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SDT warns that revised dishonesty test could cause delays in trying solicitors

Supreme Court: Ruling to impact on SDT

The recent Supreme Court ruling that changed the test of dishonesty could cause delays and more hearings at the Solicitors Disciplinary Tribunal (SDT), its chief executive has warned.

The prediction came as the tribunal’s 2018 budget of £2.8m – a fall of 2.5% on the current year – was ratified by the Legal Services Board (LSB).

However, with the Solicitors Regulation Authority (SRA) forecasting significantly more cases going before the tribunal than the SDT itself has budgeted for, contingency for a further £215,000 was also agreed.

Solicitors pay for the SDT through their practising fees and its budget has to be submitted to the Law Society and then approved by the LSB. It works out at about £19 per solicitor per annum.

Last month, the Supreme Court rewrote the 35-year-old Ghosh test of dishonesty to remove the requirement that the defendant must have realised that ordinary honest people would regard the behaviour as dishonest.

In Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017] UKSC 67, Lord Hughes ruled: “When dishonesty is in question, the fact-finding tribunal must first ascertain (subjectively) the actual state of the individual’s knowledge or belief as to the facts.

“The reasonableness or otherwise of his belief is a matter of evidence (often in practice determinative) going to whether he held the belief, but it is not an additional requirement that his belief must be reasonable; the question is whether it is genuinely held.

“When once his actual state of mind as to knowledge or belief as to facts is established, the question whether his conduct was honest or dishonest is to be determined by the fact-finder by applying the (objective) standards of ordinary decent people. There is no requirement that the defendant must appreciate that what he has done is, by those standards.”

This brings the criminal test in line with the civil, but the SDT – though a civil tribunal – has historically applied the Ghosh test.

According to the minutes of last month’s LSB meeting, SDT chief Susan Humble explained that this shift was expected to impact on a number of cases currently going through the SDT.

Further, this “might potentially cause delays, create additional hearing days and therefore drive up costs”.

The SDT’s budget had assumed a total 160 cases from all sources which will would require 300 sitting days (compared to 345 days in 2017).

However, the SRA subsequently revealed that its working assumption was that 180 matters would be referred to the SDT, with an average of three days per case, making 540 days in total.

A paper before the LSB said: “Taking into account its experience on days ‘lost’ as a result of agreed outcomes (90 days) and adjournments (40), SDT considers that additional 110 days would be reasonable.” Most of the £215,000 contingency for this was made up of fees payable to tribunal members.

The LSB noted that the actual spend was often considerably lower in the year than the original budget – it was £530,000 in 2016 and anticipated to be £257,000 in 2017. Any underspend is returned to the Law Society.

A key contributor to underspend is delays to case and an LSB analysis found that 24 of the 54 cases heard in 2016 were delayed. The main reasons were found to be issues serving the respondent solicitors, no open hearing dates and having the wrong address for respondents.