Solicitor who let luxury car club use client account loses appeal

A solicitor who used his client account to handle money on behalf of a luxury car club has lost his appeal against a £7,500 fine imposed by the SDT.

Mr Justice Cranston (pictured) said Premji Patel, principal of Alliance Solicitors in Harrow, London, held funds for investors in the club and distributed profits when cars were sold.

“The appellant checked invoices, purchase orders, and other documentation for the purpose of ensuring that funds were released properly in accordance with the arrangements,” Cranston J said.

The High Court heard that SRA investigation officers identified the ‘German Autos’ client account in 2008, and found that from the date of the first transaction in April 2006 until mid-2008, the account recorded total credits and debits of almost £12m.

Delivering judgment in Patel v SRA [2012] EWHC 3373 (Admin), Cranston J said that in 2009 the firm admitted that the arrangements for two of the most important investors did not involve Patel’s legal expertise.

“The SRA’s case was that the appellant had provided banking facilities through the German Autos client account when there was no underlying legal transaction.

“That offended against the principle stated by the Solicitors Disciplinary Tribunal in Wood and Burdett, restated as note (ix) to Rule 15 of the Solicitors’ Accounts Rules, that it was not a proper part of a solicitor’s everyday practice to operate a banking facility for third parties, whether clients or not.”

The SDT fined Patel £7,500 and imposed a costs order of £20,000 including VAT.

Cranston J rejected the arguments of Patel’s counsel that the principle in Wood and Burdett should be limited because its origins lay in the prevention of money-laundering or other illegal activity.

He concluded: “While many of the functions associated with conveyancing and acting as an executor are of an administrative nature, their long association with the legal profession gives them the character of professional services.

“They are part of the everyday practice of solicitors. What the appellant did here, as described in the client care letter, was purely administrative.

“He was the custodian of funds. That had no association with the professional duties of a solicitor and was not in relation to an underlying legal transaction.”

He dismissed the appeal. Lord Justice Moore-Bick agreed.