The High Court has rejected an appeal by a solicitor struck off after he “turned a blind eye” to the warning signs of fraud in an early release pension scam.
Mr Justice Murray said that Robert John Metcalfe admitted in his appeal acting with a lack of integrity, meaning that he came from a “more difficult starting point” than he had done at his tribunal hearing.
The solicitor’s position before the Solicitors Disciplinary Tribunal (SDT) in 2019 was “essentially that, although he may have made some mistakes, he had always acted with integrity”.
Murray J said that by failing to challenge the other findings, the solicitor must accept that he had “failed to act with integrity, failed to act in the best interests of each client, failed to behave in a way that maintains the trust that the public places in a solicitor and in the provision of legal services, and failed to protect client money and assets”.
Challenging his striking off at the High Court, Mr Metcalfe argued that the SDT was wrong to make findings of dishonesty against him, the sanction he received was “disproportionate and too severe”, and the Solicitors Regulation Authority (SRA) should not have been awarded costs of £30,500.
The SDT found that Mr Metcalfe, principal of RMJ Solicitors in Liverpool, had “sought to replace the income he had lost” following the departure of his four personal injury lawyers with another income stream.
Early release pension scams persuade people to remove money from their pensions before they reach the age of 55.
The money is transferred to a fund set up by the scammers, often overseas, with the individual receiving around half of it and much of the rest taken up by fees.
In this case, there was a 20% deduction from the sum for interest on loans the clients did not know they were making, between 12% and 22% for the introducer or agent, and 5% for Mr Metcalfe.
The SDT said the solicitor, who had no contact at all with his clients, had “deliberately turned a blind eye and had asked no questions and undertaken no enquiries so as not to establish as a fact the dubious nature of the scheme” – he was unaware that the scheme involved early release.
A separate finding was that he acted in a back-to-back share purchase scheme, which saw shares bought and then sold on immediately for a much higher prices, arrangements which again had the hallmark of fraud.
Murray J said the tribunal did not need to find that either scheme was fraudulent before concluding that the solicitor was dishonest.
“It was enough that the transactions bore clear and obvious hallmarks of fraud and that Mr Metcalfe had deliberately turned a blind eye to those hallmarks.”
Further, for the purposes of the test of dishonesty, “it was open to the SDT to conclude that Mr Metcalfe’s decision not to speak to his clients about the transactions was deliberate, motivated by a desire to avoid learning something that he would rather not know.
“Having concluded that, it was open to the SDT to conclude that ordinary decent people would consider such conduct to be dishonest and, therefore, to conclude to the criminal standard that Mr Metcalfe’s conduct had been dishonest.”
Murray J said counsel for Mr Metcalfe had criticised the SDT for reaching its conclusions, and “purporting to do so to the criminal standard”, on the basis of various inferences.
“As is regularly demonstrated in the criminal courts, however, a case based on inferences can, nonetheless, be a powerful one. The fact that a tribunal relies on inference does not mean that the criminal standard of proof cannot be satisfied.”
On sanction, counsel for the solicitor argued among other things no client had complained about the transactions, and Mr Metcalfe had become “overwhelmed to a degree by the pressure of running the firm”.
Mr Metcalfe had also suffered “certified serious mental stress”, affecting his ability to “maintain full regulatory compliance consistently on all fronts”.
Counsel for the SRA argued that his misconduct was no ‘moment of madness’ and instead was “planned and considered” and he had been “evasive in both the interview and his written answers”.
The only evidence of mental stress was a letter from the sole practitioner’s doctor dating from after the period of the misconduct.
Dismissing the appeal on this point, Murray J said it was “not arguable that there were exceptional circumstances justifying a sanction other than striking-off, much less that the sanction of striking-off was clearly inappropriate”.
He also found no reason to disturb the costs order.