Keane v The Law Society (Rev 1)

The Legal Complaints Service (“the LCS”) of the Law Society considers complaints of inadequate professional service by solicitors. This part of the Law Society’s role is distinct from the regulatory role of the Solicitors Regulatory Authority and from the representative tasks which the Law Society also performs in a way that has some resemblance to a trade union. Complaints of inadequate professional service are considered by Adjudicators. This claim for judicial review concerns a series of decisions by an adjudicator, Mr Hannen Beith, in which he found that the Claimant, practising as Parker & Hammond, had provided inadequate professional services to her client, Richard Haley. Richard Haley has been served as an Interested Party, but he has taken no part in these proceedings.

In 1998 Richard Haley, his father Joe, his mother Valerie and his brother Terry were defendants in a patent action. For simplicity, I will refer to members of the Haley family by their first names. The action was nearing trial and the Haleys’ former solicitors declined to act for them any further because (it seems) of a dispute over their fees. The Claimant had had previous professional and business dealings with the Haleys. Although she was not familiar with patent law, on 24^th September 1998 she agreed to act for them in this action. Neuberger J. gave judgment on 1^st February 1999 against all of the defendants except Valerie. On 8^th April 1999 the Claimant obtained charges securing payment of £125,000 over Valerie and Joe’s property and for a further £40,000 over Richard’s home in Caxton, Cambridgeshire. Those charges were to secure the fees which had by then been incurred and the future costs of the patent litigation. The Haleys applied to Neuberger J. for permission to re-open the trial because of fresh evidence. Permission was granted but conditional on the Haleys providing security for costs, which they were unable to do. The patent litigation effectively came to an end on 9^th September 1999 with their application for more time to provide the security being dismissed. In December 1999 Joe was declared bankrupt and on 5^th January 2001 Richard was also declared bankrupt. In the course of the examination of his affairs, Richard said that the Claimant had a charge over his home to secure £40,000 in respect of unpaid legal fees. Joe and Richard were discharged from bankruptcy in 2003. In October 2003 Joe died.

In July 2004, Sandra Hayes, Richard’s sister, made various complaints to the LCS about the Claimant. These included the refusal to supply invoices. In November 2004, the Claimant wrote to Richard asking for his proposals to settle the outstanding amount secured by the charge on his home. Richard requested a bill which the Claimant did not provide. In December 2004, the Claimant assigned to White Lake Ltd her right to the monies owed to her by Richard and which were secured by the charge over his property at Caxton (though notice of the assignment was not given to Richard until 8^th March 2006). In July 2005 Richard and his mother issued proceedings in the Chancery Division against the Claimant (HCO5C02010). They argued that the charges which had been provided by Richard, Joe and Valerie should be set aside because of the Claimant’s alleged undue influence. Valerie and Richard also sought an order from the court that the Claimant deliver a bill. In August 2005 the LCS closed its file on Mrs Hayes’ complaint because of these parallel legal proceedings. On 30^th March 2006 Deputy Master Bartlett struck out the claim to set aside the charges. He gave directions for mediation of the claim that the Claimant deliver a bill (Footnote: ¹).

On 2^nd November 2006, Richard asked that Mrs Hayes’ complaint to the LCS should be re-opened.

On 10^th September 2007 Mr Beith made his first decision on Richard’s complaint. He found that the Claimant’s services were inadequate in the following ways:

The Claimant complied with this direction on 26^th October 2007. The total amount of her bill was £225,012.34.

In a further decision on 19^th November 2007 and amended on 3^rd December 2007 Mr Beith also directed the Claimant to apply at her own expense to the High Court for a detailed assessment of the bill.

Mr Treverton-Jones QC on behalf of the Claimant submits that these decisions of Mr Beith should be quashed. In summary, his grounds as developed at the hearing were:

Before expanding on these grounds it is helpful to set out the statutory powers under which the LCS scheme operates. It was introduced in 1985 by an amendment to the Solicitors Act 1974. Schedule 1A was added to the Act. So far as is material, this provides:

“1.

(1) The Council [i.e. the Council of the Law Society] may take any of the steps mentioned in paragraph 2 ("the steps") with respect to a solicitor where it appears to them that the professional services provided by him in connection with any matter in which he or his firm had been instructed by a client have, in any respect, not been of the quality which it is reasonable to expect of him as a solicitor.

(2)

The Council shall not take any of the steps unless they are satisfied that in all the circumstances of the case it is appropriate to do so.

(3)

In determining in any case whether it is appropriate to take any of the steps, the Council may --

(a)

have regard to the existence of any remedy which it is reasonable to expect to be available to the client in civil proceedings; and

(b)

where proceedings seeking any such remedy has not been begun by him, have regard to whether it is reasonable to expect him to begin them.

