Mireskandari v The Law Society

On 21 and 22 July 2009 I heard argument on costs and other consequential matters arising after service by Dr Mireskandari of a notice of discontinuance of his claim against the Solicitors Regulation Authority (“the SRA”), the division of the Law Society to which the Law Society has delegated its disciplinary and regulatory functions and the exercise of its powers under schedule 1 to the Solicitors Act 1974.

By his claim, which was started by a Part 8 claim form issued on 23 December 2008, Dr Mireskandari asked for orders that interventions into his practice as a solicitor which the SRA had resolved to make on 12 and 17 December 2008 should be withdrawn, that the suspension of his practising certificate (which was one of the automatic consequences of the interventions) should be discharged, and that the Law Society should pay his costs.

The notice of discontinuance was served at a very late stage indeed. On 27 March 2009 directions were given by Blackburne J for trial of the action in a window between 7 and 31 July, with a time estimate of five days. At a pre- trial review held on 8 June, after Blackburne J had decided to recuse himself for reasons which I will come to later in this judgment, I dismissed applications by Dr Mireskandari to adjourn the pre-trial review and the forthcoming trial. I gave directions for Dr Mireskandari to serve any evidence in reply upon which he wished to rely by 29 June, and to file and exchange his skeleton argument for trial by 3 July. Subject to listing requirements, I directed that the trial should begin on Monday, 6 July (together with the trial of an associated claim brought by Ms Turbin), with the first three days set aside for pre-reading by the court.

On 29 June Dr Mireskandari filed a lengthy witness statement, but no skeleton argument had appeared by 3 July, and instead he made a further, last minute, application to adjourn the trial. This application first came before me on Tuesday, 7 July, when I adjourned it until 9 July. On 9 July I refused the adjournment, and also dismissed two other applications made by Dr Mireskandari (for disclosure, and for consolidation of the present action with other proceedings that he is bringing against the Law Society in the High Court, alleging unlawful discrimination against him on the grounds of his race and religion).

It was only when all these attempts to postpone the trial of the action had failed that Dr Mireskandari, through his solicitors Saunders Bearman, informed the court on the morning of Friday, 10 July that he had decided to withdraw his claim. This was then followed, later in the morning, by a formal notice of discontinuance.

By virtue of CPR 38.6(1):

“Unless the court orders otherwise, a claimant who discontinues is liable for the costs which a defendant against whom he discontinues incurred on or before the date on which notice of discontinuance was served on him.”

CPR 44.12(1)(d) provides that where a right to costs arises under Rule 38.6, “a costs order will be deemed to have been made on the standard basis”. However, the power of the court under Rule 38.6 to “order otherwise” clearly includes power, in an appropriate case, to order that the defendant’s costs should be paid on the indemnity basis. This was confirmed by Rattee J in Atlantic Bar & Grill Ltd v Posthouse Hotels Ltd [2000] C.P.Rep. 32, noted in the White Book at para 38.6.2.

Neither Dr Mireskandari nor his solicitors attended court on 10 July, when I heard and dismissed applications by Ms Turbin for the adjournment of her claim and for further disclosure. Ms Turbin has throughout acted in person, and having dismissed her application for an adjournment I gave her until the following Monday (13 July) to consider her position and to decide whether or not to continue with the trial of her claim. In the event, she too decided to discontinue, although her decision was not communicated either to the court or to the Law Society until the Monday morning.

Meanwhile, the SRA through its counsel (Mr Hodge Malek QC, leading Mr Andrew Tabachnik) had made it clear on 10 July that it wished to seek an order against Dr Mireskandari that the SRA’s costs of the proceedings should be assessed on the indemnity basis, and that an interim payment on account of those costs should be made. I therefore directed that all consequential matters, including the costs applications, should be dealt with at a further hearing before me during the week of 13 to 17 July. The SRA’s solicitors, Russell-Cooke LLP, then faxed a letter to Dr Mireskandari’s solicitors informing them of this direction, and inviting them to arrange for Dr Mireskandari to be represented on 13 July so that a suitable time for the hearing could be fixed.

It is not disputed that this letter was received at the offices of Saunders Bearman on 10 July, but I was subsequently told, on instructions, that it somehow failed to come to the attention of the relevant person dealing with the case on Dr Mireskandari’s behalf. In any event, he was unrepresented on 13 July, and on the assumption that this was a deliberate decision on his part I fixed the hearing for Wednesday, 15 July. This then prompted an application issued on 14 July, supported by a witness statement of the same date from Dr Mireskandari, asking (in effect) that the hearing should be adjourned until a date in the autumn when the leading counsel whom he now wished to instruct, Mr Michael Beloff QC, would be free to argue the costs questions for him. Mr Beloff (together with a junior from his chambers) had already put in a fleeting appearance for Dr Mireskandari at the first hearing of the application to adjourn the trial on 7 July. Mr Beloff told me on that occasion that he had been instructed at very short notice. Neither Mr Beloff nor his junior had any previous involvement in or acquaintance with the case, but Dr Mireskandari explained in an earlier witness statement dated 6 July that Mr Beloff had been “recommended to [him] by Lord Brennan QC … as being the right person to act for [him] in a case of such high sensitivity”. Unsurprisingly, Mr Beloff was unavailable for a one day hearing until September 2009 at the earliest, subject to a possibility that he might become free for a hearing on the last day of term, 31 July.

I heard the adjournment application on 15 July, when Dr Mireskandari was represented (as he had been at the effective hearing of the earlier application to adjourn the trial on 9 July) by junior counsel, Mr Jonathan O’Mahony. On both occasions when he appeared before me, Mr O’Mahony had been instructed at extremely short notice, and he performed his difficult task with skill and discretion. I decided that an adjournment until the autumn to suit Mr Beloff’s convenience could not be justified, particularly having regard to his lack of prior involvement in the case, but I agreed to grant a short adjournment until the following Tuesday, 21 July, so that Dr Mireskandari could have a final opportunity to arrange for representation. In the light of past experience, I also directed that no further evidence should be filed, that the name of counsel instructed should be notified to my clerk and Russell-Cooke by 5 pm on 15 July, and that Dr Mireskandari’s skeleton for the hearing should be filed and served by 10 am on 20 July.

Dr Mireskandari then instructed Mr Hugo Page QC, who duly prepared a skeleton argument and appeared for him at the hearing on 21 July, which in the event did not conclude until 2.30 pm on the following day. Mr Page, too, had no prior involvement in the case, and on a few occasions I felt that his lack of detailed knowledge of the tangled history of the case understandably led him to make submissions which were misplaced or unrealistic. In general, however, I wish to express my gratitude for the considerable assistance that he was able to give the court in both his written and his oral submissions.

I have recounted these recent events in some detail because they are, in my judgment, symptomatic of Dr Mireskandari’s modus operandi. The following points in particular may be noted.

First, he made repeated, but ultimately unsuccessful, efforts to have the trial adjourned, without it ever being clear what he really hoped to achieve by the adjournment apart from delay and an increase in the already very substantial time and costs that the SRA has had to expend in dealing with his claim. This apparent lack of proper motive became even clearer when on 8 July the Court of Appeal (Lord Clarke of Stone-cum-Ebony MR and Longmore LJ) dismissed his appeal against the refusal of Blackburne J on 8 May 2009 to extend the time for compliance with an unless order which he had made on 27 March, the effect of which (in the event of non-compliance by 24 April) was to limit his grounds of challenge to the SRA’s intervention into his practice to those set out in sub-paragraphs 5(a) to (d) of his claim form, and to preclude him from filing any further evidence in support of the action. Instead of preparing for trial on this limited basis, and seeking an adjournment only if the Court of Appeal allowed his appeal (an adjournment which, in those circumstances, could hardly have been opposed), he appears to have taken no steps at all to prepare for trial (evidenced by his failure to file a skeleton argument by 3 July, or to lodge any trial bundles), and instead to have pinned all his hopes on success in the Court of Appeal, or if that failed on obtaining an adjournment on other grounds.

Secondly, there is a pattern of applications made at the last minute, on constantly shifting grounds, and the instruction of a changing array of counsel, usually at very short notice, to argue them. Thus, since my own involvement in the case began in early June, Dr Mireskandari has been represented:

As to shifting grounds, it is perhaps enough to note that in his application notice for adjournment of the trial, issued on 1 July, Dr Mireskandari said that he needed further time to prepare his evidence but said nothing about his state of health. By the beginning of the following week, however, the primary ground that he sought to rely upon was his state of health, and in his witness statement of 6 July he referred to and exhibited a letter from a consultant psychiatrist saying that he was not fit enough to be involved in a trial. I should add, in fairness to Dr Mireskandari, that a further ground relied upon, namely the death on 4 July of an uncle to whom he was extremely close, had been unexpected, and I do not doubt that it caused him significant distress. The late appearance, and (as it stood) inadequacy, of the medical evidence was one of the reasons I decided to adjourn the application at the first hearing on 7 July. The other main reason was that the Court of Appeal hearing was due to take place on the following day, and everybody agreed that, if the appeal were to succeed, the trial would have to be adjourned. When the hearing of the adjournment application resumed on 9 July, the Court of Appeal had dismissed Dr Mireskandari’s appeal and fuller medical evidence was available, including a report from a consultant psychiatrist instructed by the SRA. As I have already said, I dismissed the application. I refused Dr Mireskandari permission to appeal against my decision, and on the following day he discontinued his claim.

