Shuttari v Solicitors' Indemnity Fund

J U D G M E N T

1. THE DEPUTY JUDGE: This is a claim by Fawzia Amtul-Habib Shuttari against the Solicitors Indemnity Fund Limited pursuant to section 68 of the Arbitration Act 1996 for an order remitting an award dated 22 November 2003 in an arbitration between these two parties for reconsideration, alternatively, for the award to be set aside in its entirety.

2. The issue in the arbitration was whether Ms Shuttari had acted dishonestly in relation to a mortgage transaction in which she acted as solicitor for the mortgagee and the purchaser of a residential property known as 8 Bostonthorpe Road in Hanwell.

3. The arbitration arose in the following way. Ms Shuttari is a solicitor of the Supreme Court. The Solicitors' Indemnity Fund, to whom I shall refer as SIF, is a mutual insurance company. Ms Shuttari was, as she was obliged to be, insured as a solicitor by the SIF. At the relevant time she practised as a sole practitioner.

4. As I indicated, Ms Shuttari acted for the purchaser of the residential property known as 8 Bostonthorpe Road. I shall refer to the purchaser by her initials as TN. Ms Shuttari also acted for the mortgage lender, known at the time as National Home Loans Limited. That company later became known as Paragon Finance Plc, and I shall refer to it throughout this judgment as Paragon. As far as Paragon was concerned, the purchase was for a price of £85,000 and did not involve a sub-sale.

5. From papers received by Ms Shuttari, had she read them, she would have seen that TN was buying the property from a company called GC Construction by means of a sub-sale, that company buying in turn from the Britannia Building Society, the registered chargee, which appears to have been selling under its power of sale in a legal charge granted by the registered proprietor. That sale appears to have been a sale for £73,000. The sub-sale was being effected at a sum of £85,000.

6. Ms Shuttari discussed the transaction with an erstwhile colleague of hers, to whom I shall refer as DP. DP acted (or said he was acting) for the vendor company called GC Construction Limited. He had, it seems, at some time been in partnership with Ms Shuttari but at the time of the above transaction she was, as I have indicated, in sole practice. She regarded him as knowing much more about conveyancing than she did.

7. She was instructed by Paragon to investigate the title in the usual way and to advise them if she became aware of a reduction in the purchase price or in the existence of a sub-sale. The existence of a sub-sale is, of course, a well-known tell-tale sign of a possible mortgage fraud. Their instructions to her included a form of report on title to be returned to them in due course by Ms Shuttari.

8. In short, the transaction went badly wrong for Paragon and that company eventually had to sell the property at a loss. What went wrong was this: it appears that Paragon was a victim of a mortgage fraud. The only real transaction seems to have been a purchase by TN for £73,000.

9. TN had applied for a mortgage to Paragon on the basis that she was buying the property from GC Construction Limited for £85,000. On that basis Paragon offered a loan to her of some £78,835. The apparent mortgage fraud involved interposing between Britannia and TN a sub-vendor, namely, GC Construction Limited. I am told by both counsel that such a company simply did not exist. Yet the transaction was completed by a transfer from Britannia to GC Construction Limited and a further transfer from GC Construction Limited to TN.

10. Apparently, a registered title was ultimately procured in favour of TN. How this was achieved is not known but, no doubt, the Registry were told that GC Construction Limited was an existing company and one capable of effecting this transaction.

11. In time there was a failure to service the loan. Paragon had to step in and sell the property under its power of sale, which it did at a loss. It claims that loss from Ms Shuttari. Paragon sued Ms Shuttari for damages for negligence and deceit, alleging that she was party to a conspiracy to commit a mortgage fraud. She served a defence in October 1997, and in turn sought indemnity cover from her insurers, the SIF. The SIF refused cover after Ms Shuttari was interviewed on their behalf by Mr Michael Pooles QC. The refusal was made in reliance on rule 14.1 of the Solicitors' Indemnity Rules which provides:

"The fund shall not afford any indemnity in respect of any loss arising out of any claim ... (f) in respect of any dishonest or fraudulent act or omission."

12. Ms Shuttari in turn invoked rule 20, which enables a solicitor who is dissatisfied with the Fund's decision to refer the matter to arbitration.

