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|Neutral Citation Number:  EWHC 3726 (Admin)
|Case No: CO/1195/2014
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
|Royal Courts of Justice
Strand, London, WC2A 2LL
|11th November 2014
B e f o r e :
THE HONOURABLE MRS JUSTICE PATTERSON DBE
| THE QUEEN ON THE APPLICATION OF KERMAN & CO LLP
|- and -
- and -
(1) PETER STEPHEN LEVY
(2) MRS MARILYN SCHROEDER
(Transcript of the Handed Down Judgment of
WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
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Official Shorthand Writers to the Court)
Mr PJ Kirby QC and Mr Leon Glenister (instructed by Kerman & Co LLP) for the Claimant
Mr James Cornwell (instructed by the General Counsel, Legal Ombudsman) for the Defendant
Hearing date: 5 November 2014
HTML VERSION OF JUDGMENT
Crown Copyright ©
Mrs Justice Patterson:
- This is a claim for judicial review by Kerman & Co LLP, a firm of solicitors, of a decision of the defendant, in a letter dated 19 December 2013, that the claimant was the successor to PS Levy & Co and responsible for dealing with a complaint made by Mrs Schroeder to the Legal Ombudsman, the Defendant.
- Permission to apply for judicial review was granted by Nicola Davies J on 2 May 2014.
- There is one issue in the case, namely, whether the defendant has jurisdiction to deal with the complaint?
- The complaint arose from service given by Mr Peter Levy (PL) to the Emanuel Davis Will Trust as trustee when he was a solicitor in his own firm of PS Levy & Co where he was a sole practitioner. He provided services to the Trust between 1995 and 2010. In 2012 he joined the claimant firm as a consultant.
The legal framework
- A procedure to enable complaints to be brought against "authorised persons" was set up under the Legal Services Act 2007 (LSA). Part 6 of the Act deals with Legal Complaints. Each approved regulator has to require each relevant "authorised person" to make provision for internal procedures to deal with complaints: section 112. Section 113 provides an overview of the scheme. It reads, where relevant:
"(1) This Part provides for a scheme under which complaints which—
(a) relate to an act or omission of a person ("the respondent") in carrying on an activity, and
(b) are within the jurisdiction of the scheme (see section 125),
may be resolved quickly and with minimum formality by an independent person."
- Section 114 provides for the creation of the Office of Legal Complaints (OLC). Section 115 provides that an ombudsman scheme is to be established and operate in accordance with Part 6 of the LSA and with scheme rules made by the OLC under Part 6 of the Act.
- Section 116 sets out the general obligations. It reads:
"(1) In discharging its functions the OLC must comply with the requirements of this section.
(2) The OLC must, so far as is reasonably practicable, act in a way—
(a) which is compatible with the regulatory objectives, and
(b) which it considers most appropriate for the purpose of meeting those objectives.
(3) The OLC must have regard to any principles appearing to it to represent the best practice of those who administer ombudsman schemes."
- Regulatory objectives referred to in section 116(2) are defined in section 1(1) which reads, where material:
"(1) In this Act a reference to "the regulatory objectives" is a reference to the objectives of—
(a) protecting and promoting the public interest;
(d) protecting and promoting the interests of consumers;
(f) encouraging an independent, strong, diverse and effective legal profession;
(h) promoting and maintaining adherence to the professional principles.
(2) The services within this subsection are services such as are provided by authorised persons (including services which do not involve the carrying on of activities which are reserved legal activities).
(3) The "professional principles" are—
(a) that authorised persons should act with independence and integrity,
(b) that authorised persons should maintain proper standards of work,
(c) that authorised persons should act in the best interests of their clients,
(4) In this section "authorised persons" means authorised persons in relation to activities which are reserved legal activities."
- A complaint is within the jurisdiction of the scheme if it is not excluded from jurisdiction as a result of the respondent's complaints procedures not being used: see section 126, or if it is not excluded by scheme rules: see section 127. Section 128 deals with the parties to a complaint. A respondent to a complaint is within section 128 if, at the relevant time, the respondent was an "authorised person" in relation to an activity which was a reserved legal activity: section 128(4). Relevant time is defined under section 128(7) in relation to a complaint as, "the time when the act or omission to which the complaint relates took place."