A further illustration of shifting grounds may be found in the arguments advanced for Dr Mireskandari at the costs hearing. In his skeleton argument for the hearing on 15 July, Mr O’Mahony said, no doubt on instructions, that one of the matters Dr Mireskandari wished to address in the costs application was that the discontinuance had occurred as a result of misfeasance by the SRA. This was, on the face of it, a wild and extraordinary allegation, without a shred of evidence to substantiate it, and it is hardly surprising that it played no part in Mr Page’s submissions at the hearing. On the other hand, in his skeleton argument Mr Page introduced for the first time, again no doubt on instructions, a number of fresh contentions, including a submission that Russell-Cooke were arguably unable to recover any costs at all, because they were allegedly in a position of conflict of interest, and that the court should direct an issue to be tried in order to resolve the question. Mr Malek complained, with some justification, that he and his team were constantly being faced at the last minute with unheralded, changing, and frequently recycled allegations, which in turn made preparation for hearings very much more laborious and time-consuming than it should have been.

Thirdly, there is a pattern of refusal or failure to comply with court orders. I have already referred to Dr Mireskandari’s failure to comply with the unless order made on 27 March 2009, and to his failure to provide a skeleton argument for trial. A further striking example is afforded by the lengthy witness statement which he filed on 29 June, ostensibly pursuant to the order which I had made at the pre-trial review on 8 June. By paragraph 7 of my order of 8 June I gave Dr Mireskandari permission “to serve evidence in reply to new material contained within the evidence served by [the SRA] between 14 and 29 May 2009”. The permission was strictly limited to evidence in reply to new material contained within the SRA’s latest round of evidence, including in particular the second forensic investigation report, not least because Dr Mireskandari was already precluded by the unless order (which had taken effect on 24 April) from filing any further evidence in support of his claim. Furthermore, in oral exchanges with counsel after I had given judgment on 8 June I made it abundantly clear that the evidence to be served by Dr Mireskandari was confined to evidence that was truly responsive to the additional material contained in the SRA’s latest evidence, and was not intended to give him an opportunity to reply at large to material contained in the first forensic investigation report.

Despite this clear guidance, and in apparently total disregard of the terms of my order, the lengthy witness statement that Dr Mireskandari served on 29 June did not address itself solely to new material, but instead ranged far and wide, containing large quantities of material which was either completely irrelevant or else relevant, if at all, only to issues which he was prevented from pursuing by the unless order. In addition, it contained much material of a scandalous and vexatious nature, including grossly defamatory allegations against a number of people, and ventilated at length his complaints of discrimination and victimisation by the SRA on grounds of race or religion, even though those complaints have no part to play in the present action and are already the subject matter of separate proceedings both in the Employment Tribunal and in the High Court. If Dr Mireskandari were an inexperienced litigant in person, this conduct might perhaps be excusable; but as he is a solicitor and an officer of the court, I can only describe it as deplorable. His service of this statement gives rise to one of the questions that I now have to decide, namely whether I should accede to the SRA’s request for a direction pursuant to CPR 32.13(2) that it should not be open to inspection by members of the public.

With this introduction, I can now identify the issues upon which I need to rule. They are, in summary, as follows:

Before dealing with these issues, however, I first need to say a little more about the background to the case and the history of the proceedings until June 2008.

In October 2008 Dr Mireskandari was the senior, and virtually sole, equity partner of Dean & Dean (“the Firm”). The Firm specialised in the provision of legal services to clients from ethnic or religious minority backgrounds. Dr Mireskandari himself is an Iranian by origin and a Muslim. The only other equity partner in the Firm was a Mr Bell, who subsequently informed the SRA that his equity share was in truth a nominal one, of the order of 0.001%, and he had been given it only because Dr Mireskandari preferred that he should pay his own tax and national insurance contributions rather than having them paid through the Firm’s PAYE procedures. There were also two salaried partners, with no share in the equity of the Firm, Ms Caroline Turbin (who had become a salaried partner in October 2007) and Ms Kathleen O’Donnell (who became a salaried partner from 1 October 2008).

On 3 October 2008 the SRA wrote to Dr Mireskandari seeking his written explanation with regard to allegations that he had “obtained admission as a solicitor on the basis of untruthful responses to required questions; misrepresentations; the submission of false documents and bogus academic qualifications”. Particulars of the allegations were set out in the letter at some length, and Dr Mireskandari was required to provide a detailed response by 24 October.

Two days earlier, on 1 October 2008, leading counsel, Mr Richard Spearman QC, had sent a lengthy email to Mr Bell, in his capacity as the Firm’s managing partner, on the subject of unpaid fees owed to himself and another barrister for work done for the Firm, mostly in cases in which the Firm itself was the client. Mr Spearman said that, if the outstanding fees were not paid by 3 October, he proposed (unless cogent reasons to the contrary were provided in writing) to refer the matter to the Law Society on the grounds that there was reason to suspect dishonesty on the part of all or some of three named fee earners, including Dr Mireskandari.

On 2 October 2008 the Firm paid staff salaries of £20,574.07 directly from client account. This was, on any view, a blatant and serious breach of the Solicitors’ Account Rules (“the SAR”). In further breach of the SAR, the payment from client account was made without any written signed instruction from a solicitor or other person of a designated position. As the SRA was later to discover, the office account was at the time overdrawn by £502,362.68, and according to Ms Turbin the Firm’s overdraft facility was only £490,000. Pursuant to SAR rule 7(1), any breach of the rules must be remedied promptly, and this includes the replacement of any money improperly withdrawn from a client account. The duty rests not only on the person causing the breach, but also on all the principals in the practice. The term “principal” includes salaried partners. Despite these requirements, the money improperly withdrawn was never replaced.

On 7 October the SRA served a formal notice on the Firm under section 44B of the Solicitors Act 1974, requiring certain documents relating to the affairs of specified clients to be produced for inspection. The notice was signed by Mr Mike Calvert, the Head of Forensic Investigation at the SRA. By a further notice given on the following day, 8 October, pursuant to rule 34 of the SAR and other enabling powers, Mr Calvert notified the Firm that an investigation of the Firm by three named investigation officers would commence on that date, and required the Firm’s books of account and bank records to be made available to them.

The Firm’s reaction to these developments was not to co-operate with the SRA, but to seek (and obtain) a without notice injunction from Forbes J on the evening of 10 October, following fruitless attempts to have the application heard earlier in the day. The injunction was sought in support of an application for judicial review of the SRA’s decision to serve the relevant notices, on the ground that the SRA had been improperly motivated by racial and/or religious discrimination and the pursuit of a vendetta against Dr Mireskandari.

With the benefit of hindsight, it is now obvious that the injunction should never have been granted. However, it was continued by Stadlen J at a hearing on 15 October when both sides were represented, and directions were given for a further hearing to take place together with the Firm’s application for permission to seek judicial review on the first open date after 5 November 2008. Directions were also given for the service of evidence in the meantime.

On 6 November 2008 the Firm’s applications were heard by Pitchford J. He refused permission to seek judicial review, and set aside the injunction. He found that the court had been misled on the without notice application to Forbes J, and he held there was no evidence to indicate that the inspection had been undertaken for improper motives. He ordered the Firm to pay indemnity costs, with an interim payment on account of £70,000, none of which has been paid.

I cite some extracts from the judgment which Pitchford J delivered at the conclusion of the hearing on 6 November:

“34.

Forbes J was, I am satisfied, misled in two important particulars. First, an injunction was completely unnecessary. No urgency attended the application since the investigators had already decided to leave the firm’s offices to return on Tuesday morning. Second, it was untrue that the SRA had been informed of an impending application to the High Court for an injunction.

…

44.

Far from supporting the grounds of claim drafted by counsel this witness statement [i.e. Dr Mireskandari’s statement of 10 October 2008] made an all out attack on the good faith of the Law Society when issuing its notices.

…

49.

The fact that Dr Mireskandari needs to descend to detail, to make justification, to make accusations of dishonesty and unreliability against others, including members of his own profession, simply serves in my view to undermine his case that the Law Society has issued its notices for unmeritorious and contrived reasons. In particular, Dr Mireskandari has in his second witness statement sought to assure the court by evidence contained within it and by documents exhibited to it that both he and the firm are substantially sound.

…

51.

The issue for me upon the arguments addressed is whether the claimant has an arguable case that the Law Society is seeking to use its powers not on fair and proper grounds but to victimise Dr Mireskandari for his outspokenness on behalf of black and minority ethnic solicitors.

52.

It seemed to me that the grounds as formulated in the claim do not even nearly reflect the allegations now made …

53.

The interim order from Forbes J was obtained upon partial and misleading information as to the urgency of the application and the grounds and strength of the claim.

…

54.

