The Law Reports (Appeal Cases)
[1940] AC 282
[HOUSE OF LORDS.]
1939 Oct. 19, 23, 24, 25, 30;
Dec. 5.
VISCOUNT MAUGHAM, LORD ATKIN, LORD RUSSELL OF KILLOWEN, LORD WRIGHT, and LORD PORTER.
Solicitor — Alleged professional misconduct — Delivering defence suspected to be false — Filing inadequate affidavit of documents — Proceedings conducted by clerk — Liability of solicitor to pay costs personally — Jurisdiction of judge.
The jurisdiction of the Court to order a solicitor to pay the costs of proceedings is not limited to cases where he personally has been guilty of misconduct, but extends to a case where his managing clerk, to whom he has entrusted the necessary work, is guilty of misconduct, as, for example, in the preparation and filing of incorrect and inadequate affidavits of documents. The jurisdiction is not limited to deal with cases of misconduct or default, but extends to the case where costs have been improperly incurred or without reasonable cause or have proved fruitless by reason of undue delay in proceeding under a judgment or order.
An order for discovery requires the client to give information in writing and on oath of all documents which are or have been in his possession or power, whether he is bound to produce them or not, but as a client cannot be expected to realize the whole scope of that obligation without the aid and advice of his solicitor, the latter has a peculiar duty as an officer of the Court carefully to investigate the position, and, as far as possible, see that the order is complied with. The solicitor cannot simply allow the client to make whatever affidavit of documents he thinks fit, nor can he escape the responsibility of careful investigation or supervision. If the client will not give him the information which he is entitled to require, or if the client insists on swearing an affidavit which the solicitor knows to be imperfect, the solicitor’s duty is to withdraw from the case. A solicitor who has innocently put upon the file an affidavit by his client which he subsequently discovers to be false, owes a duty to the Court to put the matter right at the earliest moment if he continues to act as solicitor on the record.
Decision of the Court of Appeal (reported sub nom Myers v. Rothfield [1939] 1 K. B. 109) reversed, Lord Russell of Killowen dissenting on the ground that the evidence submitted to the House failed in his opinion to establish any of the charges against the managing clerk, and, therefore, the order against the respondent could not stand.
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APPEAL from a decision of the Court of Appeal reported sub nom Myers v. Rothfield.[1]
At the conclusion of the trial of an action in which a verdict and judgment were given in favour of the plaintiff, an application was made on behalf of the plaintiff to the trial judge for an order that the solicitors for the respective defendants should pay to her the costs of the action and of the application on the ground, as was alleged, of their professional misconduct in the proceedings. The particular misconduct alleged against one of the solicitors was that he had delivered defences which he must have known or suspected to be false and that he had prepared and permitted his clients to make affidavits of documents which were inadequate and false. It appeared that the solicitor in question had left the conduct of the proceedings in the action largely to his managing clerk, who though not an admitted solicitor was a solicitor’s clerk of ability and long experience, and that, on the solicitor himself intervening, he at length obtained from the clients a further and adequate affidavit of documents.
Singleton J. who tried the action held that the solicitor had not been guilty of professional misconduct in allowing the defences to be delivered, but that he had been guilty of such misconduct in allowing the inadequate affidavits of documents to be made, and the judge accordingly ordered that the solicitor should pay one-third of the plaintiff’s costs of the action and two-thirds of the costs of the application.
On appeal by the solicitor to the Court of Appeal it was held by Greer and Slesser L.JJ., MacKinnon L.J. dissenting, that, assuming that the acts in question, if done by a solicitor personally, would constitute professional misconduct on his part, the solicitor was not liable in this case, inasmuch as he had appointed a fully qualified clerk to do such business, and the acts had been done, not by the solicitor himself, but by the clerk; and further, that, even if the solicitor himself had prepared and delivered the defences, he would not by so doing have been liable, since it was not professional misconduct in a solicitor to prepare and deliver on behalf of his client a defence which he might himself suspect contained misstatements or raised false issues and put the plaintiff to the proof of his case.
The plaintiff appealed to this House.
R. A. Willes and G. B. Croasdell (for L. H. Gluckstein on active service) for the appellant. The substantial question is this: does a solicitor who, without exercising any supervision, delegates his duty to a managing clerk who is not a solicitor, secure thereby immunity from the disciplinary action of the Court even where the clerk has been guilty of misconduct in the discharge of his duty. The Court regards misconduct committed in the course of proceedings before the Court as misconduct by the solicitor whose name is on the record, and though it will carefully investigate the circumstances in which the misconduct complained of arose, and will give the solicitor the fullest opportunity to make an answer or explanation, it will not allow him, as the officer responsible, seeing that his name is on the record, to avoid responsibility by alleging and proving that in fact the act complained of was done by his unqualified managing clerk. In Norton v. Cooper. In re Manby and Hawksford[2] a member of a firm of solicitors who was not personally cognizant of his partner’s act in bringing an action in the name of a person without that person’s authority, was held liable in respect of costs. In Dunkley v. Farris[3], where an attorney’s clerk fraudulently simulated the Court seal upon a writ of summons, the Court not only set aside the writ and all proceedings thereon, but ordered the attorney, though personally blameless, to pay the costs. In Simmons v. Rose[4] a country solicitor was made liable for a loss though the representations giving rise to the claim were made by his London agents. See also Schmitten v. Faulks[5] as to a solicitor’s liability. The principle laid down by the Court of Appeal that a solicitor is not liable for the misconduct of his clerk is erroneous.
[LORD PORTER referred to Wheatley v. Bastow.[6]]
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T. F. Davis and T. J. F. Hobley for the respondent. Where a charge of professional misconduct is made against a solicitor it must be shown that he personally has been guilty, and that has not been established in this case. The charge made is in effect quasi-criminal, and to establish it it must be proved in the strictest way, the onus of proof being on the person making the charge. Here we submit that there was no evidence against the respondent. No doubt the Court can order a solicitor to pay costs even where the neglect or default is not personal to himself, but where a charge of professional misconduct is made he cannot be held guilty unless he personally is implicated. There is no ground for suggesting that the respondent was aware of what the clerk had done. With regard to the cases cited for the appellant, none of them establishes any principle of liability applicable in the present case. In Norton v. Cooper. In re Manby and Hawksford[7], the complaint was made by the solicitor’s own client — a matter which would now be dealt with under Order 65. In no way was that case analogous to the present one. In Dunkley v. Farris[8], the clerk had fraudulently simulated the Court seal — a circumstance quite different from this case. The like criticism is applicable to the other decisions referred to. In no case has it been laid down that, apart from personal misconduct, a solicitor has been held liable to the disciplinary jurisdiction of the Court. They also referred to In re Dangar’s Trusts[9], and Marsh v. Joseph.[10]
R. A. Willes replied.
The House took time for consideration.
The questions raised by the appeal are whether in the circumstances the respondent was guilty of professional misconduct; whether the learned judge misdirected himself in holding that the respondent was guilty of professional misconduct, and whether there was any jurisdiction to order the respondent to pay costs to parties for whom he was not acting as solicitor in so far as the conduct complained of was not committed by him but by his managing clerk, Mr. Osborn, who was not a solicitor.
The writ in the action was issued on November 3, 1936. The respondent accepted on behalf of the defendants, Henry Isaac Rothfield and Nathaniel Rothfield, service of the writ and of the statement of claim which was delivered therewith. The plaintiff’s claim as set out in the statement of claim alleged that the defendants were conducting a systematic swindle by means of a bogus and fraudulent business carried on as Horwood & Co., and alleged that various fraudulent misrepresentations were made whereby the plaintiff had been defrauded of various sums and securities amounting to 9560 l. 2s. The details of the fraud will be stated by my noble and learned friend Lord Wright.
The defendants, in addition to Henry Isaac Rothfield and Nathaniel Rothfield, were Norman Baron Rothfield, a firm sued as Rothies, and, lastly, the firm of Horwood & Co. The service on that firm resulted in the appearance of one Morser, who was served as a partner in that firm. Owing largely to difficulties with regard to discovery, the action could not be brought to trial until March 7, 1938. Though Norman Baron Rothfield was the only defendant who actually appeared and disputed the claim, the trial of the action lasted five full days. The jury’s verdict in favour of the plaintiff awarded her 9400 l. damages for fraudulent conspiracy for which judgment was entered against all the defendants with 287the costs of the action. It is stated that nothing could be recovered from any of the defendants.
Immediately after such judgment had been entered counsel for the plaintiff invited the learned judge, in the light of the evidence and of the facts disclosed relating to the conduct of the solicitors appearing on the record for the respective defendants, to exercise the Court’s jurisdiction over its officers, and to order and direct such solicitors to pay the costs so recovered from their respective clients on the ground that such solicitors and each of them had been guilty of professional misconduct as officers of the Court in conducting the defences of their clients.
The learned judge directed notice to be served on the respective solicitors of the grounds of complaint against each of them respectively, and, this having been done, he re-heard the application and (holding that there was not sufficient justification for an order against one of the solicitors concerned) directed an inquiry into the conduct of three other solicitors, one of whom was the present respondent, which, after further and elaborate particulars had been delivered, was specially fixed to be heard by the learned judge on the first day of the following sittings, April 26, 1938. The hearing lasted for five days. The learned judge, in addition to the evidence he had heard during the trial, heard the evidence of the plaintiff’s solicitors’ managing clerk. He also heard the evidence of Mr. Elman (the respondent) and of Mr. Osborn, his managing clerk. He had before him a considerable correspondence between Mr. Elman and his clients which the appellant’s advisers had not previously seen.
Singleton J. in his considered judgment, held that Mr. Elman was not guilty of professional misconduct in filing defences which put in issue the charges of fraud made against his clients. But finding that both Mr. Elman and his clerk, between whom he found himself unable to draw any distinction, “knew a good deal about the matters in question,” and that they had “as a result of a deliberate policy adopted in Mr. Elman’s office,” in the conduct of the defence, and in relation to discovery, “increased the plaintiff’s difficulties,
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added to the expense, and obstructed the interests of justice,” he held Mr. Elman guilty of professional misconduct as a solicitor and an officer of the Court, and he made the order stated in the first paragraph above.
The respondent appealed to the Court of Appeal against the order of Singleton J. and by an order dated July 11, 1938, the Court of Appeal by a majority rescinded the order. Greer and Slesser L.JJ. were in favour of allowing the appeal, MacKinnon L.J. agreed with Singleton J., but expressed the view that his order erred on the side of leniency.
My Lords, as I understand the judgments of Greer and Slesser L.JJ., those learned judges were of opinion that the jurisdiction of the Court to order a solicitor to pay the costs of proceedings is a punitive power resting on the personal misconduct of the solicitor and precisely similar to the power of striking a solicitor off the rolls or suspending him from practice. If this is a correct view no doubt it would follow that the solicitor ought not to be ordered to pay costs unless he has himself been guilty of disgraceful conduct; and it would follow that however negligent or obstructive or improper his conduct of the proceedings as solicitor has seemed to be, whatever injury has been inflicted on the other party or parties to the litigation, he has only to show that he left the whole matter in the hands of a clerk and he will then escape the jurisdiction of the Court in relation to costs. It would also seem to follow that if instead of a single solicitor a firm with two or more members is acting for the client it will be necessary in such a case to inquire into their several responsibilities and an order can only be made against those partners who can be shown to be personally involved. I am unable to agree with the main proposition, for which I may add there seems to be no authority. The jurisdiction to strike off the rolls or to suspend a solicitor seems to me to be of a very different character. Apart from the statutory grounds, it is of course true that a solicitor may be struck off the rolls or suspended on the ground of professional misconduct, words which have been properly defined as conduct which would reasonably be regarded as disgraceful or dishonourable by
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solicitors of good repute and competency: In re a Solicitor. Ex parte The Law Society.[11] Mere negligence, even of a serious character, will not suffice. The application is strictly personal and relates to the solicitor himself and his fitness to practise. In my opinion the jurisdiction as to costs is quite different. Misconduct or default or negligence in the course of the proceedings is in some cases sufficient to justify an order. The primary object of the Court is not to punish the solicitor, but to protect the client who has suffered and to indemnify the party who has been injured. Order LXV., s. 11, of the Rules of the Supreme Court provides the necessary machinery where the person injured is the client of the solicitor. It is a rule supplementary to the summary jurisdiction of the Court. It is not limited to misconduct or default, but expressly extends to costs incurred improperly or without reasonable cause, or which have proved fruitless by reason of undue delay in proceeding under a judgment or order. The jurisdiction to order the solicitor to pay costs to the opposite party is exercised on similar grounds. The principle will be found clearly stated in Halsbury’s Laws of England, 2nd ed., vol. xxxi., p. 271, where a number of authorities are cited. It will be found that many of these authorities depend, in cases where the order as to costs has been made, on the negligence or mistake of the solicitor and in that sense only on his misconduct in the proceedings. Some of the cases are those where the solicitor has instituted an action without proper authority, and it may be that they can be supported on the ground that in such cases the solicitor has warranted that he has the authority of his client to act for him in the litigation; but it must be observed that that is not the ground stated by the Court and I think they rest on the jurisdiction of the Court over its officers. I propose to select a few cases only for comment, since some of your Lordships will deal with the others.
