Western Avenue Properties Ltd and Another v Sadhana Soni and Another
| Jurisdiction | England & Wales |
| Judge | His Honour Judge Curran |
| Judgment Date | 26 October 2017 |
| Neutral Citation | [2017] EWHC 2650 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: HQ17X02473 |
| Date | 26 October 2017 |
[2017] EWHC 2650 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
His Honour Judge Curran QC
(Sitting as a Judge of the High Court)
Case No: HQ17X02473
Mr Mark Warwick QC (instructed by Judge Sykes Frixou) for the Claimants
Mr Stuart Cutting (instructed by Kennedys Law LLP) for the Defendants
Hearing dates: 10 October 2017
His Honour Judge Curran QC:
Introduction
By a claim form issued on 13 July 2017 the Claimants began proceedings against the Defendants for an injunction and damages on the ground of breach of duty owed to the Claimants as their former solicitors. By the particulars of claim filed and served in the proceedings it is alleged that in about February 2015 the Second Claimant, Mr Patel, retained the First Defendant as his solicitor, in connection then with criminal proceedings which had been brought against him in respect of an alleged fraud. It is averred that whilst she was retained as his solicitor the First Defendant became privy to substantial confidential information relating to the Second Claimant's businesses, which included property ownership and development.
Further, it is claimed that in 2015 the First Defendant was also retained by the First Claimant, the company, to act on its behalf in relation to property owned by the company in West London.
It is now alleged that in breach of contract or fiduciary duty, or both, the First Defendant, as an employee of the Second Defendant, has accepted instructions from former business associates of the Claimants to act in contemplated proceedings against them both.
There are three applications before the Court:
i) An application by both Claimants for an injunction restraining the Defendants from acting as solicitors in proceedings concerning the Claimants;
ii) an application by both Claimants for disclosure of a "waiver" signed by a Mr Aman Thukral; and,
iii) an application by both Defendants for the Claimants to answer the Defendants' Part 18 Request for Further Information, together with an extension of time for service of the Defence.
Factual summary
Ms Soni is a solicitor who was admitted on 15 January 1998, and was employed as an "in-house lawyer" for the First Claimant ("WAPL") and also for the Second Claimant ("Mr Patel") from March 2015 until February 2016. It is not suggested that her duties as an in-house lawyer were confined to any single project or restricted to any specific matter. In view of the post in which she was employed she would during the eleven months or so of her employment have had access to confidential information in respect of the assets and financial and legal affairs of the WAPL and also to confidential information in respect of the personal assets and financial and legal affairs of Mr Patel.
In particular, it is both Claimants' case that during the course of her employment Ms Soni acted on behalf of WAPL in respect of some freehold land and premises owned by the company at 600 – 610 Western Avenue, London W3. Documents in the application bundle show that Ms Soni was involved in the negotiation of leases of the property, and arranging for its insurance, and also in preparing tax returns for WAPL.
So far as Mr Patel is concerned, the case is put upon the basis that in acting as his solicitor, in particular when preparing his defence in respect of the fraud allegations, Ms Soni inevitably acquired detailed confidential information in respect of Mr Patel's business and personal affairs.
Ms Soni now works as a solicitor nominally employed by the Second Defendant company. That company was incorporated on 16 October 2015 and at all material times Ms Soni has owned all its issued shares. Since 28 April 2016, from about the time that it received authorisation from the Solicitors Regulation Authority ("the "SRA"), she has been the Second Defendant's sole director. From the dates alone it is clear that neither of the Claimants has ever been a client of the Second Defendant company. The basis of the case against the Second Defendant, as I understand it, is that it can only act through Ms Soni and is fixed with knowledge of matters known to her.
As a matter of history, from February 2015, Mr Patel was the subject of an investigation by Lincolnshire Police in relation to allegations of money laundering and fraud, involving some £12 million. He was charged with criminal offences of money-laundering and fraud arising from that investigation. In due time he was tried at the Crown Court at Leicester, between October 2016 and December 2016, and was acquitted. However, the Crown Court had made a restraint order in respect of his assets pending the resolution of the criminal proceedings, and Mr Patel had been in breach of that order, which he admitted. As a result, in March 2017 he was sentenced to 12 months' imprisonment and was fined £330,000.