That state of affairs was not corrected during the hearing before Stadlen J.

55.

As a result the purpose of a without notice inspection has already been frustrated.

56.

The grounds upon which the Law Society formed its suspicions were substantial. I make it plain that this does not involve a judgment upon the accuracy or truth of the complaints nor does it involve the drawing of concluded inferences adverse to anyone. The sole question is whether the defendant had proper grounds upon which to issue the notices it did. Answers such as those Dr Mireskandari may provide could have been anticipated. That is why exercise of the power of production was required. As Dr Mireskandari has himself acknowledged, he should not be exempt.

57.

I have found nothing in the preparation or execution of the notices which remotely justifies a suspicion, let alone an inference, that the defendants may have acted for oblique motives. As the defendants have demonstrated, I am satisfied, they were forced to act in response to information from several different sources and to the fact that information was appearing in the newspapers which might prejudice their inquiries if they delayed, information which they were continuing to receive until days before the notices were issued.

58.

Thus it is my conclusion that the claimant has no prospect of a successful claim. The application for permission is refused.

59.

It follows that the interim orders made by Forbes J and Stadlen J will be discharged.”

I should also draw attention to certain events which had taken place between the abortive commencement of the inspection and the hearing on 6 November:

On 6 November 2008, the very day of the hearing before Pitchford J, Radcliffes wrote to the SRA’s solicitors (then, as now, Russell-Cooke) to inform them that Dr Mireskandari had decided “to take a sabbatical for a period of at least 3 months in order to devote his time to preparing his response to the allegations which the SRA has made against him”. The letter continued:

“The sabbatical, which commenced today, has the following effect:

1.

Mr Mireskandari will not be practising as a solicitor in [the Firm] during the period of the sabbatical.

2.

Mr Mireskandari will not be taking any part in the management of [the Firm] during the period of his sabbatical.

3.

The letter heading of [the Firm] will be changed with effect from today to state that Mr Mireskandari is a non-practising consultant. That description is designed to ensure that there is as little disruption as possible to the clients and staff of the firm arising from Mr Mireskandari’s decision to take a sabbatical.

4.

Mr Mireskandari will not be holding any sums of money in connection with the practice of [the Firm], or any trust, during the period of the sabbatical and the [Firm’s] bank is today being informed that [his] name should be removed from the bank mandates with immediate effect.

5.

Mr Mireskandari will not have any documents in his possession relating to the practice of [the Firm] save to the extent that the documents are needed to answer the allegations which the SRA has made against him …”

The letter went on to say that Dr Mireskandari was currently in America collecting evidence to corroborate his response to the allegations in the SRA’s letter of 3 October. After dealing with various other matters, and asking the SRA to confirm which allegations made by the SRA in the judicial review proceedings it wished to pursue, Radcliffes sought confirmation that the SRA would not attempt to exercise any powers of intervention in relation to Dr Mireskandari or the Firm.

On 7 November, the day after Dr Mireskandari’s sabbatical had allegedly begun, he orally instructed Ms Turbin (according to answers given by her to the SRA at a subsequent interview) to transfer from client to office account a sum of £100,000 received from a client on the same day. She complied with the instruction. Her initial explanation was that she had discussed the matter with Dr Mireskandari, and she authorised the transfer on his assurance that the monies in question were a loan. I should add, however, that in subsequent interviews and witness statements Ms Turbin gave a number of conflicting explanations of this episode, including (most recently) a denial that she spoke to Dr Mireskandari at all before transferring the funds from client to office account.

On 11 November the SRA interviewed Ms Turbin, Ms O’Donnell and Mr Bell. On 14 November Mr Bell and Ms O’Donnell resigned from the Firm, leaving Dr Mireskandari (apparently on sabbatical) as the sole equity partner and Ms Turbin as the sole salaried partner.

On 16 November the Firm provided the SRA investigators with a schedule of debts owed to counsel totalling £913,792.63. On 5 December 2008 the Bar Council issued a withdrawal of credit direction against the Firm on grounds of non-payment of counsels’ fees. Meanwhile, the SRA conducted further interviews with Ms Turbin, Ms O’Donnell and Mr Bell.

In an interview on 2 December Ms Turbin said that, in view of Dr Mireskandari’s sabbatical, it was proposed to re-involve the former principal of the firm, Mr Jami Tehrani, as an equity partner. Mr Tehrani had been the sole principal of the Firm’s practice from 1999 until 1 November 2005, and he had then carried it on in partnership with Dr Mireskandari until 23 November 2006 when he resigned as a partner on terms agreed between him and Dr Mireskandari. According to Ms Turbin, the intention was that he would again become an equity partner, although the details remained to be arranged. According to a letter from Radcliffes to Russell-Cooke dated 23 December 2008, an oral agreement was reached on 20 November 2008 for Dr Mireskandari to transfer his interest in the Firm to Mr Tehrani with effect from 1 December. The terms of the agreement were set out in a letter sent by Mr Tehrani to Dr Mireskandari on 22 November, and an assignment was then executed on 11 December. Radcliffes enclosed copies of the letter of 22 November and the assignment, neither of which had previously been seen by the SRA. There is a dispute, which I cannot resolve without having heard oral evidence and cross-examination, whether these documents were in fact signed on the dates which they bear. By the assignment, Dr Mireskandari purportedly assigned his full equity interest in the practice to Mr Tehrani with effect from 1 December 2008. The agreement provided that Dr Mireskandari would remain responsible for the debts and liabilities of the practice, including the current overdraft with the bank. It further provided that Mr Tehrani would thereafter conduct the practice as he thought fit, and for his own benefit, and that Dr Mireskandari would have no control or involvement in the management or running of the practice, although he would provide assistance, if requested, in respect of matters or cases which he had conducted or been involved in while a partner.

On 11 December Mr Calvert signed off a forensic investigation report (“the first forensic investigation report”), and on the same day an investigation officer, Ms Ku Patel, prepared a detailed case note (“the case note”) for the SRA adjudication panel. These two documents, with their supporting annexes and appendices, ran to several hundred pages and covered a number of separate grounds for suspecting dishonesty on the part of Dr Mireskandari, as well as grounds for concluding that both he and Ms Turbin had breached the SAR.

On the next day, 12 December, this material was considered by an adjudication panel chaired by Mr R Hegarty, and it was resolved to intervene into the practice of Dr Mireskandari on grounds of suspected dishonesty, pursuant to paragraph 1(1)(a)(i) of Part I of schedule 1 to the Solicitors Act 1974. The panel’s resolution recorded that they were satisfied that it was necessary to intervene in view of the nature of the matters identified in the first forensic investigation report and other issues of concern. In particular, the panel were concerned that:

“(i)

unauthorised transfers of monies from client to office bank account were made whereby Dr Mireskandari and/or the firm benefited from utilising client funds without clients’ consent/knowledge;

(ii)

In the client matter of [G] £200,000 bail bond monies were transferred to office account between 26 October and 2 November 2007 and utilised by Dr Mireskandari for his/the firm’s benefit, causing a cash shortage until 17 April 2008 when a loan was secured to enable the bail monies to be sent to HM Court Service;

(iii)

a client’s mortgage funds held on client designated deposit account in the sum of £122,746.56 were improperly transferred to office account despite being subject to undertakings given to two separate parties. Accordingly, the recipients of the undertakings were misled. In addition, the client’s property may have been at risk if the loan had been defaulted upon;

(iv)

staff salaries were paid from client bank account at a time when the office account had exceeded its bank overdraft limit;

(v)

A Costs Judge reduced a bill raised by Dr Mireskandari of £444,705 to £99,449.65 and referred the matter to the Law Society (Angel Airlines v Dean & Dean). Further, in a separate hearing in the Court of Appeal comment was made that the Judge in the lower court “was seriously misled by the papers put before him”;

(vi)

In another court hearing in relation to the setting aside of a freezing order obtained by Dean & Dean against their client [G], the Judge commented that the judge who granted the freezing order had not been informed of material facts that should have been brought to his attention, namely the judge had not been informed that the client had paid £403,000 on account of Dean & Dean’s costs but only £49,000.

(vii)

The funds of the firm’s client, [P], have been transferred in excess of those agreed with the client.

(viii)

The issues relating to Dr Mireskandari’s qualifications are serious, in view of the available evidence to date.

(ix)

Dr Mireskandari misled the court in the injunction proceedings against the SRA.

(x)

The firm’s indebtedness as illustrated in the schedule of Counsels’ fees owed in excess of £900,000 give[s] cause for further concern that clients’ funds may be at risk.”

Among other matters, the panel also decided to refer Dr Mireskandari’s conduct to the Solicitors Disciplinary Tribunal (“the SDT”).

On 15 December the resolution to intervene was put into effect, and the process of removing files from the Firm’s offices commenced. As I shall explain later on, the SRA instructed its solicitors, Russell-Cooke, that no papers relevant to Dr Mireskandari’s Employment Tribunal proceedings against the Law Society should be taken or inspected, and independent counsel, Mr Nigel Ingram, was instructed for this purpose.