2.

(1) The steps are --

(a)

determining whether the costs to which the solicitor is entitled in respect of his services ("costs") are to be limited to such amount as may be specified in the determination and directing him to comply, or to secure compliance, with such one or more of the permitted requirements as appear to the Council to be necessary in order for respect to be given to the determination;

(b)

...

(c)

directing him to pay such compensation to the client as the council sees fit to specify in the direction;

(d)

directing him to take, at the expense or at that of his firm, such other action in the interests of the client as they may specify.

(2)

The "permitted requirements" are --

(a)

that the whole or part of any amount already paid by or on behalf of the client in respect of the costs be refunded;

(b)

that the whole or part of the costs be remitted;

(c)

that the right to recover the costs be waived, where in whole or to any specified extent.

(3)

The power of the council to take any such steps is not confined to cases where the client may have a cause of action against the solicitor for negligence.

3.

(1) the amount specified in the direction by virtue of paragraph 2 (1) (c) shall not exceed £15,000.”

Mr Treverton-Jones drew attention to the guidance provided by the Law Society on its own website as to when a complaint should be brought. The version that was current between 1999 and 2008 said this:

“Older complaints

If you are complaining about your solicitor, you must contact us:

•

Within six months of the end of the work which the solicitor did for you; or

•

Within six months of the solicitor’s final response to your complaint; whichever is the later.

.....

It is important that you contact us within the timescales outlined above. If you leave it any longer, we may decide not to investigate your complaint. However, in some circumstances we may decide that the six month time limit should not apply. For example, if we think your complaint is particularly serious, or you can show us a good reason for not making the complaint within the time limit.”

This version of the guidance was provided in the course of the hearing. In the light of the last sentence, it is clear that the six month period is not an absolute deadline, but can be extended in the discretion of the Adjudicator.

In the present case “the end of the work” which the solicitor did for Richard was in September 1999.

After the hearing I asked the parties for their submissions as to what had been the “final response to [Richard’s] complaint”. The Claimant submitted that it was her letter of 7^th February 2005 to Hewitsons. They were acting for Richard and Valerie and had written to the Claimant on 22^nd December 2004. Although that letter was not (it seems) before the Adjudicator, the Claimant infers that it was in the same terms as the letter from Hewitsons to her of 1^st February 2005. This was before the Adjudicator. It was again written by Hewitsons on behalf of both Richard and Valerie. The Defendant agrees that this was the Claimant’s final response to Richard’s complaint.

An initial question is whether the complaint was out of time at all. As I have noted above, the guidance at the time said that the complaint should be brought within 6 months of either the work which the solicitor had carried out (in this case September 1999) or the final response of the solicitor to the complaint. The parties are agreed that this took place on 7^th February 2005. Richard’s individual complaint was not made until 2^nd November 2006. The Adjudicator refers to an earlier complaint by his sister. That appears to have been made in July 2004 by Richard’s sister. A copy of that complaint later produced to me shows that in fact it came from two of his sisters. It refers to him being in the same predicament but does not in terms say that the complaint was made on his behalf. Hewitsons letter of 1^st February 2005 said that they were going to forward a copy of the letter to the Office for the Supervision of Solicitors to be dealt with in relation to inadequate professional services. I asked whether that was done. The Defendant confirmed to me that it cannot be established for certain whether it was, but the letter of 22^nd December 2004 was in identical terms and was sent to the Law Society. The letter, it will be recalled, was written by Hewitsons on behalf of both Valerie and Richard.

The position in fact would therefore seem to be that Richard, through Hewitsons, first complained to the Law Society on 22^nd December 2004. This was over 6 weeks before the Claimant’s final response to Richard’s complaints. On this basis, his complaint was within the published time limit.

However, the Defendants do not ask me to deal with the matter on this basis. It takes this approach for the following reasons:

I see the force of these submissions and will adopt this approach.

The Adjudicator said at paragraph 3.3 of his decision of 10^th September 2007 that he was going to structure the decision by reference to the letter from Radcliffes Le Brasseur (the Claimant’s solicitors) of 28^th August 2007. They had this to say about delay at the end of that letter:

"Our client remains concerned that the LCS have agreed to investigate this matter so long after the incidents complained of. It is clear that Mr Haley, having been content to rely on the charge granted to our client to defeat the claims of his creditors when made bankrupt, (and we understand to defeat his former wife's claim to a share of their matrimonial home) is now seeking to use any means available to secure an advantage for himself which he would not have been entitled to had he brought the complaint within the Law Society's usual time limits. No reason has been given by Mr Haley for his delay in making this complaint.

