Neumans LLP v The Law Society (The Solicitors Regulation Authority)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Newey |
| Judgment Date | 31 July 2017 |
| Neutral Citation | [2017] EWHC 2004 (Ch) |
| Docket Number | Case No: HC-2017-001962 |
| Court | Chancery Division |
| Date | 31 July 2017 |
[2017] EWHC 2004 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Rolls Building, Royal Courts of Justice
7 Rolls Buildings, Fetter Lane
London, EC4A 1NL
Mr Justice Newey
Case No: HC-2017-001962
Miss Fenella Morris QC (instructed by RadcliffesLeBrasseur) for the Claimant
Mr James Ramsden QC and Miss Sarah Bousfield (instructed by Capsticks LLP) for the Defendant
Hearing date: 21 July 2017
Further written submissions: 28 July 2017
This case involves an application by Neumans LLP ("Neumans"), a firm of solicitors, for the intervention of the Solicitors Regulation Authority ("the SRA") into its practice to be withdrawn.
Narrative
Neumans was established in 2006 as "Sabir Selby LLP", replacing a partnership of the same name. It originally had three members: Ms Sarwa Sabir, Mrs Chitra Selby and Mr Nabeel Sheikh. Ms Sabir and Mr Sheikh were already, and remain, married to each other.
In 2008, following a partnership dispute, Mrs Selby left the practice and the firm changed to its present name. Ms Sabir and Mr Sheikh became the only members. They each had a 50% interest, but Ms Sabir has explained that she was away from the business between March 2007 and December 2015 while she had and cared for children.
The SRA's intervention arose out of work that Neumans undertook for a Mr Hiran Patel, who was charged with a number of offences. Under its original retainer letter, Neumans was to charge for its services at rates of between £150 and £350 per hour (plus VAT). By early January 2007, Neumans and Mr Patel had agreed somewhat higher hourly rates on the basis of which Neumans estimated that total costs were "likely to be in the region of £1,250,000 plus VAT", of which the firm's own fees (without counsel) would be approximately £900,000 plus VAT. At much the same time, however, Mr Sheikh and Mr Patel appear to have orally agreed that Neumans' fees should be limited to £275,000 plus VAT ("the Capping Agreement").
On 28 November 2007, Mr Patel was convicted of two offences of placing on the market without an appropriate authorisation a medicinal product. The other charges against him had been dropped.
In August 2008, Mr Patel applied to the Court of Appeal for permission to appeal and, in November of the following year, his appeal was allowed and his convictions quashed. On 20 January 2010, a defendant's costs order was granted allowing Mr Patel to recover his legal expenses from central funds.
In the meantime, Neumans and Mr Patel had entered into an agreement formalised in a "Memorandum of agreement & understanding and deed of variation" dated 13 October 2009 ("the Deed of Variation"). This stated that the Capping Agreement was not binding and provided for the firm's hourly charging rates to be increased with retrospective effect. The Deed of Variation was signed by Mr Patel and Mr Sheikh, whose signature was witnessed by Ms Sabir.
On 27 June 2011, Neumans submitted to the Court of Appeal a bill of costs in the sum of £2,916,396 plus VAT. Later that year, Neumans received an interim payment of £500,000 out of central funds. On 28 June 2012, however, the Court of Appeal invited Master Egan QC, the Registrar of Criminal Appeals, to conduct a formal investigation into matters relating to the bill.
In a report dated 20 May 2015, Master Egan explained that he was satisfied that there was clear evidence of fraud. In summary, he considered that the evidence would clearly support a case that:
"1. Claims for 2,783 hours of the 3,047 hours Crown Court preparation by NS [i.e. Mr Sheikh] between 27 January 2006 and 11 September 2007 are false.
2. The sheets that support NS's claim for 102 hrs work in the Court of Appeal bear a striking similarity to the sheets for the claims for the 2783 hours. This could support an inference that they too are false.
3. The claim made for the Noting Brief is an example of dishonest opportunism in claiming over £300,000 which HP [i.e. Mr Patel] would never have contemplated agreeing to pay himself.
4. The creation of the invoice for £2,916,396.22 dated 10 June 2011 for submission to the [Court of Appeal (Criminal Division)] with the deliberate non-disclosure that HP had paid 8 solicitor and own client bills for work up to 16 November 2007 ('the 8 invoices') was dishonest and designed to facilitate a payment from Central Funds of far more money than the client was entitled to recover under section 16(6) Prosecution of Offences Act 1985.
5. The evidence of HP in his affidavit:-
(i) swearing that he was content to pay £2,188, 166 (ex VAT) to the solicitors retrospectively without any legal obligation to do so, and
(ii) deliberately failing to disclose the 8 invoices
was dishonest and would support a clear inference that he was also involved in a fraud to obtain public funds.
