Wingate & Anor v The Solicitors Regulation Authority, Court of Appeal - Civil Division, March 07, 2018, [2018] EWCA Civ 366

Resolution Date:March 07, 2018
Issuing Organization:Civil Division
Actores:Wingate & Anor v The Solicitors Regulation Authority

Neutral Citation Number: [2018] EWCA Civ 366

Case No: C1/2017/1002 & 1003 & C1/2017/1249


ON APPEAL FROM High Court, QBD, Administrative Court

Mr Justice Holman


ON APPEAL FROM High Court, QBD, Administrative Court

Mr Justice Mostyn


Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 07/03/2018

Before :





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Between :

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On the Wingate and Evans appeal, Mr Gregory Treverton-Jones QC (instructed by WE Solicitors LLP) for the 1st & 2nd Appellant

Mr Richard Coleman QC (instructed by Russell Cooke Solicitors) for the Respondent

On the Malins appeal, Mr Richard Coleman QC & Ms Chloe Carpenter (instructed by Russell Cooke Solicitors) for the Appellant

Ms Fenella Morris QC (instructed by RadcliffesLeBrasseur Solicitors) for the Respondent

Hearing dates: Tuesday 6th & Wednesday 7th February 2018

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Lord Justice Rupert Jackson :

  1. This judgment is in eight parts, namely:

    Part 1. Introduction

  2. These are two appeals arising out of disciplinary proceedings against solicitors. In the first case (Wingate and Evans) the Solicitors Regulation Authority (``SRA'') appealed successfully to the High Court against acquittals by the Solicitors Disciplinary Tribunal. The solicitors are now seeking to reinstate their acquittals. In the second case (Malins) a solicitor successfully appealed to the High Court against findings of misconduct and an order that he be struck off the Roll. The SRA now seeks to reinstate the findings of the Solicitors Disciplinary Tribunal.

  3. A central issue in both appeals is the meaning of ``integrity'' as that word is used in the SRA's Code of Conduct and Principles.

  4. I shall refer to the ten principles which appear at the front of the SRA's Code of Conduct as ``the Principles''. They read as follows:

    ``You must:

  5. uphold the rule of law and the proper administration of justice;

  6. act with integrity;

  7. not allow your independence to be compromised;

  8. act in the best interests of each client;

  9. provide a proper standard of service to your clients;

  10. behave in a way that maintains the trust the public places in you and in the provision of legal services;

  11. comply with your legal and regulatory obligations and deal with your regulators and ombudsmen in an open, timely and cooperative manner;

  12. run your business or carry out your role in the business effectively and in accordance with proper governance and sound financial and risk management principles;

  13. run your business or carry out your role in the business in a way that encourages equality of opportunity and respect for diversity; and

  14. protect client money and assets.''

  15. In this judgment:

    ``ATE'' means `after-the-event' insurance.

    ``FSA'' means Financial Services Authority.

    ``LASPO'' means the Legal Aid, Sentencing and Punishment of Offenders Act 2012.

    ``Rule 5 Statement'' means statement served pursuant rule 5(2) of the Solicitors (Disciplinary Proceedings) Rules 2007.

  16. After these introductory remarks, I must now turn to the facts.

    Part 2. - The Facts: Wingate and Evans

  17. Mr Wingate and Mr Evans practised together as partners for many years in a small firm, W E Solicitors LLP. W E Solicitors occupied a single office in Greater Manchester. They specialised in personal injury work, principally industrial disease claims. The firm employed six staff, two of whom were solicitors. Within the firm, Mr Wingate concentrated on management and finance. Mr Evans concentrated on the current litigation workload.

  18. The firm fell into financial difficulties. By 2012 it owed £930,000 to HBOS and could see no way of meeting the monthly interest payments which were due. HBOS recognised the realities of the situation and indicated a willingness to settle for £450,000. Unfortunately, no mainstream lender was willing to lend a sum of that size to W E Solicitors.

  19. Mr Wingate learned of a fund called Axiom, which specialised in funding the costs of litigation. Tangerine Investment Management Ltd (``Tangerine'') was the manager of Axiom. Between June and August 2012 Mr Wingate had meetings with Jeff Hudson, representing Tangerine, and Richard Barnett, representing Axiom. At the time Mr Barnett was an apparently respectable solicitor and a member of the Council of the Law Society. He has subsequently been struck off.