In the case of In re Jones[12], Lord Hatherley L.C. laid down the rule with his usual clearness. It was a case where the solicitor had engaged to indemnify the plaintiff against the costs of a doubtful suit which failed. The defendants, failing 290to recover their costs from the plaintiff, applied by petition for (amongst other things) an order on the solicitor to pay their costs. Lord Hatherley began by laying down the general principle. He said, “I think it the duty of the Court to be equally anxious to see that solicitors not only perform their duty towards their own clients, but also towards all those against whom they are concerned.” He added that care should be taken to see that the litigation is the bona fide litigation of the client who instructs the solicitor and not one carried on altogether on the solicitor’s account, a well known proposition with which we are not concerned here. The solicitor was ordered to pay the costs. I cannot find that the proposition laid down by Lord Hatherley has ever been doubted and the cases cited in Halsbury certainly tend to support it. It is hardly necessary to point out that Lord Hatherley’s phrase implying the solicitor’s duty to parties for whom he is not acting is founded on his duty to the Court.
Nor is the proposition a modern invention. To go no further back than Serjeant Sayer’s book on the Law of Costs, 2nd ed. (1777), it will be found that he has a chapter (No. 47), “Of the liability of an attorney in a cause to pay costs.” He cites there six cases, the first being thus described: “Many mistakes having been made by the plaintiff’s attorney in the Copy of a Capias, a rule was made for him to show cause why he should not pay to both plaintiff and defendant the costs occasioned by those mistakes”: White v. Washington.[13] We are left to infer that the rule was made absolute, and the same observation applies to a statement of the case in Barnes’ Notes of Cases, 3rd ed., p. 411. In another case cited in Sayer, Fowke v. Horabin[14], a rule was made for the plaintiff’s attorney, guilty merely of gross mistakes in a certain record which had to be amended, to pay the costs occasioned by the amendments (see the statement of the case in Barnes’ Notes, 3rd ed., p. 11). These cases did not depend on disgraceful or dishonourable conduct by the solicitor, but on mere negligence of a serious character, the result of which was to occasion useless costs to the other parties.
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If then as I think the authorities show that the jurisdiction may be exercised where the solicitor is merely negligent, it would seem to follow that he cannot shelter himself behind a clerk, for whose actions within the scope of his authority he is liable. That a partner in a firm of solicitors cannot escape from such an order on the ground that he took no active part in the proceedings seems to me to be clear. If authority is needed I think the case of Norton v. Cooper[15] may be referred to. A firm of solicitors having instituted a suit without a satisfactory retainer and the suit having failed, Sir John Stuart V.-C. ordered the firm to pay the costs incurred by the plaintiff in the suit. One partner alone was concerned in the suit and the other partner contended that he was in no degree liable. The Vice-Chancellor observed: “The safety of the public and the rules of Court are to be satisfied only by holding, in a case of this kind, that, so long as Mr. Hawksford (the innocent partner) continued to appear as one of the solicitors of the plaintiff on the records of the Court, he is responsible for what took place in the conduct of the cause.” If this is true of an innocent partner it must be equally true if a person being solicitor on the record in an action or other legal proceedings chooses to leave the actual conduct of the matter to a managing clerk. The other parties have no means of knowing what particular part the solicitor, as distinguished from his clerk or his partner, has taken in the matter. If we rely on the principle laid down by Lord Hatherley, it is clear that the principle would be to a large extent useless if a solicitor on the record has merely to leave everything to a clerk.
My conclusion is that Mr. Elman cannot dissociate himself from the acts and defaults of Mr. Osborn, and in what follows I shall generally omit any reference to him and shall treat his acts as being those of his principal.
My Lords, if we approach the facts on the footing that Mr. Elman as an officer of the Court owed a duty to the Court in the proceedings by Mrs. Myers against Norman Baron Rothfield, Henry Isaac Rothfield, Nathaniel Rothfield, and 292the two firms, and that he was responsible in the performance or non-performance of that duty for the acts or defaults of his managing clerk, a good many of the difficulties disappear. But, although in the view I take it is not necessary to show that Mr. Elman has been guilty of conduct which would justify the punishment of striking him off the rolls or of suspending him from practice, I entirely agree with the contention that the jurisdiction in question ought to be exercised only when there has been established a serious dereliction of duty as a solicitor either by himself or by his clerks. The findings of Singleton J., after a long and patient inquiry and after hearing the evidence of Mr. Elman and his managing clerk, would seem to settle that question; but the matter is undoubtedly one of great importance to Mr. Elman and we have had the advantage of an elaborate hearing in which the whole of the material correspondence and the evidence given on the inquiry before Singleton J. have been exhaustively considered. I am unable to come to any conclusion different from that of the learned judge; and I shall endeavour as briefly as possible to state my reasons, bearing in mind that Mr. Elman is in no way responsible for the frauds of which his two clients have been guilty.
The particulars given before the inquiry directed by Singleton J. began included two matters, first, the filing of defences by his two clients which he knew to be false, and, secondly, that he prepared and advised and permitted his clients to make and file affidavits of documents which were wholly inadequate and false. On the first charge the learned judge absolved Mr. Elman; on the second he found that the charge was true. I think it useful to observe here that there is this plain distinction between defences which consist — as they did here — of a denial of allegations and untrue affidavits of documents. The defences are not on oath and they merely put the plaintiff to the proof of the allegations in the statement of claim; and moreover, as the learned judge pointed out, there is in such a case as the present a matter of damages which must be determined if the plaintiff’s allegations are proved. On the other hand in many actions and in particular 293in such an action as Mrs. Myers had brought, based on disgraceful frauds, and on fraudulent conspiracy of the most shameless character, it is essential in the interests of justice that the defendants should be compelled to make full disclosure of all the documents bearing on the alleged frauds in the form of proper affidavits of documents. If the defendants are guilty of the alleged frauds, it is hardly to be expected that they will make adequate affidavits without considerable pressure. However guilty they may be, an honourable solicitor is perfectly justified in acting for them and doing his very best in their interests, with, however, this important qualification, that he is not entitled to assist them in any way in dishonourable conduct in the course of the proceedings. The swearing of an untrue affidavit of documents is perhaps the most obvious example of conduct which his solicitor cannot knowingly permit. He must assist and advise his client as to the latter’s bounden duty in that matter; and if the client should persist in omitting relevant documents from his affidavit, it seems to me plain that the solicitor should decline to act for him any further. He cannot properly, still less can he consistently with his duty to the Court, prepare and place a perjured affidavit upon the file.
A further observation should be made here. Suppose that in such a case the client swears an affidavit of documents which discloses nothing relating to the frauds alleged in the statement of claim and suppose that the solicitor has previously given his client full and proper advice in the matter but has no good reason to suppose that the affidavit is untrue, it may be asked what else ought the most punctilious solicitor to do? My answer is nothing at that time. But suppose that, before the action comes on for trial, facts come to the knowledge of the solicitor which show clearly that the original affidavit by his client as defendant was untrue and that important documents were omitted from it, what then is the duty of the solicitor? I cannot doubt that his duty to the plaintiff, and to the Court, is to inform his client that he, the solicitor, must inform the plaintiff’s solicitor of the omitted documents, and if this course is not assented to he must cease to act for the 294client. He cannot honestly contemplate the plaintiff failing in the action owing to his client’s false affidavit. That would, in effect, be to connive in a fraud and to defeat the ends of justice. A solicitor who has innocently put on the file an affidavit by his client which he has subsequently discovered to be certainly false owes it to the Court to put the matter right at the earliest date if he continues to act as solicitor upon the record. The duty of the client is equally plain. I wish to say with emphasis that I reject the notion that it is justifiable in such a case to keep silence and to wait and wait till the plaintiff succeeds, if he can, in obtaining an order for a further and better affidavit. To do so is, in the language of Singleton J., to obstruct the interests of justice, to occasion unnecessary costs, and — even if disclosure is ultimately obtained — to delay the hearing of the action in a case where an early hearing may be of great importance.
The relationship of the three Rothfields, the dates of the events in this eventful story, and the early history of the fraudulent family so far as it was known to Mr. Elman are of first-rate importance in considering the circumstances proved as to the various affidavits of documents sworn by his clients. It should be observed that the three Rothfields were the main defendants in the action. Henry Isaac Rothfield was the father of Norman Baron Rothfield and Nathaniel Rothfield. The first of these three was, to the knowledge of Mr. Elman, an undischarged bankrupt, having been so adjudicated in 1922 and again in 1928. Nathaniel was an infant when the writ was issued. He attained his age of twenty-one years on May 17, 1937, and he then adopted the defence filed on his behalf by Mr. Elman acting for the guardian ad litem. Another material fact is that Henry Isaac Rothfield was arrested on November 13, 1936, and charged with the Horwood & Co. frauds, including that practised on Mrs. Myers. Mr. Elman obtained bail for him and he was apparently at large till September 7, 1937, when he was convicted at the Old Bailey of all the frauds, including those the subject of Mrs. Myers’ action, and sentenced to four years’ penal servitude. It is not surprising that he did not appear at the trial in the 295following March. Nor did Nathaniel Rothfield, who had gone in January, 1938, to the West Indies on the ground of ill-health.
Henry Isaac Rothfield and Nathaniel Rothfield were not strangers to Mr. Elman when he entered appearances for them in the Myers action (November 6, 1936). In March, 1935, he had acted for Morser in the purchase of the business of Horwood & Co. In December of that year on the instructions of Nathaniel Rothfield (aged nineteen) he acted in the incorporation of a private company called the Mushroom Farmers’ Association, Ld. In the following January he acted for that company in an action brought against it for passing off and breach of copyright. Nathaniel Rothfield was the sole director of the company. Mr. Elman knew that the father was an undischarged bankrupt, a circumstance which might explain his absence from the board. In March, 1936, it is proved that Mr. Elman was giving advice to Henry Isaac Rothfield and Morser in relation to the formation of a limited company to take over the business of Horwood & Co. He appears to have opposed such a step, and it is plain that he must have known something of its activities to have been in a position to give that advice. In April, 1936, and at subsequent dates up to June, 1937, he acted for Nathaniel Rothfield in the purchase of a number of small properties which were conveyed to Norman Baron Rothfield as trustee for Nathaniel, who, ostensibly at least, found the purchase moneys. On June 19, 1936, an action claiming damages for frauds of the sharepushing kind was commenced by Lady Chichele-Plowden against one Thomas Livingstone, Henry Isaac Rothfield and Nathaniel Rothfield. Mr. Elman arranged that Norman Baron Rothfield should be guardian ad litem for his brother Nathaniel, and Mr. Elman entered appearances for all three defendants. On July 31, 1936, a Mr. Still commenced a similar action which (after amendment) claimed damages against Morser, Henry Isaac Rothfield and one MacArthur. Morser and Henry Isaac Rothfield consulted Mr. Elman, and he delivered the latter’s defence on January 11, 1937. Morser joined Henry Isaac Rothfield and Nathaniel Rothfield as third parties and claimed to be entitled to be indemnified by 296them. Mr. Elman acted for them on this claim, which was afterwards dismissed on the ground that it was founded on a fraudulent conspiracy. The action succeeded on May 25, 1937. The Myers action began on November 3, 1936.
The degree of acquaintance between Mr. Elman and Henry Isaac Rothfield is to be surmised from a letter dated March 15, 1937 (four months after the arrest of this client on a grave charge of fraud). It is in these terms:—
“Dear Henry,
“re Myers, Still, &c.