Our client believes the complaint has been brought in bad faith and is an attempt to circumvent the due process of the court. In this regard we would again draw the attention of the LCS to the judgement of Deputy Master Bartlett who indicated that Mr Haley should not be allowed to benefit from his bankruptcy or delay. In this regard, upholding Mister Haley's complaint to the LCS would be contrary to this judgement."

The Adjudicator responded by saying at para 3.15 of his decision:

"Radcliffes Le Brasseur raise the issue of delay in bringing the complaint. I think in all the circumstances of this matter it is quite right that this office should investigate this complaint. Furthermore, the original complaint was lodged some time ago. After the complaint was originally received the office file was closed pending the outcome of litigation. Mr Haley should not be penalised for this. Radcliffes Le Brasseur point out that their client believes that the complaint has been brought in bad faith and is an attempt to circumvent the process of the court. I repeat the jurisdiction of this office is entirely separate from the court. Mr Haley, as a consumer of legal services, has the right to bring his complaint. I have seen nothing amongst any of the papers I have read to indicate that the complaint has been brought in bad faith."

Mr Treverton-Jones argues that this was an irrational exercise of the power to allow a complaint to continue notwithstanding that it had been brought very much longer than 6 months after the matters complained of. Alternatively, it gives wholly inadequate reasons for the decision.

Within his irrationality challenge, Mr Treverton-Jones makes these submissions.

Mr Giffin QC on behalf of the Law Society responds to these submissions as follows:

It seems to me that there is substantial force in these arguments.

Mr Treverton-Jones submits that it was obvious that the Claimant would be prejudiced by the delay. It was her case that her dealings with Joe had been largely oral. He was now dead and it was all a long time ago. It was not obvious that any evidence he could have given would have been hostile to her case. It was not obvious that he would have denied being the liaison person for the family or that there had been a commercial benefit for all sides in their agreement that she should waive her fees above £165,000 in return for being relieved of the obligation to deliver a bill. If there had been such an agreement and it had been made on Richard’s behalf, the Adjudicator was no more free to go behind it than a court would have been. Deputy Master Bartlett had recognised that the issue as to whether Joe had acted on behalf of the other members of the Haley family in waiving the need for a bill would need to be adjourned to a trial of the Chancery action. The Adjudicator ought to have recognised that it could not be summarily disposed of in the complaint procedure.

Nonetheless, the fact remains that prejudice was not the basis on which Radcliffes resisted an extension of time for Richard to make his complaint. That may have been because they appreciated that the legal proceedings by Richard and Valerie for delivery of a bill had not concluded – they had merely been adjourned to allow time for mediation. Radcliffes may have assumed that an argument to the LCS that she would be prejudiced would cut no ice with the Adjudicator since she would (or might) in any event have to be ready to present her arguments on these matters to a mediator or a court. But whether this speculation on my part is correct or not, when experienced solicitors are representing the subject of a consumer complaint, an Adjudicator is entitled to focus on the points which they raise. In this case, I conclude that his decision cannot be characterised as irrational or otherwise unlawful because the decision did not deal with a matter that the solicitors did not raise.

Mr Giffin also argued that the Adjudicator had taken account of the question of prejudice. He did so by reference to the witness statement of Mr Beith made in response to these proceedings. Mr Beith there said,

“I have also been asked about my reasons for dealing with the complaint substantively despite the delay in making it. It seemed to me that the complaint raised a number of serious issues, and that it would be unfair to Mr Haley to deny him consideration of those issues. Further, it did not seem to me that consideration of the complaint would cause prejudice to the parties because of the lapse of time, in circumstances in which it appeared to me that most if not all of the relevant documents were still in existence, and also that (in part because of the litigation) the facts were still relatively fresh in their minds. This, along with what I said in the decision, was my thinking at the time. It seems to me now that the decision to adjudicate and to give directions has to some extent been vindicated by the fact that Mrs Keane has indeed prepared a bill of costs which can be the subject of detailed assessment.”

A court must be cautious in relying on a decision-maker’s supplemental reasons that are given for the first time in response to a judicial review challenge. The reasons are obvious: there is a risk of ex post facto rationalisation or justification even where the evidence is given in good faith – see for instance R v Westminster City Council ex parte Ermakov [1996] 2 All ER 302 CA and R (Nash) v Chelsea College of Art and Design [2001] EWHC 538 (Admin). In this case, though, I consider that it is right for me to take account of the evidence, for the following reasons. The Adjudicator’s evidence does not contradict anything in the decision letter. He is a single decision-maker (the problems of post-decision evidence are more acute where the decision-maker is a group of people). The evidence also seeks to respond to an issue which was raised for the first time in the judicial review proceedings. Finally, the evidence supports a decision to which I would have come anyway.