13. She invoked that rule on 13 May 1999. Mr Phillip Naughton QC was duly appointed arbitrator, some years later in fact, on 28 March 2003. Why there was such a delay in relation to that appointment is unexplained.

14. Although Paragon was alleging dishonesty on the part of Ms Shuttari it is right to point out that the dishonesty alleged by the SIF was not that she was implicated in the mortgage fraud. The dishonesty relied upon by the SIF was restricted to a single document in the transaction, namely, her report on title dated 11 June 1991. It is important for her sake to note that the SIF did not allege in the arbitration that she was party to the mortgage fraud.

15. The evidence as to what happened in this transaction is quite striking in its unusual nature. Essentially, it is that she had practically nothing to do with the conveyancing transaction. She was suffering at the time from stress and depression. She had just given birth to her third child and was going through a divorce and her mother was ill. She regarded herself as incompetent to handle a conveyancing transaction of this kind. She considered that DP, her colleague, a solicitor, as I have indicated, knew very much more about conveyancing than she did. He could not act for the purchaser in this transaction as he was acting for the vendor, GC Construction Limited, and he could not of course act on both sides. Despite that, she relied entirely on him.

16. In fact, all that she really did in this transaction, and this she did at his request, was to instigate a local land search and read through the results. She did not read the rest of the papers, although she speed read her instructions. She did not notice the part played by the Britannia Building Society; she did not know that the transaction was being effected by way of a sub-sale. In short, she did not investigate title at all but left it all to DP, who, as I have indicated, was and was known to her to be the solicitor to the immediate vendor to her client.

17. Paragon's instructions to her required her in their standard form to ( inter alia) investigate the title and to advise them if she should become aware of a reduction in the price for the property, for whatever reason, or of the existence of a sub-sale. She signed a report on title, which, as I have indicated, is the subject matter of the alleged dishonesty, in the name of her firm. It contained ( inter alia) the following words:

"We confirm that we have read and have complied or (as appropriate) will comply in all respects with the company's instructions to solicitors. In accordance with those instructions we have investigated the title to the property and we hereby certify as follows ... 3. The applicant has or will acquire on completion a good and marketable title to the Property and the Property complies with your requirements as stated in your instructions ... 7. Save as mentioned below, there are no matters affecting the property which should be brought to the company's attention including (but not limited to) anything contained or referred to in your instructions."

18. This is the only document, as I have indicated, which contained the dishonesty alleged against her and which is said by the SIF, and indeed has been held by the arbitrator, to invalidate her cover. Perhaps this would be a convenient time just on this point to record the few questions asked by Mr Fenwick QC of her in the course of the arbitration, and her answers, which were recorded by the arbitrator in his award:

"Mr Fenwick: You read (the words set out above) before you signed it?

Answer: Yes.

Question: Did you intend to be saying that to NHL [NHL is now known as Paragon] by signing this report on title?

Answer: I thought that when I was signing this that I was certifying that it was a good and marketable title.

Question: Did you intend to tell NHL that you had read and had complied or as appropriate would comply in all respects with the company's instructions?

Answer: Well, obviously. I signed the document and that is stated in the document.

Question: And it was a lie, was it not?

Answer: It was wrong, yes."

19. I go back, before looking more closely at the arbitral award, to the procedural history of this arbitration. As I have indicated, the arbitrator was appointed on the 28th March 2003. I can only say from what followed that he gave Ms Shuttari every latitude and every indulgence to enable her to put her case and call the evidence she wished. On the 31st March 2003 he wrote to both parties with a series of questions inviting a response within seven days. The SIF responded in time. There was no response from Ms Shuttari. Then he made a procedural order allowing both to set out their case in correspondence, the SIF to serve theirs before 8th May, Ms Shuttari to respond within 14 days. The SIF complied but she failed to do so by the expiry of the time within which she should have done so.

20. On the 3rd June she asked the arbitrator for an adjournment for 28 days. At that time the hearing was due to begin on the 9th June. That adjournment was granted and the time was extended to 18th June. The arbitrator asked both sides to make proposals for further directions. He adjourned the hearing and it subsequently became fixed for the 10th and 11th September.