- An authorised person is defined in section 18, which provides, where material:
"(1) For the purposes of this Act "authorised person", in relation to an activity ("the relevant activity") which is a reserved legal activity, means —
(a) a person who is authorised to carry on the relevant activity by a relevant approved regulator in relation to the relevant activity (other than by virtue of a licence under Part 5), or
- Section 132 which is critical in the current litigation reads:
"(1) The ability of a person to make a complaint about an act or omission of a partnership or other unincorporated body is not affected by any change in the membership of the partnership or body.
(2) Scheme rules must make provision determining the circumstances in which, for the purposes of the ombudsman scheme, an act or omission of a person ("A") is, where A ceases to exist and another person ("B") succeeds to the whole or substantially the whole of the business of A, to be treated as an act or omission of B.
(3) Rules under subsection (2) must, in relation to cases where an act or omission of A is treated as an act or omission of B, make provision about the treatment of complaints under the ombudsman scheme which are outstanding against A at the time A ceases to exist.
(4) Scheme rules must make provision permitting such persons as may be specified in the rules to continue a complaint made by a person who has died or is otherwise unable to act; and for that purpose may modify references to the complainant in this Part and in scheme rules."
- Where a complaint is determined it is by reference to what, in the opinion of the ombudsman, is fair and reasonable in the circumstances of the case: section 137. Where possible misconduct is discovered in dealing with a complaint under the ombudsman scheme such that the regulator should consider whether to take action against the person being investigated the ombudsman must give a copy of his/her report to the relevant regulator: section 143. During an investigation an authorised person is under a duty to co-operate with the investigation: section 145.
- Under section 150 the OLC may publish a report of the investigation, consideration or determination of a complaint made under the ombudsman scheme.
- Section 207(1) defines the word "person" broadly. It reads, ""person" includes a body of persons (corporate or unincorporate)."
- The scheme rules referred to in section 132 provide:
"2.9. A complaint is not affected by any change in the membership of a partnership or other unincorporated body.
2.10. Where authorised person A ceases to exist and B succeeds to the whole (or substantially the whole) of A's business:
a) acts/omissions by A become acts/omissions of B; and
b) complaints already outstanding against A become complaints against B.
Unless an Ombudsman decides that this is, in his/her opinion, not fair and reasonable in all the circumstances of the case."
- An authorised person is defined in rule 1.7. That reads, where relevant, "somebody authorised in England and Wales to carry out a reserved legal activity at the time of the relevant act/omission…including…solicitors."
- The approach to decisions of the Legal Ombudsman has been considered recently in R (on the application of Crawford) v Legal Ombudsman  EWHC 182 where Popplewell J said at 25:
"Decisions of the Legal Ombudsman are to be read with a degree of benevolence (see R (Siborurema) v Office of the Independent Adjudicator  EWCA Civ 1365,  ELR 209 at 79) and should not be construed as if they were statutes or judgments, nor subject to pedantic exegesis (see Osmani v Camden LBC  HLR 325 at 38(9) per Auld LJ)."
- The facts are not in dispute although there is a disagreement as to the emphasis to be placed on certain of them.
- PL practised under the name or style of PS Levy & Co between 30 June 1978 and 31 July 2012. He was a sole practitioner.
- From 18 November 2004 to 31 July 2012 PL was also the sole director of a company known as PS Levy Limited. No complaint is made about PS Levy Limited and it is not relevant to the current proceedings.
- The records held by the Solicitors Regulatory Authority show that both PS Levy & Co and PS Levy Limited ceased business on 31 July 2012.
- By that time PL had received a complaint from Mrs Schroeder (at the time represented by her daughter, Ms Melody Schroeder) about his administration of a trust fund of which she was the beneficiary and in respect of which he was a trustee. That complaint was notified to PL by letter dated 18 July 2012 from Russell-Cooke Solicitors.
- That complaint, which has still to be resolved (and is on hold awaiting the outcome of the current proceedings), concerns services provided by PL in relation to the Emanuel Davis Will Trust. Mrs Schroeder's late father left his residuary estate on trust for her. The estate comprised a property in which Mrs Schroeder lived and limited further investments. As the trust fund became depleted over time Mrs Schroeder moved out of the property which was sold with a view to providing funds for the acquisition of a cheaper property from the proceeds of sale. Mrs Schroeder complained that PL:
i) Failed to place the proceeds of sale in an interest bearing account; and
ii) Charged excessive amounts for the administration of the trust generally.
