors were "distressed" and anxious to sell. Thomson has strongly denied any wrongdoing.

The solicitor, Christopher Hales, who acted for Thomson, was struck off last year for professional misconduct over his role in the deals.

All of the 13 transactions for which Hales was struck off involved Thomson or the property venture M&F Property Solutions, in which a tribunal stated she was a partner.

The 53-page Scottish Solicitors' Discipline Tribunal ruling states the "central role of Michelle Thomson and M&F Property Solutions in a number of these transactions should have set alarm bells ringing". A redacted version of the ruling was published last year but released in full to The Sunday Times last week.

It said Hales "must have been aware that there was a possibility he was facilitating mortgage fraud, whether or not this occurred". In some cases loans obtained for the properties were greater than the actual purchase price. Hales failed to provide the mortgage company with key information that is used to prevent fraud.

The correct facts — if they had been provided to the lender — may have had "a material effect on the decision to lend", the tribunal ruled.

The Sunday Times revealed last week that Thomson and her husband, Peter Thomson, a music teacher, had built up a property portfolio, worth about £1.7m according to Registers of Scotland documents, by buying homes at knockdown prices from families in financial hardship.

It also reported claims from families of discrepancies on the land registry, alleging that the price on official records was higher than the amount received by vendors. Peter Thomson, who bought some of these properties, denies any wrongdoing and official documents show vendors confirmed the sale values.

The Law Society of Scotland said last week it was examining the property transactions detailed by this newspaper's investigation. It can prosecute cases before the Scottish Solicitors' Discipline Tribunal. A tribunal document also confirmed Michelle Thomson's role in mortgage deals set out at the disciplinary hearing against Hales, a former partner at Grigor Hales in Edinburgh, in May last year.

In one of the deals, Sarah Capper, 77, responded to a newspaper advertisement to sell her three-bedroom home in Stirling in the autumn of 2010. Capper says she had bought it for £79,000 about two years previously and spent £50,000 on refurbishments, including a new kitchen and a conservatory.

Capper, who has two sons, three grandchildren and two great-grandchildren, was being treated for skin cancer, which is now in remission, and was anxious to return to England to be near her family. She was offered £64,000 for the house by Frank Gilbride, a former journalist who was a business partner of Thomson.

Capper reluctantly accepted the offer and the house was sold to Gilbride on November 19 2010. On the same day Michelle Thomson bought it from Gilbride for £95,000, but she then received a "cashback" from Gilbride of £28,181.80.

Hales, Thomson's lawyer, did not inform the lender — The Mortgage Works — that the property had been bought and sold in a "back-to-back" transaction and that Thomson had got it at a discount, because of the cashback.

The tribunal ruled that it must have been "glaringly obvious" to Hales that something was "amiss".

Capper, a widow who now lives in Henfield, West Sussex, said last week she wanted an explanation of why Gilbride and Thomson had bought and sold her house on the same day with a £31,000 mark-up.

She said: "I am livid. My daughter-in-law had told me not to accept the offer, but I had to do it. I sold it to get back to England and see my family.

"I had cancer, and I had no one to fall back on. I could have got a lot more money if I had gone to an estate agent. I am struggling now."

In June 2010 Michelle Thomson bought a three-bedroom terraced house near Aberdeen for £245,000 and sold it a few hours later to someone she knew for £315,000.

The tribunal ruled that the quick sale — or "back-toback" transaction — was not disclosed by Hales to the mortgage lender, contrary to the Council of Mortgage Lenders Handbook.

Experts say back-to-back transactions by two parties operating together can be used to secure a larger mortgage than would otherwise be available. It can also reduce tax, by recording a higher price on the land registry than was actually paid. It means when the property is later sold, the profit — which is subject to capital gains tax — may be understated by thousands of pounds.

In 10 of the other deals for which Hales was struck off, M&F Property Solutions, in which both Thomson and Gilbride were partners, provided deposits to other homebuyers.

The tribunal said Hales should have told their lenders that some of the funds were "not provided by the purchaser".

The tribunal ruled that it had no other option than to strike Hales from the register, the most severe sanction at its disposal.

It said his actions had been "extremely damaging" to the reputation of the legal profession. The Mortgage Works, which provided a loan for Thomson for Capper's home, would not say whether it was investigating the matter, but said solicitors were required to warn them of any back-toback transaction.

Thomson, 50, trained as a musician at the Royal Scottish Academy of Music and Drama but later embarked on a business and property career. Her husband teaches music at St George's School for Girls, a private school in Edinburgh.

Last month her email address appeared on the list released by hackers of the infidelity website Ashley Madison. She said the email address was out of date and that she was the victim of a smear.

Registers of Scotland records show at least 17 homes in Scotland are owned by Thomson, her husband or the couple jointly. The Thomsons say they operate to the highest ethical standards, and that they provide support and advice for struggling families.

Sandra and Garry Kelly, who sold their Edinburgh home to Peter Thomson in 2009, said they intend to lodge a complaint with the Scottish Legal Complaints Commission. The couple say they were offered £73,000 by an intermediary for their home, but legal papers say the price to be paid by Peter Thomson was £105,000.

Sandra Kelly said she signed this document because she was told it was a condition of the sale, but insists the actual price was £73,000.

A spokesman for Michelle and Peter Thomson said land registry documents showed that the Kellys had acknowledged receipt of the sum of £105,000 for their property. The spokesman previously said the Thomsons "vigorously deny any allegation of wrongdoing or impropriety".

A spokesperson for Michelle Thomson said: "Michelle has always acted within the law and will be giving no further comment."
Gilbride did not respond to a request for comment. Hales was not available for comment.

A spokeswoman for the Law Society of Scotland said: "The Law Society is considering the information it has received and which has been reported in The Sunday Times."