I also reject Mr Treverton-Jones’ reasons challenge. There is no statutory obligation to give reasons, but I accept that the Adjudicator was obliged to say why he was allowing this matter to proceed. As can be seen from paragraph 3.15 of his decision, the Adjudicator did give his reasons. He addressed the objections raised by Radcliffes. In my judgment his reasons were legally adequate.

The Solicitors Act 1974 s.70(1) gives the recipient of a solicitor’s bill the right to have it taxed (in modern parlance, ‘assessed’) if an application is made within one month. Section 70(2) provides that the Court may order a bill to be taxed on the application of either the solicitor or (if application was not made within one month) the recipient of the bill. Section 70(9) and (10) say

“(9)

Unless -

(a)

The order for taxation was made on the application of the solicitor and the party chargeable does not attend the taxation, or

(b)

The order for taxation of an order under subsection (10) otherwise provides,

the costs of a taxation shall be paid according to the event of the taxation, that is to say, if one-fifth of the amount of the bill is taxed off, the solicitor shall pay the costs, but otherwise the party chargeable shall pay the costs.

(10)

The taxing officer may certify to the court any special circumstances relating to a bill or to the taxation of the bill, and the court may make such order as respects the costs of the taxation as it may think fit.”

The Adjudicator directed the Claimant to make an application to the Court under s.70(1). That was obviously inapt since that subsection can only be invoked by the party to be charged with the bill. The Adjudicator’s witness statement says that this was a slip and he intended to refer to s.70(2). This error aside, Mr Treverton-Jones argues that the Adjudicator’s decision subverted the statutory scheme. His order that the Claimant should bear the costs of the assessment would mean that she will have to bear those costs even if the taxation process reduces her bill by less than one fifth, or indeed, even if it does not reduce her bill at all. He submits that the provisions of Schedule 1A cannot trump the scheme for the allocation of costs in s.70.

I do not agree. An adjudicator is given power to direct that a solicitor who has provided inadequate professional services shall take “at his expense or that of his firm, such other action in the interests of the client” as the direction specifies - see 1974 Act Schedule 1A para 2(1)(d). I see no reason in principle why this power should not be used to direct that a solicitor “at her own expense” takes the action of having her bill assessed. Section 70 is dealing with the generality of cases where a solicitor’s bill is assessed. Schedule 1A is addressing the far more specific situation where a solicitor has been found to have provided inadequate professional services and where the Adjudicator considers a direction of this kind is appropriate. Further, as Mr Giffin submitted, section 70 would not preclude a solicitor from agreeing in advance to waive any right to receive the costs of an assessment even if less than one fifth was taxed off. There is no objection in principle to the Adjudicator in effect requiring the solicitor to take that course.

Mr Treverton-Jones’ second argument under this head was that the Adjudicator behaved unreasonably in the circumstances in giving this direction. He submits that the Claimant has limited her right of recovery as against Richard to the amount which she has now received from the assignee of his debt – a total of some £29,000. The assignee has settled its claim against Richard. He is therefore liable to no more as a result of the fees charged by the Claimant for her services. Mr Treverton-Jones submits that it is inconceivable that a bill for over £225,000 could be reduced to less than £29,000. The whole exercise of having the bill assessed is a therefore a complete waste of time and, since the Claimant has been ordered to fund the process, a complete waste of her money. Mr Giffin responds by saying that the position is not so clear-cut. Joe and Valerie agreed to provide a charge over their property to secure £125,000. Added to Richard’s £29,000, the total which the Claimant is entitled to receive is £151,000. He submits that it is not impossible that an assessment would reduce the Claimant’s bill below that sum. If that were the case, it would be for the Haley family to decide between them who would take the benefit of the reduction or how it should be shared between them.