- On 9 July 2012 a merger agreement was executed between the claimant, Kerman & Co Management (referred to in the agreement as "Kerman & Co"), PL and PS Levy & Co (referred to in the agreement as "PSL & Co"). The recitals B include:
"PL has previously worked for many years as a sole partner in the solicitors' partnership of PS Levy & Co and has now been offered and has agreed to accept consultancy terms through his company PS Levy Limited with Kerman & Co with effect from and including the commencement date (as defined below).
C. Kerman & Co have agreed to acquire certain assets, and Kerman & Co LLP has agreed to acquire the goodwill, of PSL & Co on the terms of this deed."
- The commencement date of the agreement is defined as being 1 August 2012. Goodwill is defined as the goodwill of the legal practice of PSL & Co including the right for Kerman & Co and Kerman & Co LLP to represent themselves as carrying on business in succession to PSL & Co and all rights of PSL & Co or PL in the name required to carry on business in succession to PSL & Co and the right to use the name on their letterhead and any other media or communication.
- The agreement included that Mr Levy would move into and operate from 200 Strand which was Kerman & Co LLP's practice address.
- Under clause 2.1 Kerman & Co Management Limited agreed to offer a service agreement to the one remaining member of PS Levy & Co's staff not made redundant.
- Under clause 3 PL and PS Levy & Co agreed that from 1 August 2012 the goodwill and name of PS Levy & Co would be transferred to K. PL acknowledged that the goodwill belonged to K and that neither he nor PS Levy & Co would claim in respect of it.
- Under clause 6.1, Kerman & Co Management Ltd and Kerman & Co LLP acknowledged and agreed that for at least twelve months from the commencement date the name of PS Levy & Co should be displayed on the letterhead used by PL.
- Under clause 7.1(a) Kerman & Co Management Ltd agreed, as a successor practice, that they would pay all professional indemnity cover in relation to past and current liabilities of PS Levy & Co. They agreed also to pay all storage charges relating to PS Levy & Co's deeds and files and that client account balances in relation to open files would be transferred to Kerman & Co LLP's bankers and Kerman & Co LLP would open new files for such clients.
- On 24 August 2012 Russell-Cooke wrote to Kerman & Co LLP asking for a copy of their complaints procedure as Ms Schroeder was considering making a formal complaint about PL. On 30 August 2012, Mr Ian Ogus responded, introducing himself as the firm's complaint partner. His letter continued, "If in the meantime you or your client wish to make a formal complaint can you please set out the relevant details in a letter to the writer who will investigate the matter further and respond."
- Correspondence then ensued between Russell-Cooke and either Mr Ogus or Mr Levy. The relevant parts of that are:
i) On 23 October 2012 Russell-Cooke formally raised a complaint;
ii) Mr Levy responded on Kerman & Co LLP's headed notepaper which included the phrase "Incorporating PS Levy & Co";
iii) On a number of occasions Mr Ogus wrote to Russell-Cooke on Kerman & Co LLP's headed paper which again included the heading "Incorporating PS Levy & Co";
iv) On 28 November 2012 Mr Ogus sought clarification as to whether the complaint was against PS Levy & Co, Kerman & Co LLP or against Mr Levy in his personal capacity as trustee. On 14 December 2012 Russell-Cooke confirmed that:
"The complaint is directed against Mr Levy in his capacity as solicitor to the trustees of the trust. As your firm incorporates PS Levy & Co and as you have in any event directed us to write to you, we don't see the significance of whether the complaint is against PS Levy or Kerman & Co.";
v) On 18 December 2012 Mr Ogus wrote to Russell-Cooke saying, "it appears…that these are matters relating to the action of the professional trustees and not matters of complaint against this firm." Mr Ogus asserted that the complaints were in relation to Mr Levy personally in his position as trustee;
vi) On 14 February 2013 Mr Ogus wrote to Russell-Cooke and stated, "Mr Levy's practice was incorporated into this firm early last August and purely on the basis that we are successor practice for indemnity insurance only";
- On 21 May 2013 Ms Schroeder (on behalf of her mother) complained to the defendant about the services of PS Levy & Co and the administration of the trust.
- On 30 May 2013 the defendant received confirmation from the Solicitors Regulatory Authority of Mr Levy's practice details. Their email reads:
"According to our records Peter Stephen Levy (84743) practised at two firms between August 1995 and June 2010:--
- From 30 June 1978 to 31 July 2012 he practised as a sole practitioner at PS Levy & Co (53927).
- From 18 November 2004 to 31 July 2012 he was the sole director at PS Levy Limited (407312).
