In criminal law, the law surrounding the concept of dishonesty, an element in many charges, has been largely settled since 1982, by the famous judgement of Lord Lane in R v Ghosh, requiring both proof of subjective and objective dishonesty. The issue has been less clear in regulatory cases, and was seemingly turned on its head by the judgement in Malins v SRA  EWHC 835.
The Solicitors Regulation Authority (SRA) brought a case against a litigation solicitor in 2016. The solicitor was acting for a client in a dispute over building works. His client had taken out an “After the Event Insurance (ATE)” policy to cover the risk of an adverse costs order. As a result of a change in the law, the cost of premiums in respect of ATE policies taken out after 1 April 2013 would no longer be recoverable in a costs order. Policies taken out before 1 April 2013 would remain recoverable provided that a notice in Form N251 had been served on the other party and had been filed with the court.
The solicitor’s case was that he was positive that he had sent a copy of Form N251 to his opponent. However, he could find no evidence in support, and more than a year later he created a backdated letter and form of notice, which was sent to the other side, and subsequently relied upon in settlement negotiations.
The matter came to light, and in June 2014, the appellant notified his firm that there existed a circumstance that might give rise to a claim under the firm’s professional indemnity policy. This led to the firm reporting the matter to the SRA. The solicitor subsequently made a self-report to the SRA, where he stated:
“I accept that I made subsequent false representations in relation to the letter and Form N251 to the opposing solicitors and to the client. This was totally unacceptable and the creation of those documents was a total aberration on my part of which I am ashamed. I created the documents myself and no one else at the firm was involved in creating the documents”.
The matter was referred by the SRA to the Solicitor’s Disciplinary Tribunal. The SRA alleged the solicitor had:
- Created a Form N251 (notice of funding) on 2 May 2014, which he backdated to 19 March 2013, in breach of Principles 2 and 6 of the SRA Principles 2011.
- Created a covering letter for a notice of funding on 2 May 2014 with a date of 19 March 2013, in breach of Principles 2 and 6 of the SRA Principles 2011.
- Relied on or acquiesced in others at his firm relying on the backdated documents mentioned above from 2 May 2014 until on or around October 2014 as evidence in support of his position when seeking to favourably negotiate a settlement with his opponent in litigation, in breach of Principles 1, 2 and 6 of the SRA Principles 2011.
The SRA stated that while dishonesty was alleged with respect to the third allegation, proof of dishonesty was not an essential ingredient for proof of any of the allegations. No allegation was made of dishonesty in respect of the first two allegations, only that the appellant lacked integrity, a breach of Principle 2. The disciplinary tribunal found the solicitor guilty of all charges and struck him off the roll. He appealed against the conviction and sentence.
The appeal was successful. Mr Justice Mostyn described the charges accusing the appellant of lacking integrity but not dishonestly in relation to the creation of the documents as “intellectually virtually impossible to understand”. The judgement proposed “honesty” and “integrity” as synonyms, moving away from Bolton v The Law Society  1 WLR 512 which drew a distinction between being found guilty of acting with dishonesty, and acting without “integrity, probity and trustworthiness”. Bolton was reiterated as most recently as 2016 in SRA v Wingate  EWHC 3455 (Admin) which stated: “While all dishonesty involves a lack of integrity, not all lack of integrity involves dishonesty”.
Significantly, Bolton has long been adopted by legal regulators, who used “lacking integrity” as a lower hurdle distinct from dishonestly. The difference is significant. In the latter case a strike-off is almost inevitable, but in the former a striking off order does not necessarily follow.
Therefore, although the tribunal’s judgment was that the appellant was found guilty of serious dishonesty, it was made in violation of the basic rule that if someone is facing a case of dishonesty they have to know that explicitly so that the precise allegation can be challenged.
The impact on regulators is clear: they must expressly plead and prove dishonesty. The theoretical lesser charge of lack of integrity has lost its purpose as an allegation more serious than misconduct but less than dishonesty.
The most obvious way forward for regulators is to adopt the criminal law definition of dishonesty, with appropriate revisions. The term “dishonesty” is not defined in the Theft Act 1968, but section 2 provides three distinct circumstances where a person’s appropriation of property belonging to another is not to be regarded as dishonest:
- Where the person believes he has (in law) the right to deprive the other person of the property on behalf of himself or of a third person.
- Where he would have the other person’s consent if the other knew of the appropriation and the circumstances of it.
- Where the owner of the property cannot be discovered by taking reasonable steps.
In R v Ghosh  EWCA Crim 2, the court stated that the test for dishonesty under the TA 1968 was a two stage test to determine whether a defendant had acted dishonestly, as follows:
- A jury had first to decide whether, according to the ordinary standards of reasonable and honest people, what was done was dishonest. If it was not dishonest by those standards, that would be the end of the matter and the prosecution would fail. This is known as the objective test.
- If it was dishonest by those standards, then the jury had to consider whether the defendant himself had to have realised that what he was doing was by those standards dishonest. This is known as the subjective test.
The subjective test is purely focused on whether the defendant knew what he was doing was dishonest, rather than morally justified. For example, an anti-vivisectionist stealing a live animal from a testing lab would be guilty of theft despite his own moral justification (R v Ghosh, Lord Lane).
However, this important decision should overshadow the failings of the SRA in bringing these charges, which were poorly drafted and did not leave the appellant clear as to what he was required to defend. As Mr Justice Mostyn remarked, the lack of a principle concerning honesty is further evidence that integrity is a synonym. In contrast, the Law Society of Ireland spells it out for Solicitors in their code of conduct:
- Honesty: A solicitor must be honest in his practice as a solicitor in all his dealings with others.
And the Law Society of Scotland rule B1.2: Trust and personal integrity states:
- You must be trustworthy and act honestly at all times so that your personal integrity is beyond question. In particular, you must not behave, whether in a professional capacity or otherwise, in a way which is fraudulent or deceitful.