On 17 December the adjudication panel passed further resolutions to intervene into the practices of both Dr Mireskandari and Ms Turbin on the grounds that the panel were satisfied they had failed to comply with the SAR, pursuant to paragraph 1(1)(c) of Part I of schedule 1 to the 1974 Act. The apparent breaches of the SAR identified in the panel’s resolution included improper withdrawals from client account in breach of rule 22, a breach of rule 23 (the rule which requires proper written authority for transfers from client account), and a failure to remedy breaches on discovery contrary to rule 7.

On 23 December, as I have already said, Radcliffes wrote to Russell-Cooke giving details of the alleged transfer by Dr Mireskandari of his equity interest in the Firm to Mr Tehrani. On the same day, Dr Mireskandari issued his Part 8 claim form against the SRA seeking to set aside the two intervention notices into his practice and the suspension of his practising certificate. It is important to note that the summary grounds set out in paragraph 5 of the claim form did not expressly challenge the existence of grounds to justify either of the interventions, nor was any application made for the resumption of the practice, whether by Dr Mireskandari or Mr Tehrani. Instead, the grounds relied upon were:

In his witness statement in support of the challenge, also dated 23 December 2008, Dr Mireskandari referred, among other matters, to Mr Tehrani’s prior involvement in the Firm, and to the discrimination proceedings which he had commenced against the Law Society on 19 May 2008 in the Employment Tribunal. He said in paragraph 11:

“I do not expect this Court to make any decision in relation to the discrimination allegations, as that is a matter for the Employment Tribunal.”

He then referred to some of the events leading up to his decision to take a sabbatical, and described how his negotiations with Mr Tehrani had resulted in an oral agreement between them on 20 November and the formal assignment of 11 December. In paragraph 41, apparently moving beyond the grounds of challenge set out in his claim form, he said that he proposed to comment on the alleged irregularities in the accounts “once the SRA has provided full details of the allegations”, and that he strongly objected to the allegations of dishonesty, although he had not yet had enough time to reply to them in detail. In paragraph 43.4 he complained that Russell-Cooke had removed the Firm’s files relating to his Employment Tribunal proceedings, and said he understood they were currently with an independent counsel:

“That has prevented me from pursuing my case at a critical time as a preliminary issue hearing has been listed for the end of January 2009 and the main trial has been listed for hearing in April 2009.”

On 28 December 2008 Ms Turbin also issued a Part 8 claim against the SRA, seeking to set aside the intervention into her practice (which was based only on alleged breaches of the SAR). On 6 January 2009 Dr Mireskandari’s claim form was served on the SRA, and on 7 January Russell-Cooke wrote to Radcliffes seeking clarification of Dr Mireskandari’s challenge to the intervention resolutions, and in particular whether the challenge was confined to the grounds set out in the claim form. No response was received to this letter, or to a further chasing letter sent on 20 January.

Instead, on 14 January, Dr Mireskandari issued separate Part 8 proceedings, in his own name, the defendants to which were the SRA, Mr John Gould (who had been appointed to act as the SRA’s intervention agent and has at all material times been a partner in Russell-Cooke) and Mr Nigel Ingram, the independent counsel instructed by Russell-Cooke for the purposes of the intervention. The principal relief sought was delivery up of all of the files relating to Dr Mireskandari’s Employment Tribunal proceedings, and the service of witness statements by Mr Gould and Mr Ingram giving details of all persons who had had access to the files. Arrangements were made for an urgent hearing of the application before Blackburne J on 20 and 21 January. At the conclusion of the hearing Blackburne J indicated that he was not willing to grant any of the relief sought, and in a reserved judgment which he handed down on 9 February he gave his reasons for coming to that conclusion.

In paragraph 13 of his judgment Blackburne J described Mr Ingram’s role in the matter:

“Prior to the intervention occurring, indeed prior even to the decision by the SRA to intervene but in the expectation that such a decision would be made, Russell-Cooke prepared and sent “instructions to counsel” to act as independent counsel on the intervention. No one was named at that stage. As the instructions made clear, and as Mr Gould confirmed in his witness statement, neither Russell-Cooke nor the Law Society selected counsel who was chosen, namely Mr Ingram. Instead, this was left to the clerk in the chambers … to which the instructions were sent. The request was for junior counsel of some seniority. In the event, Mr Ingram was nominated by the clerk and was duly instructed. The purpose of instructing him was, as paragraph 2 of the instructions made clear, “to put in place arrangements by which material over which legal professional privilege is or could be asserted can be examined by independent Counsel, initially at the offices of the Firm or, if required, following removal by independent Counsel back to Chambers”. Implicit in this instruction, and fully understood by Mr Ingram, was that any material over which legal professional privilege could be claimed would not be inspected by (and thus its contents come to the knowledge of) either the SRA or Russell-Cooke.”

Blackburne J went on to describe how the intervention had been effected, and in paragraph 16 he set out in full an attendance note of a conference between two members of Russell-Cooke and Mr Ingram on 18 December. The judge commented that the attendance note was of importance, because it set out fully the arrangements made and protocol established to preserve the Firm’s, and Dr Mireskandari’s, confidentiality in documents over which legal professional privilege could be asserted. He then set out the subsequent history of the dispute and summarised Dr Mireskandari’s complaints about the respective roles of Mr Ingram and Russell-Cooke, as advanced by counsel (Mr Stuart Adair) on his behalf at the hearing.

So far as Mr Ingram was concerned, Blackburne J rejected as unjustified a submission that he was not truly independent because he had been instructed by Russell-Cooke acting on behalf of the SRA. The judge said in paragraph 40:

“The mere fact that Mr Ingram was appointed at the instigation of Russell-Cooke acting on behalf of the SRA does not mean that he was not independent in the sense intended by his instructions, and as understood by Mr Ingram, and therefore that he could not in law and in fact act independently so as to preserve the firm’s (and if different, the claimant’s) legal professional privilege over documents in the firm’s custody.”

He accepted Mr Ingram’s explanation that he had extensive experience of acting as independent counsel in search and seizure actions for the police and in other contexts, and that he was fully alive to the need to ensure that privileged material relating to any dispute with the SRA should be preserved from inspection by the SRA and its advisers.

With regard to Russell-Cooke’s role, Mr Adair submitted that Russell-Cooke were in a position of conflict of interest, and that the arrangements set out in the attendance note of 18 December were inadequate as a means of resolving that conflict. The conflict was said to arise because, as the solicitors acting for the SRA in the intervention, Russell-Cooke were under a duty to protect the interests of the intervened solicitor’s clients, while as solicitors acting for the SRA in the Employment Tribunal proceedings, they were under a duty to bring to the SRA’s attention any information that might come to them in relation to those proceedings. Reference was made to the observations of Lord Millett in Bolkiah v KPMG [1999] 2 AC 222 at 237-8, and it was submitted that the arrangements which Russell-Cooke would have to set up in order to prevent the seepage of confidential information from those persons in Russell-Cooke engaged on the intervention to those engaged in the SRA’s defence of the Employment Tribunal proceedings would have to be of the “organisational nature” held to be necessary by the House of Lords in that case. Counsel submitted that, consistently with what Lord Millett had said, the burden was on Russell-Cooke to establish that it had set up an effective Chinese wall and, on the evidence, it had failed to do so.

For the reasons given in paragraphs 43 to 45 of his judgment, Blackburne J rejected the supposed analogy with Bolkiah’s case, and identified the “real and only question” as being whether, as a result of the intervention, anyone in Russell-Cooke had come into possession of information confidential to Dr Mireskandari in connection with his Employment Tribunal claim, and if so what steps either had been or could be taken to prevent such information coming into the possession of the SRA or of any member of Russell-Cooke acting for the SRA in the Employment Tribunal proceedings, and whether those steps were effective.

Blackburne J then continued:

“46.

The only source of information (whether covered by legal professional privilege or otherwise) confidential to the claimant which could plausibly be said to have come into Russell-Cooke’s possession and which could give rise to any conflict of interest necessitating the establishment of a Chinese wall or, failing that, Russell-Cooke’s withdrawal from one of its two roles on behalf of the SRA must derive from documents taken as a result of the intervention the contents of which have come to Russell-Cooke’s notice. The onus lies on the claimant to establish, by credible evidence, that this has happened. Unless he can do so, any question of Russell-Cooke having to demonstrate that it has set up an effective Chinese wall between those in the firm who are in possession of the claimant’s confidential information and those within the firm who are acting for [the] SRA in the Employment Tribunal Proceedings simply does not arise.

…

47.

On the evidence which has been laid before me, I am of the view that the claimant has not begun to discharge this burden.”

In paragraph 54, the judge said it was “abundantly clear” to him that the procedures put in place by Russell-Cooke had successfully ensured that no one in Russell-Cooke engaged in the Employment Tribunal proceedings had seen any material which was or might be subject to privilege in Dr Mireskandari. He was equally satisfied that there was “no significant risk” of this happening in the future.

