Rocha-Afodu v SRA – the regulator's powers over solicitors' private lives are examined again

If the boundary between a solicitor's professional and private lives were ever to be mapped, it would probably look like the coastline of Norway - infinitely complex, jagged and largely rocky. The da Rocha-Afodu v SRA decision ([2021] EWHC 1666 (Ch)) is another Divisional Court case exploring this difficult terrain, following upon that of Beckwith v SRA [2020] EWHC 3231 (Admin).

Facts

The issues in da Rocha-Afodu arose in 2015 when Mr da Rocha-Afodu was a freelance solicitor for a law firm. He received instructions from a client (we refer to as "Husband") in relation to an application by Husband's former trustee in bankruptcy for the sale of property in which Husband had an interest, and of which he claimed his wife ("Wife") was owner or part owner. Mr da Rocha-Afodu began proceedings on Husband's behalf to establish that Wife was owner. Wife was substituted as the correct applicant. Mr da Rocha-Afodu argued that at that point the law firm's retainer came to an end.

Mr da Rocha-Afodu then had (what he called) "private business discussions" regarding how Wife could buy out the trustee's interest. He said he entered into a private agreement with Wife, for which he would be paid, concerning the use of a fund totalling £45,000 that had been donated by Husband's family in order to buy out the trustee's interest in the property. Mr da Rocha-Afodu transferred the money to a company with which he was associated (at one stage a director), and the money was used for an investment which, according to Mr da Rocha-Afodu, he had Wife's permission to do. During some of this period, it appears Husband may have been in prison. Husband complained about the investment, stating that the money had only been provided to negotiate with his trustee in bankruptcy, and the SRA became involved. The SRA was concerned that Mr da Rocha-Afodu had taken unfair advantage of Husband and/or Wife about his use of the money and the legitimacy of the company to which he transferred it.

The SRA applied for disclosure of documents concerning the treatment of the £45,000, under section 44B of the Solicitors Act 1974. Under s.44B, the SRA has wide powers to require the regulated to provide information, if it is satisfied that it is necessary for the purposes of investigating whether there has been professional misconduct or whether the solicitor has failed to comply with any requirements of the Solicitors Act or other relevant rules.

The lower court allowed the application for disclosure, holding that there was a clear link between Mr da Rocha-Afodu's practice as a solicitor and the concerns being investigated. Mr da Rocha-Afodu appealed, arguing that the SRA and court had no jurisdiction over him, as he had not been acting as a solicitor in his dealings with Wife. He claimed that the disclosure was also a breach of his ECHR Article 8 rights, using Beckwith v SRA [2020] EWHC 3231 (Admin), where the Divisional Court emphasised the importance of caution where an investigation might impose on a solicitor's private life.

Mr da Rocha-Afodu's appeal was dismissed, the High Court holding that the Master in the lower court had been correct to order the disclosure. According to Mr Justice Adam Johnson, the evidence showed a clear link between Mr da Rocha-Afodu's practice as a solicitor, and the concerns being investigated. Further, the power under s.44B was broad. Under Law Society of England and Wales v Sibley [2017] EWHC 1453 (Ch), at the SRA investigation stage the question is not whether the grounds of complaint have been made out, but whether the proposed grounds for issue of the notice had been made out. Neither the issue of a notice or making of an order by the court implies a finding of misconduct.

Regarding the distinction between the role of a solicitor and Mr da Rocha-Afodu's private business, the High Court said that no hard and fast distinction could be drawn in this case between his role as solicitor, and his role as a private investment adviser or manager – Mr da Rocha-Afodu's connection to Wife (and therefore the £45,000) arose as a result of him previously acting as solicitor for Husband. The £45,000 had apparently been given to Husband by family members to assist his bankruptcy and it was in connection with the bankruptcy that Mr da Rocha-Afodu had acted.

Regarding Mr da Rocha-Afodu's argument that the order infringed his human rights under Article 8, Mr Justice Johnson held that the information sought was not really information private to the appellant, but was information that Wife was entitled to, regarding funds she has invested. Further, Article 8 is a qualified right which can be interfered with to the extent it was necessary in a democratic society. In this case, interference (by the SRA) would be justified.

Comment

The da Rocha-Afodu case is less contentious than the Beckwith decision of last year. The fact that it was Mr da Rocha-Afodu's private business dealings that were being investigated, as opposed to the intimate details of his personal life, presumably made the decision easier for the court, as did the SRA's broad powers under s.44B.

What is interesting about the da Rocha-Afodu decision is the somewhat attenuated connection between his activities as solicitor, and his actions in an alleged private capacity. The shading of the boundary between a person acting as a solicitor (and fiduciary), and private business dealings with (say) a former client or a former client's family, is a topic that has frequently exercised the court in the past. It can raise issues associated with the misuse of confidential information (imparted by the original client), and the possibility of breach of the fiduciary obligation of loyalty. This decision shows that the SRA will easily be able to justify its investigation into such boundary crossings.

And, if someone reading the da Rocha-Afodu decision were to think 'that sort of thing wouldn't ever happen at my firm', then how about this scenario: a corporate lawyer acts on a deal for a client, they get on well and, following the end of the retainer, the client offers shares to the lawyer in exchange for her providing sage advice from time to time on the running of the client’s business. Can that corporate lawyer argue that her business advice was private domain, not amenable to SRA interest? On the basis of da Rocha-Afodu, it looks unlikely because the business relationship had its origins in solicitoring. Risk & Compliance teams may therefore want to reflect how this decision could affect internal policies relating to client contact outside of a strictly solicitor-client relationship.