“I find from certain correspondence which has been supplied to me and which I have not heard of or seen before that your position as between H. Morser and yourself in the Third Party proceedings and which proceedings are open and well known to the various plaintiffs, will require very careful explanation.
“In order that you will understand my meaning, I enclose herewith copies of three letters and shall be glad to know exactly how you are proposing to deal with it.
“Yours truly,
“Mr. Henry Rothfield, Burnett L. Elman.
“Highcroft Farm,
“Highcroft,
“Wickford,
“Essex.”
It may be noted in passing that Highcroft Farm, where Henry Rothfield was residing, was one of the properties bought by Nathaniel Rothfield, and it may be surmised that the latter was on good terms with his father. The important points about the letter are, first, that Mr. Elman addressed his client in familiar fashion by his first name, and, secondly, that the three letters seemed to have caused Mr. Elman some perturbation of mind. My Lords, I am not surprised. The three letters, which the learned judge cited in full, seem to me to establish beyond reasonable doubt that Henry Isaac Rothfield was the virtual owner and in any case the prime mover in the activities of Horwood & Co., and that Morser, as he was contending in the Still action, was little more than a
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dummy. It should be added that Morser had been arrested in September, 1936, as the presumed owner of the business of Horwood & Co., and that his release was followed by the arrest of Henry Isaac Rothfield — facts which pointed in the same direction.
The close connection of Henry Isaac Rothfield with the business of Horwood & Co. can scarcely have come to Mr. Elman as a complete surprise. On August 20, 1936, there had been an interview at Mr. Elman’s office at the instance of some respectable brokers who had been innocently connected with the fraudulent sale by Horwood & Co. of certain valuable shares belonging to Mrs. Myers. Several persons were present including Mr. Elman in person, a representative of the brokers, and Mr. Barker, a clerk sent by Messrs. Peacock & Goddard, the solicitors for Mrs. Myers. (Her action, it will be remembered began a fortnight later.) A letter to “Mr. Horwood” by Mrs. Myers relating to her shares was read aloud by Mr. Elman. The evidence given by Mr. Barker on the inquiry was that those present throughout referred to Mr. Rothfield as being Horwood and the witness added that it was obvious that Mr. Elman knew Mr. Rothfield was Mr. Horwood. It should also be stated that when Mr. Elman was asked for copies of the letters addressed to or coming from the possession of Horwood & Co., he said he would “get into touch with Mr. Rothfield” and subject to that would supply the copies. Counsel for Mr. Elman, with, I think, admirable discretion, did not ask any questions in cross-examination on these points. There was of course, to the knowledge of Mr. Elman, no “Mr. Horwood” at this time; and he did not apparently think that any one really controlled Horwood & Co. except Henry Isaac Rothfield. This person in fact had pretended to be Mr. Horwood at a lunch he gave to Mrs. Myers.
Mr. Elman’s knowledge of Nathaniel Rothfield was perhaps not so intimate. As we have seen, he acted for him in the formation of a company and in the purchase of a number of properties. He knew that this precocious infant had at least one banking account, for on August 10, 1936, he received a cheque for 1000 l. from him drawn on Nathaniel’s own account 298at Lloyds Bank, 222, Strand. On August 17, 1936, he delivered the defences of Henry Isaac Rothfield and Nathaniel Rothfield in the Lady Chichele-Plowden action, presumably on instructions.
My Lords, when the statement of claim in the Myers case was delivered, the knowledge already at the disposal of Mr. Elman was more than enough to put him on his guard. The case reeked with fraud. The charges made in the various proceedings against Henry Isaac Rothfield and Nathaniel Rothfield might no doubt be untrue and the criminal proceedings against the father might break down; but the clouds seemed to be gathering and care was necessary. The first affidavits of documents sworn by Henry Isaac Rothfield and Nathaniel Rothfield in the Myers action, dated March 1, 1937, disclosed nothing of the connection of either with Horwood & Co. I will assume that at that time Mr. Elman had nothing but suspicions as to the inadequacy of these affidavits. He was, however, warned by Messrs. Peacock & Goddard by a letter of March 5, of the many documents which were undisclosed. This letter and a number of subsequent letters are set out in full in the judgment of Singleton J. and I cannot usefully transcribe them here. That Mr. Elman was under no illusions after he had obtained, in March, 1937, the three letters above referred to seems to be clear from his letter to Nathaniel Rothfield on May 5, 1937, in which he told his client that there should be in his possession pass-books showing payments made by him in connection with his purchase of shares in Consolidated Gold Alluvials of British Columbia, Ld. (a purchase which formed part of the fraud on Mrs. Myers), and his transactions in connection therewith with Horwood & Co. Mr. Elman did nothing to compel the production of these documents and it was left to Messrs. Peacock & Goddard to obtain an order for further discovery. On May 3, 1937, a second affidavit of documents by Henry Isaac Rothfield was filed by Mr. Elman. A second affidavit by Nathaniel Rothfield was resisted but an order was finally obtained.
Nathaniel Rothfield’s second affidavit was sworn May 29, 1937. It disclosed a mass of documents, including 299correspondence between Nathaniel Rothfield and Horwood & Co. relating to his transactions with that business in connection with Consolidated Gold Alluvials Shares and it also included a limited number of entries in Nathaniel Rothfield’s bank pass-book of his account at Lloyds Bank (Law Courts Branch). During inspection of the documents so disclosed on June 8 and 23, 1937, the plaintiff’s solicitors, while protesting against the inadequacy of the disclosures, pointed out to Mr. Elman’s clerk that even in the documents which were disclosed there appeared references to other banking accounts which Nathaniel Rothfield had not disclosed.
Mr. Osborn informed Singleton J. at the inquiry that the Lloyds Bank pass-book had not been examined by him and had been sealed up by Mr. Elman’s clerks in accordance with Nathaniel Rothfield’s instructions. When that pass-book was first produced to the plaintiff’s solicitors only certain debit items and four credit items were disclosed. The period covered by such items was January 6 to August 18, 1936. This pass-book was not completely disclosed to the plaintiff’s solicitors till the month of November, 1937, though Mr. Osborn stated that in fact it had been in Mr. Elman’s office for over a fortnight in the month of June, 1937. When it was examined by the learned judge it appeared that upwards of 54,000 l. had passed through this account in a period of approximately fifteen months (August, 1935 — November, 1936), and it also appeared that in that pass-book on the same page as that on which an entry had been disclosed there appeared, amongst the entries which had been concealed, an entry showing a payment in cash of 1000 l. to Mr. Elman on August 10, 1936, and another showing a payment on the same day, simply “cash 1000 l.”
My Lords, like Singleton J., I do not believe that Mr. Elman never looked at the pass-book. It was his duty to look at it; for I cannot think that, in the very peculiar circumstances of this case, it was right for Mr. Elman to leave it to his client to say what items in the account ought to be disclosed. The case was one in which full disclosure of the banking accounts was a vital matter. Nor was it right to go on resisting discovery, 300and in effect, as Singleton J. observed, to leave it to Nathaniel Rothfield to say what was relevant, and to be willing to act upon that in so far as Mr. Elman’s dealings with the plaintiff’s solicitors were concerned. These were breaches of his duty to the Court in the circumstances of this case. It was not till November 30, 1937, after considerable expense and delay that Nathaniel Rothfield as the result of an order was compelled to swear his third affidavit of documents. The case against him was then clear beyond doubt, for the Lloyds Bank account in full and other banking accounts which he produced made it clear that he had taken an important part in the Horwood & Co. frauds. The details are contained in the judgment of Singleton J., and I cannot set them out here. It had thus taken from January 28, 1937, to November 30, 1937 — and three orders of the Court — to obtain a satisfactory affidavit of documents from Nathaniel Rothfield. I will not deal with the application made in the name of Nathaniel Rothfield to postpone the hearing of the case in order that he might appear as a witness, except to say that I do not believe that he ever intended to enter the witness-box. As the result of the application, the action did not come on for trial till March 7, 1938. Neither solicitor nor counsel appeared for Henry Isaac Rothfield and Nathaniel Rothfield. It is not without signficance that Mr. Elman never at any time sought to inspect any of the numerous documents disclosed by the plaintiff.
I think I have said enough to show why I agree with the findings of the learned judge and why I think that his inferences where the matters depended on inference were fully justified. He had heard and seen the witnesses, and in view of the knowledge which Mr. Elman admittedly possessed of the activities of the Rothfield family, and to his statements and those of his clerk in the witness-box, which I have read with care, and to the correspondence which was disclosed, it is my opinion that Singleton J. was amply justified in concluding that Mr. Elman was guilty of professional misconduct in not insisting on his clients disclosing the relevant documents as soon as he knew that they were or had been in their possession, custody or power, and in preparing and putting on the file 301affidavits of documents which he knew to be very inadequate. It is clear that MacKinnon L.J. was of the same opinion on the facts, and it seems probable that Greer L.J. and Slesser L.J. also agreed with their colleague as to the facts and only disagreed on the question of law.
My Lords, I think this appeal should be allowed with costs here and below and the order of Singleton J. should be restored.
LORD ATKIN (read by LORD WRIGHT). My Lords, this is an appeal from the Court of Appeal, who by a majority allowed an appeal from an order of Singleton J., who after an inquiry lasting five days had ordered the respondent, a solicitor who had acted for two of the defendants in an action of Myers v. Rothfield and others, to pay part of the costs of the action of the successful plaintiff. The ground was that the solicitor had been guilty of misconduct. The misconduct found by the judge was that in allowing certain affidavits of discovery to be sworn and put on the file he was allowing something to be done which he knew to be wrong and that in resisting further discovery he was obstructing the interests of justice and causing delay. The facts disclosed in the inquiry showed that during the course of the action the solicitor Mr. Elman was for some weeks at a time absent from his office, and that he had entrusted the conduct of the litigation generally to the charge of his managing clerk, Mr. Osborn, unadmitted but having a large experience of the conduct of litigation. The judge expressed himself as unable to draw any distinction between Mr. Elman and his managing clerk, for whom he was responsible. I think it fair to assume, as was done in the Court of Appeal, that such a phrase indicates that the learned judge was not finding that Mr. Elman himself was personally a party to the misconduct found. The majority of the Court of Appeal (Greer and Slesser L.JJ.) were of opinion that the learned judge could not exercise his punitive jurisdiction over a solicitor unless the solicitor personally had been guilty of misconduct and discharged the order. MacKinnon L.J. dissented. My Lords, I believe that all your Lordships are of opinion that the view taken by the majority of the Court of Appeal was incorrect.
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From time immemorial judges have exercised over solicitors, using that phrase in its now extended form, a disciplinary jurisdiction in cases of misconduct. At times the misconduct is associated with the conduct of litigation proceeding in the Court itself. Rules are disobeyed, false statements are made to the Court or to the parties by which the course of justice is either perverted or delayed. The duty owed to the Court to conduct litigation before it with due propriety is owed by the solicitors for the respective parties whether they be carrying on the profession alone or as a firm. They cannot evade the consequences of breach of duty by showing that the performance of the particular duty of which breach is alleged was delegated by them to a clerk. Such delegation is inevitable, and there is no one in the profession, whether in practice or as a judge, who will not bear ungrudging tribute to the efficiency and integrity with which, in general, managing clerks, whether admitted or unadmitted, perform their duties. The machinery of justice would not work without them. But as far as the interests of the Court and the other litigants are concerned it is a matter of no moment whether the work is actually done by the solicitor on the record or his servant or agent. If the Court is deceived or the litigant is improperly delayed or put to unnecessary expense, the solicitor on the record will be held responsible and will be admonished or visited with such pecuniary penalty as the Court thinks necessary in the circumstances of the case. Misconduct of course may be such as to indicate personal turpitude on the part of the person committing it and to lead to the conclusion that the party committing it, if an officer of the Court, is no longer fit to act as such. Over conduct such as that, punitive jurisdiction will be exercised, but it seems hardly necessary to state that no punishment based on personal misconduct will be inflicted unless the party visited is himself proved to be personally implicated. Some confusion has, I think, arisen from the fact that charges of personal misconduct have been generally brought by a special procedure, by a rule or order to answer allegations made in an affidavit, later by a report by the Discipline Committee of the Law Society, and now 303since 1917 by proceedings before the Society, who themselves determine the fact and the punishment. Such cases involve personal misdoing: they are rightly termed cases of professional misconduct; but the words “professional misconduct” themselves are not necessarily confined to cases where the solicitor himself is personally guilty. After all they only mean misconduct in the exercise of the profession: and they cover cases where a duty is owed by the solicitor to the Court and is not performed owing to the wrongdoing of the clerk to whom that duty has been entrusted. In Dunkley v. Farris[16] the solicitor’s clerk had forged the seal of the Court to the writ. In re Eyre. Palmer v. Evans[17] the solicitor’s clerk had falsely represented to the defendant that judgment had been signed and execution issued whereby he had paid an unnecessary sum for costs; in neither case was the solicitor personally implicated; but in both he was ordered to pay the costs and in the latter case to refund the excessive costs. In both cases, it may be observed, the application was to the full Court that the solicitor should answer matters contained in an affidavit, upon which the Court could proceed to attachment or to suspension or removal from the rolls. It seems to me quite incorrect to suppose that the cases in which solicitors have been ordered to pay costs where there has been no personal complicity are cases in which the Court is exercising a kind of summary jurisdiction in contract or tort by way of awarding damages for breach of warranty of authority. The Court is not concerning itself with a breach of duty to the other litigant but with a breach of duty to itself. Its jurisdiction is punitive, and is exercised in appropriate cases and in appropriate measure where there has been no personal complicity by the solicitor charged.
