Paul Baxendale-Walker v David Middleton and Others (Defendants/Applicants)
| Jurisdiction | England & Wales |
| Judge | The Hon. Mr Justice Supperstone,Mr Justice Supperstone |
| Judgment Date | 18 April 2011 |
| Neutral Citation | [2011] EWHC 998 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: HQ10X02119 |
| Date | 18 April 2011 |
[2011] EWHC 998 (QB)
The Honourable Mr Justice Supperstone
Case No: HQ10X02119
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Peter Susman QC and Matthew Richardson (instructed by Messrs Griffin Law) for the Claimant/Respondent
Marcus Smith QC and Rupert Allen (instructed by Messrs Bevan Brittan) for the 1 st to 3 rd Defendants
Charles Hollander QC and Jonathan Dawid (instructed by Messrs Wiggin) for the 4 th, 6 th and 7 th Defendants
Sue Carr QC and Jonathan Hough (instructed by Messrs Browne Jacobson) for the 8 th and 9 th Defendants
The Fifth Defendant did not appear and was not represented
Hearing dates: 15, 16, 17 & 18 March 2011
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
The Defendants (with the exception of the Fifth Defendant) have applied to strike out the "replacement" Particulars of Claim dated 29 July 2010 and apply for summary judgment to be entered against Mr Baxendale-Walker, the Claimant. The Fifth Defendant is not a party to these applications as he disputes that he has been served with the proceedings.
The Claimant is a former solicitor who specialised in tax law. He developed and advised on tax avoidance schemes including schemes utilising Employee Benefit Trusts ("EBTs"). These schemes were marketed through FSL Services Ltd ("FSL"). He received income both from FSL and from the clients to whom he recommended the schemes he devised for FSL. The Claimant practised from around 1994 as a sole principal and then, from around October 1997, as a partner in his own firm, Baxendale Walker Solicitors ("BWS").
Mr Middleton, the First Defendant, and Mr Duerden, the Second Defendant, are employed by the Solicitors Regulation Authority ("SRA") and previously by the Office for the Supervision of Solicitors ("OSS"). The First Defendant is a solicitor who was until 2007, Head of Investigations at the OSS and thereafter he was Head of Legal at the SRA. The Second Defendant was an investigating officer with the SRA. The SRA is (and the OSS was) responsible for discharging the regulatory functions of the Law Society, the Third Defendant, in relation to regulation and discipline of solicitors. This included investigating and, if appropriate, initiating and conducting disciplinary proceedings against solicitors for misconduct or breaches of regulatory rules. Mr Marcus Smith QC appears for the first three Defendants who have been referred to as "the Law Society Defendants".
Mr Langley, the Fourth Defendant, and Mr Woodhouse, the Sixth Defendant, were partners of Deloitte & Touche LLP ("Deloitte"), a firm of accountants. Deloitte, and specifically Mr Langley, were engaged in around September 2002 by the Law Society to produce a report in relation to the legality of some of the tax avoidance schemes devised and promoted by the Claimant. In producing this report, Mr Langley was assisted by, amongst others, Mr Thornton, the Fifth Defendant, who at that time was an employee of Deloitte. Mr Charles Hollander QC appears for the Fourth, Sixth and Seventh Defendants, who have been referred to as the "Deloitte Defendants".
Mr Isaacs, the Eighth Defendant, was Chairman of the Panel of the Solicitors Disciplinary Tribunal ("SDT"), the Ninth Defendant, which decided that the Claimant should be struck off the Roll of Solicitors on 29 September 2006. Ms Sue Carr QC appears for the Eighth and Ninth Defendants.
The Claim
Paragraphs 28–39 of the Particulars of Claim contain what is described as "an overview of the Claimant's case":
"28. The Claimant's case is that at a time unknown to him but probably around the year 2000, the First Defendant and the Second Defendant, acting or purportedly acting on behalf of the OSS, formed the joint intention of constructing a knowingly false and fraudulent case against the Claimant with a view to destroying his tax practice and, if possible, to procuring his being struck off the roll of solicitors by the Ninth Defendant.
29. The method to be employed was to construct a case that the Claimant's Schemes were a fraud on HMRC and involved the participants in those Schemes in acting in a way which was unlawful and/or in fraud of HMRC.