In a postscript to his judgment, Blackburne J expressed the view that there was in truth no basis for the urgency with which the application had been brought before him, because the hearing which was due to take place before the Central London Employment Tribunal on 21 to 23 January was the hearing of an application by the SRA to strike the proceedings out on legal grounds which would not require access to any of the documents still in the possession of the defendants. In this context, the judge referred to a letter which Dr Mireskandari had sent to the Tribunal and concluded that it contained representations which were “wholly without substance”. The judge went on to say, at the end of paragraph 62:

“… the inference can only be that the claimant has deliberately set out to mislead the Employment Tribunal.”

For this, and other reasons, Blackburne J ruled on 23 February 2009 that Dr Mireskandari should pay each defendant’s costs on the indemnity basis, without set-off or deduction. He ordered a payment on account of £33,000, none of which has been paid. He also refused Dr Mireskandari permission to appeal. Dr Mireskandari filed an appellant’s notice, but later withdrew his appeal.

Much of the subsequent history of the present proceedings, from February 2009 until the pre-trial review on 8 June, is set out in paragraphs 12 to 27 of the judgment which I delivered on that occasion. The main developments may be summarised as follows:

Mr Page argued that Russell-Cooke were subject to the conflict of interest which counsel for Dr Mireskandari had identified in the delivery-up proceedings before Blackburne J, and that the existence of this conflict disqualified them from recovering any costs from Dr Mireskandari in the present proceedings. He submitted that the position of Russell-Cooke was “precisely the same” as it would be if they had previously acted for Dr Mireskandari, and that they had in their possession, either themselves or through Mr Ingram, all of Dr Mireskandari’s Employment Tribunal papers, including a large quantity of confidential material. He submitted that the principle of Bolkiah’s case applied, and it was for Russell-Cooke to demonstrate that the measures taken by them to prevent the disclosure of Dr Mireskandari’s confidential papers and information were adequate.

Mr Page accepted that a similar submission had been rejected by Blackburne J in the delivery-up proceedings, but argued that his decision did not give rise to an issue estoppel, and was incorrect in law. In particular, he submitted that Blackburne J’s ruling on the burden of proof was wrong, and led to the absurd result that a client in Dr Mireskandari’s position would have to show that “contamination” had taken place within Russell-Cooke, a burden which it would in practice be all but impossible to discharge.

With regard to the dual test laid down by Lord Millett in Bolkiah at 235D-E, Mr Page submitted that Dr Mireskandari should have little difficulty in establishing:

Mr Page relied on Lord Millett’s observation at 235E:

“Although the burden of proof is on the plaintiff, it is not a heavy one. The former [requirement] may readily be inferred; the latter will often be obvious.”

He also relied on Lord Millett’s further observation at 237G, in connection with the evidential burden on the solicitor’s firm to show that there is no risk of contamination once propositions (a) and (b) above have been established:

“There is no rule of law that Chinese walls or other arrangements of a similar kind are insufficient to eliminate the risk. But the starting point must be that, unless special measures are taken, information moves within a firm.”

I am unable to accept these submissions. In my judgment Blackburne J was right to hold that in the present context there could be no conflict of interest of the nature discussed in Bolkiah, for the simple reason that Russell-Cooke have never acted for Dr Mireskandari. Where a solicitor has acted for a client in the past, confidential information relating to the client’s affairs will almost inevitably have come into the solicitor’s possession in the course of that relationship. In that situation it is clearly appropriate that an evidential burden should rest on the solicitor’s firm to show that there is no risk of contamination if it now acts against the same client. By contrast, the only real issue in cases of the present type is the question identified by Blackburne J in paragraph 45 of his judgment of 9 February 2009 (see paragraph 48 above), and attention therefore has to be focused on the precautions that were taken to prevent Dr Mireskandari’s confidential papers and information coming into Russell-Cooke’s possession during the intervention. As to that, Blackburne J reviewed the evidence before him and concluded that Dr Mireskandari had not begun to discharge the burden of showing that contamination had actually taken place, or that there was any significant risk of it occurring in the future. On the contrary, Russell-Cooke had taken elaborate precautions, including the instruction of independent counsel before the intervention, to ensure that there would be no significant risk of contamination. In those circumstances, the potential conflict of interest identified by counsel for Dr Mireskandari remained purely theoretical, and no burden lay on Russell-Cooke to show that no contamination could occur. I respectfully agree with Blackburne J’s analysis of the position, and even if the point is not strictly res judicata I see no reason to suppose that a fresh trial of the issue might lead to a different result.

There is, however, another even more fundamental objection to the course of action which Mr Page proposes. Let it be supposed that (contrary to what I have just decided) there was a more than theoretical risk of conflict of interest within Russell-Cooke upon which Dr Mireskandari might arguably have been able to rely. Nevertheless, from the commencement of his claim down to the date of its discontinuance, no serious objection was ever taken by him to Russell-Cooke’s acting for the SRA in relation to the intervention and the present proceedings. No injunction to prevent Russell-Cooke from so acting was ever sought or threatened, although I believe it was suggested on one occasion that an injunction might be sought to prevent them from acting in the discrimination proceedings. Thus Russell-Cooke have acted for the SRA throughout the present case without objection from Dr Mireskandari, and in the course of so acting they have incurred costs and disbursements in the usual way. I know of no authority, and none was cited to me, which in such circumstances could disqualify the successful defendant’s solicitors from recovering their costs at the end of the case.

Under this head Mr Page submitted that the court should have regard to five matters which he said constituted unreasonable conduct of its case by the SRA, such as to justify a reduction of 20% in any costs order in its favour.

The first point was that the SRA’s adjudication panel had decided to intervene in Dr Mireskandari’s practice on the basis, among other matters, of an erroneous statement in the case note that the cash shortfall in the Firm’s client account was £77,324.27, whereas the true position (as a careful reading of the relevant part of the first forensic investigation report would have revealed) was that the shortfall had been reduced by a number of subsequently cleared cheques to a figure in the region of £40,000. Mr Page relied on the fact that the panel never met in person and made the decisions to intervene by telephone conference, no note or record of which had been kept. He went so far as to invite the court to infer that the panel had decided to intervene without reading the first forensic investigation report. He submitted that the size of the cash shortage was an important part of the case against Dr Mireskandari, and that it was incumbent on the SRA to examine all of the grounds for intervention with scrupulous care in view of the very serious consequences of any intervention for the solicitor concerned.

That an error was made by the panel, either in their deliberations or in the drawing up of the relevant intervention notice, is, I think, undeniable, but I cannot in the circumstances regard it as a very serious one. They had a multitude of matters to consider, and in the public interest they had to reach a decision quickly. The mistake went only to the extent to which the cash shortfall had been rectified. The shortfall should never have been allowed to occur in the first place, and the rectification was only partial. At best, it mitigated the gravity of some of the breaches of the SAR which had occurred, but it had no effect on the basic point that the Firm had apparently committed serious breaches of the SAR for which Dr Mireskandari, as a partner, was personally responsible. It cannot seriously be suggested that the panel’s decision would have been any different if the mistake had not been made.

In a case of this complexity, with the documentation that the panel had to consider running to several hundred pages, I am not surprised that an isolated error of this nature was made, and I decline to attach any adverse significance to it. Furthermore, I can see nothing to justify the grave accusation that, in dereliction of their duty, the members of the panel failed to read the first forensic investigation report. This point was raised in correspondence last December, when Radcliffes wrote to Russell-Cooke seeking confirmation “that all members of the panel had read all of the documents and that no other documents were before the members of the panel”. The confirmation requested was provided by Russell-Cooke in a letter dated 23 December. In the circumstances, I think it is regrettable that Dr Mireskandari should have chosen to instruct his counsel to resurrect this accusation.

Mr Page’s second and third points concerned the whereabouts of certain files relating to three clients of the Firm on various dates between January and March 2009, and alleged inaccuracies in a witness statement by Mr Gould of Russell-Cooke and in the SRA’s skeleton argument for a hearing on 10 March. In my judgment these are relatively trivial complaints, in the context of a large-scale and contentious intervention, and I will not take up time dealing with them in detail. In my view they provide no solid foundation for Mr Page’s fourth point, which is that taken together they allegedly “show a degree of incompetence” in the SRA and Russell-Cooke. I refuse to draw any such conclusion, and wish to make it clear that I have seen no evidence which would justify such a criticism of either the SRA or Russell-Cooke.

I would make similar comments in relation to Mr Page’s final point, which concerned submissions made to me by Mr Malek on 8 June to the effect that Dr Mireskandari had a history of applying for adjournments at the last minute. He submitted that Mr Malek had given me an incomplete description of the hearing which took place before Slade J on 5 November 2008, and that it was unfair to categorise it as a last minute application for an adjournment in view of the arrangements which had previously been made for the hearing to take place on 20 November, and the fact that the hearing had then been moved to 6 November without reference to the Firm. It is true that Mr Malek did not give me the whole picture in relation to this episode at the hearing on 8 June, but I do not criticise him for that. It was only a small part of one among many submissions, and, as Slade J’s judgment makes clear, the Firm was indeed applying for the adjournment of a hearing which, by that date, was due to take place on the following day (as in fact it did, when the application was refused). Furthermore, my own experience from 8 June onwards leaves me in no doubt at all about Dr Mireskandari’s general propensity to seek last-minute adjournments for inadequate reasons.