Our records show that both firms closed on 30 July 2012. PS Levy & Co amalgamated with another firm, Kerman & Co LLP (382661). Mr Levy is currently practising as a consultant at Kerman & Co LLP. PS Levy Limited closed and files and papers were transferred to Kerman & Co LLP."
- There then followed correspondence between Kerman & Co LLP, PL and the defendant. During that correspondence PL confirmed in an email dated 29 August 2013 that the trust administration was carried out entirely by PS Levy & Co and that no work had been carried out by Kerman & Co.
- Mr Gary Garland, lead ombudsman at the Legal Ombudsman since late 2013, wrote to Mr Ogus on 4 November 2013 setting out his provisional view that Kerman & Co LLP was the successor to PS Levy & Co. Kerman & Co LLP had taken on matters that were ongoing and reopened them as Kerman & Co LLP files. On balance, the indicator suggested that, for present purposes, Kerman & Co LLP was a successor to PS Levy and Co.
- On 19 December 2013 Mr Garland sent his final decision to Mr Ogus. He stated:
"I am satisfied that Mr Levy when he ceased practice came to an agreement with your firm for it to take over his practice, lock stock and barrel. I understand your firm took custody of all the files from that firm and ongoing files that are being dealt with by and on behalf of your firm. In addition the letterhead of your firm did include a reference to 'Incorporating PS Levy & Co.' which in my view is a very strong indicator that your firm succeeded substantially to the whole of PS Levy & Co when Mr Levy chose to close down. I also note in the merger agreement between Kerman & Co and PS Levy & Co at point 7.1(a) that it details that you accepted liability as a successor for insurance purpose. Therefore, in my opinion your firm are a successor for the purposes of dealing with this complaint.
You suggest that the firm of PS Levy & Co still exists through the person of Mr Levy. It seems to me the correct question is whether the firm still exists, rather than Mr Levy who clearly does. In my view it is absolutely clear that PS Levy & Co does no longer exist as an entity, as your headed paper says, it has been incorporated into your firm."
- As a result Mr Garland concluded that Kerman & Co LLP was responsible for dealing with the Schroeder complaint.
- The parties are agreed that the issue is one of statutory interpretation. The following principles, therefore, apply:
a) The court must objectively ascertain the intention of parliament as expressed in the language used: R v Secretary of State for the Environment, Transport and the Regions ex p Spath Holme Ltd  2 AC 349 at 396.
b) A purposive approach is always part of the process of construction: Fothergill v Monarch Airlines  AC 251.
c) There remains limits on the extent to which a court should depart from the literal wording used: Stock v Frank Jones (Tipton) Ltd  1 WLR 231 at 237.
- The Claimant contends that the ombudsman determines complaints within his jurisdiction with reference to what he considers to be fair and reasonable in all the circumstances. The wide discretion vested in the ombudsman in dealing with a complaint is not an issue in these proceedings. The issue is whether the ombudsman had jurisdiction at all.
- A complaint is within the jurisdiction of the ombudsman scheme if:
a) The respondent was "at the relevant time…an authorised person in relation to an activity which was a reserved legal activity": section 128(1);
b) The services to which the complaint relates were provided by the respondent: section 128(4)(a). The services can include services provided by the respondent to a person acting as a personal representative or trustee where the complainant is a beneficiary of the trust in question.
- It is common ground that Mrs Schroeder was a beneficiary of the trust and so entitled to make a complaint against Mr Levy whether he was acting as a trustee or as a solicitor to the trust. At the relevant time Mr Levy was in practice as PS Levy & Co, an authorised person. The issue is whether Mrs Schroeder's complaint should be treated as a complaint for which Kerman & Co LLP is the respondent as a result of its later merger with PL and PS Levy and Co, albeit that Kerman & Co LLP had no involvement in the work for the Trust.
- That involves a consideration of section 132 (set out above). Section 132(2) is critical. That deals with circumstances in which the defendant may treat a complaint against one person (person A) as a complaint against another (person B). In particular, the issue involves a consideration of the meaning of the words "where…A ceases to exist" which are also found in rule 2.10.
- The claimant submits that PS Levy & Co was at all material times the trading or practising name of PL. PS Levy & Co is not a person. It is simply the trading name of Mr Levy. As such, PS Levy & Co cannot be person A for the purposes of section 132(2).
- Section 132(2) draws a distinction between person A ceasing to exist and another person succeeding to the business of A. The words "ceased to exist" must be given their ordinary meaning. In relation to a natural person it means when that person has died. That interpretation also accords with a purposive of construction of the statute.
