The Law Society of England and Wales v Dixit Shah (also known as Sanjay Shah)
| Jurisdiction | England & Wales |
| Judge | Mr Tim Kerr |
| Judgment Date | 12 January 2015 |
| Neutral Citation | [2015] EWHC 2711 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC14B01963 |
| Date | 12 January 2015 |
2015 EWHC 2711 (CH)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Rolls Building, Royal Courts of Justice
7 Rolls Buildings, Fetter Lane
London, EC4A 1NL
Mr Tim Kerr QC
(sitting as a Deputy Judge of the High Court)
Case No: HC14B01963
Timothy Dutton QC (Instructed by Russell-Cooke LLP, 2 Putney Hill, London SW15 6AB) appeared on behalf of the Claimant /Applicant
Christopher Heather (Instructed under the Chancery Bar Litigant in Person Support Scheme) appeared on behalf of the Defendant/Respondent
Hearing dates: 13–14 November 2014
Mr Tim Kerr QC:
Introduction
Can the claimant ("the Law Society" or "the Society") invoke the court's inherent or supervisory jurisdiction to prohibit a struck off former solicitor from holding himself out as a solicitor, or undertaking activities which would breach, or cause others to breach, the regulatory regime? Does the Society have a general power, analogous to that of the Attorney-General, to restrain breaches of the criminal law within its regulatory sphere? If not, can it do so in a private law capacity, to protect the solicitors' profession against financial loss? Or can it only obtain relief in accordance with expressly conferred powers? If so, are those powers wide enough to ground the relief sought here?
This judgment addresses those issues for the purpose of determining an application by the Law Society for a permanent injunction against the defendant ("Mr Shah"), who is a struck off former solicitor. On 22 May 2014, Proudman J granted an interim order prohibiting Mr Shah, whether directly or through others acting on his behalf, from:
(1) holding himself out as a solicitor or
(2) undertaking any reserved legal activities (as defined in section 12 of the Legal Services Act 2007) through any body authorised by the Solicitors Regulation Authority ("SRA"), or
(3) being employed by or remunerated by, or managing or controlling the practice of, a solicitor or any body regulated by the Law Society without the prior written permission of the Law Society being given to such solicitor or body.
Proudman J also ordered Mr Shah to swear, file and serve on the Law Society an affidavit setting out all his dealings since 1 October 2013 with any solicitors or bodies regulated by the SRA, including specifically his dealings with a Ms Doe Fosuhene and her firm, Trinity & Co, whether by way of employment, remuneration, management, control, association or otherwise, and made an order for delivery up of certain computers, hard drives and discs used in the practice of Ms Fosuhene or Trinity & Co.
The Law Society now applies for an injunction making the prohibitions above permanent. It also seeks an order for a further affidavit, contending that the affidavit sworn by Mr Shah in response to Proudman J's interim order fails to comply fully with that order in that it only sets out his dealings with Ms Fosuhene and Trinity & Co, and does not set out his dealings with any other solicitors or bodies regulated by the SRA, which is the independent regulatory arm of the Society.
Finally, the Society seeks an order that it may take such steps as it considers appropriate to publicise the court's order, by publishing a notice in the form annexed to the draft order. The draft notice is in the form of a warning notice, giving information about Mr Shah, providing a photograph of him and notifying readers that he is struck off and restrained by injunction from holding himself out as a solicitor or otherwise breaching the prohibitions referred to above.
I am very grateful to both counsel for their considerable assistance, including overnight research and cogent submissions of high quality, some of which had to be formulated and developed at short notice. Mr Heather was new to the case, being instructed under the Chancery Bar Litigant in Person Support Scheme (CLIPS) on the first day of the hearing, and was able to deploy arguments of sophistication and complexity which were none the worse for being crafted at short notice under heavy time pressure.
The Facts
This was a Part 8 claim and neither party sought permission to cross-examine any witnesses. Although Mr Shah disputed some of the facts relied upon in the Law Society's evidence, he did not deny many of the essential features of the factual history relied on by the Society. He did deny any wrongdoing, and denied having held himself out as a solicitor, which would be a criminal offence.
Mr Dutton QC, for the Law Society, submitted that the evidence showed Mr Shah was closely involved in the management of Trinity & Co, a practice recently operated by Ms Fosuhene, until the Law Society intervened in it and caused it to cease operations. Mr Dutton says that the evidence shows Mr Shah poses a risk to the public despite the intervention in Trinity & Co. He submits that the injunctions sought are necessary to uphold the law and protect the public. He relied on the following matters.