The only question that remains is whether the judge was right in his finding that the managing clerk, Mr. Osborn, had been guilty of misconduct which justified the order against his principal to pay part of the costs of the action. It is to be noticed that the judge laid down for himself a standard which was perhaps too favourable to the solicitor. “By misconduct,” 304he said, “is meant something which would reasonably be regarded as disgraceful or dishonourable by solicitors of good repute; for example, wilfully misleading the Court in the conduct of a case.” I think that this is too favourable for it would appear from the cases that a breach of duty owed to the Court committed by gross negligence may lead to the exercise of punitive jurisdiction. But in the present case it is right to accept the test laid down by the learned judge and ascertain whether by that standard misconduct was proved. I have had the opportunity of considering the survey of the facts made by the noble Viscount and by Lord Wright, and as I agree with their statement and with the conclusions they draw I find it unnecessary to discuss the evidence at any length. The question is confined to the matter of discovery of documents. It is a subject which undoubtedly often presents difficulties to a solicitor, who in quite ordinary disputes finds it difficult to convince his client that business documents, as well as documents which the client considers private and confidential, must be disclosed.
The difficulty is increased where the case involves a charge of dishonesty against the client, who may have every motive for concealing some at any rate of the relevant documents. What is the duty of the solicitor? He is at an early stage of the proceedings engaged in putting before the Court on the oath of his client information which may afford evidence at the trial. Obviously he must explain to his client what is the meaning of relevance: and equally obviously he must not necessarily be satisfied by the statement of his client that he has no documents or no more than he chooses to disclose. If he has reasonable ground for supposing that there are others, he must investigate the matter; but he need not go beyond taking reasonable steps to ascertain the truth. He is not the ultimate judge, and if he reasonably decides to believe his client, criticism cannot be directed to him. But I may add that the duty is specially incumbent on the solicitor where there is a charge of fraud; for a wilful omission to perform his duty in such a case may well amount to conduct which is aiding and abetting a criminal 305in concealing his crime, and in preventing restitution.
I am myself satisfied that the judge had ample evidence on which to find that Mr. Osborn, in allowing the two earlier affidavits to be sworn and put on the file, was allowing something to be done which he knew to be wrong. In the discussion before us little was said about Nathaniel Rothfield’s first affidavit which was filed on March 1, 1937, the same day as Henry Rothfield’s and about fourteen weeks after the latter had been arrested on charges of fraud. In the August before Mr. Elman had had handed to him by Henry the documents passing between Mrs. Myers, the plaintiff in the case, and Horwood & Co., for whom Henry was at any rate ostensibly manager. We know now that the worthless Canadian gold shares supplied to Mrs. Myers had been purchased through Nathaniel, and that most of the proceeds of the valuable shares of which she had been defrauded had been paid into Nathaniel’s account. It seems almost certain that such reasonable inquiries addressed to Henry as through whom were the gold shares bought, how were they paid for, how were the valuable shares sold, where did the proceeds go, would either have elicited the truth, or would have satisfied the solicitor that concealment was being practised, and that the solicitor could not honestly continue. But in regard to the second affidavit of Nathaniel filed on May 29, the facts as found by the learned judge in the documents disclosed in relation to it appear to me conclusive of the misconduct of Mr. Osborn. The issue turns upon the disclosure by Nathaniel of his pass-book at Lloyds Bank in the Strand. It is described in the First Schedule, Part I., as “Pass-book, Lloyds Bank, Ld., 222, Strand, W.C.2, relevant entries only.” At the time when the affidavit was sworn and filed the pass book had not been produced to the solicitor, no entries had been identified as the relevant entries, no part had been sealed up. The book itself, or rather the sheets, were not taken by Nathaniel to Mr. Osborn according to the latter’s account until the morning of June 8, the day upon which the plaintiff’s solicitors were attending for inspection, and on that day Mr. Osborn, who had the sheets in his possession, directed his typist to seal up all the portions 306of the sheets except those which had been marked as relevant by Nathaniel himself. This procedure in itself seems to me highly irregular. By such a proceeding no oath is taken by the party defining what is relevant, or therefore defining that which he may have in his possession but swears to be irrelevant, and as far as the solicitor himself is concerned it would be a grave breach of duty to leave the decision as to relevance to the oath of a boy just come of age who with his family was charged with fraud, and who obviously had been guilty of a misstatement in his first affidavit. But the charge is established by two facts; first the judge’s finding that he does not accept Mr. Osborn’s statement that he did not see the whole contents of the pass-book; secondly, by Mr. Osborn’s admission, which was obviously correct, that any experienced person who saw the whole pass-book and the large amount of receipts, 54,000 l. in about twelve months, would recognize that the whole pass-book was relevant. On the judge’s finding, with which I entirely agree, Mr. Osborn must have seen the whole book; if so, he allowed the affidavit to take the form of having sworn to only a few relevant entries and not to the whole.
It may be mentioned that apart from this an inspection of an alleged account between Horwood & Co. and Nathaniel which was in fact disclosed reveals payments and receipts in addition to those actually disclosed, some of which undoubtedly appeared in the pass-book and were thus in that document concealed. I need only refer to one item, the sale of 2500 l. 3½ per cent. War Loan, which is entered in the pass-book under August 14, 1937, the receipt of which from Horwood & Co. is entered in the Horwood account a day or two previously. There are others equally relevant. I do not go into detail as to the correspondence, but I am also satisfied that the letters passing between the solicitors, and the proceedings on the various summonses for further discovery well warrant the judge’s finding that in resisting further discovery the solicitor was obstructing the interests of justice, adding to the difficulties of the plaintiff, and causing delay where a speedy judgment was of great importance to the plaintiff. In coming to the conclusion that the appeal should be allowed I have tried to 307bear in mind the difficulties into which an honest member of the profession is put when he has to defend a client charged with dishonesty or any other crime. He is not to arrogate to himself the ultimate decision which is to be the judge’s. He may be suspicious, but his suspicions may be misplaced. Every one has a right to have his defence put before the Court. But in such cases it is specially incumbent upon solicitor and counsel alike to observe their obligations to the Court. As Dr. Johnson said, they are not to tell what they know to be a lie. It is because the rule of conduct was in this case gravely broken that I think that the salutary decision of Singleton J. should be restored.
LORD RUSSELL OF KILLOWEN. My Lords, assuming that the judge has rightly found that Mr. Osborn knowingly filed false affidavits of documents, the Court was, in my opinion, entitled in the exercise of its jurisdiction over its officers, to order Mr. Elman, who was the solicitor on the record for the deponent and who acted by Mr. Osborn as such solicitor, to pay such amount of the plaintiff’s costs as the Court deemed proper. It is, I think, immaterial that no professional misconduct is attributable to Mr. Elman personally. He would none the less have failed in the discharge of the duty which he owed to the Court. I agree in all respects upon this point with the opinion of Viscount Maugham, which I have had the privilege of reading.
Nevertheless, I would dismiss this appeal, because although I differ from the reasons upon which the order of the Court of Appeal is founded, I am of opinion that upon the evidence before us, it is impossible to hold that any of the charges alleged against Mr. Osborn have been proved. If this view is correct, an order against Mr. Elman could not stand, for a fortiori no charge has been proved as against him.
Let me first state what were the charges which Mr. Elman was called upon to meet, and in regard to which his case and the evidence in support of it were presented at the hearing before Singleton J. It is essential to appreciate what the exact charges were, because the proceedings which were 308based upon them are in their nature penal, and the respondent was in the position of a person accused. In these circumstances the accuser must be confined to the actual charges made, and it is not open to the tribunal to find that other charges are proved, and to impose a punishment accordingly. Nor was any notice ever given that other and additional charges would be made or considered. The actual charges which Mr. Elman was called upon to meet are clearly defined by the particulars. They were two in number, which I quote verbatim — namely: (1.) “Mr. Burnett L. Elman instructed counsel to draw and then filed defences which were to his knowledge false in respect of each and both of his clients, persisting in such conduct of the defence of these defendants notwithstanding that his client Henry Isaac Rothfield had been convicted and sentenced to penal servitude for the frauds, the subject of the plaintiff’s claim”; and (2.) “In the light of the knowledge which the respective solicitors had of the business conducted by their clients and of the position and relationship of their clients and of the existence of material documents which were or had been in the power, possession or control of their several and respective clients, each of the solicitors were (sic) guilty of misconduct in preparing and advising or permitting their clients to make and file affidavits of documents which were wholly inadequate and obviously false.” The first charge I will allude to no more. The judge found no misconduct under that head. The second charge may, I think, be summarized as a charge of knowingly filing false affidavits of documents. That is the accusation; that and nothing else. But even as to this charge it has, upon the judge’s findings, been confined before your Lordships’ House to a charge in relation to the affidavits of documents sworn by Nathaniel Rothfield. The judge makes no specific finding in relation to Henry Rothfield’s affidavits, nor was any case in respect of them opened before us. They are not even included in the books before us, and I have never seen them.
To understand with accuracy what the judge decided it is necessary to read his judgment with some care, because 309the findings of fact are not formally or consecutively stated. They have to be picked out here and there. I will now state these findings and make my comments upon them.
Later in his judgment the learned judge, referring to this disclosure, says: “The failure to disclose the accounts, Lloyds Bank account in particular, at the proper time, added to the plaintiff’s difficulties, added to the expense, and entailed delay. I am satisfied that it was a deliberate policy adopted in the office of Mr. Elman.” That is indeed a grave charge; but for myself I see no trace in the documents or evidence of any such policy, deliberate or otherwise; and no such charge is included in the indictment.
The learned judge also finds that the order for the third affidavit of Nathaniel was made notwithstanding the opposition of Mr. Osborn, and that in resisting discovery of the Lloyds Banking account, the solicitor was obstructing justice. He adds: “He — when I say ‘he’ I mean either the solicitor or his managing clerk, or both — knew the relevance of the banking account and the importance of it. He held it up as long as he could merely on the request of his client Nathaniel.” That Mr. Osborn knew the relevance of the Lloyds Banking account when the order for the third affidavit was made is not in dispute; but there is no justification for the statement that the order was opposed. There is no evidence to that effect at all. It is the other way. Nor can I discover any foundation for the suggestion that the banking account was held up on the request of Nathaniel. I need not repeat the criticism of the irrelevance of such a finding in relation to the charge as regards the third affidavit.
The only finding of the learned judge which is strictly 311relevant to the charge made runs thus: “In allowing the two earlier affidavits to be sworn and put on the file, I believe the solicitor was allowing something to be done which he knew to be wrong.” This I understand to be a finding that Mr. Osborn knew that Nathaniel’s first two affidavits were false; but it is a finding which appears to me to have no foundation on the evidence. I have read the correspondence between Mr. Osborn and Nathaniel and the evidence of Mr. Osborn, and I find nothing therein to justify a charge of this nature. The letters written by Mr. Osborn in the name of the firm appear to me proper in all respects.
