Baxendale-Walker v The Law Society

Factual and Procedural Background

These proceedings arise from a disciplinary case before the Solicitor's Disciplinary Tribunal concerning the conduct of the Appellant, a solicitor admitted in 1990 and in sole practice since 1994. The Law Society alleged that the Appellant acted in a manner unbefitting a solicitor in two respects: first, by giving evidence in High Court proceedings found to be "manifestly untrue" (an allegation that was dismissed), and second, by providing a reference in circumstances deemed improper and/or unprofessional (an allegation admitted but with uncertain scope). The Tribunal found the Appellant guilty of conduct unbefitting a solicitor based on the second allegation and suspended him from practice for three years. It also ordered the Law Society to pay 30% of the Appellant's costs.

The Appellant appealed the suspension, but the Divisional Court dismissed his appeal. The Law Society cross-appealed the costs order, and the Divisional Court increased the Appellant's costs liability to 60% of the Law Society's costs. The present appeal concerns the penalty imposed and the costs order.

The background facts include the Appellant's involvement in pension fund loan arrangements in 1994, where pension monies were loaned to a company called Kesking Limited and subsidiaries. The loan was secured by a worthless document. The Appellant dealt with Independent Financial Partnership Limited, the new pension scheme administrator, and was involved in transferring pension funds requiring the signature of an individual named Mr Nurkiman, who was the sole trustee.

The Appellant wrote a reference for Mr Nurkiman to Barclays Bank in relation to Money Laundering Regulations 1994, confirming Mr Nurkiman's identity and integrity, despite having no personal knowledge. The reference was found to be false and improper by both the High Court and the Tribunal. The High Court judge expressed serious doubts about the Appellant's credibility and honesty, describing parts of his evidence as "manifestly untrue" and "ridiculous".

The Tribunal concluded that the false reference was both improper and a serious breach of professional duty, justifying a three-year suspension to maintain public confidence in the solicitors' profession. The disciplinary proceedings and subsequent appeals focused on the appropriateness of the suspension and the allocation of costs between the parties.

Legal Issues Presented

1. Whether the penalty of suspension imposed by the Solicitor's Disciplinary Tribunal was wrong in principle, excessive, or disproportionate.
2. Whether the Tribunal erred in law by ordering the Law Society to pay 30% of the Appellant's costs of the disciplinary proceedings.

Arguments of the Parties

Appellant's Arguments

• The suspension was inappropriate because the misconduct amounted to an error of judgment or gross carelessness, not dishonesty, and caused no loss.
• The three-year suspension was excessive and out of line with other Tribunal decisions involving similar conduct.
• The costs order requiring the Law Society to pay part of the Appellant's costs was justified because the first allegation was dismissed and the Law Society had not abused the process.

Law Society's Arguments

• The penalty of suspension was justified given the serious breach of professional duty and the need to maintain public confidence in the profession.
• The Law Society should not be ordered to pay costs absent dishonesty or improper motive, as it acts as a regulator in the public interest.
• The Tribunal's discretion on costs under the Solicitors Act 1974 should be respected, and the costs order in favor of the Appellant was unjustified.
• Precedents support the principle that costs should not automatically follow the event in regulatory disciplinary proceedings to avoid chilling the exercise of public functions.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Bolton v Law Society [1994] 1 WLR 512	Justification of suspension for flagrant disregard of elementary professional rules even absent dishonesty.	The Court endorsed that serious misconduct justifies suspension to maintain professional standards and public confidence.
Gorlov v Institute of Chartered Accountants [2001] EWHC Admin 220	Costs in disciplinary proceedings involving regulatory bodies acting in the public interest.	Costs should not automatically follow the event; regulatory responsibilities reduce the likelihood of adverse costs orders absent improper conduct.
City of Bradford Metropolitan District Council v Booth [2000] COD 338	Costs discretion in public law/regulatory decisions; balancing financial prejudice against encouraging public bodies to act in public interest.	Costs orders against regulators require consideration of public interest and potential chilling effects on regulatory functions.
Law Society v Adcock [2006] EWHC 3212	Limits on presumptions about costs orders against regulators.	Clarified that no presumption exists for or against costs orders; each case requires careful consideration of circumstances.
R v Merthyr Tydfil Crown Court, ex parte Chief Constable Dyfed Powys Police (1998)	Costs discretion in regulatory decisions involving public bodies.	Supports principle that costs orders against regulators should consider broader public interest and fairness.
R v Totnes Licensing Justices, ex parte Chief Constable of Devon and Cornwall (1990)	Costs discretion and public interest in regulatory proceedings.	Reinforces balancing of interests in costs decisions involving public authorities.
Chief Constable of Derbyshire v Goodman and Newton (1998, unreported)	Costs discretion in public law/regulatory context.	Supports the approach of weighing financial prejudice and encouragement of regulatory decisions.

Court's Reasoning and Analysis

The court adopted the detailed factual findings and analysis of the Divisional Court and the Solicitor's Disciplinary Tribunal. It emphasized that the Appellant's conduct in providing a false reference about a person he did not know was a grave breach of professional duty, justifying a substantial suspension despite the absence of dishonesty. The court rejected the Appellant's argument that suspension was disproportionate, affirming that protection of the profession's reputation and public confidence is paramount.

Regarding costs, the court analyzed the statutory discretion under section 47(2) of the Solicitors Act 1974 and relevant case law. It recognized the unique regulatory role of the Law Society acting in the public interest, which distinguishes disciplinary proceedings from ordinary civil litigation. The court agreed with the Divisional Court that costs should not automatically follow the event in regulatory cases absent improper motives or bad faith.

The Tribunal erred by ordering the Law Society to pay part of the Appellant's costs solely because the first allegation failed. This overlooked the public interest role of the Law Society and the costs incurred in relation to the admitted professional misconduct. The Divisional Court's order requiring the Appellant to pay 60% of the Law Society's costs was a fair reflection of overall justice and was upheld.

Holding and Implications

The court DISMISSED the Appellant's appeal against the suspension and the appeal against the costs order. The three-year suspension imposed by the Solicitor's Disciplinary Tribunal was upheld as justified and proportionate to the serious professional misconduct. The costs order was also upheld, requiring the Appellant to pay 60% of the Law Society's costs of the disciplinary proceedings.

This decision reinforces the principle that serious breaches of professional duty by solicitors, even absent dishonesty, warrant significant sanctions to maintain public confidence in the legal profession. It also clarifies that costs orders in disciplinary proceedings must carefully balance the public interest role of regulatory bodies against fairness to the parties, avoiding automatic costs orders against regulators who act properly in the public interest.