In the circumstances I am wholly unpersuaded that it would be appropriate to make any percentage reduction in the costs recoverable by the SRA.

There was no dispute between the parties about the principles by reference to which the court should decide whether or not to order Dr Mireskandari to pay the SRA’s costs on the indemnity rather than the standard basis.

So far as material, CPR 44.3(4) and (5) provide as follows:

“(4)

In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including –

(a)

the conduct of all the parties;

(b)

whether a party has succeeded on part of his case, even if he has not been wholly successful …

(5)

The conduct of the parties includes –

(a)

conduct before, as well as during, the proceedings …

(b)

whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(c)

the manner in which a party has pursued or defended his case or a particular allegation or issue …”

The two bases of assessment are set out in CPR 44.4(1), which provides that:

“Where the court is to assess the amounts of costs (whether by summary or detailed assessment) it will assess those costs –

(a)

on the standard basis; or

(b)

on the indemnity basis,

but the court will not in either case allow costs which have been unreasonably incurred or are unreasonable in amount.”

By virtue of CPR 44.4(2), where the amount of costs is to be assessed on the standard basis, the court will only allow costs which are proportionate to the matters in issue, and will resolve any doubt which it may have as to whether costs were reasonably incurred or reasonable and proportionate in amount in favour of the paying party. Paragraph (3) of the rule then says that, where the assessment is on the indemnity basis,

“the court will resolve any doubt which it may have as to whether costs were reasonably incurred or were reasonable in amount in favour of the receiving party.”

There are accordingly two main differences between assessment on the standard basis and assessment on the indemnity basis. Where an indemnity order is made, the burden of showing that any costs were unreasonable lies on the paying party, not the receiving party. Secondly, the requirement of proportionality does not apply, at any rate expressly, in relation to an order on the indemnity basis. The latter difference was described as “a matter of real significance” by Lord Woolf CJ in Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hammer Aspden & Johnson [2002] EWCA Civ 879 at paragraph 15, although a contrary view was expressed by Lord Scott of Foscote in Fourie v Le Roux [2007] UKHL 1, [2007] 1 WLR 320, at paragraph 39 (“The criterion of proportionality, which applies only to standard basis costs, seems to me to add very little to the reasonableness criterion”).

In the Excelsior case, the Court of Appeal declined to lay down any detailed guidelines for the assistance of lower courts in deciding whether indemnity orders should be made. As Lord Woolf said in paragraph 32:

“In my judgment it is dangerous for the court to try and add to the requirements of the CPR which are not spelt out in the relevant parts of the CPR. This court can do no more than draw attention to the width of the discretion of the trial judge and re-emphasise the point that has already been made that, before an indemnity order can be made, there must be some conduct or some circumstance which takes the case out of the norm. That is the critical requirement.”

To similar effect, Waller LJ said at paragraph 39:

“The question will always be: is there something in the conduct of the action or the circumstances of the case which takes the case out of the norm in a way which justifies an order for indemnity costs?”

Laws LJ agreed with both judgments: see paragraph 42.

Despite the clear warning given by the Court of Appeal in Excelsior, the temptation to provide a list of relevant guiding factors has not been resisted by all judges. I will yield to the temptation only to the extent of citing one principle identified by Tomlinson J in Three Rivers District Council and others v The Bank of England [2006] EWHC 816 (Comm) in paragraph 25 of his judgment:

“Where a claim is speculative, weak, opportunistic or thin, a claimant who chooses to pursue it is taking a high risk and can expect to pay indemnity costs if it fails.”

I emphasise, however, that I would not for myself regard that as a guiding principle in the true sense, but rather as an illustration of one type of factual situation which the court may well conclude takes a case out of the norm.

I will begin my consideration of this question with Dr Mireskandari’s pleaded case. The grounds of challenge to the interventions set out in paragraph 5 of his claim form rely on his “sabbatical”, the alleged cessation of his partnership in the Firm, and the proposition that he had no interest in the Firm on the dates of the intervention resolutions. It is clear from the contemporary correspondence that these steps were taken by Dr Mireskandari with the deliberate object of preventing any intervention into his practice by the SRA: see Radcliffes’ letter of 6 November 2008 to Russell-Cooke and paragraph 31 above. The assignment of his full equity interest in the Firm to Mr Tehrani, which for present purposes I will assume took place on 11 December 2008, was no doubt intended to strengthen his position in this respect. However, the proposition that Dr Mireskandari could avoid an intervention by the simple expedient of taking a sabbatical of indefinite duration, and assigning his equity interest in the Firm to a friendly third party and former business associate, is in my judgment one that could never have had any reasonable prospect of success. Whatever the position may have been as between Dr Mireskandari and Mr Tehrani, or as between Dr Mireskandari and the other fee-earners at the Firm, he had apparently taken no steps before the interventions either to notify the Firm’s clients of these developments or to obtain their informed consent to the discharge of their existing retainers of the Firm and their replacement with retainers of Mr Tehrani. In the absence of clear evidence of a contractual novation on the part of every existing client of the Firm, the suggestion that Dr Mireskandari had no practice left to intervene in was in my view always a hopeless one, and the inference that he was cynically doing his best to prevent an intervention by the regulatory body of his own profession is all but irresistible.

Furthermore, the grounds relied upon in the claim form disclose no basis of challenge whatever to the SRA’s decisions to intervene. The propriety of the interventions depended (in relation to the first intervention) on the existence of “reason to suspect dishonesty”, and (in relation to the second intervention) on the SRA being satisfied that Dr Mireskandari had breached the SAR. Dr Mireskandari’s sabbatical, alleged retirement, and transfer of his equity interest, were all completely irrelevant to the question whether those threshold conditions were satisfied. In those circumstances, the only issue for the court at the trial of the claim would have been the single issue whether the intervention notices should be withdrawn: see Sheikh v The Law Society [2006] EWCA Civ 1577, [2007] 3 All ER 183, at paragraphs 87 to 90 per Chadwick LJ. In considering that issue, the court would be obliged to “have regard to the views of The Law Society as the professional body charged by statute with the regulation of solicitors” (paragraph 90), and the issue of dishonesty would arise (if at all) only in the context of deciding whether the intervention should continue (ibid).

In view of the numerous and serious grounds upon which the decisions to intervene were founded, it seems to me inconceivable that, in the absence of cogent and convincing explanations for his conduct by Dr Mireskandari, there could have been any realistic prospect of the SRA changing its mind and accepting that the interventions could safely be withdrawn. Similarly, there could have been no reasonable prospect of the court reaching any different conclusion. Yet Dr Mireskandari’s claim form, and his witness statement of 23 December 2008, which still remains the only evidence ever filed by him in support of his claim, provide next to nothing in the way of explanation, rebuttal or extenuation of the very detailed case deployed against him by the SRA.

It is against this background that the consistent failure by Dr Mireskandari to take advantage of the numerous opportunities which he has had to explain his conduct must be evaluated. He had the opportunity to do so either in the proceedings (by complying with Blackburne J’s order of 10 February 2009) or outside the proceedings (for example in correspondence). Yet he has not done so. Instead, he has employed diversionary tactics of every kind, including the delivery-up proceedings, the accusations of bias which finally led Blackburne J to recuse himself, the repeated attempts to adjourn the trial, the making of unjustified disclosure applications, the indiscriminate levelling of charges of professional misconduct against the SRA and its lawyers, and all the other matters to which I have already drawn attention in this judgment. I deliberately leave out of this list Dr Mireskandari’s repeated complaints of discrimination against him on racial and/or religious grounds, because they are the subject of separate proceedings and it would be wrong for me to prejudge their outcome by expressing any view on whether his complaints are well-founded.

None of this diversionary activity can disguise the gaping hole at the heart of Dr Mireskandari’s case, which is the total absence of any plausible reason for withdrawal of the intervention notices even though it is now more than seven months since they were served. This is all the more extraordinary in the light of the well-established principle that the procedure for challenging an intervention is inherently a summary one which should be dealt with as speedily as possible: see my judgment of 8 June at paragraphs 45, 46 and 49, and see too the observations of the Court of Appeal in Sheikh v The Law Society at paragraphs 110 to 114. A striking, if belated, recognition of the lack of merit of Dr Mireskandari’s pleaded case may be found in the grounds of appeal dated 28 May 2009 which were filed in support of his application for permission to appeal against Blackburne J’s refusal to extend time for compliance with the unless order. In paragraph 4 of the grounds, which were settled by Dr Mireskandari’s solicitors, it was said on two occasions that the judge’s refusal to extend time rendered his Part 8 claim “unarguable”, and also (in the concluding sub-paragraph) that it left him in a position where “he had little or no prospect of success”.