My Lords, I have an uneasy feeling that the judge may, in arriving at his findings of fact, have unconsciously transferred to a solicitor and his clerk the prejudice which properly attached to the rogues for whom they were acting, with the result that he has found Mr. Osborn guilty of conduct which was neither alleged nor proved. In my opinion the only charge with which this House was concerned was unsupported by any evidence and this appeal should be dismissed accordingly.
LORD WRIGHT My Lords, the Court of Appeal, by a majority consisting of Greer and Slesser L.JJ.(MacKinnon L.J. dissenting) reversed the decision of Singleton J., who by way of exercising the summary jurisdiction which the Court has over solicitors as officers of the Court, had directed payment to the appellant, the plaintiff in the action, of one-third of her costs of the action and two-thirds of the costs of the application in pursuance of which the order was made. The respondent had acted as solicitor for Nathaniel Rothfield, one of the defendants in the action. The judge made the order because he found that the respondent or his clerk had been guilty of professional misconduct in regard to discovery in the action. The Court of Appeal overruled his decision because they held that misconduct was not established against the respondent personally, but only, if at all, against his clerk, and that the punitive powers of the Court could only be exercised when the solicitor was guilty personally of misconduct. It is not clear whether they accepted that the 312evidence showed the deliberate obstruction to complete discovery on the part at least of the solicitor’s clerk which the judge found as a fact. Before this House, the respondent sought to support the judgment of the Court of Appeal not only on the ground of law on which it was based, but on the ground that the judge’s finding of fact that there was professional misconduct was not justified by the evidence. The House has accordingly heard an elaborate examination of the evidence before the learned judge.
The crucial issue in these proceedings concerns the conduct of the solicitor, or his clerk, in regard to discovery. It will be convenient to give a meagre, but I hope sufficient, outline of the general facts of the case. The appellant, Mrs. Myers, who was plaintiff in the action, brought her action against a number of defendants, Norman Baron Rothfield, Henry Isaac Rothfield, Nathaniel Rothfield, Rothies (sued as a firm) and Horwood & Co. (sued as a firm). The writ was issued on November 3, 1936, and claimed 9560 l. 2s. as money had and received by the defendants to the use of the plaintiff, or in the alternative damages for conspiracy and fraud. The allegations of the statement of claim were established at the trial, and the defendants, including Nathaniel Rothfield, were found guilty of conspiracy. The story was of a character unfortunately too common. The world is left uncertain whether to wonder more at the greed or the credulity of the victims. Mrs. Myers received a circular as from Horwood & Co., inviting her to invest in what was called an Empire Produce Pool, which was to produce without any risk about 12½ per cent. for three months, both capital and profit being guaranteed. She sent 50 l. as the purchase price of five units of 10 l. each in the Pool. This was on June 10, 1936. There was, of course, no pool, but a month or so later she was informed that the profits were 6 l. 10s. She was persuaded then by Horwoods to buy fifty-six shares in Consolidated Gold Alluvials, Ld., at 20s. a share, which Horwoods represented would soon be worth 2 l. or 3 l. a share. That would use up 56 l., leaving 10s. which was sent to her in settlement. This was the bait. She was next 313entertained at lunch at the Savoy Restaurant by “Horwood,” who turned out later to have been Henry I. Rothfield, and was in the end induced to buy 7500 shares in the Gold Company at the same price. She had not the money to pay for them, but was pursuaded to deposit a number of valuable shares which she possessed, together with transfers in blank, to be used, so H. I. Rothfield said, to obtain a loan of the necessary cash to purchase the Gold Company’s shares. The profits were to be realized in less than a month; the shares would then, it was said, be released from the charge and she would get the balance of the profits. Nothing could be simpler or more attractive. Unfortunately there were no profits, the gold shares were worthless, and the blank transfers given by the appellant were used by Rothfield in order to sell her shares, and convert the sums so realized. The appellant seems to have soon become suspicious, or at least to have disclosed what she had done to her husband or friends.
Her solicitors at once wrote to the Birmingham brokers who had put through the sale of the shares, explaining what had happened. The brokers applied to Horwood & Co., at their offices they saw H. I. Rothfield, who at once consulted the respondent by telephone. The respondent was thus put in touch with the brokers’ solicitors and had the file of papers sent to him for examination. On August 20, 1936, he had a full discussion with the brokers’ solicitors. On November 3, 1936, the writ was issued, the statement of claim being delivered with it. On March 11, 1938, after trial before Singleton J. and a special jury, judgment was entered for the plaintiff against all the defendants for 9400 l. 16s. 1d. and costs. The trial was delayed largely owing to the obstructive policy in regard to discovery pursued by Nathaniel Rothfield. Nothing has been realized on the judgment.
Henry Isaac Rothfield, father of Norman B. and Nathaniel Rothfield, was at all material times an undischarged bankrupt. Nathaniel Rothfield was, at the date of the writ, an infant, but came of age on May 17, 1937, when he adopted the defence filed on his behalf by the respondent who was acting at that stage of the action both for Nathaniel and his father.
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The respondent also acted for H. I. and Nathaniel Rothfield in an action brought in May, 1936, by Lady Chichele-Plowden, in which similar frauds were alleged, but it was never brought to trial. In yet another action of the same type, Still v. Morser and Others, he entered appearance, and delivered a defence on behalf of H. I. Rothfield, who was one of the defendants, though at a later date another solicitor, Mr. Garber, took over his defence in that action. On November 13, 1936, H. I. Rothfield was arrested on charges of fraud in connection with the sale of Consolidated Gold Alluvial shares, including the transactions with the appellant. The respondent at first acted for him in these proceedings, but was replaced by another solicitor before the date of the trial, which was in September, 1937, when Rothfield was convicted and sentenced to four years’ penal servitude. I think it is clearly established that the respondent was at all material times aware that Horwood & Co., though one Morser was up to a certain date registered as proprietor under the Business Names Act, was in fact the business of H. I. Rothfield and was merely a name or cover which he used for his dealings. I need not here detail my reasons for this conclusion, or refer to the numerous third-party proceedings brought by Morser against the Rothfields in which the respondent acted for the latter in the various actions brought against Morser alleging frauds such as those in the Still v. Morser action or the appellant’s action. Morser had in fact obtained a letter of indemnity from Rothfield. The respondent seems to have been on terms of some intimacy with H. I. Rothfield, whom in one letter he addresses as “Dear Henry.” It appeared that during the material period large sums of money passed to him from Nathaniel Rothfield.
I think this brief and far from complete outline is sufficient to indicate the complicated web of affairs in which the respondent acted for the Rothfields, including Nathaniel, who has been established as a co-conspirator. It also shows how important discovery was in order to elicit the relationship of the different defendants, so as to establish the conspiracy and if possible trace what had happened to the proceeds of 315the frauds, a large portion at least of which, it is now established, passed through Nathaniel Rothfield’s bank account. The disclosure of bank books and of accounts was in this respect particularly vital. In fact, as will appear, there was no proper disclosure until after two orders for further discovery had been made, and until after the third affidavit was sworn, which was not till November 30, 1937, the order for directions providing for an affidavit of documents within ten days having been made as far back as January, 1937. The documents disclosed under Nathaniel Rothfield’s third affidavit, in particular his pass-books, showed clearly enough that he had been receiving large sums of money, about 54,000 l. in all over a period of about twelve months, including many payments from Horwood & Co. It also disclosed documents showing purchases of the Gold Alluvial shares as well as other dealings with that firm. There could be no possible doubt of Nathaniel Rothfield’s complicity in the fraud as soon as this discovery was made. But when at last the case came on for trial and judgment was obtained, the cupboard was bare. Nathaniel Rothfield did not appear at the trial.
After judgment was given, an application was made to Singleton J. to exercise the summary jurisdiction of the Court over the respondent as a solicitor and officer of the Court in respect of his professional conduct in the case. A similar application was made in respect of the solicitors for the other defendants, but as this failed I do not discuss it further.
The application was based on two separate grounds. The first was that the respondent had filed and persisted in a defence which he knew or had reason to think was false. Singleton J. rejected the application so far as based on this ground and I agree with what he has said. There may indeed be circumstances in which a legal adviser has taken such action or so comported himself on behalf of a client as to go further than an honest advocate or solicitor could properly go. It is difficult and perhaps impossible to formulate any principle which would afford a general definition applicable to such cases. Singleton J. wisely said: “Nothing ought to 316be said which may prevent or tend to prevent solicitor or counsel from doing his best for his client so long as his duty to the Court is borne in mind.” A client is entitled to have legal aid in order to put the other side to proof of the case against him, and to test and probe that case and the evidence adduced. Thus the client is entitled to say that he denies the fraud or other matters charged and to have that defence placed on the record. He is entitled to have professional aid in regard to the maintenance of that defence before and at the trial and to plead matters in mitigation and in regard to questions of damage. Whatever knowledge or suspicion the respondent may have had of the Rothfields, he did not overpass the limits fixed by his duty as an officer of the Court merely in filing or persisting in the defences. I agree with the opinion of Singleton J. that it is not sufficient evidence of misconduct, taken by itself, that a solicitor continued to act in the action notwithstanding that he was aware or was put on inquiry that the defendants were or might be raising false issues in it. The judge’s decision on this matter was not questioned in this House.
The second complaint raised in the appellant’s application had reference to discovery. The general effect of the complaint as stated in the application and so far as here material was that the respondent was guilty of misconduct, in the light of what he knew or might reasonably suspect of his client’s business and of his relationship to the other defendants and of the existence of material documents, in preparing and advising or permitting Nathaniel Rothfield to make and file affidavits of documents which were wholly inadequate and as he knew or was put on inquiry were untrue. On this head of complaint, Singleton J. decided against the respondent. He held that the original failure to disclose the accounts was a deliberate policy adopted in the respondent’s office; that the respondent had held up discovery as long as he could merely on the request of his client, Nathaniel Rothfield. “His duty,” the judge said, “was to see that it [the banking account] was disclosed, and if the client persisted in his refusal the solicitor ought to have declined to act further 317for him. A solicitor is an officer of the Court and owes a duty to the Court; he is a helper in the administration of justice. He owes a duty to his client, but if he is asked or required by his client to do something which is inconsistent with his duty to the Court, it is for him to point out that he cannot do it and, if necessary, to cease to act.” In holding that in regard to discovery there was misconduct in a professional sense, he drew no distinction between the respondent and the managing clerk, for whom he was responsible, though he said, having heard the evidence of both, that both knew a good deal about the matters in question. I think the judge meant that he drew no distinction either in fact or in law between them. Indeed he was not asked to do so. The point on which his decision was reversed by the Court of Appeal was not raised before him. It was not raised until the hearing in that Court; similarly the point that the judge’s decision was not justified by the evidence was not raised until the appeal to this House.
In order to deal with the point of law decided by the Court of Appeal, it is necessary to explain briefly the nature of the jurisdiction of the Court which the appellant invoked. A solicitor (or in former days a solicitor or an attorney) was long ago held to be an officer of the Court on the Roll of which he was entered and as such to be subject to the discipline of that Court. The Court might strike him off the Roll or suspend him; for instance, the Court of Chancery might strike a solicitor off the Roll of the Court, and order a communication of that order to be made to the Courts in Westminster Hall. There are many such instances in the books. By the Solicitors Act, 1888 , there was established the Disciplinary Committee appointed by the Master of the Rolls from members or past members of the Council of the Law Society. This Committee was charged with the duty of investigating complaints against solicitors and reporting their decision to the Court, which could then, if so minded, strike the solicitor off the Roll or suspend him. It was not until 1919 that by the Solicitors Act of that year, the Disciplinary Committee was itself given power to strike off the Roll or to 318suspend or to order payment of costs by the solicitor subject to an appeal to the Court. But the jurisdiction of the Master of the Rolls and any judge of the High Court over solicitors was expressly preserved, as it now is by s. 5, sub-s. 1, of the Solicitors Act, 1932 . Whether the Court would now entertain an application to strike a solicitor off the Roll or to suspend him instead of leaving the matter to the Disciplinary Committee may be doubted. But alongside the jurisdiction to strike off the Roll or to suspend, there existed in the Court the jurisdiction to punish a solicitor or attorney by ordering him to pay costs, sometimes the costs of his own client, sometimes those of the opposite party, sometimes, it may be, of both. The ground of such an order was that the solicitor had been guilty of professional misconduct (as it is generally called) not, however, of so serious a character as to justify striking him off the Roll or suspending him. This was a summary jurisdiction exercised by the Court which had tried the case in the course of which the misconduct was committed. It was clearly preserved to the Court by s. 5, sub-s. 1, quoted above. It was a summary jurisdiction, in which the intervention of the judge was invoked at the conclusion of the case either by motion in the Chancery Court or by a motion or application for a rule in the Courts of Common Law. Though the proceedings were penal, no stereotyped forms were followed. Hence now the complaint is not treated like a charge in an indictment or even as requiring the particularity of a pleading in a civil action. All that is necessary is that the judge should see that the solicitor has full and sufficient notice of what is the complaint made against him and full and sufficient opportunity of answering it. Thus, formal amendments of the complaint are not necessary, so long as the variations of the charge are sufficiently defined and the solicitor is given sufficient liberty to make his answer. The summary jurisdiction thus involves a discretion both as to procedure and as to substantive relief, though there was and is an appeal.
