Dishonesty v lack of integrity: the same…or not?

Malins v SRA [12.04.17]

Date published

02/08/2017

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The ruling in Malins v SRA [12.04.17] has created uncertainty regarding the distinction between dishonesty and lack of integrity in professional conduct proceedings.

The ruling may be cited outside the context of solicitors disciplinary proceedings, and may have wider implications in areas of law where similar concepts are considered.

Background

Solicitor Mr Malins was acting for a client who took out after-the-event (ATE) insurance in March 2013. This was just prior to the introduction of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, in April 2013, which would thereafter prevent the recoverability of ATE premiums from a defendant.

Unfortunately (for him) Mr Malins failed to file notice of the premium at court or serve it on the other party. Having discovered his omission over a year later, Mr Malins created backdated documents attempting to cover up his error.

The matter was reported to the Solicitors Regulation Authority (SRA) and, following referral to the Solicitors Disciplinary Tribunal, Mr Malins was found guilty of:

  • Lacking integrity for creating a backdated cover letter and notice form.
  • Dishonesty for sending the documents to the claimant’s solicitor.

Decision

Overturning this decision, the High Court ruled that it was incorrect to view dishonesty and a lack of integrity as two separate concepts, and this flawed reasoning meant that the case should be re-examined.

Referring to the seminal Court of Appeal case in solicitors disciplinary cases (Bolton v The Law Society [1994]) the judge in Malins (Mr Justice Mostyn) stated that, in his view, there should be no distinction between the two concepts, as lacking integrity and dishonesty are synonymous, and should be proved to the same standard. The SRA is seeking to appeal this judgment.

Dishonesty

The criminal test for dishonesty is often cited in civil matters. For a finding of dishonesty a person must:

  • Be objectively dishonest by everyday, moral standards
  • Act in the knowledge that their actions are wrong (a subjective test), per Twinsectra v Yardley [2002].

Lack of integrity

Traditionally, the test for lack of integrity has been less onerous.

For a lack of integrity finding, it need only be shown that a person was objectively dishonest by everyday standards, with the need to show the person knew they were acting dishonestly falling away.

Actual knowledge and recklessness, in the sense of being aware that conduct poses a risk and consciously taking it, will be highly likely to give rise to a finding of lack of integrity. However, lack of integrity does not necessarily involve risk-taking and there is no requirement for any recklessness.

Comment

The decision in Malins has proven controversial. Many commentators have expressed the view that the decision is incorrect and should be treated with caution.

Mostyn J relied on the SRA Code of Conduct referring only to integrity and not to honesty, in concluding that the two concepts are synonymous. However, this line of reasoning has lost force following the recent announcement that honesty will be added to the new Code of Conduct.

In the financial regulatory sphere, Financial Conduct Authority (FCA) Principles prescribe only that a person need act with integrity. Therefore ‘only’ a lack of integrity, as opposed to dishonesty, needs to be shown for a fine to be imposed or prohibition order to be made. This means that alleged breaches can often fall short of dishonesty, avoiding the difficult burden of proving subjective dishonesty.

If reasoning such as that in Malins was adopted in relation to FCA regulatory matters, then there could be wider implications for those subject to investigation. For example, coverage issues might arise where an individual’s insurance cover contains a conduct exclusion which precludes indemnity in situations of dishonesty, with which lack of integrity is arguably synonymous — based on a Malins analogy.

The Court of Appeal’s decision in Malins (and other similar cases) is awaited but it is expected to confirm that, in the field of solicitors’ regulation, the concepts of dishonesty and lack of integrity are indeed separate and distinct.

It appears unlikely that the rationale of Mostyn J will find broader support, either within the Court of Appeal or outside the scope of solicitors’ regulation, but we await to see if this proves to be the case.

Read other items in the Professions and Financial Lines Brief - August 2017