A City firm has been left to pick up its own £291,000 costs after fending off a Solicitors Regulation Authority prosecution, it has emerged.

Candey was cleared of all wrongdoing last September after a six-day substantive hearing at the Solicitors Disciplinary Tribunal.

The SRA had alleged that the firm breached money laundering regulations by failing to ensure adequate source-of-funds checks were made in relation to transactions worth around £24m. The money was transferred into the Candey client account in 2015 following work on a property investment dispute in Qatar.

The tribunal found that enhanced due diligence was not required in the circumstances and there had been no breach of money laundering regulations. Following the decision, Candey said in a statement it was 'regrettable' that the SRA had not engaged more with the firm to avoid 'substantial wasted time and costs'. 

Former partner Richard Morris had admitted failing to carry out adequate checks on a client, but he was cleared of authorising any payments or of using the client account as a banking facility.

Following the decision, the tribunal ruled that Morris should pay £10,000 costs and that there should be no order in relation to Candey or the SRA, effectively leaving both parties to pay their own costs.

A judgment now published reveals the costs were accrued in the prosecution and defence of the case. The SRA submitted that its costs had come to almost £64,000 and argued that the firm and Morris should pay half each. Candey’s defence costs came to £290,675 in total.

The firm argued that the SRA should pay its costs as it had shown neither an understanding of the money laundering regulations nor how they should be applied. Instead, it was submitted, the regulator had conducted a ‘checklist approach and had applied the incorrect checklist’. Candey added that it had considered making a submission of no case to answer at the close of the SRA’s case but had decided to allow the tribunal to hear all the evidence.

The SRA told the tribunal it had been ‘right and proper’ to bring proceedings and the evidence showed reasons for concerns about adherence to the MLRs.

The tribunal noted that whilst the firm had always denied breaching regulations, its reasons for denying the allegations ‘remained fluid’. Candey’s responses had been altered throughout correspondence until they became settled at the hearing. Its application to strike out the proceedings had been abandoned midway through the case.

The tribunal also found that the costs claimed and time spent on the defence of the allegations was ‘excessive’. It added: ‘The tribunal determined that whilst it was reasonable for the firm to defend the allegations it faced (indeed the tribunal had dismissed the allegations), its conduct in doing so had been unreasonable such that there was, in the tribunal’s view, no reason to depart from the starting point of no order as to costs.’

 

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