6. If the jury were satisfied of any of the above that could support a factual conclusion that the retrospective variation agreement of March-October 2009 was designed to facilitate the dishonest claim."
At a hearing on 15 June 2016, the Court of Appeal concluded that it should conduct a fact-finding hearing before deciding whether the defendant's costs order in Mr Patel's favour should be set aside. The matter returned to the Court of Appeal on 19 December 2016. On that occasion, the defendant's costs order was revoked and Mr Patel and Neumans were held to be jointly and severally liable to repay the £500,000 interim payment. Simon LJ, who gave the Court of Appeal's judgment, concluded by saying that the Court intended to send the papers in the case to the Director of Public Prosecutions and to refer the conduct of Neumans to the relevant regulatory authority. In the event, Mr Patel repaid the £500,000 on 8 January 2017.
Master Egan submitted his May 2015 report to the SRA on 16 January 2017. On 21 March, a notice under section 44B of the Solicitors Act 1974 was served on Ms Sabir requiring her to provide information and documents relating to the Patel matter and her involvement with it. Ms Sabir responded to that on 7 April and then, on 16 April, Neumans provided the SRA with a "self-report". This explained that the "Firm and its Partners vehemently deny any suggestion that there has been any form of dishonesty or agreement to unlawfully obtain funds from the public purse or otherwise". Neumans addressed, and rejected, each of Master Egan's six points. The report mentioned in the next paragraph summarised the firm's responses as follows:
"(a) Master Egan wrongly concluded that 91% of the hours spent preparing the defence to the Crown Court proceedings were false. The Firm [i.e. Neumans] does not accept the conclusion that the lack of contemporaneous notes by Mr Sheik must mean the work was not done. If Master Egan is correct in his conclusion then it would mean that only 38 minutes per working day were spent preparing the defence to the Crown Court proceedings. The Firm considers that to be clearly wrong given this case was deemed to be the biggest worldwide conspiracy ever brought to trial.
(b) The Firm does not accept the criticism that Mr Sheik's attendance notes supporting his work for the 2,783 claimed hours in preparation of the defence to the Crown Court proceedings bear a striking similarity to those supporting his claim for 102 hours in the Court of Appeal proceedings. The Firm accepts as a fact that the attendance notes are similar in style and content. However, the Firm states that fact does not equate to evidence of the work not being done. This fact is reflective of the similar nature of the activities being done, for example, reading and considering documents.
(c) The Firm considers that the basis of Master Egan's allegation that the claim of over £300,000 for a noting brief was required to attend the trial of co-defendants of Mr Patel (the trial of which took place prior to Mr Patel's trial) in order to better prepare Mr Patel's defence. The Firm accepts that at the time of this earlier trial Mr Patel did not contemplate having to pay in excess of £300,000 for the noting brief. This was because of the existence of the Capping Agreement. At the point of retrospectively varying the fees (with the Deed of Variation) Mr Patel was then in a position to assess the value of work undertaken by the noting brief and, ultimately, pay for that work.
(d) In relation to Master Egan's conclusion that the submission of the bill of costs and the deliberate non-disclosure of the eight invoices by the Firm was dishonest, the Firm submits that the non-disclosure was not dishonest. Instead, the Firm chose not [to] disclose the invoices in order to avoid confusion. The Firm considered the invoices to be unenforceable due to the retrospective effect of the Deed of Variation so instead treated the payments made against those invoices as payments on account against the final bill. Further, the Firm is of the view that it did disclose the invoices when it was asked for them.
(e) Master Egan's fifth conclusion was in relation to Mr Patel's affidavit, which the Court of Appeal ordered him to prepare in support of the DCO [i.e. defendant's costs order]. Master Egan concluded that Mr Patel's evidence that he was content to pay the final invoice in the full amount and his evidence about the deliberate non-disclosure of the invoices he paid was dishonest. In response to this the Firm repeated its points raised in response to the fourth conclusion. The Firm also directed the Supervisor to a witness statement prepared by Mr Patel to support the Firm's report to the SRA. Specifically, the Firm provided this statement in relation to Master Egan's conclusions about the non-disclosure of the eight invoices. As can be seen, Mr Patel's witness statement does not address this point.
(f) Master Egan's...
To continue reading
Request your trial
-
Soophia Khan v Solicitors Regulation Authority Ltd
...are involved in so acting; and those include risks both to the society and to the solicitors concerned.” 16 In Neumans v Law Society [2017] EWHC 2004 (Ch) at [26(vi)], Newey J (as he then was) summed up the Vice-Chancellor's explanation as being that the SRA “can properly decide to interve......