21. On the 4th July the arbitrator, having heard nothing from either party, asked for an explanation as to why he had not heard. The SIF replied that they did not wish to put in further evidence. Ms Shuttari responded on the 9th July indicating that she was dealing with a matter in the High Court. On the 23rd July the SIF asked for a final order to be made. On the 28th July the arbitrator made an unless order indicating that unless by 14th August Ms Shuttari filed her material she would not be permitted to rely on any new material.

22. On the 8th August she wrote and said that her evidence would be served by the 22nd August and asked for an extension until that date. On the 13th August that extension was refused. Nonetheless, on the 27th August she served her witness statement and two files of papers and a further statement of another witness. The material put in by her was allowed to be put in and the hearing eventually started on the 10th September and went over to the 11th September. Ms Shuttari was cross-examined on that first day and, as I understand it, her cross-examination was completed on that first day.

23. On the second morning she instructed counsel, Mr Owen Rhys, who appeared before me on her behalf, to make an application to the arbitrator for an adjournment to permit her to obtain medical evidence as to her state of mind at the time of the critical transaction in 1991. It is unclear (counsel could not remember precisely) whether that application was in fact made to the arbitrator on that day, but what is important is that it was indicated on that day that Ms Shuttari wished to have the opportunity of putting in medical evidence.

24. When her counsel was nearly through his submissions, most unfortunately, Ms Shuttari suffered a seizure and the arbitrator very properly adjourned the arbitration. Eventually the arbitration was refixed to resume on the 23rd October, some six weeks or so later. In the meantime, as I understand it, Ms Shuttari on 11th September was taken to hospital but I have no further information, and nor, I think, did the arbitrator, as to precisely what transpired (so far as her health was concerned) between that day and the resumption of the hearing on 23rd October.

25. But on the 23rd October, a few moments before the hearing was to begin, a copy of a letter was given to the representatives of the SIF and put before the arbitrator. It was a letter from Dr Mike Harris, Forensic Services Director of the Nottinghamshire Health Care NHS Trust. It is an important document on the application before me and I think I should read it in full. It is addressed to Ms Shuttari and dated 23rd October:

"Dear Madam, Further to our telephone discussion today approximately 11.15am on Thursday 23rd October. You outlined to me briefly the background to your current case and asked whether I could assist. As I understand it you are involved in a legal dispute with your indemnity company. You indicated that the specific incident over which the dispute is involved occurred at a time when you were one month post partum. You indicated to me that at the time you also had two other children under the age of five, your marriage had just split up and your mother was unwell. You asked whether I would be able to provide you with a psychiatric assessment and opinion. I have had the opportunity of discussing this also with your counsel, Owen Rhys.

I am a consultant forensic psychiatrist currently working as Executive Director of Forensic Services for Nottinghamshire Health Care NHS Trust (that means I manage Rampton High Security Hospital, two medium secure units and a community forensic service). I have been a Consultant Psychiatrist for the past 21 years and a Consultant in forensic psychiatry for the past sixteen years. I have been a Consultant Forensic Psychiatrist at Nottingham Health Care Trust, St Andrew's Hospital, Northampton, and more recently in Rampton Hospital. I have acted as Medical Director both at Nottingham and at St Andrew's Hospital.

I have significant experience of providing medico-legal reports both in civil and criminal actions and have had substantial experience of assessing and then treating women with prenatal disorders. I indicated to you that I would be able to undertake an assessment within a month and it would take me a further month to prepare a report after that. I will of course need to find space in my diary to come and see you to do the assessment and I will also need time to read the relevant case papers including obtaining your medical records from your general practitioner and any hospital records that you have, and seeing the relevant papers relating to this individual legal action. I also need time to prepare the report. I should add that I have also been a Sub Dean of the Royal College of Psychiatrists and would be happy to provide my full curriculum vitae if required.

If the court are mindful to allow you to obtain such a report and if you would like to instruct me to provide a report in your case, I would be happy to do that. I look forward to hearing from you."