In all the circumstances, I have no hesitation in concluding:

The SRA’s submissions in support of its application for indemnity costs were very detailed and elaborate. They included a minute examination of the whole history of the proceedings, a review of the merits of each of the grounds relied upon in support of the interventions, and reference to a number of other occasions on which courts have made adverse findings against Dr Mireskandari which reflect on his integrity or when he is said to have acted unreasonably. Although Mr Malek disclaimed any such intention, I felt at times as though I were being asked to conduct a mini-trial of the case on the documents, even though Dr Mireskandari had discontinued his claim and I had heard no oral evidence. In my view there was an element of over-kill in this approach, and it made the question of indemnity costs much more complicated than it needed to be. Mr Malek implicitly, and at times explicitly, invited me to emulate the approach of Tomlinson J in the Three Rivers case, where he delivered a lengthy and detailed judgment explaining his decision to award costs on the indemnity basis against the claimant liquidators of BCCI when they finally discontinued their claim. However, the circumstances in that case were very different. In the first place, it was litigation on a massive scale, and the notice of discontinuance was not served until Day 256 of the trial. Secondly, it involved allegations of dishonesty and misconduct, of the utmost gravity, against the Bank of England and over forty officials. Thirdly, a vast amount of oral evidence had already been heard when the case came to its abrupt end, and cross-examination of the Bank’s witnesses was interrupted in mid-flow. In that situation it was entirely appropriate for Tomlinson J to deal with the question of costs at considerable length. In the present case, by contrast, the trial proper had not begun (although I had done a good deal of pre-reading), no oral evidence was given, and the trial would have been confined to the very limited grounds of challenge set out in Dr Mireskandari’s claim form.

There is in my judgment a further reason why it would be most undesirable for me to go into the SRA’s allegations of dishonesty and breaches of the SAR against Dr Mireskandari, or to express any concluded views on the merits of those allegations. As I understand it, they have all, or virtually all, been referred to the SDT, and will therefore be the subject of disciplinary proceedings in due course. That will be the occasion for the merits of the allegations to be fully investigated and for evidence to be given on both sides. In my view I should say as little as possible in this judgment about matters that the SDT will have to consider. What I can and will say, without in any way seeking to prejudge the issues to be determined by the SDT, is that on the basis of all the material I have read, and the extensive written and oral submissions advanced to me, I am abundantly satisfied that:

I have already given brief details of some of the main steps in the recusal application: see sub-paragraphs 52(4), (5), (7), (8) and (10) above. It is unnecessary for me to set out the history of the application at any great length, because it is fully described in the judgment which Blackburne J delivered on 18 May 2009. One additional point which needs to be emphasised is that the SRA was throughout neutral in relation to the application, although it provided assistance to the court by ensuring that the necessary evidence to put the application in context was before the judge: see in particular Mr Gould’s witness statement of 24 April.

As initially advanced, the application was put on two main grounds: actual bias allegedly shown by Blackburne J in rulings which he had made earlier in the proceedings, and the alleged involvement of a Mr Faryab as a “significant witness central to the intervention” (to quote from the application notice of 27 March). As Blackburne J explained in his judgment of 18 May, in the second half of the 1990s he had tried and dismissed a claim by Mr Faryab against a Miss Smyth. In the course of his judgment in that case, he had made adverse remarks about Mr Faryab’s credibility. Mr Faryab appealed, unsuccessfully, against the judgment, and then embarked upon a campaign to discredit Blackburne J, although Blackburne J was wholly unaware of Mr Faryab’s campaign against him (and others) until he saw Dr Mireskandari’s first witness statement in support of the recusal application.

According to Dr Mireskandari, he assisted Mr Faryab in the earlier court case and gave evidence on his behalf. He expressed concern that Mr Faryab was “one of the main witnesses relied upon” by the SRA in making their decisions to intervene into his practice. The suggestion appeared to be that, because Dr Mireskandari had assisted Mr Faryab at the earlier trial some 12 years ago, and because the SRA had supposedly relied on extensive information supplied by Mr Faryab in deciding to intervene, and because Blackburne J had not accepted Mr Faryab as a truthful witness, the conclusion somehow followed that the judge was biased against him in the present proceedings. In truth, the suggestion was both incoherent and absurd. Moreover, Mr Malek made it clear on behalf of the SRA at an early stage that the SRA would not be advancing any contention at trial which depended upon the evidence of Mr Faryab.

In paragraph 12 of his judgment of 18 May, Blackburne J said this in relation to the grounds hitherto relied upon by Dr Mireskandari in support of the application:

“As to the grounds to my recusal, I make it clear that, having carefully considered the authorities referred to in the skeleton argument of Mr Nicholas Vineall QC, who now represents Dr Mireskandari at today’s hearing, I am wholly unpersuaded that any of my rulings in the course of these intervention proceedings provides the slightest basis for recusal, either when considering those rulings individually or when considering them collectively. I do not propose to take up any time dealing with those matter.”

It is only necessary to add that, at the hearing in the Court of Appeal on 8 July, Mr Vineall was apparently asked by the court whether he wished to place reliance upon any of those grounds, and made it clear that he did not.

Blackburne J went on to explain why he had finally decided to recuse himself. In his earlier evidence, Dr Mireskandari had appeared to make it abundantly clear that he was “in no way involved in, and indeed deplored, Mr Faryab’s campaign” against Blackburne J: see paragraph 17 of the judgment, and the extract from Dr Mireskandari’s witness statement of 15 April quoted in paragraph 18. Blackburne J then continued:

“19.

That being so, I felt and still feel, quite unable to see how the fact that Mr Faryab was an employee of Dr Mireskandari’s firm and the fact that Dr Mireskandari assisted Mr Faryab at the trial 12 years ago, could possibly justify my recusal. Not least of the considerations here was that, as I explained to the parties at an earlier hearing, and as can be seen from the transcript of the judgment in the Faryab v Smyth case, Dr Mireskandari was a witness, along with a great many others, and that I accepted him as a truthful witness. Any suggestion that Dr Mireskandari should stand tainted in my estimation of him because of his past association with Mr Faryab, seemed to me, and still seems, far fetched. No judge thinks ill of a person merely because one of his associates, even a personal friend, turns out to be dishonest and vindictive.

20.

What has now changed is a suggestion which Dr Mireskandari now makes – it first surfaced in his witness statement of 7 May – which is that so far from having had no involvement in Mr Faryab’s attempts to mount a prosecution against me and others, he was indeed involved in the steps taken to investigate on Mr Faryab’s behalf, whether a prosecution should be mounted against me.”

Blackburne J then quoted from Dr Mireskandari’s witness statement of 7 May a passage referring to a conference arranged with counsel at the offices of Tehrani & Co, during which “to my surprise, Mr Faryab for the first time stated that he wanted to bring a private prosecution against Mr Justice Blackburne”. Two supporting witness statements, from Mr Tehrani and a Ms Sokhal, appeared to provide confirmation that a discussion of this nature had indeed taken place at a conference with counsel at which Dr Mireskandari was present. The judge continued:

“24.

I cannot help feeling some scepticism about this last minute disclosure given Dr Mireskandari’s earlier disavowal of any involvement. But I have come to the view that, if, as he now appears to be saying, Dr Mireskandari did have a part, even if initially unwittingly, in investigating whether I should be prosecuted for misfeasance in the conduct of Mr Faryab’s claim against Miss Smyth all those years ago, a fair-minded and informed observer might conclude that there was a real possibility that I would be biased against Dr Mireskandari, even if that bias might be entirely unconscious on my part.

25.

I am also most concerned that these proceedings should not become side-tracked or taken over by a dispute over whether I should be the judge who hears the matter … I would merely observe that the late and self-serving appearance of Dr Mireskandari’s disclosure sits ill with his earlier disavowal of any involvement, let alone the fact that any question of my recusal only surfaced in [early] March, notwithstanding earlier hearings, including separate proceedings brought by Dr Mireskandari against the Law Society and others which I heard in January [i.e. the delivery-up proceedings], at which Dr Mireskandari was represented by solicitors and counsel, and in which no question arose and no suggestion was mentioned that I might not, for reasons of which at that stage I was wholly unaware, be the appropriate judge to hear the matter.

26.

Bearing in mind, therefore, what was described in one of the earlier authorities on the topic of recusal as the so-called precautionary principle, (see CAWG Group v Morrison [2006] 1 WLR 1163) I consider that the sensible course is to stand down from these proceedings and let another judge take over from me.”

Mr Page submitted that the SRA must be taken to have opposed Dr Mireskandari’s application that Blackburne J should recuse himself, because it filed evidence in relation to the application. Accordingly, he said, despite its protestations of neutrality, the SRA should be ordered to pay Dr Mireskandari’s costs of the application as the losing party, such costs to be set off against the costs awarded to the SRA. Alternatively, Mr Page submitted that, if the SRA was indeed neutral, it had no costs to recover. Nobody asked the SRA for assistance, and it could not generate recoverable costs by officious intervention.

In answer to specific points made by the SRA in its skeleton argument, Mr Page further submitted:

I am unable to accept these submissions. In my judgment the recusal application, as originally formulated, was obviously hopeless, and was rightly dismissed out of hand by Blackburne J in paragraph 12 of his judgment. The sole ground upon which he did decide to recuse himself appeared for the first time in Dr Mireskandari’s witness statement of 7 May 2009. The critical evidence had not been foreshadowed in any of his earlier statements, and it related to matters of which Blackburne J could have had no personal knowledge. Furthermore, it post-dated the disclosure application, which Blackburne J dismissed on the ground that it had “all the hallmarks of a fishing expedition”: see paragraph 19 of his judgment of 30 April.

