Sheehan v Law Society of Ireland and Another

• Jurisdiction: Ireland
• Judge: Kearns P.
• Judgment Date: 26 June 2015
• Neutral Citation: [2015] IEHC 402
• Docket Number: [2015 No. 3 SA]
• Court: High Court
• Date: 26 June 2015

[2015] IEHC 402

THE HIGH COURT

Kearns P.

[2015 No. 3 SA]

IN THE MATTER OF THE SOLICITORS ACTS 1954-2008 AND IN THE MATTER OF AN APPLICATION PURSUANT TO SECTION 7(13)A OF THE SOLICITORS AMENDMENT ACT 1960

BETWEEN:

SEÁN SHEEHAN

APPELLANT

AND

THE LAW SOCIETY OF IRELAND

RESPONDENT

AND

THE SOLICITORS DISCIPLINARY TRIBUNAL

NOTICE PARTY

Professional Ethics & Regulation – S. 24 of the Solicitors (Amendment) Act 1994 – Misconduct – O. 53 of the Rules of the Superior Court

Facts: The appellant sought an order for rescinding the findings and decision of the notice party that the appellant was guilty of misconduct as the appellant had breached the Solicitors Accounts Regulations. The appellant contended that his conduct fell short of being categorized as misconduct for there was no finding of some element of deliberate fraud or conspiracy against him and that the alleged irregularity in the accounts did not cause any harm to any of his clients.

Justice Kearns P. refused to grant an order for rescinding the findings and the decision of the notice party and hence dismissed the appeal. The Court held that the professional misconduct under s. 24 of the Solicitors (Amendment) Act 1994 included any conduct that tended to bring the solicitor's profession into dispute and contravened the provisions of the said Act or any regulation made therein. The Court observed that account rules were made to ensure that the money of the public was guarded against improper and unauthorized use and therefore, those rules must be followed strictly. The Court held that the conduct of the appellant in disregarding Solicitors Accounts Regulations for a long time period and delay in removal of alleged irregularities when pointed out to the appellant amounted to grave misconduct irrespective of the fact that those were not done with any dishonest intention.

JUDGMENT of Kearns P. delivered on the 26th day of June, 2015

1 The appellant seeks an order pursuant to Order 53 of the Rules of the Superior Courts rescinding the finding and decision of the notice party made on 6th January, 2015 in respect of a complaint made by the respondent on 30th January, 2012 to the effect that the applicant had been guilty of misconduct.

BACKGROUND

2 The appellant is a practising solicitor and partner in the practice of Aaron Kelly & Co., Drogheda, Co. Louth. In February 2010 Ms. Mary Devereux, a chartered accountant employed in the respondent's Regulation Department, was appointed to conduct an inspection of the appellant's practice. The appellant was notified of the inspection and was required to have his books of account written up to 28th February 2010.

3 Following a short delay, the inspection took place in May 2010 and Ms. Devereux prepared a report dated 8th July 2010 for the respondent's Regulation of Practice Committee. The report found that there was a shortfall of €66,528 on the client account as at 31st March 2010, part of which was due to a bank error and debit balances which were later cleared. The report also found that proper books of account were not maintained in accordance with the Solicitors Accounts Regulations and that the accounting system was written up in arrears, that there was no compliance with section 68 of the Solicitors (Amendment) Act 1994, that costs were transferred in bulk to the office account and then allocated to the relevant files, that debit balances were created in breach of Regulation 7 and that interest was left in the client account in breach of the Solicitors Accounts Regulations.

4 Following an application made by the respondent, an application into the applicant's conduct was convened before the Solicitors Disciplinary Tribunal. On 19th March 2013 the Tribunal found that there was a prima facie case for inquiry in respect of the following allegations –

‘…that the respondent solicitor in the title hereof Sean R. Sheehan has been guilty of professional misconduct in his practice as a solicitor in that he:

a) ‘breached Regulation 7(2)(a) of the Regulations by allowing debit balances to arise on the client account’

…

b) ‘breached Regulation 12(1) by failing to maintain proper books of account.’’

5 An inquiry into the alleged misconduct was held on 26th September 2013. On completion of the inquiry the Tribunal found the respondent guilty of misconduct in respect of both allegations. This decision was challenged by the solicitor by way of judicial review and by order dated 24th June, 2014 this Court ordered that the matter be remitted to a sitting of the Tribunal comprised of the same members, without the need for a fresh hearing, but with the Tribunal furnishing reasons for its findings in accordance with law.