26. On the basis of that letter Mr Rhys was instructed to ask, and asked, for an adjournment of the arbitration. The arbitrator, having heard submissions on that, gave an oral ruling which was not tape recorded but a note was taken by Mr Fenwick's instructing solicitors and Mr Rhys accepts the note as accurate. The application was refused but as this lies at the heart of the application before me and is not very long I think I should read the short oral judgment in full:

"I will refuse this application. The arbitration and the proceedings and timetable have been largely ignored by Ms Shuttari every step of the way. But I have allowed her to continue in every case largely on the ground that the Respondent has not been unduly prejudiced. I would do so again if I could see a point in such a step at this stage. However, this application was made after the cross-examination had been completed. The application was made at a time when I was in receipt of both oral and written evidence as to the state of mind of Ms Shuttari. I was obliged to adjourn these proceedings following the onset of ill health on the last occasion. No step has been taken to help me as to what I might learn which is not evident from the oral evidence which I might learn from a forensic psychiatrist. All the letter of 23 October 2003 from Dr Mike Harris to Ms Shuttari tells me is that he has experience and will prepare a report. I do not know what that report could say which might affect the issues in this case.

"The timescale for an investigation is unclear. She could see him within a month. The time for the report is unclear. As Justin Fenwick says (Counsel for the Respondent) time would be needed for the Respondent to put in a reply if necessary. That will add a substantial time to the arbitration. Applying section 33, I should not accede to an application made so very late without any guidance as to what that inquiry might show after oral evidence has been given. It would not be fair or proportionate.

"I should say that whilst there is a tape recording of the evidence the way in which the evidence was given is important. I would be most reluctant to delay the matter until Christmas given the demeanour of the person. For all these reasons I refuse the application."

27. Accordingly, the arbitration continued on the 23rd October. The arbitrator then took time to write his award. It was an interim award because costs had not been dealt with. He published his award on the 27th November, although there is a reference in the SIF's evidence to it being published on the 8th December. It does not matter for present purposes which is correct.

28. There followed these proceedings, that is, the proceedings before me. They were issued on the 23rd December. In the claim form Ms Shuttari applies for a remedy pursuant to section 68 of the Arbitration Act 1996, as I have indicated, for an order remitting the award or setting it aside in its entirety. The grounds of the application are stated to be:

(1) The principal issue in the arbitration relating to the claimant's state of mind in a period in May 1991 and in particular whether she had acted dishonestly in relation to a particular transaction which she had dealt with in her capacity as a solicitor.

(2) The claimant gave evidence that, in the period in question, she had only recently given birth to her third child, she had two other small children both under five years of age whom she was looking after, she was separated and was in the process of divorcing her husband, and her mother was seriously unwell. She also gave evidence that she was exhausted and not properly coping with her work and was at times "in a trance".

(3) An application was made to the arbitrator, during the course of the arbitration, for permission to adduce expert evidence as to the claimant's mental condition at the time of the transaction in question. The claimant believes that her state of mental exhaustion and the fact that she had so recently given birth and was nursing her baby, did seriously compromise her ability to judge whether her actions were in accordance with the generally recognised standards of her profession.

(4) The arbitrator refused her permission to adduce such evidence which has caused substantial injustice to her.

(5) The claimant applied for permission to challenge that decision from the arbitrator but no such permission was given, and the claimant continued with the arbitration while reserving all her rights to challenge the decision at a future date.

29. I do not think any of the other grounds are pertinent to the problem that I have to face.

30. She filed an affidavit in support dated the 22nd December 2003 and indicated that a medical report would be forthcoming by the end of January of this year. In fact, it was not produced until the day before yesterday, that is to say the 19th May, the first day in respect of which this hearing was originally scheduled to be heard. In fact the hearing began and was completed yesterday and I am delivering judgment today, before the beginning of the usual court day.

31. It is a lengthy report in which Dr Harris records Ms Shuttari's family history and various life events occurring in 1991, including in particular the birth of her third child and her divorce. Reading all of that, one can only have the greatest sympathy for a woman in her unfortunate position at the time, trying, with all these problems, to hold down a solicitor's practice. I should quote fully from the report the only paragraph that is really centrally pertinent to the problems that I face, although I will start with the first sentence at the top of page 8:

"Ms Shuttari gives a strong history of a mild to moderate depression at times becoming severe."

