Soophia Khan v Solicitors Regulation Authority Ltd
| Jurisdiction | England & Wales |
| Judge | Sir Gerald Barling |
| Judgment Date | 07 March 2022 |
| Neutral Citation | [2022] EWHC 484 (Ch) |
| Docket Number | Case No: BL-2021-001526 |
| Court | Chancery Division |
[2022] EWHC 484 (Ch)
THE HONOURABLE Sir Gerald Barling
Sitting as a Judge in the High Court
Case No: BL-2021-001526
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
CHANCERY
Royal Courts of Justice
Strand, London, WC2A 2LL
Mark Green (instructed by Direct Access) for the Claimants
Rupert Allen (instructed by Capsticks Solicitors LLP) for the Defendant
Hearing dates: 27 th & 28 th January 2022
APPROVED JUDGMENT
Introduction
The first-named claimant, Ms Soophia Khan (“SK”), was admitted to the Roll of Solicitors on 1 November 2006. She is a solicitor advocate and has been the sole director and shareholder of the second-named claimant, Sophie Khan & Co Limited (“the Firm”). The defendant, the Solicitors Regulation Authority Limited, (“SRA”) has, since June 2021, been a separate legal entity from the Law Society of England and Wales, and entitled to exercise in its own right certain regulatory functions and powers which before that date were delegated to it by the Law Society. The powers in question include the power to suspend solicitors and to intervene in their practices.
On 19 August 2021 a three-member adjudication panel of the SRA (“the Panel”) issued a decision (“the Decision”) pursuant to which it intervened in SK's and the Firm's practices pursuant to section 35 and Part 1 of Schedule 1 to the Solicitors Act 1974 on the following grounds:
In respect of SK's practice: (1) that there was reason to suspect dishonesty on SK's part in connection with her practice as a solicitor (paragraph 1(1)(a)(i) of Schedule 1 – Part I to the Solicitors Act 1974); and (2) that SK had failed to comply with rules (paragraph 1(1)(c) of Schedule 1 – Part I to the Solicitors Act 1974).
In respect of the Firm's practice: (1) that there was reason to suspect dishonesty on the part of SK, as a manager of the Firm, in connection with the Firm's business (paragraph 32(1)(d)(i) of Schedule 2 to the Administration of Justice Act 1985); and (2) that SK, as a manager of the Firm, and the Firm itself, had failed to comply with the SRA Principles 2011 and 2019 and the SRA Accounts Rules 2011 and 2019 (paragraph 32(1)(a) of Schedule 2 to the 1985 Act).
In the Decision the Panel also exercised the power under paragraphs 6(1) and 6(2) of Schedule 1, Part II to the 1974 Act, to direct that the right to recover and receive money in connection with the Firm should vest in the Law Society. It exercised the power under paragraph 9(1) to appoint a person to take possession of documents and otherwise to act as the Law Society's agent in relation to the intervention. It also suspended SK's practising certificate.
Sub-paragraphs 6(4) and (5) of Part 2 of Schedule 1 to the 1974 Act provide:
“(4) 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 … may apply to the High Court for an order directing the Society to withdraw the notice.
(5) If the court makes such an order, it shall have power also to make such other order with respect to the matter as it may think fit.”
The notice referred to in sub-paragraph 6(4) is that which is served on a solicitor upon an intervention and which prohibits payment out of money held by the solicitor or his firm in connection with his practice.
On 31 August 2021, SK issued a Part 8 claim form under CPR 64.4(1)(b) seeking an order pursuant to sub-paragraph 6(4) that the intervention notice be withdrawn on the grounds that
“the decision to intervene was fundamentally flawed and disproportionate”
and/or
“on having regard to the material now before the Court, the intervention ought in any event to be withdrawn”.
On 2 September 2021 Meade J ordered the Firm to be added as a claimant and the SRA to be substituted for the Law Society as a defendant.
The SRA contends that the intervention challenge is without merit, and that on the evidence then available the intervention was clearly necessary and proportionate for the protection of clients and the public interest. The SRA also relies upon subsequent events as rendering it wholly unrealistic in any event to argue that the intervention notice should now be withdrawn. In this regard they refer, in particular but not exclusively, to the fact that SK is currently serving a six months sentence of imprisonment imposed by Leech J on 12 January 2022. This was imposed on the ground that SK was in contempt of court by reason of her failure to comply with court orders dated 7 September 2021 and 21 September 2021 requiring her to deliver up certain practice documents to the SRA. The SRA contends that SK's imprisonment would give rise to a further ground of intervention in her practice, and that her conduct since the intervention, including that which led to the finding of contempt, demonstrates her unsuitability to practice as a solicitor in any capacity.