6 Consequently, on 10th December, 2014 the inquiry resumed before the same division of the Tribunal and it was found that the solicitor was guilty of misconduct in respect of the following complaints –

a) ‘breached Regulation 7(2)(a) of the Regulations by allowing debit balances to arise on the client account’

b) ‘breached Regulation 12(1) by failing to maintain proper books of account.’

7 The Tribunal recommended the following sanctions –

a) an order advising and admonishing the respondent solicitor

b) an order directing the respondent solicitor to pay the sum of €5,000 plus VAT as a contribution towards the whole of the costs of the applicant

STATUTORY PROVISIONS AND THE REGULATIONS

8 Section 24 of the Solicitors (Amendment) Act 1994 states that the meaning of “misconduct” as it appears in the statutory provisions includes –

(a) the commission of treason or a felony or a misdemeanour,

(b) the commission, outside the State, of a crime or an offence which would be a felony or a misdemeanour if committed in the State,

(c) the contravention of a provision of the Principal Act or this Act or the Solicitors (Amendment) Act, 1994, or any order or regulation made thereunder,

(d) conduct tending to bring the solicitors' profession into disrepute;

9 Regulation 7(2)(a) of the Solicitors Accounts Regulations provides as follows –

(2) For the avoidance of doubt, it shall be a breach of these Regulations—

(a) for a debit balance to arise on any clients' ledger account in respect of any client of a solicitor, other than a debit balance which is totally offset by a credit balance arising on another clients' ledger account in respect of the same client;

10 Regulation 12(1) relates to the books of account to be maintained by a solicitor and states –

12 (1) A solicitor shall, at all times in the course of and arising from his or her practice as a solicitor, maintain (as part of his or her accounting records) proper books of account and such relevant supporting documents as will enable clients' moneys handled and dealt with by the solicitor to be duly recorded and the entries relevant thereto in the books of account to be appropriately vouched.

SUBMISSIONS OF THE APPELLANT

11 In his grounding affidavit, the appellant solicitor acknowledges the role of the Law Society and the value of inspections in ensuring that solicitors' accounts are properly maintained. He states that since the initial inspection he has implemented the recommendations of the Society and that, as a result, two subsequent inspections of his accounts went ‘much more smoothly’. He accepts that there were errors in relation to his accounts but states that no client suffered any loss as a result of any breaches of the Regulations and that there is no allegation of deliberate fraud, exploitation, or misleading of clients. It is submitted that at no time was clients' money put at risk. He attributes his failure to immediately rectify errors in his accounts to the busy nature of his practice and an administrative error whereby a legal executive tasked with certain responsibilities in relation to the accounts was working from a laptop on which accounts were not regularly updated.

12 Counsel on behalf of the appellant submits that the decision of the Tribunal ought to be rescinded on three grounds. Firstly, the facts as admitted and as found by the Tribunal do not amount to misconduct. Secondly, it is contended that the breaches of the Regulations as conceded by the solicitor were relatively minor in nature and arose partly due to accidental oversight and partly due to a significant error on the part of the solicitor's bank. Thirdly, it is submitted that the facts as found by the Tribunal in respect of a breach of Regulation 7(2) did not constitute a breach of Regulation 12(1).

13 Counsel submits that the misconduct was brought about by errors of duplication or oversight and in one instance a debit balance occurred due to Ulster bank accidentally lodging a sum of €50,000 as €5,000. However, it is accepted that the appellant neglected to lodge cheques to correct the debit balances in a timely fashion. Nonetheless, it is submitted that there is no suggestion of any fraud or mala fides on the part of the appellant solicitor and there was no ulterior motive.

14 The appellant submits that it as been accepted by the Society that not every breach of an Order or Regulation amounts to misconduct under s.24 of the 1994 Act. It is submitted that this position is consistent with an application of the principle of interpretation noscitur a sociis, which says that the meaning of questionable words or phrases in a statute may be ascertained by reference to the meaning of words or phrases associated with it. In the case of McCabe v Governor of Mountjoy Prison (No.1) [2014] IEHC 309 Hogan J. referred to this principle in the following terms –

‘17. More fundamentally, this is another classic example where the principle of noscitur a sociis (‘known by its companions’) comes into play. This principle reflects the fact that in the English language words do not always have fixed meanings, but...