32. Then I will move to the complete paragraph starting at the bottom of page 8:

"Given the likelihood that Ms Shuttari was moderately depressed with some severe episodes of depression and the symptoms I have outlined above, it is probable Ms Shuttari's ability to make effective judgments around issues of probity would have been affected; that is whilst in a normal state of mind she would very clearly know that certain actions were wrong (such as signing documents that she had not herself completed); when in a depressed state she would not necessarily have been aware of the fact that she was doing wrong and could well have just been depending upon her partner, whom she trusted, to make those decisions for her. People with depression often become remarkably passive as to accepting advice from others, and acting on that advice without intellectual or emotional discrimination."

33. I now go to the award and draw attention to one or two aspects. As I have indicated, the arbitrator recorded some of the cross-examination going to the critical document, namely, the report on title, which I have repeated above. He recorded also that Ms Shuttari had said:

"When I signed the report on title what I thought I was certifying was that I had investigated through [DP] the title and that it was a good and marketable title: that is what I thought I was certifying."

34. Substituting initials for names, the arbitrator recorded her saying:

"It is only in this particular case because of the history of DP and my relationship with DP that I relied upon him and I relied upon him because I thought he was much better and more competent than me in conveyancing. I had been making mistakes. He had been the one who had been guiding me through the conveyancing in other matters. He was the one I had referred to whenever I had any problems; he or [then she refers to another solicitor], and if either of them at that time had told me that this was a good and marketable title -- 'we've investigated it' -- I would have believed it. My own knowledge was so deficient that I did not realise that trusting someone like that was wrong."

35. The arbitrator went on in paragraph 26 to say this:

"There are two strands in this part of Ms Shuttari's evidence. In the first place she tells me that she 'did not see DP as a separate entity.' She thought she would be better off relying upon him as an experienced conveyancer. He was more likely to spot defects and he gave assurances that he had investigated title. The second strand relates to the vulnerability of Ms Shuttari herself. She was almost 'in a trance'. She had just had her third child, she was going through divorce proceedings, her mother was ill, she was exhausted."

36. In paragraph 46 he said:

"I am entitled to take all the circumstances into account in reaching my conclusion and I do take account of the fact that she had given birth to her third child only weeks before she was engaged in this transaction and had other emotional pressures. I do not accept that she was in a trance, but allow that she was exhausted and although the exhaustion was self-inflicted, she was continuing to man the duty roster at Bow Street and her local police station -- her actions in attempting to do so much do not make her fraudulent. Her key defence is that DP did everything save registration and was better at it than Ms Shuttari and that she delegated to him the task of obtaining a good marketable title."

37. In paragraph 48 he said:

"On the other side of the balance of evidence is the direct evidence of Ms Shuttari that while she now realised it was wrong, at the material time she felt she was entitled to rely upon DP to do everything. She is entitled to rely upon the absence of sustained allegations against TN. Without evidence of complicity by TN, the sinister quality of the inclusion of the figure of £73,000 falls away, and that in turn leads me to conclude that, on the balance of probabilities the figure of £73,000 was information which was provided by DP. It is a short step from there to accept, again on the balance of probabilities, that Ms Shuttari did rely totally upon DP and did so because she was not competent to do the work herself."

38. At paragraph 49:

"But Ms Shuttari is accused of completing the report on title dishonestly. She explains why she did it -- she needed the assistance of DP, but this does not excuse the fact that she did it. I do not accept her evidence that even at the time she thought she was entitled to delegate the preparation of the Report on Title to the vendor's solicitor. I find that she knew that no honest solicitor would sign the Report saying that they had complied with their instructions if they had not in fact done so. This dishonesty was causative of the loss suffered by NHL consequent upon its advancing mortgage funds."

39. The arbitrator concludes in paragraph 50 by saying:

"It follows from my finding above that Ms Shuttari fails in her claim for an indemnity."

