Public and Regulatory Law Group Alert: June 2012

Case Law

Law Society v Waddingham, Smith and Parsonage EWHC 1519 (Admin)

Considering the application of the test of dishonesty set out in Twinsectra Ltd v Yardley UKHL 12

This case relates to allegations that W, S and P, partners in a solicitors firm, transferred sums from the firm's client account to its office account, acted in circumstances of a conflict of interest in making loans to S and P from money that it held in trust and, in relation W and S only, made loans from money from the same trust to another of the firm's clients.

The trust in question was established under the will of a former client, of which W had been appointed as executor and trustee. On counsel's advice, a single loan 'of a modest amount of money' was made to S from the trust for reasons totally unconnected with the business of the firm. Subsequently however, further loans were made to S and also to P, to allow them to introduce further capital to the firm. No date for repayment was specified and none of the loans were secured. Further, W and S made loans (with no interest payments) to a company which leased vehicles to people who had been involved in traffic accidents, and recommended the firm to those who might become involved in litigation as a result of the accidents.

All allegations were admitted, and the sole live issue at the hearing was whether the conduct in relation to the loan allegations was dishonest. A further allegation, of misuse of trust funds, was introduced during thecourse of the hearing and again the SRA alleged dishonesty in relation to this allegation.

Further to an indication from the Tribunal that it was not satisfied that dishonesty had been made out in relation to the loan allegations, the solicitor for the SRA indicated to the Tribunal that although he had understood that all Respondents were admitting the new allegation absent dishonesty, he understood now that this was not the case. On that basis, he withdrew this allegation.

In the Tribunal's written decision regarding its findings on dishonesty, it took into account, in relation to W, the two conditions in the test set out in Twinsectra Ltd v Yardley UKHL 12, finding that the first condition had been met as the public would undoubtedly consider the taking of trust monies as dishonest.  However, it was not satisfied that the second limb was satisfied, that is that W knew what he had done was wrong. The Tribunal then went on to repeat that dishonesty was not found in relation to S or P either, but did not expressly state which aspect of the Twinsectra test had not been made out.  W and S were fined £12,000 and P £7000 and ordered to pay costs of £6800 each.

The Law Society appealed against findings in respect of S and P. On appeal, the Court found that the proceedings were confused, inaccurate and inconsistent at times. Further, it found that the objective and subjective limbs of the Twinsectra test had to stand or fall together, as it could not sensibly be concluded that the conduct of S and P would have been regarded as dishonest according to the standards of reasonable and honest people, without their being aware subjectively that they were acting dishonestly.

The Court concluded that whilst S and P probably did act dishonestly, the Court could not be sure to the required standard. It found that the financial penalties imposed on the Respondents were wholly inappropriate in the circumstances. On this basis S was suspended for 18 months and P for 12 months.

R v General Teaching Council for England EWHC 1505 (Admin)

The approach to matters of insight, and earlier denials of misconduct

The Appellant Head Teacher (H) appealed against a two year prohibition order imposed by the Council's Professional Conduct Committee following a finding of unacceptable professional conduct.  H had been dismissed from a school following a disciplinary hearing into allegations that he masturbated in his school office on two occasions, viewed adult pornography on his school computer during school hours, and that he failed to make proper checks when recruiting a teacher who he knew had had allegations of inappropriate conduct with pupils made against him.

Throughout the internal disciplinary proceedings, and during the respondent Council's investigation, H admitted the allegations, save for the first allegation (of masturbating in his office), which he denied until the Notice of Hearing was served, at which point counsel had been instructed.

H did not attend the hearing, but was represented by Counsel who made extensive submissions as to H's insight into his misconduct and his excellent record and testimonials. The Committee found that H's behaviour amounted to unacceptable professional conduct and fell well below the standards expected of the profession and particularly those expected of a head teacher. It concluded that it could not be satisfied that H did not pose a significant risk of repeated behaviour as it had seen no evidence that he had taken steps to address underlying factors which gave rise to the allegations.

On appeal, H submitted that the Committee had erred in its approach to insight, wrongly giving weight to his history of denying the masturbation allegations which it had erroneously equated with lack of insight and giving inadequate weight to his admission of the other factual matters and to his successful career and positive references. Further, the Committee's decision was inconsistent with other decisions made by the Council and the penalty was disproportionate. 

The Court dismissed the appeal, disagreeing that the Committee equated denial with a lack of insight.  The Committee was entitled to take in to account that H had had numerous formal opportunities over three years to admit the masturbation allegation, but did not. Some credit had to be given, however H's admission could not be regarded as showing the same insight as an early, unpressured admission, absent further explanation. There had been no other evidence before the committee as to H's insight and because H had not attended the hearing, the committee had been unable to ask questions to assess the depths of his insight.

