Madiya Ahmed Arshad
- Admitted on 01/02/2017. Annual practising certificate from 01/11/2023.
- Type of lawyer
- Solicitors Regulation Authority
- SRA number
- Regulatory record
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Decision - Agreement
Outcome: Regulatory settlement agreement
Outcome date: 14 October 2021
Published date: 27 October 2021
Firm or organisation at time of matters giving rise to outcome
Name: Arrans Solicitors Limited
Address(es): 6 Waterhouse Street, Halifax, HX1 1UQ
Firm ID: 590692
Firm or organisation at date of publication
Name: AIT Solicitors
Address(es): Westgate House, 1 Westgate Avenue, Bolton, BL1 4RF
Firm ID: 814928
This outcome was reached by agreement.
This outcome was reached by SRA decision.
1. Agreed outcome
1.1 Madiya Ahmed Arshad ("Ms Arshad"), a solicitor at AIT Solicitors, (and who was, at all material times, a solicitor at Arrans Solicitors Limited ("the Firm")), agrees to the following outcome to the investigation of her conduct by the Solicitors Regulation Authority ("SRA"):
- she is rebuked
- to the publication of this agreement
- she will pay the costs of the investigation in the sum of £600.
2. Summary of Facts
2.1 The Firm commenced trading in July 2013. Its sole manager and shareholder was Martin Keith Waters, who was also the Firm’s Compliance Officer for Legal Practice and Compliance Officer for Finance and Administration.
2.2 Ms Arshad was the only other employed solicitor at the Firm. The Firm also engaged a solicitor who undertook consultancy work at the Firm, and a number of paralegals, one of whom was Ms S.
2.3 The Firm held client money and its client accounts could be operated by either Mr Waters or Ms Arshad.
2.4 In December 2017, Mr Waters was the victim of an assault which required hospital treatment followed by a period of convalescence at home. As the only employed solicitor at the Firm, Ms Arshad was asked to operate the client account of the Firm whilst Mr Waters was unavailable.
2.5 Whilst Mr Waters was absent from the Firm, a number of conveyancing transactions were undertaken by Ms S. Two of those transactions caused a shortage on client account.
2.6 In March 2018, the SRA commenced an inspection of the Firm. A report prepared by an SRA Forensic Investigation Officer ("FIO") identified breaches of the SRA Principles 2011 ("the Principles") and the SRA Accounts Rules 2011 ("the Accounts Rules").
2.7 Those breaches related to (amongst other matters) two conveyancing transactions on which the Firm acted.
2.8 In December 2017 the Firm was instructed by Client A on the sale of Property 1. Mr Waters and Ms Arshad confirmed to the FIO that Ms S was the fee-earner with conduct of the matter.
2.9 The Firm’s client ledger showed that the Firm received the purchase money of £185,000 on 19 December 2017 and that the transaction completed later that day.
2.10 Between 20 December 2017 and 11 January 2018, all but £505.43 of the purchase monies was paid out of the Firm’s client account, in four payments, to accounts purporting to be in the name of Client A, his wife and his daughter. One of the first two payments was rejected and the returned money was paid out again as part of the third and fourth payments.
2.11 The Firm’s file did not record who had instructed the Firm to make those payments and the bank details for the payments out. The Firm’s file did not record who had authorised the first and second payments. Ms Arshad had authorised the third and fourth payments.
2.12 At the time those payments were made, both Client A and his wife had died. Accordingly, the payments could not have been made on Client A’s instructions and the payments could not have been made to Client A or his wife.
2.13 In the circumstances, the payments totalling £184,494.57 relating to Property 1 represented a cash shortage on the Firm’s client account.
2.14 Also in December 2017, the Firm was instructed by Client B on the sale of Property 2. Mr Waters and Ms Arshad confirmed to the FIO that Ms S was the fee-earner with conduct of the matter.
2.15 The Firm’s client ledger showed that the Firm received the purchase money of £200,000 on 25 January 2018 and that the transaction completed later that day.
2.16 On 26 January 2018, all but £25 of the purchase monies was paid out of the Firm’s client account, in four payments. Two of the first three payments were rejected and the returned money was paid out again in the fourth payment. While the Firm’s client ledger indicated that three of the four payments were made to different recipients, they were in fact made to the same bank account.
2.17 The Firm’s file did not record who had instructed the Firm to make those payments and the bank details for the payments out. Ms Arshad confirmed that she had authorised each of the payments.