From 1998 until September 2000 Mr Shah, then a qualified solicitor, was an active equity partner in a group of legal practices which together traded as a group, known as the Brandon group of firms (together, "Brandons"). The Law Society alleges that Mr Shah was responsible for the misappropriation of about £8 million of client funds from Brandons' client accounts. Mr Shah denies the misappropriation. He was later convicted and sentenced for mortgage fraud, separately from the alleged misappropriation of funds.
The Law Society has paid out over £12 million from its statutory compensation fund in consequence of losses suffered by clients of Brandons. In September 2000, the Society intervened in the practice of Brandons on the ground of suspicion of dishonesty on Mr Shah's part and failure to comply with relevant accounting rules by other partners. Mr Shah went to India at about that time and was reported as denying any part in the misappropriations.
The Law Society, exercising its subrogated rights on behalf of its compensation fund, then brought proceedings against Mr Shah and other Brandons partners. Mr Shah did not seek to defend those proceedings. In February 2002, he was struck off the roll of solicitors in proceedings before the Solicitors Disciplinary Tribunal ("the Tribunal") at which he did not appear (though he made written submissions sent from India), for having employed a Mr Nicolas Bentley as a solicitor while knowing that Mr Bentley was suspended from practice, contrary to section 41 of the Solicitors Act 1974.
In August 2002 Mr Shah was made bankrupt (for the second time; the first time was in 1998) on the petition of the Law Society, as a result of unpaid legal and professional intervention costs of just under £865,000. He remains undischarged from his bankruptcy because of an order which became effective in 1999, suspending his discharge. Mr Shah remains jointly and severally liable for the full amount of unpaid debts owed by Brandons to the Law Society for its intervention costs, which are a statutory debt (under the Solicitors Act 1974, Schedule 1, paragraph 13).
The Law Society asserts that Mr Shah was apprehended at Dublin airport in 2006, but managed to remain at large while on bail. It is not disputed that he was arrested in September 2009, remanded at HMP Wandsworth and subsequently charged on counts of possession of an article with intent to commit fraud, and one count of conspiracy to defraud. He remained in custody while awaiting trial.
Shortly after the start of his contested trial at Southwark Crown Court in June 2010, towards the end of the Crown's opening speech, Mr Shah entered a guilty plea to conspiracy to defraud. Then, in July 2010, he attempted to withdraw his plea of guilty. On 3 December 2010 that application was refused. On the same day, Mr Shah was sentenced to 66 months' (five and a half years') imprisonment (less credit for 431 days spent on remand in custody).
The basis of his guilty plea, read together with the sentencing remarks of His Honour Judge Testar, show that the guilty plea was based on 10 or 11 mortgage transactions in which mortgage loans totalling just over £3.061 million were applied for, resulting in the obtaining of about £2.7 million, though the actual loss to the victims of the conspiracy was considerably less, at just over £360,500. Mr Shah appealed or attempted to appeal against his conviction and sentence, without success. He was released from prison on 28 June 2012.
Mr Shah's links with Ms Fosuhene go back at least to June 2010, and probably earlier. She qualified as a solicitor in 2007. In June 2010, while Mr Shah was in custody awaiting trial, she applied for cancellation of a caution in respect of a property in north west London, citing Mr Shah as the registered proprietor. She gave her address as 18 Gill Close, Hertfordshire, which was one of the properties listed in Mr Shah's subsequent basis of guilty plea, in respect of which he admitted conspiring to obtain a mortgage by fraud.
In June 2013, Ms Fosuhene established her practice, Trinity & Co ("Trinity"). It was a small practice without large quantities of work. Ms Fosuhene was the only practising solicitor working there. On 28 October 2013, Mr Shah rented a desk at Suite 215, 1 Olympic Way, Wembley in north west London. From 4 November 2013, Trinity entered into an agreement to occupy Suite 219. Mr Shah contributed £1,000 to Trinity's client account on 11 November 2013 and a further £1,000 on 11 December 2013.
On 28 January 2014, Mr Shah moved into Suite 219, occupied by Trinity. He acquired a telephone extension number (extension 8465) within Suite 219. In or about March 2014, Trinity moved to the larger Suite 220, eventually relinquishing Suite 219. In mid-March 2014, a...
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