The Transparency Task Force (TTF), a social enterprise which campaigns for greater transparency in financial services, has been granted access to a limited number of documents used in Solicitors Disciplinary Tribunal (SDT) hearings relating to a collapsed Brazilian property investment scheme.
The SDT struck off Charles Valentine Fraser-McNamara in March 2019 for his role in promoting Ecohouse Developments, a Ponzi scheme which paid existing investors with funds received from new investors.
Mr Fraser-McNamara, a consultant at former Black Country firm Sanders & Co, had already been suspended for a year by the SDT in December 2016 for his involvement with Ecohouse.
Michael John Davies, senior partner of Sanders & Co, and managing partner Clare Louise Taman were also suspended for a year.
The law firm, which closed in the summer of 2016, acted both for Ecohouse and the investors. Ecohouse suspended its operations in November 2014, following the intervention of the Brazilian police.
TTF said its disclosure application was “made in support of and in association with numerous victims” of the Ecohouse scheme, who had “suffered financial loss and distress on account of the actions of the solicitor respondents”.
The campaign group said the public interest was “amplified” by the fact that 850 clients had suffered for over two and a half years, insurers refused to indemnity client losses, the Solicitors Regulation Authority (SRA) refused to make any awards from its Compensation Fund and the fact this was a Ponzi scheme.
TTF applied for non-party disclosure of a long list of documents used in the tribunal proceedings in 2016 and 2019, most of which the SDT decided not to disclose.
However, in a memorandum of application for non-party disclosure, the SDT did decide to disclose the SRA’s ‘rule 5 statements’ – setting out the allegations and supporting evidence – for both hearings, a move opposed by the regulator.
In its submission to the tribunal, the SRA argued that the material sought by the TTF included confidential documents, some possibly subject to privilege.
It said: “TTF seek a wide range of documents which are voluminous and could only be rendered capable of disclosure through extensive sifting, redaction and anonymisation, which the tribunal has no power to direct the SRA to undertake and it would be inappropriate and impracticable for it to undertake itself.”
The SRA argued that the SDT’s rulings contained “sufficient detail of the Ecohouse investment scheme and the solicitors’ roles in the scheme” to enable the public to understand what happened.
However, the SDT ruled that the rule 5 statement for the 2016 hearing should be disclosed “subject to redactions to protect the identities of investors and other third parties”, but the exhibit that went with it and was over 700 pages long should not be disclosed.
The exhibit “contained a very extensive amount of personal information and copy documents which were unambiguously client documents attracting legal professional privilege”.
The SDT made a similar decision in relation to the 2019 hearing.
The SRA argued that this could undermine a memorandum of understanding it had with the Insolvency Service, but the tribunal said the statement, as opposed to the exhibit, made only “limited” references to the service and there was no need for these to be redacted.
The SRA was neutral on whether the respondents’ responses to the first rule 5 statement should be disclosed, and the tribunal ruled that they should be, along with the witness statements for the first hearing, apart from the first of two given by Mr Fraser-McNamara.
Witness statements given by three investor clients who did not appear at the 2016 hearing were not disclosed, nor was a copy of the SRA’s forensic investigation report into Sanders & Co, or a copy of all the client complaints made against the law firm.
The SDT said the bundles of authorities for the hearings could not be disclosed because they could not be located.
Disclosure of any of the documents was opposed by the respondents.
In a joint statement, Mr Davies and Ms Taman argued that the information sought by TTF contained “personal information as to the identity of the disappointed Investors together with financial information” which was privileged.
Mr Fraser-McNamara argued that the documents sought contained “highly personal, both medical and financial, information” and accused TTF of going on a “policy fishing exercise”.
Following its ruling, the SDT circulated the redacted documents it had decided to disclose to the SRA and the respondents.
In a further memorandum of application for non-party disclosure, the tribunal agreed to a “small number of additional redactions required to the names of individuals (and one company) for consistency” but rejected a request by Mr Davies and Ms Taman for further redactions.
Last year, the SDT released a new policy that said non-parties should in principle be given access to documents placed before it and referred to during hearings.
Rejecting suggestions that it does not apply this in practice, the tribunal cautioned that, while it endorsed the open justice principle outlined by the Supreme Court in 2019 in relation to court documents, it could be more tricky in regulatory proceedings.