40. Before I turn to the Arbitration Act itself and the nature of my jurisdiction, I understood both counsel to accept that the proper test to be applied so far as the meaning of dishonesty is concerned is that stated by Lord Hutton in paragraph 35 of his Lordship's speech in Twinsectra Limited v Yardley and Others [2002] 2AC 164:

"There is, in my opinion, a further consideration which supports the view that for liability as an accessory to arise the defendant must himself appreciate that what he was doing was dishonest by the standards of honest and reasonable men. A finding by a judge that a defendant has been dishonest is a grave finding, and it is particularly grave against a professional man, such as a solicitor. Notwithstanding that the issue arises in equity law and not in a criminal context, I think it would be less than just for the law to permit a finding that a defendant had been 'dishonest' in assisting in a breach of trust where he knew of the facts which created the trust and its breach but had not been aware that what he was doing would be regarded by honest men as being dishonest."

41. The question then for the arbitrator was whether Ms Shuttari was aware that what she was saying in the report on title would be regarded by honest men or honest solicitors as dishonest.

42. I turn to the Arbitration Act 1996 now and my jurisdiction in these proceedings to interfere with the interim award. The process before me is not an appeal from the decision of the arbitrator. These proceedings are a challenge to that award under section 68 of the Arbitration Act 1996. I quote from that section so far as is relevant, and from section 33 as well. Between them those sections map out the jurisdiction of this court to interfere with the arbitral award in response to the application made before me. Section 68, which is headed "Challenging the award: serious irregularity", reads as follows:

"(1) A party to arbitral proceedings may (upon notice to the other parties and to the tribunal) apply to the court challenging an award in the proceedings on the ground of serious irregularity affecting the tribunal, the proceedings or the award...

"(2) Serious irregularity means an irregularity of one or more of the following kinds which the court considers has caused or will cause substantial injustice to the applicant-

"(a) failure by the tribunal to comply with section 33 (general duty of tribunal)."

43. I do not read any of the other subparagraphs of subsection (2) but I will read subsection (3), which is as follows:

"If there is shown to be serious irregularity affecting the tribunal, the proceedings or the award, the court may-

"(a) remit the award to the tribunal, in whole or in part, for reconsideration,

"(b) set the award aside in whole or in part, or

"(c) declare the award to be of no effect, in whole or in part."

44. I do not think I need read any more of section 68. I then turn to section 33, which is headed "General duty of the tribunal":

"(1) The tribunal shall-

"(a) act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting his case and dealing with that of his opponent, and

"(b) adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense, so as to provide a fair means for the resolution of the matters falling to be determined.

"(2) The tribunal shall comply with that general duty in conducting the arbitral proceedings, in its decisions on matters of procedure and evidence and in the exercise of all other powers conferred on it."

45. It will be seen that the threshold question on this challenge to the arbitral award is whether there has been an irregularity affecting the tribunal, the proceedings or the award. Even if that threshold is crossed the court has to go on to consider that that irregularity has caused or will cause substantial injustice to Ms Shuttari so as to fall within the conception of "serious irregularity" within the meaning of subsection (2) of section 68.

46. What is relied upon in relation to the first threshold question is the failure of the tribunal to comply with the general duty of the tribunal laid down in section 33 and, in particular, with the duty under section 33 subsection (1) (a) to act fairly, giving each party a reasonable opportunity of putting his case. The simple question is whether the arbitrator has acted fairly and whether he gave Ms Shuttari a reasonable opportunity of putting her case.

47. It is said on her behalf by Mr Owen Rhys that the arbitrator's refusal to give her time to obtain and then adduce expert evidence as to her mental condition at the time of the 1991 transaction amounted to such irregularity. Even though made very late in the day the value of such evidence to Ms Shuttari was, he submitted, so great that it should have been allowed unless some overwhelming prejudice would have resulted, if the adjournment had been allowed, to the other party, namely, the SIF.

48. There was no particular urgency, he said, because the Paragon proceedings against Ms Shuttari had been stayed and were stayed pending the outcome of the arbitration and the SIF would naturally, if the adjournment had been allowed, have been permitted to call its own medical evidence in reply if it was so advised. The arbitrator, he urged upon me, ought to have granted the adjournment.

