Rajeswary Ramasmy v The Law Society
| Jurisdiction | England & Wales |
| Judge | Judge Behrens |
| Judgment Date | 11 March 2016 |
| Neutral Citation | [2016] EWHC 501 (Ch) |
| Docket Number | Case No: HC-2015-002585 |
| Court | Chancery Division |
| Date | 11 March 2016 |
[2016] EWHC 501 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
The Royal Courts of Justice
Strand
London WC2A 2LL
His Honour Judge Behrens sitting as a Judge of the High Court in Leeds
Case No: HC-2015-002585
Jeremy Barnett (instructed by Lewis Nedas Law Ltd) for the Claimant
Andrew Tabachnik (instructed by Bevan Brittan LLP) for the Defendant
Hearing dates: 29 February 2016, 1 March 2016
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
This is an application by Mrs Ramasamy to set aside the intervention on 17 June 2015 by the Law Society into her practice as a solicitor. The Law Society oppose the application and seek to maintain the intervention.
Mrs Ramasamy commenced practice as a sole practitioner (with a small number of employees) trading as Thames Chambers Solicitors ("the Firm") in October 2008. The Firm initially traded from a two room office, later moving to a three room office (with a conference room).
The grounds on which the Law Society seek to maintain the intervention are not identical to those relied on when the intervention took place. There are 6 matters relied on by the Law Society.
1. There are a number of instances in which Mrs Ramasamy sought to claim VAT on the Firm's fees from non-clients (one of which was the SRA Compensation Fund), despite not being VAT registered or therefore having any entitlement to do so. The various false VAT claims were maintained over an extended period. The Law Society contends that there is reason to suspect dishonesty on Mrs Ramasamy's part arising from these matters.
2. The transcript of a hearing which took place on 12 December 2011 indicates that the Firm represented its clients through a struck-off solicitor called Rajesh Singh Pathania ("Mr Pathania"). Shortly afterwards Mrs Ramasamy sent the client an email seeking £600 for "attendance in court". Mrs Ramasamy denied that anyone had appeared at the hearing and subsequently explained that the email was written in order to assist one client in a payment dispute with another client. The Law Society considers that there is reason to suspect dishonesty on the part of Mrs Ramasamy arising out of this.
3. Mr Pathania was a client of the Firm. He was adjudged bankrupt on 29 June 2010. On a number of occasions Mrs Ramasamy made applications on behalf of Mr Pathania at a time when the relevant cause of action was vested in his Trustee. One such instance was visited with a wasted costs order which was upheld on appeal by a High Court Judge. This is said to be "gross incompetence" on the part of Mrs Ramasamy.
4. Mr Mutahar Hussain was an administrative assistant employed by the Firm. As such he had an email account – m.hussain@tc-solicitors.co.uk ("the M Hussain account"). There is considerable evidence that Mr Pathania used the M Hussain account. The Law Society believe that Mrs Ramasamy permitted this state of affairs and then dishonestly denied that she had done so.
5. There is substantial evidence that Mr Pathania was allowed to participate in the management of the Firm. The Law Society contends that it is inconceivable this occurred without Mrs Ramasamy's knowledge and consent.
6. The Law Society believe that Mrs Ramasamy was employing and/or remunerating Mr Pathania in connection with her practice as a solicitor, and that she has aided and abetted his "acting as a solicitor" by way of conducting litigation. They believe that she dishonestly denied the true position during her various regulatory interviews.
One of the grounds relied upon by the Adjudication Panel in its decision to intervene in the Firm's practice related to an advice and invoice from a Barrister, John McLanachan, ("Mr McLanachan") that was said to be fabricated. This was one of two grounds set out in its decision which were said to be reasons to suspect dishonesty by Mrs Ramasamy. Although Mr McLanachan had confirmed the position in a witness statement dated 15 th September 2015 he later retracted his evidence with the result that the Law Society no longer rely on this ground.
Mrs Ramasamy's case is summarised in paragraph 73 and 74 of Mr Barnett's skeleton argument. He submits:
1. The main reason for dishonesty that was initially relied upon by the SRA has been abandoned.
2. The remaining allegations are not based on clear or cogent evidence.
3. The remaining allegations might support a disciplinary sanction in due course if proved, they are not sufficiently serious to justify intervention.