As regards the position of the SRA, I see no reason to doubt that its neutrality was genuine, or that the evidence which it filed assisted the court in resolving the question. More generally, it is important to bear in mind that, although the recusal application eventually succeeded, it would not have needed to be made in the first place if Dr Mireskandari had not chosen to begin the present action, an action which I have found to lack any merit and in respect of which I am going to make an indemnity costs order in favour of the SRA.

Finally, it should be noted that Blackburne J was clearly sceptical about the last-minute evidence produced by Dr Mireskandari, not least because it appeared to contradict earlier evidence which he had given in support of the same application. I fully share Blackburne J’s scepticism, and respectfully agree with the observations he made in paragraphs 24 and 25 of his judgment.

Taking all these factors into consideration, I have concluded that Dr Mireskandari should also be ordered to pay the SRA’s costs of the recusal application on the indemnity basis. This conclusion may be reached by either of two routes, or indeed a combination of them. First, the application was unreasonable both in its inception and the manner in which it was prosecuted by Dr Mireskandari, and there are grounds for considerable scepticism about the basis on which it ultimately succeeded. The role played by the SRA was entirely proper, and most of the costs incurred by the SRA related to the misconceived original grounds for the application and the unnecessary disclosure application. Secondly, and perhaps more simply, the costs should be treated as costs in the case, because the application was made in the course of proceedings which I have found to lack merit and to justify an award of costs on the indemnity basis. The SRA did not cause Dr Mireskandari to incur any particular costs in respect of the application, and it is fair that the SRA’s costs should be dealt with in the same way as the costs of the main action.

The SRA has produced an estimate of its costs dated 14 July 2009 in a total sum of just under £516,000 inclusive of VAT. The estimate is divided into two periods: the period prior to 1 June 2009, in respect of which an estimate had already been filed for the listing questionnaire, and the period from 1 June to 15 July inclusive. The estimated costs for the first period come to just under £352,800, the main components of which are Russell-Cooke’s profit costs (£140,266.30), counsels’ fees (£147,000) and the costs of the recusal application (£16,148.10), in each case plus VAT. No more detailed breakdown than this is available. The estimate for the second period, supported by an attached statement of costs, totals approximately £163,180, the main components of which are profit costs of £47,602 and counsels’ fees of £90,075, again plus VAT.

CPR 44.3(8) provides that

“Where the court has ordered a party to pay costs, it may order an amount to be paid on account before the costs are assessed.”

As the notes in paragraph 44.3.15 of the White Book make clear, the normal practice is to make an interim order not exceeding the minimum amount that the court thinks the successful party is likely to recover on detailed assessment, although the general rule will always yield to the requirements of justice in the particular case. Among the points taken by Mr Page was a submission that the SRA’s costs estimate in the present case is so high that the court should refuse to order any interim payment at all. I disagree. If the court considers that a costs estimate is unreasonably high, the court will tailor the interim payment accordingly, but it is not a good reason for refusing to make any interim payment at all. Furthermore, although the total amount of the SRA’s estimated costs is high, I am satisfied that Dr Mireskandari’s conduct of the case has made it an exceptionally difficult and time-consuming one for the SRA and its lawyers to deal with. I am also encouraged to order an interim payment by the fact that Dr Mireskandari has failed to pay a penny in respect of the costs orders already made against him in the proceedings (whether by way of summary assessment or earlier orders for interim payment), although he evidently has the resources to instruct leading counsel of his choice whenever it suits him to do so. I was provided with a schedule of unpaid costs orders which totals no less than £157,056.24 (inclusive of VAT, but excluding interest). This is just one further facet of the wholly unreasonable way in which Dr Mireskandari has conducted these proceedings.

Mr Page took a number of other points in relation to the amount claimed. He submitted that, since the only factual issues in the claim were those raised in Dr Mireskandari’s claim form, and he had never been permitted to expand them, it was unreasonable for the SRA to prepare for trial on the basis that the grounds for intervention would be in issue. He submitted that the amount claimed for counsels’ fees before 1 June was excessive, and that many of the hearings could have been dealt with by junior counsel alone, especially at Mr Tabachnik is a very experienced junior and has been instructed throughout. He submitted that an unnecessarily large number of fee earners had attended the various directions hearings, and that costs had sometimes been increased by the SRA’s habit of serving applications at a late stage (he instanced in particular some complaints on this score made by Dr Mireskandari and Ms Turbin at the hearing on 10 March 2009). Finally, he suggested that the SRA’s estimate did not properly allow for overlap with work done in allied proceedings, including the SRA’s separate interventions into the Firm and into Ms Turbin’s practice, and that the 80%/20% split adopted by the SRA for composite work done relating to the interventions into the practices of Dr Mireskandari and Ms Turbin respectively was inappropriate and should be replaced with a 50/50 split.

Taking the last points first, I can see no good reason at this stage to question the broad estimate made by the SRA of the appropriate division of time spent, both between the present claim and other related proceedings, and specifically between this claim and Ms Turbin’s claim. The 80%/20% split is in line with my own experience of dealing with claims by both Dr Mireskandari and Ms Turbin since early June, and reflects the fact that Ms Turbin has throughout been a litigant in person, and has pursued her case in a moderate and reasonable fashion. I am equally unimpressed by the submission that the SRA ran up costs unnecessarily by preparing for trial on a broad basis. Not only was this the only prudent course to follow, in the light of the directions for trial given in March and Dr Mireskandari’s avowed intention of broadening its scope, but even on the pleadings as they stood the wider picture was still relevant to the issue whether the intervention notices should be withdrawn: see paragraph 74 above. As to Mr Page’s remaining points, there may be some force in some of them, but that is not a matter which I can determine at this stage and they will have to await the detailed assessment. I remind myself, however, that the burden of showing that any costs were unreasonably incurred will rest upon Dr Mireskandari, because the costs are to be assessed on the indemnity basis.

Mr Malek submitted that I should order a payment on account of £300,000, or in other words approximately 58% of the estimate. In my judgment that is a reasonable figure in all the circumstances, and I will so order. I will also direct the costs to be paid without set-off or deduction. Mr Page opposed the making of a direction in those terms, but the Court of Appeal thought it appropriate to do so, having heard argument on the point, when it dismissed Dr Mireskandari’s application for permission to appeal with costs summarily assessed in the sum of £20,000, and I see no reason to take a different view. In the absence of such a direction, it seems to me all too predictable that Dr Mireskandari will attempt to rely on his damages claim in the discrimination proceedings as a reason for paying no costs at all at this stage.

I have already given a brief description of this witness statement in paragraphs 17 and 18 above.

The relevant provisions of CPR 32.13 read as follows:

“(2)

Any person may ask for a direction that a witness statement is not open to inspection.

(3)

The court will not make a direction under paragraph (2) unless it is satisfied that a witness statement should not be open to inspection because of –

(a)

the interests of justice;

(b)

the public interest;

…

(d)

the nature of any confidential information (including information relating to personal financial matters) in the statement; or

(e)

the need to protect the interests of any child or protected party.

(4)

The court may exclude from inspection words or passages in the statement.”

The SRA invites the court to make an order under CPR 32.13(2) for a number of separate reasons. First, the evidence contained in the statement is, almost without exception, clearly outside the limited scope of the permission which I gave on 8 June for the service of evidence in reply. Secondly, it contains much material which, on any view, is wholly irrelevant to the present case. Thirdly, it deals at length with Dr Mireskandari’s allegations of discrimination and victimisation by the SRA, even though those issues are the subject of separate proceedings, and Dr Mireskandari expressly accepted in his earlier statement of 23 December 2008 that such allegations were a matter for the Employment Tribunal. Fourthly, the statement contains much material of a scandalous and defamatory nature, and the SRA is understandably concerned that Dr Mireskandari may seek to deploy this material in the public arena with the benefit of the absolute privilege afforded to a litigant.

In his skeleton argument Mr Page said that Dr Mireskandari had no submissions to make as to whether the statement should be open to inspection. By the date of the hearing, however, Dr Mireskandari had evidently changed his mind, and instructed Mr Page to oppose the application. Mr Page did not dispute that some of the material in the statement should be excluded, but submitted that a redaction exercise could and should be performed, with a view to ensuring that only the truly offensive material was excluded from public inspection.

I consider that I should make the direction sought by the SRA. As I have already made clear, the statement was served in almost complete disregard of the order which I made on 8 June, and the quantity of objectionable material contained in it is very large. For a solicitor and officer of the court to serve such a witness statement is, in my judgment, truly deplorable. It is not for the court, or the SRA, to become engaged in a redaction exercise that Dr Mireskandari should have performed for himself, and the fact that he now opposes the application can only increase the court’s disquiet about the uses to which he intends to put the statement. In my view the interests of justice require that no part of it should be open to inspection, and I will so order.