2.18 The Land Registry refused to register the transfer of the Property. Documents seen by the FIO indicated that the identification document held by the Firm for Client B was forged, and that the signature on that identification document did not match that which appeared on the transfer deed for Property 2.
2.19 In the circumstances, the payments totalling £199,975 relating to Property 2 represented a cash shortage on the Firm’s client account.
2.20 The sum of £384,469.57 (being the cash shortage of £184,494.57 relating to Property 1 and £199,975 relating to Property 2) was not replaced until 16 October 2018.
2.21 During an interview with the FIO, Ms Arshad confirmed that she had no experience of conveyancing matters and did not ask to review the Firm’s files in relation to Transaction 1 and Transaction 2 before authorising the payments identified above and relied on the explanations given by Ms S as to the reason for the transfers.
3.1 Ms Arshad makes the following admissions which the SRA accepts:
- She caused or allowed a cash shortage of £384,469.57 to exist in the Firm’s books of account as at 23 April 2018 in breach of Rules 1.2(c) and 20.1 of the Accounts Rules and Principles 4, 6 and 10 of the Principles.
4. Why a rebuke is an appropriate outcome
4.1 The SRA’s Enforcement Strategy sets out its approach to the use of its enforcement powers where there has been a failure to meet its standards or requirements.
4.2 When considering the appropriate sanctions and controls in this matter, the SRA has taken into account the admissions made by Ms Arshad and the following mitigation which she has put forward:
- At the time of the conduct, she had been qualified as a solicitor for less than one year and did not have any experience in conveyancing transactions;
- Her involvement in these transactions was motivated by a desire to assist Mr Waters, the Firm’s clients and other members of staff;
- Ms S had been at the Firm for a significant amount of time and was a trusted member of staff.
- The SRA has not had cause to take any other regulatory action against Ms Arshad in respect of her conduct since the relevant events took place
4.3 The SRA also takes into account Mr Waters’ comments that he was the only person at the firm who could have identified that these might be fraudulent transactions as Ms Arshad was not a conveyancing solicitor.
4.4 The SRA considers that a rebuke is the appropriate outcome because:
- Ms Arshad’s conduct led to client money being improperly disbursed from the Firm’s client account. Although that money was ultimately replaced, it was not replaced for several months.
- She was a qualified solicitor, entrusted by the Firm to authorise payments from the Firm’s client account, and could therefore be expected to properly comply with her regulatory obligations.
- Her conduct was not deliberate, was not motivated by dishonesty, and did not display a lack of integrity nor a reckless disregard for her obligations. Her actions were as a result of her efforts to help the Firm and its principal, Mr Waters, at a difficult time. By her own admission, she did not have any experience in conveyancing transactions. At the time of the transactions giving rise to the misconduct she was a junior solicitor who had been qualified for less than one year. She was the only full-time solicitor in attendance at the Firm.
- Ms Arshad relied on Ms S’s assurances that the transactions had been authorised. However, Ms Arshad has shown insight by recognising that she should have reviewed the files relating to the transactions before authorising the payments and should not have simply relied on the explanations given by Ms S. The risk of repetition is therefore low. She has also co-operated with the SRA’s investigation.
- Ms Arshad does not appear to have made any financial gain or received any other benefit as a result of her conduct.
A rebuke is appropriate to maintain professional standards and uphold public confidence in the solicitors' profession and in legal services provided by authorised persons. Solicitors are entrusted with their clients’ money and assets and it is important that they take proper steps to protect them.
5.1 The SRA considers it appropriate that this agreement is published in the interests of transparency in the regulatory and disciplinary process. Ms Arshad agrees to the publication of this agreement.
6. Acting in a way which is inconsistent with this agreement
6.1 Ms Arshad agrees that she will not deny the admissions made in this agreement or act in any way which is inconsistent with it.
6.2 If Ms Arshad denies the admissions or acts in a way which is inconsistent with this agreement, the conduct which is subject to this agreement may be considered further by the SRA. That may result in a disciplinary outcome or a referral to the Solicitors Disciplinary Tribunal on the original facts and allegations.
6.3 Denying the admissions made or acting in a way which is inconsistent with this agreement may also constitute a separate breach of principles 2 and 5 of the Principles and paragraph 7.3 of the Code of Conduct for Solicitors, RELs and RFLs.
7.1 Ms Arshad agrees to pay the costs of the SRA's investigation in the sum of £600. Such costs are due within 28 days of a statement of costs due being issued by the SRA.