It is not for me to say what the outcome of the assessment process will be. However, I agree with Mr Giffin that the comparison which he draws is not so stark that it renders the Adjudicator’s decision irrational. Indeed, I must bear in mind that the lawfulness of the Adjudicator’s decision has to be judged by reference to the material that was then available to him. In September 2007, it was not known that the assignee would settle its claim against Richard. The Adjudicator was told by Radcliffes Le Brasseur that the Claimant would limit her claim against Richard to the amount of the security provided and that she would waive the rest of her fees. The security provided by the charges totalled £165,000 plus interest. The difference between that amount and her bill is still large, but not so large that it was irrational or obviously purposeless to investigate how much of the bill would survive assessment. (Footnote: ²)

In his decision of 10^th September 2007, the Adjudicator turned to the question of compensation. He considered that he could not deal with the question of financial compensation until the Claimant’s bill had been assessed. The Adjudicator then turned to the question of non-financial loss. He said this:

“Mr Haley has clearly suffered extremely serious distress and inconvenience. He has had the stress and worry of making an application to the court to obtain the bill when such a bill should have been provided some time ago and without the need for such an application. Mr Haley has also been adjudicated bankrupt (although I understand he has now been discharged). Mr Haley says that this litigation and the problems he has had with Mrs Keane have contributed to the breakdown of his marriage. The matter is still not resolved and I have considerable sympathy for him. I repeat that once further evidence comes to light, Mr Haley should be allowed to refer this matter back to the Legal Complaints Service. Once the facts are clear, and the precise amount of Mrs Keane's costs have been determined (perhaps after detailed assessment by the court), it will be possible for an adjudicator to make an award. On the papers before me at present I would envisage that such an order would be substantial. I regret that it is simply not possible for me to direct payment of compensation at the present time, much as I would like to, because Mrs Keane could simply inflate her charges by the amount awarded and so defeat the direction.”

Mr Treverton-Jones submits that the last sentence is extraordinary. The Adjudicator effectively accused the Claimant of being prepared to act dishonestly in order to subvert an LCS award. He disavows an allegation of actual bias, but, he submits, that sentence would lead a reasonable and well-informed observer to consider that the Adjudicator was or might be biased against the Claimant. The original Claim Form and grounds did not rely on this challenge but he seeks permission to add it by way of amendment. Mr Giffin responds that this remark was unfortunate. The Claimant had not provided costs estimates as she should have done and the manner in which her charges had been computed lacked the transparency which a client was entitled to expect but the Adjudicator went further than he needed to do in this final sentence. More importantly, the sentence would not have shown to a fair and reasonably well informed observer that the Adjudicator was biased against the Claimant. He submits that it is significant that this allegation of bias was not made in the original grounds for seeking judicial review, filed on 7^th December 2007. It first appeared in the Claimant’s skeleton argument which was served in February 2009.

I agree that the omission to identify this as a ground for challenging the Adjudicator’s decision until some 17 months later is a telling point against its merit. After all, if it did not strike the Claimant or her advisors as showing bias on the part of the Adjudicator until then, it is unlikely to have generated that impression on the part of the notional observer. It does show that the Adjudicator had formed an unfavourable impression of the Claimant by the time he prepared this decision, but that is not the same as bias. To treat the Claimant fairly he should, perhaps, have given her an opportunity to respond before making such a serious allegation, but that unfairness does not, in my judgment, taint the rest of his decision and it does not show bias. In my judgment there is no reasonable argument that the Adjudicator did demonstrate apparent bias and I would refuse the Claimant permission to amend on that basis.

Mr Treverton-Jones sought to make use of this sentence in the decision in a different way. He submitted that it showed the poor quality of the Adjudicator’s reasoning and I should take that into account in considering whether other aspects of his decision had a rational basis. I agree that this was an unfortunate remark for the Adjudicator to make. But I do not agree that it can be used in the way for which Mr Treverton-Jones contends. This was a distinct part of the decision. It explained why the Adjudicator was not making an immediate direction for the payment of compensation. That, of course, was a decision in the Claimant’s favour. Other parts of his decision adverse to the Claimant have to be considered on their own terms. If they are decisions to which an Adjudicator could reasonably come on the basis of the material before him, they will not become irrational because of this final remark.

I should add this. In the paragraph which I have quoted above, the Adjudicator expressed sympathy with Richard. If Richard did refer the matter back to the Adjudicator to consider the question of compensation, it is very far from clear whether he would still be the object of sympathy. The assignee of the charge on Richard’s property took proceedings against him and obtained a freezing order. In the course of those proceedings it emerged that in late 2006 or early 2007 Richard had forged the signature of the Claimant on a document which purported to be a discharge of her charge over his property. He also forged the signature of a purported witness to the document. Those acknowledged forgeries and admitted dishonesty significantly influenced Macduff J. to continue a freezing injunction against Richard (see White Lake Ltd v Richard Haley [2008] EWHC 2680 (QB). This was not a matter of which the Adjudicator was aware when he made the decisions under challenge. It is not, therefore a basis on which his decisions can be attacked in the present proceedings. I have no doubt, the Adjudicator will be told about them if there was a further application before him.

Accordingly, this application for judicial review is dismissed.