The Law Society (Respondent/Claimant) v Michael John Elsdon and Others (Applicants/Defendants)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Kitchin |
| Judgment Date | 01 February 2016 |
| Neutral Citation | [2016] EWCA Civ 306 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2015/2213 |
| Date | 01 February 2016 |
[2016] EWCA Civ 306
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(MR JUSTICE NEWEY)
Royal Courts of Justice
Strand
London, WC2A 2LL
Lord Justice Kitchin
Case No: A3/2015/2213
Mr Christian Elsdon appeared on behalf of the Applicants
The Respondent did not attend and was not represented
This is an application for permission to appeal against the order made by Newey J on 15 June 2015 following the handing down of his judgment on 12 May 2015. Permission to appeal was refused on the papers by Patten LJ by order dated 25 November 2015. The applicants (Mr Elsdon, Mrs Elsdon and Sai-Donne Limited) have requested that this decision be reconsidered at an oral hearing which has come on before me today. Mr Elsdon is unwell and accordingly with my permission has been represented, as have the other applicants, by Mr Elsdon's son, Mr Christian Elsdon.
The background relevant to this application may be summarised as follows. The case concerns an intervention by the Solicitors Regulation Authority ("SRA") into the practices of Mr Elsdon and Sai-Donne. Mr Elsdon qualified as a solicitor in 1985 and practised on his own account until 2013 when he acquired the goodwill and assets of a practice known as Woolacott. Soon after, Woolacott ceased to exist and Sai-Donne (a licensed body for the purposes of the Legal Services Act) took over the work previously conducted by that firm. It has two directors, Mr Elsdon and Mrs Elsdon. Mrs Elsdon is not a lawyer.
The SRA decided to intervene into the practices of Mr Elsdon and Sai-Donne in December 2014. Notices advising Mr and Mrs Elsdon and Sai-Donne of the intervention were sent to them and soon afterwards Mr Elsdon and Sai-Donne applied for the intervention to be withdrawn. It is Newey J's judgment on that application which led to the order which is the subject of this application for permission to appeal.
The decisions to intervene were based upon the grounds that there was reason to suspect dishonesty on the part of Mr Elsdon, that there had been a failure by Mr Elsdon and Sai-Donne to comply with the relevant SRA rules and that it was necessary to protect the interests of the clients or former clients of Mr Elsdon and Sai-Donne or to protect the interests of the beneficiaries of the trusts of which Mr Elsdon or Sai-Donne were or had been trustees.
The judge began by directing himself as to the legal framework provided by the Solicitors Act 1974 and the Legal Services Act 2007. He referred to the relevant authorities as to the meaning of dishonesty in this context and continued, entirely correctly, that this court explained in Sheikh v The Law Society [2006] EWCA Civ 1577, [2007] 3 AER 183 that overcharging in probate matters can potentially justify intervention on the basis of suspected dishonesty. In that case this court also explained the approach to be adopted upon an application such as that before the judge. Put shortly, the court must weigh the risks of reinstating the solicitor in his or her practice against the potentially catastrophic consequences to the solicitor and the inconvenience and perhaps real harm to his or her own existing clients if the intervention continues. In weighing the risks of reinstatement the court must have regard to the views of the Law Society as the professional body charged by statute with the regulation of solicitors and as the body whose members are obliged to underwrite those risks. Where the suspicion of dishonesty is challenged then the court is required to consider whether the suspicion of dishonesty has been dispelled by the other evidence before the court such that the court can safely direct withdrawal of the intervention notice.
After setting out the relevant rules the judge then turned to consider the evidence before him in relation to a number of matters with which Mr Elsdon had been intimately involved. The first and major matter concerned the estate of a Mrs Lilley. The judge set out the facts which he was able to derive in large part from the correspondence and other documents before him. Mrs Lilley died in 2008 and under her will her estate was to be shared between her three children, Mr Lilley, Mr Nind and Mrs Mackenzie. Mr Lilley and Mr Elsdon were named as executors. It was a relatively small estate amounting to about £159,000, almost all of which was accounted for by Mrs Lilley's home which was sold some three years later for £157,000. However, and by the time the SRA intervened some six years after Mrs Lilley's death, Mr Lilley had received nothing at all from the estate and his siblings had been paid less than £26,000 each. In contrast, Mr Elsdon had taken more than £50,000 excluding a sum of nearly £2,000 withdrawn in respect of the fees of an expert, Professor Hodkinson, but which were never paid to him, and £900 in respect of counsel's fees and, most importantly, despite Mr Elsdon's bills totalling some £54,000 having been assessed by Master Gordon-Saker at just under £8,000. Further, Mr Elsdon had brought proceedings against Mr Lilley as his co-executor notwithstanding that the other beneficiaries had renounced any benefit from the proceedings, the police had declined to proceed themselves and the amounts at stake were relatively small. The judge thought that with Mr Elsdon as executor things had gone very seriously wrong.
The judge proceeded to highlight a number of concerns arising from Mr Elsdon's bills. First, the enormous amount by which they had been reduced upon assessment by Master Gordon-Saker indicated overcharging on a very substantial scale. Second, Mr Elsdon paid himself nearly £40,000 including two-thirds of the gross amounts of the bills assessed by Master Gordon-Saker only days after the bills had been reduced to just under £8,000. Mr Elsdon pointed out that neither Mr Nind nor Mrs Mackenzie objected to his bills, but as the judge observed, it was hard to imagine that Mr Elsdon believed that this entitled him to behave in the way that he did. Mr Nind and Mrs Mackenzie were not his clients and he did not bill them for anything. The only relevant bills were addressed to Mrs Lilley's executors. Third, Mr Elson prepared a further bill in January 2013 in the sum of over £20,000 based upon a charging rate of £275...
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