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'Speculative' regulator prosecution leads to £75,000 costs

31 Aug 2023 / britain Print

'Speculative' regulator case leads to £75,000 costs

The Solicitors Disciplinary Tribunal (SDT) in Britain has ordered the Solicitors Regulatory Authority (SRA) to pay the £75,000 costs of a solicitor cleared of giving bad advice on property developments.

Following a two-day hearing last month, the tribunal dismissed allegations against Hon-Ying Amie Tsang, ruling that she had acted reasonably within the terms of her retainer.

In a departure from the norm, the SDT then noted there had been an ‘inordinate delay’ in prosecuting the case which not only caused Tsang considerable anxiety and stress and had damaged her reputation and her practice "substantially and unjustifiably".

The tribunal said the SRA had no basis in law for its allegation, called no witnesses and had relied almost entirely on extracts from Thomson Reuters’ Practical Law which post-dated the relevant events by many years and which were of limited relevance.

“The considerable stress to Tsang, the harm to her practice and the damage to her reputation caused by the proceedings and exacerbated by the applicant’s delay, were highly relevant to the issue of costs,” said the tribunal.

“The tribunal expects the applicant not to bring speculative matters to it but ones in which there has been a full analysis of the underpinning law and facts," the England and Wales Law Society Gazette reports. 

High risks

Tsang, a solicitor for 30 years who managed her own firm, was alleged to have failed to advise about the high risks of three property development schemes.

These were large new-builds where purchasers were usually overseas buy-to-let investors. 

The SRA argued that the nature of the transactions rendered them inherently risky given that investors’ funds would be at risk until the project was completed. None of the developments were completed, and purchasers’ funds – some £27m in total going through the client account – were therefore at risk, according to the SRA.

But Gregory Treverton-Jones KC, representing Tsang, argued that in order to have committed misconduct the solicitor must have been under a duty to advise. Yet this was not found in the retainer and existed only through some sort of ‘professional’ duty.

He submitted that, if the SRA was correct, Tsang could abide by the express and implied terms of the retainer (one of which was to exercise reasonable care and skill) and  still be in breach of the SRA-imposed ‘professional’ duty.

The tribunal considered that Tsang had acted reasonably within the terms of her retainer, for which she had charged a modest fee, to set out the wider risks of the investment plan.

Matters of law

It added: “As a matter of law, she had not been required to explain in great depth all conceivable commercial risks which might be faced by her clients if the developments failed, to a greater extent than she had done; nor was it reasonable to expect her to go beyond the scope of the retainer.

"She appeared to have done her best to set out the commercial risks for her clients’ benefit, even though she had not been under a duty to do so.”

'Relentless interest'

The SRA began its investigation in October 2019 having made its first request for background information in April 2017.

Treverton-Jones said the time taken to investigate and bring the matter to a hearing was "totally unacceptable" and that the SRA’s "prolonged and relentless interest" in Tsang was ‘out of all proportion to the gravity of the case’ set out before the tribunal.

The SRA’s file amounted to 1,360 pages in total, the Gazette reports.

The SRA recognised the individual and human cost of an investigation and hearing but had argued this was “part of the price of being in the solicitors’ profession wherein its members would be expected to address concerns relating to their professional conduct brought by their regulator”.

Gazette Desk
Gazette.ie is the daily legal news site of the Law Society of Ireland