In answer to the allegations he submits:
1. There is no reliable evidence that that Mr Pathania was working or purporting to work as a solicitor at the Firm. Mrs Ramasamy was acting for him in respect of 32 cases and he also introduced approximately 7 cases to the practice. Even if Mr Pathania was giving legal advice to clients at the Firm's offices, there is no reliable evidence that he did so with the knowledge of Mrs Ramasamy. Mrs Ramasamy has positive evidence of good character which is cogent evidence and directly relevant to consideration of the issue of dishonesty.
2. Although it appears that there was a claim for VAT on the invoice, there is no evidence that Mrs Ramasamy made such a claim dishonestly. On the balance of evidence, this claim was made by Mrs Ramasamy as the result of an innocent misunderstanding as to whether or not the invoice should include VAT or not. Further, there is no evidence that the VAT was ever paid to Mrs Ramasamy.
3. The allegation of incompetence is not even sufficient to constitute a matter of professional misconduct that would in the ordinary course of events be brought before the Solicitors Disciplinary Tribunal, and is therefore incapable of being a ground to justify or continue an intervention.
The Law
The law relating to the intervention of solicitors is relatively uncontroversial and has been recently explained in the decision of Newey J in The Law Society v Elsdon [2015] EWHC 1326 (Ch). For convenience I will set it out again. Much of this section is taken verbatim from that judgment.
Intervention powers
The Law Society (of which the SRA is a functionally independent arm performing regulatory functions) is empowered to intervene in a solicitor's practice in certain circumstances by the Solicitors Act 1974. Paragraph 1 of schedule 1 to the Act states that such powers can be exercised where (among other things):
"(a) the Society has reason to suspect dishonesty on the part of– (i) a solicitor, or… in connection with that solicitor's practice or former practice …;
(c) the Society is satisfied that a solicitor has failed to comply with rules made by virtue of section 31, 32 or 37(2)(c);
(m) the Society is satisfied that it is necessary to exercise the powers conferred by Part 2 of this Schedule (or any of them) in relation to a solicitor to protect–
(i) the interests of clients (or former or potential clients) of the solicitor or his firm, or
(ii) the interests of the beneficiaries of any trust of which the solicitor is or was a trustee."
The Law Society (through the SRA) makes rules as to professional practice, conduct, discipline and accounting matters pursuant to sections 31 and 32 of the 1974 Act, to which reference is made in paragraph 1(c) of the schedule to the Act.
Guidance as to the meaning of "dishonesty" in this context is to be found in Bryant v Law Society [2007] EWHC 3043 (Admin), [2009] 1 WLR 163. The Divisional Court there held that the decision of the Court of Appeal in Law Society v Bultitude [2004] EWCA Civ 1853 stood as "binding authority that the test to be applied in the context of solicitors' disciplinary proceedings is the Twinsectra test … as it was widely understood before [ Barlow Clowes International Ltd v Eurotrust International Ltd [2005] UKPC 37, [2006] 1 WLR 1476] …, that is a test that includes the separate subjective element" (see paragraph 153). The Court accordingly concluded (in paragraph 155) that, in the case before it, the tribunal "should … have asked itself two questions when deciding the issue of dishonesty: first, whether [the solicitor] acted dishonestly by the ordinary standards of reasonable and honest people; and, secondly, whether he was aware that by those standards he was acting dishonestly". This formulation echoed the House of Lords' seeming endorsement in Twinsectra Ltd v Yardley [2002] UKHL 12, [2002] 2 AC 164 of:
"a standard which combines an objective test and a subjective test, and which requires that before there can be a finding of dishonesty it must be established that the defendant's conduct was dishonest by the ordinary standards of reasonable and honest people and that he himself realised that by those standards his conduct was dishonest".
Applications for intervention notices to be withdrawn can be made under paragraph 6(4) of schedule 1 to the Solicitors Act 1974. This states:
"Within 8 days of the service of a notice under sub-paragraph (3), the person on whom it was served, on giving not less than 48 hours' notice in writing to the Society and (if the notice gives the name of the solicitor instructed by the Society) to that solicitor, may apply to the High Court for an order directing the Society to withdraw the notice."
The Court of Appeal considered the approach to be adopted to applications under paragraph 6(4) of schedule 1 to the 1974 Act in Sheikh v Law Society [2007] 3 All ER 183. In that case Chadwick LJ noted at [87] that in...
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