SDT was wrong to slash SRA’s prosecution costs, High Court rules

Cameron: SRA’s only option was to prepare for full hearing

The Solicitors Disciplinary Tribunal (SDT) was wrong to slash the costs of the Solicitors Regulation Authority (SRA) in a successful prosecution by 78%, the High Court has ruled.

Neil Cameron KC, sitting as a deputy High Court judge, held that the SDT failed to take account of Daniel Whittingham’s failure to engage with the prosecution when it reduced the SRA’s costs claim from £22,800 to £5,000.

Mr Whittingham had been dismissed by national firm Blake Morgan and the SDT found earlier this year that he “grossly abused his position” by duping two investors into handing over money on the basis he was still working there.

He took £3,000 from one investor and £5,000 from another to buy shares in a bar in Manchester, but it was unclear whether the investment opportunity “was a genuine one”.

Mr Whittingham, admitted in 2015, worked in the banking and finance team at Blake Morgan for just over three months to June 2018. He was dismissed during his probationary period for reasons unrelated to the SDT proceedings.

After striking him off, the SDT reduced the SRA’s costs claim on the grounds that the case was “straightforward” and there were no witnesses or respondent at the hearing, which took less than a day instead of the estimated two days.

In a highly unusual move, the SRA appealed the costs order and Judge Cameron said the SDT failed to exercise its discretion properly and thus fell into an error of law.

This was because it did not take account of Mr Whittingham’s conduct, “in particular in providing equivocal responses to the allegations made against him, and in failing to state whether he planned to attend the substantive hearing”.

Judge Cameron said: “A professional subject to a regulatory regime is under an obligation to engage with the regulator. That obligation applies to the investigation and to the formal disciplinary procedures. The respondent failed to meet that obligation.”

Mr Whittingham’s failures meant that the SRA’s “only reasonable option” was to prepare for a two day hearing on the assumption that he would attend, question witnesses and give evidence.

Reassessing the costs, the court reduced the claim to reflect the fact that the hearing lasted for one day not two. He considered the ‘blended rate’ of £189 for 59.4 hours of work by the three solicitors at Capsticks who handled the prosecution for the SRA to be reasonable and proportionate.

This led to an award of costs of £19,468.

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