SDT: Serious concerns as to the risk of repetition
A very experienced solicitor who showed a “complete blind spot” with regard to his obligations to ‘know your client’ and recognise the risks of conveyancing fraud has been suspended for a year.
Anthony Gale, who qualified in 1990, was also “inept” in managing conflicts of interest and dealing with the obligations that came with acting for vulnerable clients, according to the Solicitors Disciplinary Tribunal (SDT), which was sanctioning him for the second time in four years for similar misconduct.
Mr Gale’s actions led to a vulnerable person being defrauded out of their property.
The SDT approved an agreed statement of facts and outcome put forward by the Solicitors Regulation Authority (SRA), which also imposed conditions on his return to practice after a year such that he may not be an owner or partner in a law firm, have a compliance role, hold client money, be a signatory on any client account or work as a solicitor other than in employment approved by the SRA.
Further, the SRA can only grant such approval once Mr Gale has completed training in ‘know your client’, the risks of fraud in conveyancing transactions, conflicts and accepting instructions from vulnerable clients/third parties.
Mr Gale was sanctioned for his conduct of two property transactions. During the first, he was a solicitor by Ison Harrison, and in the second at fellow Yorkshire firm Lofthouse & Co. At the time of the hearing, he worked at Pudsey Legal Services.
In the first, in 2016, he met with ‘Client C’, an accountant he had known for a long time, and ‘Client A’, described by the SRA as a vulnerable autistic individual with limited intellectual skills and an estimated mental age of 12 years and four months.
It later emerged that Mr Gale had met Client A more than eight years earlier and had concerns about his capacity, although he said he did not remember the encounter.
Client C asked the solicitor to complete the ID forms and sign the transfer he had already prepared to sell Mr A’s property to a company owned by Client C for £119,260, the amount supposedly owing on the mortgage.
In fact, no consideration was received and there was no evidence of any mortgage. There was also no valuation of the property.
In the client-care letter to Client A, Mr Gale said he was simply giving effect to the transfer and not advising on whether it was sensible or reasonable.
He had no other contact with Client A but did correspond with Client C during the transaction, even though he later said he did not act for Client C as he considered there was a potential conflict of interest.
Earlier this year, Client C was convicted of four counts of fraud and one count of money laundering in relation to exploiting Client A out of money and assets worth £332,000, including the property. He was sentenced to five years and six months’ imprisonment.
The police interviewed Mr Gale – during which he described the circumstances of the transaction as “mildly strange” – but took no action against him.
The SRA said the transactions had multiple suspicious features. Though the basic principle was that a solicitor usually was not obliged “to travel outside” their instructions, the SRA said the experience and vulnerability of the client were relevant factors.
“Where a transaction contains unusual features which the solicitor does not fully understand, or where the rationale and basis for the proposed transaction is unclear, the solicitor must make all necessary enquiries to appraise him or herself of the nature of the transaction and the unusual or hazardous features of the transaction, in order to give the advice that he or she is required to give the client.”
Mr Gale was “aware of the possibility” that Client A was subject to undue influence and/or financial abuse but took no action. This breached multiple SRA principles, including the need for act with integrity and not to act in a conflict of interest, with the regulator saying Client C had been a client.
It continued: “By proceeding to act in the transfer of the property, failing to undertake proper enquiries, failing to ascertain whether the transfer was in Client A’s best interests, failing to advise Client A as to the risks and consequences of the transfer, failing to take steps to protect Client A’s interests, and failing adequately to deal with the conflict of interest, [Mr Gale] ignored those risks and acted recklessly.”
In mitigation, Mr Gale said it was “an enormous standard to expect a solicitor to recall a client seen once briefly eight and a half years previously at a different firm”, but he admitted his failures.
He argued that Proceeds of Crime Act proceedings would likely see the property transferred back to Client A, so he would have suffered no financial loss. He had a “substantial workload” at the time and “did not give full and proper due diligence to the matter”.
In the second transaction, Lofthouse & Co was instructed by Client G on the sale of a property which was actually owned by Mr E. Mr E’s son, Mr I, told Mr Gale that Mr E had effectively gifted the property to Client G because he had paid off the mortgage.
At no time did Mr Gale contact Mr E or confirm that Mr I could provide instructions on his behalf.
In July 2020, Mr Gale completed the transaction on the basis of an undertaking to hold the funds to the buyer’s solicitors’ order pending him producing an executed transfer form. He also signed the contract for sake in the name of Mr E as the seller.
The solicitor then became aware of a dispute between Mr E, Mr I and Mr G, which continued until at least March 2021 with the transfer unsigned.
The SRA said that, at the time of signing the contract, Mr Gale knew that Mr E was not and had never been his client, had not instructed him to sell the property, had not authorised Mr I to give instructions on his behalf and had not authorised him to sign the contract.
He explained in mitigation that, having spoken to Mr E, who was a lawyer, “he took what at the time he would describe as an educated shortcut, in considering he had implied authority to exchange contracts from the registered proprietor”.
There was litigation ongoing and, if the court ruled Mr E’s favour, he would have suffered no financial loss, Mr Gale argued.
Further, the matter took place during the Covid lockdown, staff were often working from home, he was often in the office alone, his father had been diagnosed with dementia and Mr Gale “thinks he probably had mild depression at the time”.
The SDT found Mr Gale to be “highly culpable” for his misconduct and that its impact on Client A was “profound”. His actions facilitated Client A “being taken advantage of”.
Back in 2018, the SDT found he had been “sloppy, lazy and careless” when acting in conveyances on the instructions of a third party without confirming them with the clients or conducting due diligence on the clients or transaction funds.
He was fined £10,000 and banned from acting as a compliance officer and working as a sole practitioner. The High Court rejected an appeal against the latter restriction.
The latest tribunal panel said Mr Gale’s “repeated misconduct demonstrated his complete lack of insight into and understanding of his failings”.
It went on: “The tribunal held serious concerns as to the risk of repetition in the future given Mr Gale’s demonstrable propensity to ignore red flags in conveyancing transactions, and his inherent inability to identify and heed warning signs of fraud or exploitation.”
There were no mitigating features, with Mr Gale only making his admissions shortly before the hearing, having denied the allegations in their entirety up to that point.
Agreeing with the sanctions, the SDT said: “It was plain to the tribunal that Mr Gale had a complete blind spot with regard to the obligations to ‘know your client’, the risks of fraud in conveyancing transactions, management of conflicts of interest, and the obligations attendant upon accepting instructions from vulnerable clients.
“The previous sanction imposed in 2018 had not rectified Mr Gale’s ineptitude in those respects, and had not protected either the public or the reputation of the profession from repeated harm.”
Mr Gale also agreed to pay costs of £12,000.
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