The cases of the exercise of this jurisdiction to be found in the reports are numerous and show how the Courts were guided by their opinion as to the character of the conduct 319complained of. The underlying principle is that the Court has a right and a duty to supervise the conduct of its solicitors, and visit with penalties any conduct of a solicitor which is of such a nature as to tend to defeat justice in the very cause in which he is engaged professionally, as was said by Abinger C.B. in Stephens v. Hill.[18] The matter complained of need not be criminal. It need not involve peculation or dishonesty. A mere mistake or error of judgment is not generally sufficient, but a gross neglect or inaccuracy in a matter which it is a solicitor’s duty to ascertain with accuracy may suffice. Thus, a solicitor may be held bound in certain events to satisfy himself that he has a retainer to act, or as to the accuracy of an affidavit which his client swears. It is impossible to enumerate the various contingencies which may call into operation the exercise of this jurisdiction. It need not involve personal obliquity. The term professional misconduct has often been used to describe the ground on which the Court acts. It would perhaps be more accurate to describe it as conduct which involves a failure on the part of a solicitor to fulfil his duty to the Court and to realize his duty to aid in promoting in his own sphere the cause of justice. This summary procedure may often be invoked to save the expense of an action. Thus it may in proper cases take the place of an action for negligence, or an action for breach of warranty of authority brought by the person named as defendant in the writ. The jurisdiction is not merely punitive but compensatory. The order is for payment of costs thrown away or lost because of the conduct complained of. It is frequently, as in this case, exercised in order to compensate the opposite party in the action.
I do not seek to recapitulate the authorities. But as it has been held by the Court of Appeal that in this jurisdiction a solicitor is not liable to be penalized for the conduct of his agent, partner or clerk, I must refer to a few of the cases in which the contrary has been held. The justification for the rule embodied in these decisions may be that the jurisdiction is compensatory as well as penal, and that the solicitor may fairly be held answerable to make good losses caused by the 320act of an agent whom he has left to fulfil his duty, and though a solicitor may leave much to his qualified and experienced assistants, he sometimes may be held answerable on the ground of his failure to exercise proper supervision. In Norton v. Cooper. In re Manby and Hawksford[19] Stuart V.-C. puts the rule on a positive basis. He said: “The safety of the public and the rules of Court are to be satisfied only by holding, in a case of this kind, that as long as Mr. Hawksford continued to appear as one of the solicitors of the plaintiff on the records of the Court, he is responsible for what took place in the conduct of the cause.” Mr. Hawksford was not personally implicated; the fault was that of a partner who had used the name of the official assignee to bring an action against a mortgagee. Each individual partner was, it was held, prima facie liable for the misconduct, and was ordered to indemnify the official assignee against his costs. In Blundell v. Blundell[20] the defendant’s attorney was personally ordered to pay the plaintiff’s attorney his costs of opposing bail, where there had been a misrepresentation as to the respectability of the bail by the managing clerk of the defendant’s attorney, though the latter was not privy to the misconduct. The Court of Appeal in the present case referred to two authorities in order to distinguish them. One was Dunkley v. Farris[21] where the solicitor’s clerk had forged the Court’s seal on a writ. The plaintiff’s solicitor was ordered personally to repay the excessive costs of the proceedings and the costs of the rule, though no blame was imputed to him. The Court held there that he was so far implicated as to make him responsible as what was done was done in his office. The Court of Appeal distinguished that case, as I understand them, on the ground that it was not a case based on misconduct by the solicitor. With great respect I cannot agree. I cannot see how the personal order that was made there against the solicitor could be justified except as made under the summary jurisdiction of the Court. Greer L.J. explains the decision as one depending on the lack of authority of the solicitor to act for the party 321named on the writ and states that it depends on the doctrine of a breach of warranty of authority. It may be that in such cases an action might now be brought on that comparatively modern doctrine, but in Dunkley v. Farris[22] the Court was exercising clearly, as it seems to me, its summary jurisdiction. Its order was not based on any privity or breach of actual or imputed authority. The ground was that the solicitor had committed a breach of his duty to the Court. It has been said that it is the duty of the solicitor to make himself certain on the point of having a retainer before he issues a writ. The case presented merely a special instance of improper conduct. This is true also of In re Eyre. Palmer v. Evans[23], where the Court exercised its summary jurisdiction to order a solicitor to repay extortionate costs exacted by his clerk. There was improper conduct, though the solicitor was not personally implicated. Jervis C.J. thus sums up the position: “as it was done in his office, and by a person for whom he is responsible, and as he received the money, I think he is so far implicated as to make him responsible.” It is no doubt true that a solicitor will not be struck off the Rolls or suspended, unless he is personally implicated, but with the greatest respect I can find neither reason nor authority for the view of the Court of Appeal that the discretionary and remedial jurisdiction of the Court to order reimbursement of costs or expenses thrown away owing to his improper conduct in a case cannot be exercised unless the solicitor is personally implicated. I agree on this point with the judgment of MacKinnon L.J., who upheld Singleton J.
I do not refer to any others of the numerous cases which illustrate the scope and variety of the jurisdiction, except to two which specifically refer to false affidavits. One is In re James Gray[24] which was a case where a solicitor had allowed a client to make an affidavit in which he swore to a false date known to both parties to be false. Lord Romilly, in ordering the solicitor to be suspended, said that it was impossible for the Court to proceed with safety were it not that the solicitors connected with the Court should most carefully investigate, 322and as far as possible correct, such statements of their clients as to dates. Similarly in In re Davies[25] the Court of Appeal suspended a solicitor for two years because (inter alia) he had allowed a client to swear an affidavit which both he and the client knew to be false. He had warned her it would be untrue but she insisted on swearing it. The Court said that he should have withdrawn from the case. These authorities, in so far as they relate to affidavits, have special relevance to this case where Nathaniel Rothfield is held to have sworn affidavits of discovery which were false and where the solicitor (which is the term which I shall use hereafter to include either the respondent or his managing clerk Osborn, to whom to a large extent he left the conduct of the discovery) should not have allowed them to be sworn if he had done the duty which he owed to the Court. The order of discovery requires the client to give information in writing and on oath of all documents which are or have been in his corporeal possession or power, whether he is bound to produce them or not. A client cannot be expected to realize the whole scope of that obligation without the aid and advice of his solicitor, who therefore has a peculiar duty in these matters as an officer of the Court carefully to investigate the position and as far as possible see that the order is complied with. A client left to himself could not know what is relevant, nor is he likely to realize that it is his obligation to disclose every relevant document, even a document which would establish, or go far to establish, against him his opponent’s case. The solicitor cannot simply allow the client to make whatever affidavit of documents he thinks fit nor can he escape the responsibility of careful investigation or supervision. If the client will not give him the information he is entitled to require or if he insists on swearing an affidavit which the solicitor knows to be imperfect or which he has every reason to think is imperfect, then the solicitor’s proper course is to withdraw from the case. He does not discharge his duty in such a case by requesting the client to make a proper affidavit and then filing whatever affidavit the client thinks fit to swear to. That is the improper conduct which the judge 323has found to have been committed by the solicitor in this case, in his findings of fact which I have summarized above.
In my opinion these findings were fully justified. The first affidavit sworn by Nathaniel Rothfield was a mere travesty of discovery. It contained in the First Schedule, Part I., nothing but letters between solicitors after action brought and the proceedings common to both parties. This elicited a very proper letter from the appellant’s solicitors, in which they said, after referring to the character of the action, that it must be clear that a large number of relevant documents had not been disclosed and suggested that the solicitor should explain to his client the meaning and importance of the affidavit with a view to filing a further and better affidavit. This letter produced no effective result. The solicitor was satisfied with the mere denial of Nathaniel Rothfield. An application for a further and better affidavit was successfully opposed before the Master. The judge in chambers, however, reversed the decision of the Master and on April 23, 1937, ordered a further affidavit to be sworn by Nathaniel Rothfield. It was not until May 29, 1937, that under that order the second affidavit was sworn, after repeated and urgent complaints of delay. Inspection was given on June 8, 1937. What happened in this connection is most significant. The affidavit included in the schedule Nathaniel Rothfield’s pass-book at Lloyds, 222, Strand, “relevant entries only.” In the circumstances of the case, the irregular description “relevant entries only” should have roused the interest of the solicitor, unless he had actually prepared it. The entries disclosed in this way were about thirty in number. Some were marked with an asterisk, others had lines drawn in the margin against them. The rest of the account was sealed up. It is now clear that the entries disclosed had been selected with some skill, as dealing with receipts to, or payments by, the client, already disclosed in the discovery given by other defendants. But the entries disclosed would have been seen to be most inadequate if the slightest examination of the pass-book had been made. No one disputes now the truth of this. The solicitor admits that he must have seen the incompleteness of the discovery if he had looked at 324the pass-book. This part of the case rests on the evidence of Osborn, the clerk, as the respondent was away from the office about that time owing to illness. Osborn seeks to excuse this manifest breach of duty, on the ground that the pass-book was not brought into the office until just before the time fixed for the appellant’s solicitor to come to inspect, that he had no opportunity to examine the book, that he simply sent it to a typist to seal all the entries except those which were marked as being relevant. He said in evidence that he did not even look at the pass-book afterwards when it was left some days in his office and he could have done so. Singleton J., after hearing Osborn’s evidence and after asking him a number of questions, said that he felt sure that Osborn did examine the pass-book when it was handed to him. “Even a cursory examination of it must have satisfied him how damaging it was to Nathaniel Rothfield’s case, and acting on his client’s instructions he determined to keep it back as long as he could.” This finding of the learned judge has been strenuously attacked on the ground that it is not based on evidence, that it is mere speculation and not inference. It has been argued that the judge was not entitled to go behind the positive oath of Osborn that he did not examine the pass-book, because there is no direct evidence to the contrary. I am unable to accept this argument. The judge’s view is not based on speculation, but is a matter of inference based on all the facts of the case, on the circumstantial evidence which according to ordinary experience and probability make it incredible that Osborn, placed as he was, did not look at the pass-book. Where there is a denial on oath of the charge by a party charged, and no direct evidence to the contrary, a judge or jury may in certain events be entitled to refuse to believe that denial, and to act upon the circumstantial evidence in the case. The same is true in a case like this. I think the judge was entitled to find as he did on all the evidence. But in my judgment, even if the judge were wrong in discrediting Osborn’s evidence that he did not examine the pass-book because he accepted his client’s word that it contained no relevant entries, the order which the judge made would still be justified. It would be a gross breach of 325duty to the Court in a matter of discovery like this for a solicitor to accept his client’s bare word as to what was relevant, and not himself examine the documents, at least when regard is had to the general background of the case, and to all that the solicitor must have known of his client’s character and surroundings. There is really a dilemma. Either Osborn examined the pass-book or he did not. If he did, he must have known that the affidavit was false. If he did not he committed a gross breach of duty. He had no right to leave discovery to the decision of the client. In fact when the appellant’s solicitors wrote pointing out that it was quite clear that there were material entries in the pass-book other than those disclosed, the solicitor still did no more than pass on the complaint to the client, and the appellant’s solicitors were compelled to make a further application to the Court, which on November 18, 1937, ordered Nathaniel Rothfield to disclose the items sealed up in the Lloyds’ pass-book and in the pass-book of another bank account which he had, as well as to make a further and better affidavit. The third affidavit, which has been accepted as satisfactory, was eventually sworn under that order. Eventually after further delays the case was heard and judgment entered for the appellant against all the defendants on March 11, 1937. It is clear that the difficulties about discovery had increased the costs and so delayed the trial as to diminish or destroy any chance of recovering the fruits of the judgment.