49. He went on to submit that the irregularity was a serious irregularity because it has caused or will cause Ms Shuttari substantial injustice within the meaning of section 68 (2) since she has been unable to adduce Dr Harris' evidence and the arbitrator has made a finding of dishonesty against her. She has thus, he submitted, been deprived of the ability to deploy a potential defence to the charge of dishonesty.

50. Set against those submissions is the submission by Justin Fenwick QC, on behalf of the SIF, that section 33 (1) (a) does not require limitless indulgence to be given to a party to an arbitration. The history here is replete with indulgence after indulgence having been given to Ms Shuttari. She had from the end of March 2003 to start getting her case together, and it is to be remembered that she is a practising solicitor, not a stranger to the litigation processes.

51. I was told that she had instructed counsel, Mr Rhys, some short while before the hearing on 10 September 2003 and then on the second day of that hearing, as I have indicated above, and after having been cross-examined by Mr Fenwick the day before, she made it clear that she wanted to adduce medical evidence as to her mental state back in 1991, at the time of the conveyancing transaction. She had some six weeks or so to obtain such evidence before the hearing was resumed on the 23rd October and on that day, at the very last minute, she produced the letter of Dr Harris, which I have read, indicating that he could see her within a month and would produce a report within a month after that.

52. There was no explanation to the arbitrator, as I understand it, why, after all the indulgences shown to her, she did not ensure that she had seen a psychiatrist and obtained a report by the time of the hearing on 23 October, even perhaps in summary form, as to what his evidence would or would be likely to be. The arbitrator faced a situation in which he could not only not be confident that a report would be forthcoming but, more important, he had no idea as to what the content would or might be if it was obtained.

53. It is clear from the material before me that he was told the nature of the evidence it was hoped to obtain, namely, evidence as to the medical condition of Ms Shuttari in 1991, at the time of the alleged dishonesty, but there was nothing to indicate what that evidence would be and whether it would or could show that she was so impaired at the time that she was deprived of the ability to recognise her own conduct as dishonest. In those circumstances, and bearing in mind the inevitable increase in costs in opening up a whole new area of inquiry and, no doubt, recalling Ms Shuttari for further cross-examination, it seems to me that the arbitrator acted perfectly fairly within the meaning of section 33.

54. It is to be remembered that the arbitration was at the time of the application for the adjournment almost complete. I think I was told that Mr Rhys was nearing the end of his submissions and all that remained was for Mr Fenwick to reply.

55. I find it impossible to say that by refusing the adjournment asked for the arbitrator failed to give Ms Shuttari a reasonable opportunity of putting her case. Taking everything together, it seems to me that he gave both parties more than a reasonable opportunity of putting their cases and, in my judgment, quite rightly, in view of the very serious nature of the allegation against Ms Shuttari, he gave her every indulgence in enabling her to do so.

56. He said in his short judgment that he would have done so again, even on the 23rd October, if he had seen any point in doing so at the time. Plainly what he was saying is that if there had been put before him at that time even a summary of the contents of the evidence a psychiatrist was able to give and if that evidence indicated that Ms Shuttari was so mentally impaired that she failed to recognise her own dishonesty and wrongly interpreted her actions as perfectly honest, he would have granted the adjournment. But, of course, no such evidence was put before him.

57. Accordingly, in my judgment, Ms Shuttari fails to get over the first threshold in sections 68 and 33, and, strictly, that would be the end of the matter. There was, in my judgment, no irregularity under section 33. However, I think it right to look at the remaining hurdle as well and for this purpose I assume that there was an irregularity.

58. To overcome the remaining hurdle Ms Shuttari would have to satisfy me that, having regard to the contents of the medical report of Dr Harris, which is now put forward before this court, the refusal of the arbitrator to adjourn the case can now be seen to have caused, or that it will cause, substantial prejudice to her. It would, in my judgment, only do so if such evidence would stand a realistic chance of changing the arbitrator's mind on the outcome of his award.

59. Mr Rhys submits that in order for this court to conclude that the refusal of the adjournment would do anything other than cause substantial injustice the court has to be satisfied that this new evidence could not possibly have made a difference to the outcome of the award. For so long as the court considers that it could or might affect the outcome, the court is bound to consider, in his submission, that the refusal of the adjournment has caused or will cause substantial injustice.