  20. The upshot of those discussions was an oral agreement by Axiom to lend £900,000 to W E Solicitors in order to enable the firm to pay its debts and stay in business. This oral agreement had some unusual features. First, no less than £300,000 was to be paid out of the loan monies as a ``facilitation fee'' to Tangerine. Secondly, W E Solicitors were required to sign a written funding agreement and facility letter, which, on Mr Wingate's evidence, bore no relationship to the true agreement between the parties. The written funding agreement contained the following terms:

    ``1.1 Definitions

    In this Agreement, including the Schedules, the words and expressions set out below have the following meanings: ...

    ``Eligible Legal Expenses'' means the Legal Expenses relating to a Claim which is evidenced by an invoice, in form and substance the same as the form agreed in relation to that Claim prior to the first Utilisation in respect of that Claim; ...

    ``Termination Date'' means [1] in relation to the Facility or the Available Facility the date falling 36 months from the date of this Agreement or [2] in respect of a Loan, the date falling 12 months from the date of this Agreement or the Utilisation Date, whichever shall be the later ...

    ``Utilisation'' means an utilisation by the Panel Firm having requested a loan under the Facility;

    ``Utilisation Date'' means the date of a Utilisation being the date on which the relevant Loan, as detailed in any Utilisation Request submitted by the Panel Firm, is made, and which date shall not be less than 10 Business Days prior to the date which is 12 months from the date of this Agreement ...

    2.2 Purpose

    (a) The Panel Firm shall apply the proceeds of each Loan paid to the Panel firm out of the Facility towards payment of the Eligible Legal Expenses in relation to which the Loan was requested. ...

  21. Repayment

    The Panel Firm shall repay all of the amounts owing in respect of each and every Loan, together with the Facilitation Fee thereto, granted under the Facility in full on the Termination Date [being 12 months from the Utilisation Date of each Loan] and without prejudice to the generality of the foregoing all amounts owing shall include all Loans, interest arising, Facilitation Fees, and Financial Guarantee Insurance Premiums

    SAVE THAT the Lender may, but entirely at its discretion, at the request of the Panel Firm in relation to a Loan which is repaid in full on the Termination Date in relation to that Loan, immediately lend the Panel Firm that Loan for a further period of 12 months from the date of repayment [whereupon the Termination Date in relation to that Loan shall be at the end of that second period of 12 months] subject to:

    A There being no Event of Default as at the date of such request and

    B All Conditions Precedent being fulfilled and Repeating Representations confirmed by the Panel Firm as if all such conditions were restated as at the date of such request and

    C The interest rate attaching to the Loan shall be 18% from the date of the Loan being re-lent until the Termination Date for that Loan and

    D The Panel Firm signing such documents as shall be reasonably required by the Lender to evidence the further transaction herein described, which shall itself be regarded as a Condition Precedent

    BUT in the event that such Loan is re-lent for the further period of 12 months, no further Facilitation Fee will be payable or charged by the Lender in respect of that Loan by the Panel Firm, [so that there will be only one Facilitation Fee paid by the Panel Firm for that Loan which will be at the first Utilisation date for that Loan]''

  22. These and other provisions of the funding agreement made it clear that the money coming from Axiom could only be used for funding specific cases. Furthermore any sum loaned had to be repaid within twelve months, subject to the possibility of a single twelve month extension.

  23. The facility letter included the following provisions:

    ``1. The purpose for which monies may be advanced by the Lender to the Borrower under the Facility is to enable the Panel Firm to fund Claims and Legal Work for Claimants of the Panel Firm as detailed to the Lender [Client Files], together with Eligible Legal Expenses, if applicable, and a Financial Guarantee Insurance premium, together with the Facilitation Fee [all of which is more particularly mentioned and referred to in the Funding Agreement] (``the Agreed Purpose'') ...

    1.1 The proceeds of the Facility shall be used by the Panel Firm exclusively towards the Agreed Purpose but the Lender shall not be under any obligation to verify the use to which any drawdown against the Facility is put.''

  24. On 22nd August 2012 Mr Wingate signed the funding agreement and the facility letter on behalf of his firm. Axiom duly provided the agreed sum of £900,000. In reliance upon the oral agreement (namely that this was a loan for general purposes) and in disregard of the two written agreements, the firm dealt with the monies as follows:

    i) It paid £450,000 to HBOS in settlement of the outstanding debt.

    ii) It paid or allowed to be paid £300,000 to Tangerine as a facilitation fee.

    iii) It paid £27,000 as the premium for a financial guarantee policy.

    iv) It paid £10,000 to Mr Wingate and £10,000 to Mr Evans as dividends.

    v) It paid £11,535 to Lease Direct as repayment of a loan.

    vi) It paid £27,047 to HM Revenue & Customs.

    vii) The sum of £64,418 was used to fund the firm's general expenses...

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