Both sides have put in written evidence in the form of two witness statements by SK dated 27 August 2021 (“Khan 1”) and 24 September 2021 (“Khan 2”), and two witness statements by Claire Crawford, an associate solicitor with the solicitors acting for the SRA. Ms Crawford's witness statements are dated 8 October 2021 (“Crawford 1”) and 17 January 2022 (“Crawford 2”). There are about 2,000 pages of exhibits. There has been no oral evidence.
At the hearing of this claim SK and the Firm have been represented by Mr Mark James of counsel, and the SRA by Mr Rupert Allen of counsel. The hearing was conducted without oral evidence. SK did not attend. At the outset I was able to satisfy myself that she had instructed her counsel to proceed in her absence. SK's father was present throughout the hearing.
The applicable legislation and legal principles
There is to a large extent agreement between counsel as to the principles to be applied by the court in determining this challenge to the intervention. There is one main exception to the accord, which I will explain in due course.
Power to intervene
Section 35 of the 1974 Act provides that:
“The Powers conferred by Part II of Schedule 1 shall be exercisable in the circumstances specified in Part I of that Schedule.”
The grounds for intervention set out in sub-paragraph 1(1) of Part 1 of Schedule 1 are, so far as relevant, that
“(a) [the SRA] has reason to suspect dishonesty on the part of… a solicitor… in connection with that solicitor's practice or former practice…
(c) [the SRA is] satisfied that a solicitor has failed to comply with rules made by virtue of [various provisions, including sections 31 or 32 of the 1974 Act] …
(e) a solicitor has been committed to prison in any civil or criminal proceedings”
The SRA's intervention powers, which are admittedly draconian, enable the SRA to require the delivery to it of money, documents, computers and other property, the redirection of postal and electronic communications, and the suspension of the solicitor's practising certificate. The effect is often to bring an end to the solicitor's practice, at least for as long as the intervention continues, and sometimes forever. It is common ground that these intervention powers were extended (with certain necessary differences not relevant for present purposes) to bodies such as the Firm, by sub-section 9(6) and paragraphs 32 to 35 of Schedule 2 to the Administration of Justice Act 1985.
Reason to suspect dishonesty
Where, as in the present case, a ground for intervention is that the SRA has reason to suspect dishonesty on the part of a solicitor, it is agreed that the correct test for dishonesty is not that which was hitherto applied in criminal cases pursuant to R v Ghosh [1982] QB 053, viz whether the solicitor acted dishonestly by the ordinary standards of reasonable and honest people, and was aware that by those standards he was acting dishonestly. Rather, by virtue of the Supreme Court decision in Ivey v Genting Casinos (UK) Ltd [2017] UKSC 67, [2018] AC 391, the test is now aligned with the civil law test of dishonesty as explained by the Privy Council in in Barlow Clowes International Ltd v Eurotrust International Ltd [2005] UKPC 37, [2006] 1 WLR 1476. At paragraph 74 of its decision in Ivey the Supreme Court said:
“When dishonesty is in question the fact-finding tribunal must first ascertain (subjectively) the actual state of the individual's knowledge and belief as to the facts. The reasonableness or otherwise of his belief is a matter of evidence (often in practice determinative) going to whether he held the belief, but it is not an additional requirement that his belief must be reasonable; the question is whether it is genuinely held. When once his actual state of mind as to knowledge or belief as to facts is established, the question whether his conduct was honest or dishonest is to be determined by the fact-finder by applying the (objective) standards of ordinary decent people. There is no requirement that the defendant must appreciate that what he has done is, by those standards, dishonest.”
It must be borne in mind that the ground of intervention relating to dishonesty does not require the SRA, or indeed the court in a challenge under sub-paragraph 6(4) such as the present, to determine whether there has been dishonest conduct on the part of a solicitor: the SRA must have reason to suspect dishonesty on the solicitor's part. The justification for the power to take such measures on the strength of suspicion was explained by Sir Robert Megarry V-C in Buckley v Law Society (No 2) [1984] 1 WLR 1101, at 1105–1106:
“Statute has put the Law Society in a special position in relation to solicitors generally. The society has many important powers which are exercisable in the public interest. In many ways the...
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