The Court held that the Committee clearly did take H's references in to account and did not give insufficient weight to his glowing record. It confirmed that the decisions of previous committees are not meant to be precedents, nor are they meant to fetter future committees.  As to proportionality, the Committee was bound to determine that these matters were not isolated and the totality of the conduct had to be considered.

Regulatory News

CHRE publishes Annual Performance Review

The Council for Healthcare Regulatory Excellence (CHRE) has released its Annual Performance Review of UK healthcare regulators in which it has found that most regulators are performing well across their regulatory functions. The CHRE has some areas of concern in relation to some of the regulators, who are already taking action to address these matters. It has made some recommendations for the regulators and highlighted further areas of work for CHRE, which it will take forward.  The Review can be read here.

CHRE publishes NMC Strategic Review

The CHRE has made significant criticisms of the Nursing and Midwifery Council (NMC) in its Strategic Review published on 3 July 2012. The independent review highlights confusion over its regulatory purpose, weak governance, poor planning, unreliable management information, and inadequate IT systems. The report makes 15 recommendations for changes in leadership, culture, finance and operational management in order to rebuild the confidence of its staff, the public, nurses and midwives. Details of the Strategic Review can be seen here.

NMC apologises for failures identified by CHRE

The NMC responded immediately to the publication of the CHRE review, acknowledging the failures identified and apologising.  Acting Chief Executive and Registrar Jackie Smith admitted that reading the Review together with the CHRE's annual performance review (see above) was 'difficult' but the NMC were committed to using the reports as catalysts for change within the organisation, and addressing the weaknesses identified within the reports.  The full statement can be seen here.

CHRE responds to Law Commission

CHRE has submitted its response to the Law Commission, Scottish Law Commission and Northern Ireland Law Commission joint consultation on the regulation of health and social care professions.  Suggesting bolder recommendations around accountability, the CHRE has urged the Law Commission to put a greater focus on future-proofing the legislation, rather than concentrating on correcting some of the errors from the past.The NMC's response can be seen here.

CQC announces new Chief Executive

David Behan will replace Cynthia Bower as the Chief Executive of the Care Quality Commission (CQC) it has been announced.  Mr Behan takes up the role this month, leaving the Department of Health where he was the Director General of Social Care. Local Government and Care Partnerships.  The full announcement can be seen here.

GMC launches MPTS

From 11 June 2012, the Medical Practitioners Tribunal Service (MPTS) took over adjudication of all fitness to practise cases bought by the General Medical Council (GMC).  Based in Manchester, the MPTS will be accountable to parliament and part of the GMC, but operationally separate from the medical regulator's other functions.  More information about the Service can be seen here.

GSCC holds farewell reception

Ahead of its formal closure on 31 July 2012, the General Social Care Council (GSCC) thanked its friends and colleagues at a reception held on 25 June 2012.  Peter Burstow, Minister of Care Services, thanked the GSCC for its work over the last 11 years in raising the public's perception of social work as a profession, and confirmed that the GSCC's legacy would live on in future work.  GSCC Chief Executive wished the Health Professions Council, who will regulate social workers from 1 August 2012, the best of luck and said she was confident that the professionalism of social work would continue in the future.  The GSCC's comments can be seen here.

GSCC publishes learning reports

The GSCC has reported that out of 100,000 registrants, only 1.1% received a complaint against them in the last year, and only 0.3% of social workers have had findings of misconduct made against them in 8 years.  Self referrals were the second largest source of referral for the regulator, at 22%, with 34% being made by employers.  The reports capture the knowledge of the organisation after 11 years spent regulating social workers and students.  Findings of the reports can be seen here.

HFEA welcomes DH consultation document on transfer of functions to CQC and HRA

The Human Fertilisation and Embryology Authority has welcomed consultation on the issue of transfer of its functions to the Care Quality Commission and Health Research Authority.  The regulator of NHS and private fertility clinics was told in July 2010 of the Government's proposal to transfer IVF regulation to the CQC and HRA in cost cutting measures.  Since that time, the HFEA says it has worked hard to cut its costs and expenditure whilst still maintaining high standards and public confidence and looks forward to responding to the consultation.  Its full statement can be seen here.

HPC sets out standards of proficiency for social workers

The Health Professions Council has published standards of proficiency, which will be effective from 1 August 2012. These standards detail the competencies and capabilities of fully trained social workers. The standards will ensure the necessary thresholds are met, and that social workers are clear of what is expected of them. More information on the standards for safe and effective practice for social workers can be seen here. 

For further information please contact Sarah Ellson, Partner or Juliet Oliver, Partner in the Public and Regulatory practice at Fieldfisher.