30. In the course of this conspiracy, the First Defendant and the Second Defendant recruited the Fourth Defendant and the Fifth Defendant of the Seventh Defendant, each of whom acted or purported to act on behalf of the Seventh Defendant and agreed to participate in the conspiracy. The Sixth Defendant, though not a recruit to the conspiracy as such, knowingly connived in the perpetration of the frauds of the Fourth Defendant and the Seventh Defendant, intending such frauds to operate to the prejudice of the Claimant. The Sixth Defendant thus became a member of the conspiracy alleged against the Seventh Defendant and its employees.
31. In carrying out the conspiracy in the manner set out in this pleading each of the First Defendant, the Second Defendant, the Fourth Defendant, the Fifth Defendant and the Sixth Defendant acted fraudulently in that each of them
a) knew that the allegations to be made against the Claimant, his practice and his Schemes were false in fact and wrong in law; alternatively
b) did not believe that those allegations were true; alternatively
c) made and connived in others making those allegations recklessly, not caring whether they were true or false.
32. In furtherance of the conspiracy, fraudulent reports were placed before the Adjudication Panel and subsequently the Review Panel of the Law Society, resulting in the recommendation of conditions being imposed on the Claimant's practising certificate which would have had the effect of closing the Claimant's professional practice and destroying the Claimant's firm. The Claimant was obliged to appeal to the Master of the Rolls ('the MR') against this imposition. The appeal succeeded after the OSS withdrew the fraudulent report upon which the recommendations had been based. The OSS was ordered to pay the Claimant's costs. Nevertheless, the reputation and practice of the Claimant had been damaged by these manoeuvres.
33. The First Defendant and the Second Defendant then sought to achieve the striking off of the Claimant by manufacturing an allegation to be brought against the Claimant in regulatory and disciplinary proceedings, namely that he had a conflict of interest for the purposes of the then Solicitors Practice rules and the Guide to Professional Conduct. The conflict of interest was alleged to arise from the fact that the Claimant had a financial interest in the fruits of sale by FSL of his own Schemes.
34. In pursuance of that conspiracy, the First Defendant and the Second Defendant concocted a 'Rule 4 Statement', containing these allegations, which the MR ordered to be put for adjudication by a Special Adjudication Panel of the Law Society.
35. The allegations in the Rule 4 statement were false, and the First Defendant and the Second Defendant each
a) knew they were false; or
b) had no belief that they were true; or
c) were reckless as to their truth or falsity.
36. In February 2006, the Adjudication Panel held that there was a sufficient case to proceed to hearing before the Ninth Defendant. The Claimant's case is that the purported consideration of the case by the Panel was a sham in that the Panel was induced by the First Defendant to act as no more than a 'rubber stamp' for his views.
37. The complaint came before the Ninth Defendant in October 2006. The Eighth Defendant was the Chairman of the Tribunal. Despite the true position concerning the Claimant's relations with FSL being put before the Ninth Defendant, it found the complaint proved and ordered that the Claimant be struck off as a solicitor.
38. So far as it concerned the Eighth Defendant, the Ninth Defendant's decision was knowingly improper. The Claimant will say that the Eighth Defendant
a) knew or believed that the complaint of conflict of interest was a sham;
b) knew that the real purpose of the complaint was to secure the striking off of the Claimant because of the success of his tax Schemes;
c) regarded the Schemes to be dishonest, 'disreputable' and a fraud on HMRC while knowing that the Schemes had never been the subject of a successful challenge by HMRC;
d) intended to achieve the result of killing off what he wrongly and irrationally regarded as the Claimant's 'fraudulent' tax practice by manipulating a bogus case of conflict of interest to provide a pretext for striking him off.
39. In 2010 the Claimant in reliance upon the fresh evidence pleaded below, began the process of appeal against the order for his striking off."
The "fresh evidence" relied upon was the product of telephone conversations that the Claimant had with Mr Middleton on 9 September 2009 and with Mr Isaacs on 18 September 2009. At paragraphs 94–97 of the Particular of Claim the Claimant purports to summarise the conversation with Mr Middleton; and at paragraphs 98–101 of the Particulars of Claim he purports to summarise the conversation with Mr Isaacs.
The pleaded case against the First, Second, Fourth and Sixth Defendants is that they have each committed the torts of conspiracy to injure, conspiracy to defraud, conspiracy to use unlawful means and malicious falsehood. In addition the First...
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