In my opinion, the order of Singleton J. was right and should be restored.
LORD PORTER. My Lords, I agree that this appeal should be allowed. The facts have already been stated but a restatement is, I think, necessary in order to make my views intelligible.
The respondent is a solicitor who was retained in an action in the High Court of Justice entitled M. No. 3522, Stella Constance Myers v. Norman Baron Rothfield, Henry Isaac Rothfield, Nathaniel Rothefield, Rothies (sued as a firm) and Horwood & Co. (sued as a firm). In that action he represented Henry Isaac Rothfield and Nathaniel Rothfield. Of these 326defendants Henry Isaac Rothfield, who was the father of Norman Baron Rothfield and Nathaniel Rothfield, was an undischarged bankrupt, and Nathaniel at the time of the issue of the writ was an infant. The firm of Rothies was in fact Norman Baron Rothfield and the firm of Horwood & Co., which purported to be stock and share brokers was completely under the control of Henry Isaac Rothfield, though one Morser was registered as the owner under the Business Names Act and was retained as a nominal figurehead.
It is plain from the findings of the jury that the three Rothfields were engaged in carrying on a systematic swindle, using the firm of Horwood & Co. for that purpose. The method employed was to invite investors to engage in a produce pool by subscribing for 10 l. units. They were then informed that the pool had been a success, that they were entitled to considerable profits, and by this means were afterwards persuaded to sell or to hand over to Horwood & Co. for sale, such investments as they could be induced to part with and to buy with the proceeds of such sales worthless shares in a company called Consolidated Gold Alluvials, Ld.; shares which in due course were, or purported to be, transferred to the victims of the swindle. Amongst others who were so defrauded was the appellant Mrs. Myers, who between July 9 and 15, 1936, handed over cash and shares to the value, as the jury found, of 9560 l. In her case that sum was not even invested or re-invested in the shares of Consolidated Gold Alluvials, Ld., though the money with which she parted had in the main been obtained by representing that she would be wise to purchase such shares, which would shortly show a large profit.
This was not the first occasion on which the respondent’s firm had acted for Henry Isaac and Nathaniel Rothfield. On December 12, 1935, he had been instrumental in incorporating a company known first as Mushroom and Fruit Growers’ Association, Ld., and later as Mushroom Farmers’ Association, Ld., a private company which was formed by Nathaniel Rothfield and of which he was the sole director.
Before the issue of the writ in this action he had also invested a sum of between 3000 l. and 4000 l. on behalf of the same 327defendant, whom he knew to be an infant. So far as Henry Isaac Rothfield is concerned he knew him to be an undischarged bankrupt and, as he said, believed him to be the manager of the firm of Horwood & Co. which he had been instructed to transfer from Mr. Horwood to Mr. Morser on March 8, 1935. These matters were within Mr. Elman’s personal knowledge, but in litigation, as he alleged, he was represented by his clerk, Mr. Osborn, and it is clear that many, at any rate, of the details of litigation were conducted by this clerk, inasmuch as Mr. Elman during a considerable portion of the period material to the present action was ill and unable to attend at his office.
Just before Mrs. Myers had parted with her securities a writ had been issued by Lady Mary Chichele-Plowden against one Thomas Livingstone and against Henry Isaac and Nathaniel Rothfield in which she alleged that she had been fraudulently induced to hand over valuable securities for shares in Consolidated Gold Alluvials, Ld. The allegations of fraud were similar to those which were afterwards alleged in the Myers case.
In the Chichele-Plowden case the writ was issued on June 19, the statement of claim delivered on June 26, and appearance was entered for the defendants the two Rothfields by the respondent, and defences were delivered on August 7, denying the allegations in the statement of claim.
Again, on July 31, just after Mrs. Myers had parted with her securities, one William Henry Still issued a writ against Henry Morser, one MacArthur and one Horwood, alleging similar frauds and Mr. Elman appears originally to have entered appearance for Mr. Morser, but later another solicitor represented him. Eventually Henry Isaac Rothfield was substituted as defendant instead of Horwood, and Morser instituted third-party proceedings against both Henry Isaac and Nathaniel Rothfield. In both Henry Isaac Rothfield’s defence and in the third-party proceedings the respondent acted for the defendants. No doubt the details of these matters were attended to by Mr. Osborn, though Mr. Elman would, as he said, know generally that the action had been brought and that allegations of fraud had been made against his clients.
Whilst these actions were in progress Mrs. Myers appears 328to have realized that she had been defrauded and to have confided in her husband. He thereupon consulted his solicitors and they in turn communicated with certain Birmingham brokers, who had been employed to sell some of Mrs. Myers’ shares, pointing out that the sale was made without Mrs. Myers’ authority. The brokers through their solicitors wrote to Messrs. Horwood & Co. asking for an explanation. In answer to this letter the solicitors were invited to call upon Messrs. Horwood & Co., and their agents did visit that firm. As a result of the interview they were referred to the respondent, and three files of documents relating to the Myers transactions were sent to him with instructions to see the brokers and to give them all possible facilities to investigate the matter. From one of these letters, dated July 29, 1936, it was apparent that Mrs. Myers thought Henry Isaac Rothfield was Mr. Horwood. Mr. Elman did see the brokers’ solicitors on August 20, and read over to them the documents which he had received and at their request these documents were afterwards copied and sent to them.
During the month of September further steps were taken in the Still action, and Morser was arrested at Nottingham for fraud, but afterwards discharged on the ground that he was merely the nominal head of Horwood & Co., whose business was really managed by Henry Isaac and Nathaniel Rothfield. It is fair to say that the respondent did not act for Morser in these proceedings and it was not proved that the details were known to him.
On November 3, the writ was issued in the Myers action, and on the 6th of that month Mr. Elman’s firm entered appearance for Henry Isaac and Nathaniel Rothfield.
On November 13, Henry Isaac Rothfield was arrested for fraud, and on his first appearance before the magistrate was represented by Mr. Elman’s firm and bail obtained for him. Thereafter, however, Mr. Elman ceased to act in the criminal proceedings. In fact Henry Isaac Rothfield was ultimately convicted and sentenced to four years’ penal servitude for fraud, including the frauds on Lady Chichele-Plowden, Mr. Still and Mrs. Myers.
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The statement of claim in the Myers action had been delivered with the writ, and the defence was delivered on December 12, 1936, but previously Messrs. Peacock and Goddard, in consenting to give further time for its delivery, wrote to Mr. Elman stating that the correspondence had already passed through his hands and ending with the observation: “You will doubtless disclose the file of correspondence in your client’s affidavit of documents with the books relating to the business.”
The defences when delivered denied any connection with Horwood & Co. on the part of Nathaniel Rothfield and a connection only as manager by Henry Isaac Rothfield, and in these circumstances the first affidavit of documents on behalf of the two defendants was delivered by Mr. Elman’s firm on March 1, 1937. The affidavit of Nathaniel contained nothing save letters written after action brought. Neither the first nor a later affidavit of Henry Isaac Rothfield appears to have contained any of the letters or documents of Horwood & Co., but as those affidavits have not been inserted in the appendix it is not possible to determine what, if any, other documents were omitted. It is apparent that the learned judge who tried the case had before him both of these affidavits, but as they have not been inserted in the documents provided for the use of your Lordships’ House, I do not propose to found any opinion upon them.
After the delivery of these affidavits the appellant’s solicitors wrote to the respondent pointing out that neither the circulars issued by Horwood & Co., nor the banking account, books of account, or the correspondence between Horwood & Co. and its clients had been disclosed, and that neither Henry Isaac nor Nathaniel Rothfield had disclosed any documents relating to their connection with Horwood & Co. or any of their own banking accounts, and further that Mr. Morser had sworn he was merely a nominee of the three Rothfields. Mr. Elman’s reply was that Henry Isaac had relinquished his managerial position with Horwood & Co., leaving the documents with that firm, and that Nathaniel had instructed him that he had nothing to do with the affairs of Horwood & Co.
On January 8, 1937, Mr. Morser in the Myers proceedings 330made the three Rothfields defendants to third-party proceedings. In the statement of claim in these proceedings he alleged that they were the real principals and set out three letters, dated respectively February 24 and March 25 and 26, 1936, which he said evidenced that an agreement whereby he should merely act as nominee of Henry Isaac and Nathaniel Rothfield had been come to at that time.
On March 13, 1937, these letters were sent to Mr. Elman’s firm and he himself wrote to Henry Isaac Rothfield on the 15th of that month as follows:—
“Dear Henry,
“re Myers, Still, etc.,
“I find from certain correspondence which has been supplied to me and which I have not heard of or seen before that your position as between H. Morser and yourself in the third-party proceedings and which proceedings are open and well known to the various plaintiffs, will require very careful explanation.
“In order that you will understand my meaning I enclose herewith copies of three letters and shall be glad to know exactly how you are proposing to deal with it.
“Please treat the matter as urgent.
“Yours truly, “Burnett L. Elman.”
He said in evidence that when he received these letters he realized something was wrong. To this letter Henry Isaac Rothfield replied in effect that he had written the first letter in his son’s name but without authority, that notwithstanding that letter he had continued to act as manager for Morser, and that the other two letters were evidence of that fact.
Being unable to obtain a further affidavit of documents without an order of the Court, the appellant’s solicitors applied on March 18, 1937, to the Master, who ordered a further and better affidavit of documents by Henry Isaac Rothfield and Horwood & Co., but dismissed the application as far as concerned Norman Baron Rothfield and Nathaniel Rothfield. On April 23, 1937, however, the judge in Chambers ordered a further and better affidavit by the three last named parties.
331
On the same day Mr. Elman wrote to Nathaniel Rothfield asking immediately for all documents relating to the matter.
Mr. Osborn having, as he said, difficulty in getting proper discovery from Nathaniel Rothfield, took him to counsel’s chambers and on that occasion certain sheets of his banking account at Lloyds Bank, Law Courts Branch, were produced. It was then explained to Nathaniel Rothfield that all relevant entries must be disclosed and he was told to go through the account carefully and disclose such items, but the decision as to what was relevant was left to him.
No further discovery had been made by May 24, and Messrs. Peacock and Goddard wrote again to Mr. Elman demanding full disclosure of relevant documents and pointing out the necessity for the disclosure and inspection of counterfoil cheque books, banking and pass-books, paying-in books or any other books of account, and sending an extract from a copy of the account of Horwood & Co. at Lloyds Bank, Holborn Circus, showing numerous payments therefrom to Rothfield and certain payments to Mr. Elman himself.
A further affidavit of Nathaniel Rothfield was sworn on May 29, 1937. It disclosed a large bundle of correspondence including matters dealing with the purchase of Consolidated Gold Alluvial Co. shares, and showed also an account between Nathaniel Rothfield and Horwood & Co. and his pass-book at Lloyds Bank, 222, Strand, “relevant entries only.” The documents, when perused, showed that Nathaniel Rothfield had at least one other banking account, which had not been disclosed, but the main complaint with regard to the second affidavit is in regard to the items disclosed under the phrase “relevant entries only.”
According to Mr. Osborn, the matter was dealt with in this way. The documents were not seen by him until just before the affidavit was sworn, so late indeed that there was not time to put them into proper chronological order in the affidavit. The pass-book, he says, did not reach him until the very morning for which inspection had been arranged, namely June 8, and on receiving that book he observed that Nathaniel Rothfield had marked either with an asterisk, a cross or by strokes the 332items that were to be disclosed. He says that he had not himself time to examine the book as he had another appointment, and he therefore instructed a clerk to cover up all items except those marked in the way described. He was not at all times clear as to the period during which the book was in his possession. In chief he said that he had the book from about the end of May until about the middle of June so far as he could recollect. On cross-examination he repeated the same allegation but on the hearing before your Lordships’ House we were told that the book was not received until the morning of June 8 and in support of this allegation a letter of June 7 from Nathaniel Rothfield was produced.
The last date may be correct, but it does not appear what was the exact date at which the pass-book was taken away by Nathaniel. Mr. Osborn said that once the irrelevant items had been sealed up he did not see the book again, but he told Nathaniel to make sure there were no relevant items undisclosed.