60. In my judgment, he puts the test far too favourably to the challenger of the award. In my judgment, the court has positively to come to the conclusion that the refusal of the adjournment has caused or will cause substantial injustice. However, that does not mean that the court has necessarily to be satisfied that if the new evidence was allowed it would have resulted or would result in a changed verdict.

61. In my judgment, especially in a case like the present where the finding of dishonesty has such a serious consequence for Ms Shuttari, it is enough if the court is satisfied that if the new evidence was allowed in it would stand a realistic chance of reversing the verdict. After all, the section requires the court to consider that substantial injustice will occur if the evidence is not let in. I accept Mr Rhys' submission that that does not involve the court in trying the issue itself, but, in my judgment, it is plain that the court has itself to look at the new evidence and form a view as to whether "substantial injustice" will occur if the award is not remitted.

62. I have carefully considered the question and I do not consider that substantial injustice will occur if I dismiss this challenge to the award. Indeed, I do not consider that the new evidence would have a realistic chance, if admitted, of causing the arbitrator to reverse his findings. It seems to me that section 68 is really to be treated as a last resort to be invoked only in extreme cases. It will be remembered that the highest the expert can put the evidence is, in the words of Dr Harris, that:

"... when in a depressed state she would not necessarily have been aware of the fact that she was doing wrong..."

63. Doctor Harris is telling the court that she might not have been aware of the fact that she was doing wrong, but he cannot say one way or the other. And that, of course, is the highest he puts it, and that is before being cross-examined and before any contrary evidence that might be called by the SIF.

64. It should not be forgotten that on the face of the material there was plain dishonesty. Ms Shuttari signed a report on title which any honest solicitor would recognise as dishonest and, it is accepted, so would she in a normal state of mind. What is being said is that there was such an impairment of that state of mind that it deprived her of an appreciation of the dishonest nature of what she was doing.

65. Her case is not that she did not know what she was doing at all. The case is that she did know what she was saying in the report on title but that in her depressed and exhausted state did not appreciate that it was dishonest. In such unusual circumstances, and bearing in mind that it is she on an application under section 68 who must lead the court, in the words of the section, to "consider" that the refusal to adjourn "has caused or will cause substantial prejudice", it seems to me that she must produce at least some credible evidence that her mental impairment caused her to mischaracterise her behaviour as honest, or at least some credible evidence that stands a realistic prospect of persuading the tribunal that that was the case.

66. All we have is the paragraph quoted from Dr Harris, who saw her on one occasion and has given evidence as to her state of mind some 13 years after the critical events, and whose evidence, in essence, is that in her impaired state of mind she would not necessarily have been aware of the fact that she was doing wrong. In my judgment, that does not lead me to consider that substantial injustice has been or will be caused if this evidence is not led as part of her case before the tribunal.

67. As I have made clear, I do not in any event regard the tribunal as having been guilty of any irregularity at all. Strictly this latter question of substantial injustice does not therefore arise. I thought it right, however, to look at it because, had the evidence been extremely strong in negating dishonesty, I would have wanted at least to explore with counsel the possibilities of allowing it in, particularly in the light of the arbitrator's own observation that he would have granted a further indulgence if he saw any point in it. I do not say for a moment that that could properly be done by this court in those circumstances. The issue does not arise for my consideration. It seems to me that the first threshold reinforces the principle that there should be finality in the arbitral procedure, and that is the basis upon which these proceedings are dismissed.

68. Mr Rhys raised as well a point on section 3 of the Human Rights Act of 1998 and submitted that, in approaching an application under section 68, the court should as far as possible give effect to the section in a manner consistent with article 6 of the European Convention of Human Rights. However, as he himself accepts, the right to a fair trial in article 6 of the European Convention of Human Rights is fully reflected in section 33 of the Arbitration Act 1996.

69. The question is, therefore, before me and has been dealt with under section 33. I do not think that any further examination of the Human Rights Act point is warranted and, to be fair to Mr Rhys, he indicated that he did not think that the point added very much, if anything at all, to his submissions on section 33. In the circumstances I dismiss these proceedings.