The Law House Ltd ((in Administration)) v Eilish Elizabeth Adams
| Jurisdiction | England & Wales |
| Judge | Mr Justice Miles |
| Judgment Date | 15 July 2020 |
| Neutral Citation | [2020] EWHC 2344 (Ch) |
| Date | 15 July 2020 |
| Docket Number | Case No: BL-2019-001388 |
| Year | 2020 |
| Court | Chancery Division |
[2020] EWHC 2344 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY
COURTS OF ENGLAND AND WALES
Business List (Ch.D)
Royal Courts of Justice
Strand
London WC2A 2LL
Mr Justice Miles
Case No: BL-2019-001388
Ms H Evans appeared on behalf of the Claimant
Ms A Bright appeared on behalf of the Defendant
Introduction
This is the hearing of the claimant's application to commit the defendant to prison for contempt of court.
The application, which was issued in August 2019, first came before the court on 9 September 2019 when the defendant was given further time to allow her to purge her contempt. It came on for a second time on 22 October 2019 when it was adjourned to enable the defendant to adduce expert medical evidence about her ability to engage with the proceedings. On 12 December 2019 the defendant was given a further chance to obtain such medical evidence. The hearing was again adjourned in April 2020 because the Covid-19 pandemic made it difficult to arrange live hearings at that time.
The charges of contempt concern several separate orders of the High Court. The charges have been amended twice to include further charges since the application was issued in August 2019. They have been consolidated in a re-amended charge sheet.
The defendant stated through her solicitors on 13 July 2020 that she admitted all the charges particularised in the re-amended charge sheet and that her submissions would be restricted to mitigation and sentence.
Factual background
I turn to the background facts. I have adapted these from the summary contained in the claimant's skeleton argument, none of which was contested by the defendant's counsel. I have read the underlying documents and have satisfied myself of the accuracy of the summary. Some of the events concern clients of the firm in which the defendant previously practised as a solicitor and to preserve the clients' confidentiality I shall refer to them by coded initials.
In 2011 the defendant and Ms Venisha Shah set up a solicitor's practice called The Law House Limited, which is now the first claimant. They both became directors and were in effect partners. The firm is now in administration. It is insured by the second claimant, which is exposed the claims arising from the defendant's activities. Both claimants have issued proceedings against the defendant arising from the events outlined below. On 11 May 2020 the claimants obtained an order for an interim payment of £620,000 and costs.
As the two directors of the firm, Ms Shah and the defendant were authorised to give payment instructions in respect of its bank accounts. The firm, as a regulated solicitors' practice, was required to hold its client assets on trust, including under the Solicitors Accounts Rules 2011.
The defendant specialised in probate and the administration of trusts of estates.
The defendant became involved over time in several improper activities which she has since admitted.
First, she forged a number of grants of probate (orders of the court).
Secondly, she engaged in teeming and lading between estates, i.e., using the assets of one estate to pay or meet the liabilities of another. In order to make payments to the recipients and cover up what she was doing the defendant created false entries in The Law House's ledgers and payment request documents known as e-chits.
Thirdly, she deliberately overcharged for the firm's work and used the bills as a method to reduce to zero the funds held on a client account for an estate rather than paying those funds to the beneficiaries.
Fourthly, she misappropriated funds from certain estates for her own benefit.
Ms Shah says that she first had concerns about the defendant's conduct in late August 2018 when the Solicitors Regulatory Authority, prompted by complaints from two clients of the firm, visited the offices. This led to the appointment by the firm of external solicitors, DAC Beachcroft (“DACB”) and a forensic accountant, who began to assist with investigations. The defendant admitted at first that she had forged one or two grants of probate, but very much downplayed her wrongdoing. As the investigation progressed the solicitors and accountant uncovered far more widespread teeming and lading, overcharging of fees and further forged grants of probate.
In October 2018, the defendant paid sums of about £370,000 to Ms Shah and The Law House's accountant in respect of over-billing and the potential costs of a potential administration of The Law House. The firm, in fact, entered administration on 7 December 2018.
Also in October 2018, the claimants became aware that the defendant had wrongly spent £4,600 odd from the G estate to buy jewellery for herself. When challenged, the defendant repaid that sum.
By late 2018 the defendant was largely avoiding contact with DACB. She did not turn up to meetings that had been arranged and failed to respond to her own solicitor's (JMW's) attempts to contact her. She provided some information, but only sporadically and piecemeal.
The estates affected by the defendant's activities were advised to obtain independent advice. Most instructed a specialist probate firm, Wilsons Solicitors. In May 2019 Wilsons notified DACB of a suspected diversion of funds from the G estate, then believed to be about £220,000.
Prompted by this, the claimants and DACB discovered, first, that assets had been diverted from the G estate to an account held at Lloyds bank, Weston-Super-Mare (“the Lloyds WSM account”), and, secondly, that there had been a payment of some £43,000 from the F estate to a numbered National Savings and Investment Account (“the NIS account”).
At a meeting on 13 June 2019, DACB asked the defendant about these things. She did not admit that the Lloyds WSM account or the NSI account were hers. DACB urged the defendant to co-operate but during June and July 2019 she continued to avoid contact with them or, indeed, with her own solicitors.
On 27 July 2019 the claimants issued proceedings alleging that the defendant had misappropriated assets including, most significantly, diverting £403,000-odd from the G estate to the Lloyds WSM account, and procuring the payment of £43,000 from the F estate to the NSI account. There were also other alleged misappropriations. The claimants complied a table listing twelve impugned transactions, including the two I have just identified.
The claimants applied for proprietary protective relief. On 30 July 2019 Barling J granted an injunction, (“the Barling J order”) which froze the Lloyds WSM account and the NSI account. The order also required the defendant to provide “to the best of her ability” information and documentation, and an affidavit, about the payments to these two accounts and about the other ten impugned transactions listed in the table. The application was made on notice to the defendant, but she did not attend the hearing. The order, containing a penal notice, was served by being posted through the letter box of her house and by e-mail.
The following day, 31 July 2019, the defendant spoke to Ms Shah from abroad, where she was on holiday. She said that she was aware of the order and volunteered that if she did not comply with it she would potentially find herself in prison. She also volunteered that she was aware of the deadline under the order for the provision of the information.
The deadline for the defendant to provide the information and the affidavit required by the Barling J order was 8 August 2019. The defendant did not comply with the deadline. She remained on holiday. She did not engage with her solicitors, JMW, who informed the claimants that they were unable to obtain instructions. The claimants applied on 13 August 2019 to commit the defendant to prison.
On 22 August 2019, the defendant belatedly provided an affidavit, supported by no documentation, purporting to comply with the Barling J order. She admitted that she was the holder of the Lloyds WSM account. She gave some limited information about what had become of the £403,000-odd paid into the account, saying that some £150,000 had been used to acquire The Law House's offices, and that she could not rule out having benefited personally without access to the bank statements, which she did not have. She gave the impression in the affidavit that she believed that the balance...
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