The appellant’s solicitors continued to press for further discovery and in the month of November Mr. Osborn, who said he was having difficulty in getting full discovery from Nathaniel, took him to see Mr. Elman himself. On that occasion Nathaniel informed Mr. Elman that he had six banking accounts, three however dealing with Mushroom Farmers, Ld., and two only being material. Four days later an order for a further affidavit of documents was obtained by the appellant’s solicitors on November 18, 1937. A third affidavit was then sworn which gave full discovery and no complaint was made of it.
It is plain, however, from an inspection of the pass-book and the statement of account between Nathaniel Rothfield and Horwood & Co. that many items of importance were not disclosed in the second affidavit.
The case was ultimately tried before Singleton J. and a jury, and a verdict and judgment given against all the defendants for the full sum claimed and costs.
Before the trial Nathaniel Rothfield had sailed for the West Indies on the plea that he was suffering from a nervous breakdown, and an application was made to postpone the trial until 333his return. This application was supported by an affidavit by a doctor, and a short postponement was granted, but not such as to enable Nathaniel Rothfield to take part in the trial even if he desired to do so. The only party represented at the trial was Norman Baron Rothfield, against whom the jury also found a verdict.
At the end of the case Mr. Willes, as counsel for the appellant, applied that the several solicitors representing the various defendants should be ordered to pay the plaintiff’s costs of the proceedings. On this application Singleton J. gave leave to apply to fix a time at which the application should be heard, and gave instructions that notice should be given to those concerned of the facts relied upon as justifying the application, so that they might have an opportunity of meeting the case made against them. Such notice was duly given and the particulars so far as Mr. Elman was concerned may be substantially summed up in the words of the learned judge in his judgment as (1.) the filing of defences which Mr. Elman knew to be false and persisting in those defences, and (2.) questions of discovery.
Singleton J. absolved the respondent from any liability on the first ground, his short reasoning, with which I agree, being that though a solicitor may suspect his clients, they are entitled to say, “I deny any fraud,” to have that defence placed on the Record and the fraud proved, and that in any case the quantum of damages must be ascertained.
As to discovery, however, he found the respondent guilty of professional misconduct and ordered him to pay one-third of the taxed costs of the action and two-thirds of the costs of the application.
The misconduct alleged in the particulars supplied was: “DISCOVERY.
“In the light of the knowledge which the respective solicitors had of the business conducted by their clients and of the position and relationship of their clients and of the existence of material documents which were or had been in the power, possession or control of their several and respective clients, each of the solicitors were guilty of misconduct in preparing 334and advising or permitting their clients to make and file affidavits of documents which were wholly inadequate and obviously false.” Upon this matter the learned judge’s finding is expressed in the words: “In allowing the two earlier affidavits to be sworn and put on the file I believe the solicitor was allowing something to be done which he knew to be wrong. In resisting further discovery, particularly in regard to the Lloyds Bank account, he was obstructing the interests of justice, he was adding to the difficulties of the plaintiff, and he was causing delay in a case in which one must realise the importance of the plantiff getting judgment speedily if she was entitled to judgment.”
It does not appear clearly from the finding of the learned judge whether he imputes blame to both the solicitor and to his clerk or whether the clerk only is censured and the solicitor punished for his servant’s misdeeds. In these circumstances I think one must treat the solicitor as free from personal misconduct. This indeed was the view of a majority of the Court of Appeal before whom the wrongdoing of the clerk is assumed, but it was held nevertheless that no liability was imposed upon the solicitor in the absence of personal misconduct. Before your Lordships’ House not only was this view supported by counsel for the respondent, but it was also strenuously maintained that in any case no misconduct had been proved even in the case of the clerk.
So far as the first point is concerned I agree with the opinion which all your Lordships have expressed. The Courts of this country have for long exercised disciplinary jurisdiction over their officers, whether described as attorneys or solicitors. Indeed it was not until the Solicitors Act, 1888 , that a Committee of the Law Society was charged with investigating complaints against solicitors and reporting their decision to the Court, nor until the Solicitors Act, 1919 , that the Law Society was given power to deal with the delinquencies of its own members. The Court, however, continued to exercise a concurrent jurisdiction, which was preserved by s. 5, sub-s. 1, of the Solicitors Act, 1932 , and most lately asserted in Brendon v. Spiro.[26] That jurisdiction was exercised over the solicitor 335upon the record and was not confined to cases of personal misconduct only, e.g., in Norton v. Cooper. In re Manby and Hawksford[27], Hawksford, a member of a firm of solicitors, was held responsible to the Court though it was not suggested that he was guilty of personal misconduct or neglect of duty, and though his only knowledge of the case was that there was such a suit which his partner Manby was conducting. In that case the Court was exercising its summary jurisdiction over its officers, and the argument was expressly presented and rejected that such jurisdiction extended to relief only in cases of personal misconduct and neglect of duty.
So too in Simmons v. Rose[28], a solicitor was ordered to make good the loss incurred by reason of his London agent having represented that a receiver had entered into the usual recognizances when in fact he had not done so.
In this case also the Court was asked to exercise and did exercise its summary jurisdiction over the country solicitor, though it was contended that it had no power to fix a solicitor with the consequences of professional misconduct except on the application of his client, and that the remedy in any case, if there were one, was against the London agent.
Whether one regards the liability of the solicitor as arising from a failure to exercise due supervision over his representatives or because he is responsible as the solicitor upon the record, the result is the same.
It is misconduct in the way in which the work entrusted to his firm is carried on, not the personal misdoing of the individual, which gives rise to the exercise of the jurisdiction. No doubt the penalty imposed will vary according to the circumstances of the case, and it may be that the more serious cases involving such personal misconduct as would result in the penalty of suspension or expulsion would now be left to the jurisdiction of the Law Society. But the Court still retains its summary jurisdiction and will exercise it in appropriate circumstances. The majority of the Court of Appeal took the view that unless personal misconduct was established the Court’s only power under its summary jurisdiction to make the solicitor answerable 336for the costs of the other side was in cases where he had represented himself as having authority to act on behalf of a client when in fact he possessed no such authority, or in analogous cases. Yonge v. Toynbee[29] and Simmons v. Liberal Opinion, Ld.[30], are examples of the former, and In re Eyre. Palmer v. Evans[31], where the client had paid an excessive sum for costs owing to the misrepresentation of the solicitor’s clerk, and Dunkley v. Farris[32], where the clerk had forged the seal of the Court to the writ, were said to be examples of the latter.
The occasion of the Court’s action in cases of this kind no doubt is the wrongful receipt of money, or the breach of warranty of authority, but it is difficult to see how such acts would give the Court any authority to make an order against the solicitor in the original action except by virtue of its summary jurisdiction over his conduct. He is no party to the action nor is any claim being made against him by his own client. With all respect, I do not assent to the view of Greer L.J. (as he then was) that the solicitor can himself be treated as a party to the action because he has misrepresented himself as authorized to act for one party to the action and that he could therefore be made liable for the costs that have been incurred at the time when there was no defendant.
I think the principle is more accurately stated by Swinfen Eady J. (as he then was) in Yonge v. Toynbee[33]: “Whatever the legal liability may be, the Court, in exercising the authority which it possesses over its own officers, ought to proceed upon the footing that a solicitor assuming to act, in an action, for one of the parties to the action warrants his authority.” In other words, the Court is not enforcing a civil right, but exercising its authority over the conduct of its officer.
Though in more recent cases the commonest occasion for imposing a liability upon a solicitor for the payment of the costs of the opposing side is in circumstances where he has assumed an authority which he did not possess, I cannot find 337that either principle or authority has confined the imposition of that obligation to such cases.
But though the solicitor be liable for the action of his clerk, the question still has to be determined whether the clerk himself was guilty of any professional misconduct. Of course no question of misconduct relevant to the present case does or could arise in reference to the proceedings in the cases brought by Lady Chichele-Plowden or Mr. Still. Those proceedings are only material by way of a warning that discovery in the Myers action was of importance and should be carefully considered.
I say nothing of Nathaniel Rothfield’s first affidavit, since it is possible, though unlikely, that in spite of the letter of February 24, 1936, he had never had anything to do with Horwood & Co., never had any dealing with Gold Alluvial shares, and therefore had neither documents nor bank accounts which were relevant, But before the second affidavit was sworn it had been ascertained that his denials of any connection were untrue and that a mass of documents and accounts existed which were relevant and had not been disclosed.
Indeed, apart from the discovery of the defectiveness of the first affidavit there was ample warning of the need of care.
Mr. Elman himself agreed that the decision whether the entries in a pass-book should be disclosed ought not to be left to a twenty-year-old client but should be determined by a solicitor or his managing clerk, and had said that after he received in April, 1937, the letters disclosed in Morser’s statement of claim in the third-party proceedings he realized that something was wrong. Moreover, Osborn said that if he had realized that 54,000 l. had passed through Nathaniel’s banking account in sixteen months he would probably have thought it material.
It is plain that some sheets of the pass-book were examined with counsel, that the pass-book was in Osborn’s hands for about a fortnight, that for months the opposing solicitors were pressing for further discovery, and yet until a further order was made in December nothing was done.
The learned judge’s conclusion was that Osborn had 338examined the books and yet had failed to disclose the further relevant items.
I cannot say that this conclusion was unjustified merely because Osborn denied the examination. The book was in his possession, he had had warning of the materiality of full disclosure, and ample opportunity of examining it if he chose to avail himself of it. His excuse was that he meant to go through it later and that meanwhile Nathaniel took away the book in order to see if there were any further material items. Possession of the book, opportunity, and warning of materiality and of the need of care, combined with a duty to ascertain that the client fully understood the obligation imposed upon him, seem to me to be enough to warrant the judge’s finding, arrived at after an opportunity of seeing the witness in the box.
In any case I do not consider that the solicitor or his clerk has fulfilled the obligation of supervising to the best of his ability the swearing of a full and complete affidavit of documents by permitting the client to disclose part of a passbook and to withhold the rest, using for that purpose the phrase “relevant entries only.” Until it is known to him what those relevant entries are, disclosure is not complete. It is still the duty of the clerk in such circumstances himself to examine the book and see that the relevant items had been disclosed. That indeed was, as I have indicated, Mr. Elman’s own view. The two earlier affidavits of Nathaniel Rothfield were wholly inadequate and the clerk in charge of the case must either have known the defectiveness of the second as the learned judge has found or been grossly negligent in failing to acquire that knowledge.
Either finding is, I think, enough to fix him and his employer with professional misconduct and to justify the order made in the Court of First Instance.
Appeal allowed.
Solicitors for appellant: Peacock & Goddard, for Edge & Ellison, Birmingham.
Solicitor for respondent: Burnett L. Elman.
[1] [1939] 1 K. B. 109.
[2] (1856) 3 Sm. & G. 375; 26 L. J. (Ch.) 313 .
[3] (1851) 11 C. B. 457.
[4] (1862) 31 Beav. 1.
[5] [1893] W. N. 64.
[6] (1855) 7 De G. M. & G. 261, 558.
[7] 3 Sm. & G. 375 .
[8] 11 C. B. 457 .
[9] (1889) 41 Ch. D. 178.
[10] [1897] 1 Ch. 213, 244, 245.
[11] [1912] 1 K. B. 302.
[12] (1870) L. R. 6 Ch. 497.
[13] (1738) Cooke’s Practice Cases, 152.
[14] (1740) Barnes’ Notes 11.
[15] 3 Sm. & G. 375 ; 26 L. J. (Ch.) 313 .
[16] 11 C. B. 457.
[17] (1856) 1 C. B. (N.S.) 151.
[18] (1842) 10 M. & W. 28.
[19] 3 Sm. & G. 375 , 385.
[20] (1822) 5 B. & Ald. 533.
[21] 11 C. B. 457 .
[22] 11 C. B. 457 .
[23] 1 C. B. (N. S.) 151 .
[24] (1869) 20 L. T. 730.
[25] (1898) 14 Times L. R. 332.
[26] [1938] 1 K. B. 176.
[27] 3 Sm. & G. 375 .
[28] 31 Beav. 1.
[29] [1910] 1 K. B. 215.
[30] [1911] 1 K. B. 966.
[31] 1 C. B. (N. S.) 151 .
[32] 11 C. B. 457 .
[33] [1910] 1 K. B. 234.