Ms Soni resigned as in-house lawyer for WAPL and Mr Patel in or around February 2016 for "professional reasons". Her case is that she was owed a considerable amount of money by the Claimants in terms of salary and disbursements.
The premises at Western Avenue were formerly used as a car showroom, which at some stage had been demolished leaving the land as a vacant lot. Mr Aman Thukral, who is said to have been a car dealer, is alleged to have permitted another company to occupy the premises, and after the First Defendant's resignation, proceedings in the County Court were taken by WAPL against Mr Thukral resulting in an order for possession being made on 8 March 2017 against him. For the avoidance of doubt it should be made clear that there is no suggestion that the First Defendant had any involvement, even on a preparatory basis, with that litigation on either side.
Unusually, a subsequent claim for damages arising out of the same cause of action as that in the possession proceedings – trespass – has subsequently been brought by WAPL against Mr Thukral in the Central London County Court. The First Defendant in this case, Ms Soni, has signed a statement of truth in respect of the Defence settled by counsel instructed by her on behalf of Mr Thukral.
It is the case for the Defendants that in or about the 20 March 2017, they were approached both by Mr Aman Thukral and members of his family ("the Thukrals") with a request to act for them professionally. The Thukrals were, it seems, formerly business associates of the Claimants. The request they made of the Defendants was to advise them (1) on "matters relevant to the share ownership of WAPL"; and (2) on matters which might possibly involve litigation consequential to the possession order in respect of the land owned by WAPL which had been made against Mr Thukral at the Willesden County Court, where he had been represented by another firm of solicitors, MT (UK). It is said that those solicitors provided documents to the Defendants in respect of the County Court possession proceedings.
Before accepting instructions from the Thukrals, Ms Soni contacted the SRA by telephone on 20 March 2017 and sought their guidance as to whether she could act for the Thukrals against WAPL or Mr Patel. Following the provision of oral guidance, the Defendants told the Thukrals that they could act for them professionally, but only if they signed the document described as a waiver, disclosure of which is the subject of the second application notice from the Claimants. Ms Soni prudently decided to obtain confirmation of the oral advice she had received from the SRA by emailing a letter setting out her request for advice and inviting the SRA to restate its advice in writing. That email was sent on the 7 May 2017 and the response from the SRA is dated 12 May 2017.
The request for and advice given by the SRA
In her letter Ms Soni said that the telephone advice which she had received had been that,
"…conflict-of-interest can only exist between two current clients and/or with a current client."
"… confidentiality and non-disclosure applied to any relevant information Ms Soni received whilst acting for a previous client, which was relevant to a current client. Ms Soni agreed and said she was aware that the duty of confidentiality to all clients must be reconciled with the duty of disclosure to a current client and that any relevant information she received whilst acting for a previous client could not be disclosed to a current client." [Emphasis added.]
However, the letter from the SRA dated 12 May 2017, whilst confirming that the author did not consider that a conflict of interest arose between two or more current clients (which is not controversial, given that neither of the Claimants in the present case is a current client), gave this opinion in respect of chapter 4 of the code of conduct of the SRA in respect of former clients:
"… you owe a duty of confidentiality to your client (including former clients) and this requires you to keep that client's affairs confidential and not to disclose them to anybody unless you have the client's consent or disclosure is required by law. [ The code of conduct] requires that you disclose to any existing client all information that is relevant and material to their matter. Therefore you would be obliged to disclose to your new clients (the Thukral family) any relevant and material information you are aware of as a consequence of acting for WAPL and [Mr Patel] but couldn't because this information is confidential to that former client. Outcome O (4.3) [of the code of conduct] requires that where these two duties come into conflict your duty of confidentiality takes precedence and we would usually advise that you should not act for the new client." [Emphasis added.]
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...number of cases being cited and hard copies being provided today; I shall mention just three: Western Avenue F Properties & Ors v Soni [2017] EWHC 2650 QB; Despatch Management Services UK Limited v TW Douglas [2001] UKEAT/902 2001; and finally, Bayche v Essex County Council [2000] EWCA Civ ......