Professional regulation – a ‘lack of integrity’ and ‘dishonesty’ are distinct concepts

  • Insight

30 May 2018

The English Court of Appeal has recently confirmed that the concepts of “dishonesty” and “lack of integrity” have distinct meanings in the context of regulatory proceedings.

While the concept of dishonesty has recently been reformulated by the Supreme Court in Ivey v Genting Casinos, the Court of Appeal has now confirmed in Wingate and Evans v The Solicitors Regulation Authority that behaviour which is objectively honest may still lack integrity if it falls below the ethical standards we expect from the professions.

Wingate & Evans - the background

Mr Wingate and Mr Evans operated a law firm in England which specialised in personal injury claims. Mr Wingate focused on the financial and business side of the firm, while Mr Evans focused on the firm’s caseload.

In 2012, the firm fell into financial difficulty, with £930,000 in debt outstanding to HBOS. New sources of funding were needed urgently in order to keep the firm afloat.  Matters unfolded as follows:

Mr Wingate had discussions various people who worked for Axiom, a provider of funding for personal injury claims.
Those discussions apparently suggested Axiom would be willing to provide wider, more general funding which could be used as Mr Wingate saw fit to keep the law firm in operation.  
Axiom subsequently sent a standard-terms contract, which made clear that funding could only be claimed for specific legal expenses related to specified claims.
Mr Wingate signed this contract in the belief that this was not the true terms of his agreement with Axiom
Mr Evans signed it on Mr Wingate’s advice without having read it.

The firm thereafter spent the funds paying back debts and on other business expenses. Axiom fell into receivership in 2013 and at this point the Solicitors Regulatory Authority (the SRA) started to investigate the nature of the loans made to Wingate and Evans’ law firm.

The case against Wingate and Evans at the disciplinary hearing

The Solicitors Disciplinary Tribunal decided that neither solicitor had acted without integrity.  In reaching this conclusion, the tribunal relied on the fact that Wingate had genuinely believed that the contract was just a sham which would later be replaced and Evans had acted totally on Wingate’s advice.

The appeals

The Solicitors Regulatory Authority disagreed with the panel’s decision on integrity and appealed to the High Court, which held that both the solicitors had acted. The solicitors then appealed to the Court of Appeal.

The Court of Appeal’s decision on the meaning of “dishonesty” and “integrity”

The key to the Court of Appeal’s decision is that the concept of acting in a way which lacks integrity is a broader concept than acting dishonestly.

Dishonesty

The test for dishonesty has recently received significant judicial attention.

The previous test for dishonesty in English criminal law – and often adopted in professional regulatory proceedings - was a two-step test identified in R v Ghosh. Firstly, the court had to identify what objectively would appear to be dishonest behaviour but also identify whether the accused subjectively actually understood that their behaviour was dishonest – if they did not believe that, then the charge of dishonesty would fail.

This test was reformulated in Ivey v Genting Casino, to a single objective test as to whether the public at large would see the behaviour as dishonest, taking into account any information available to the accused.

The Court of Appeal was satisfied that neither Mr Wingate nor Evans had acted dishonestly. There was no deliberate fraud perpetrated and no genuine decision to conceal information from Axiom.

Integrity

However, the question remained as to whether they had acted without integrity.

Integrity is a harder concept to define than honesty, and the court stated that there was no single definition of integrity which would encapsulate all possible breaches. That said, the court held that it would be unhelpful to refuse to provide any guidance as to what constituted a lack of integrity.

The definition

Integrity, the court held, refers to the higher ethical standards that society holds professionals to compared to the general public. So, for example, lawyers owe a duty to be totally upfront and frank when appearing before a court, including a duty to highlight anything which may be unhelpful to their case. The general public merely have a duty not to act dishonestly in such proceedings. Other examples are given by the court, including:

  • A sole practice giving the appearance of being a partnership;
  • Recklessly, but not dishonestly, allowing a court to be misled;
  • Subordinating the interests of the client to the solicitors’ own financial interests;
  • Making improper payments out of the client account;
  • Allowing the firm to become involved in conveyancing transactions which bear the hallmarks of mortgage fraud; and
  • Making false representations on behalf of the client.

In all of these examples, the solicitor has acted in a way which falls below the standard expected of them, even if they have not specifically lied at any point.

The Court of Appeal’s decision on the facts

On the basis of the definitions laid out by the court, the Court of Appeal held that neither solicitor had acted dishonesty. In the case of Mr Wingate, he had honestly believed that the written contract would be subordinated to the verbal agreement he had with representatives from Axiom. Mr Evans relied wholly on Mr Wingate’s advice and was therefore not aware of the true terms of the contract with Axiom.

However, the court found that Mr Wingate had acted without integrity. While an ordinary member of the public may be entitled to rely on verbal assurances, a solicitor is not in a position to enter into a “sham contract” and claim they were not aware they would be bound by its terms. By agreeing to a contract which he had no intention of being bound by, Mr Wingate had fallen below the standards expected of the solicitors’ profession and consequently acted without integrity. As Mr Evans had been very busy and relied on Mr Wingate as his business partner, he was found not to have acted without integrity.

Lessons for regulators

A number of regulatory regimes include rules dealing with the integrity of that profession’s members. Regulators will now be aware that this has a distinct – and broader – meaning than the concept of dishonesty, and should be comfortable with the use of either or both concepts when framing their charges.

Similarly, regulated professionals should understand that behaviour is not necessarily safe from sanction, simply because it technically doesn’t amount to dishonesty. The concept of integrity provides a wide net for regulators to sanction behaviour which is manifestly inappropriate or unprofessional without resorting to the test of dishonesty.

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