- The fact that Kerman & Co LLP is the successor firm for insurance purposes ensures that the claims against Mr Levy are covered but that does not mean that Kerman & Co LLP should stand in the shoes of A for regulatory purposes or for the purposes of being a respondent to the complaint. If the distinction drawn within the section between the business and the person of A is to maintain any relevance for a sole practitioner then the person must cease to exist and his business must have transferred to person B for section 132(2) to be engaged.
- It is submitted that that interpretation is consistent with the purpose of section 132 and the complaints system. The outcome of a complaint to the defendant about poor service can be a remedy in compensation. The decision is made public. It is in the public interest that poor service is dealt with and that those who provide poor service should face public criticism for it. There is no public interest in a complaint being upheld against Kerman & Co LLP in relation to matters that had nothing to do with Kerman & Co LLP.
- On the defendant's construction PL could sell his practice to another firm, person B, join that firm for a period of time and then leave to set up a sole practice again having in the meantime passed a complaint against him onto the firm that had taken over his original practice. That would be an unfair consequence and would defeat the purpose of the regulatory regime. It is the person who is at fault that should have to deal with the complaint and take responsibility for the same.
- The defendant submits that there are three separate elements to the test under rule 2.10, namely:
i) Whether the authorised person A ceased to exist;
ii) If so, whether B succeeded to the whole/substantially the whole of A's business; and
iii) The application of the proviso by which is meant the phrase at the end of the rule, "unless an ombudsman decides that this is, in his/her opinion not fair and reasonable in all the circumstances of the case."
It is accepted that for the purposes of the current hearing that the proviso is not material.
- The defendant expressly addressed the question of whether "authorised person" A, which was PS Levy & Co, ceased to exist and found that it had. The ombudsman was not then required to ask himself whether Mr Levy in his personal capacity had ceased to exist.
- In discharging its functions the defendant is required, as far as reasonably practicable, to act in a way compatible with the regulatory objectives. Those include protecting and promoting the public interest and interest of consumers. The ombudsman scheme is intended to provide a quick and informal means of resolving disputes. The definition of the word "person" is deliberately non-exhaustive as set out in section 207(1). The definition is not limited to those strictly regarded as legal or natural persons and includes a body of persons (corporate or unincorporate).
- Section 132 and rule 2.10 are clearly drawn to cover the wide range of the ways in which lawyers organise themselves whether through LLPs, companies, sole practitioners and so forth.
- The explanatory notes to section 132 state:
"This section makes provision to ensure that a complaint does not fail simply because of a change of ownership of the partnership or body against which the complaint is made…."
- The defendant contends, first, that the note's use of the word "body" is consistent with its broader interpretation of "person". Second, the reference within the note to a change in ownership of the partnership would mean, as a partnership is not a legal person, that the section would apply only to LLPs or companies.
- The operative provision is rule 2.10 which uses the concept of "authorised person" that is defined in rule 1.7 which is essentially a list of relevant professions. The non-exhaustive definition of authorised person means that the statutory scheme can properly include an individual as sole practitioner operating through a particular firm. There is no definition of the word "firm" within the statutory scheme.
- The term "firm" is defined in the SRA handbook glossary as including a "recognised sole practitioner". The defendant's approach of treating PS Levy & Co as a firm in material respects separate from Mr Levy is entirely consistent with the regulatory framework.
- Alternatively, to the extent that PS Levy & Co is the same as Mr Levy the defendant was not constrained to conclude that the relevant person A would only cease to exist when Mr Levy died. The statutory context is concerned with complaints in relation to regulated entities so that it is entirely proper to interpret "ceases to exist" in relation to a sole practitioner as ceasing to exist for the purposes of the regulatory regime.
- Considering the implications of the claimant's interpretation has unfortunate consequences:
i) A former sole practitioner is not necessarily able or willing to deal with outstanding complaints. There is no necessary unfairness in person B bearing the burden of a complaint in respect of person A's conduct where the former now has all the benefits of the latter's business;
ii) On the claimant's interpretation there could only be continuity of complaint and, therefore, protection of the consumer in the case of a sole practitioner where he or she died before any transfer to person B;
iii) The scheme of investigating complaints assumes that the respondent is still a practising authorised person. That is evident from the fact that certain of the remedies depend entirely on the respondent practising. A sole practitioner may not have the assets to pay compensation whereas the successor firm is likely to be insured. The duty to co-operate with the ombudsman's investigation under section 145 only applies in relation to authorised persons. There is nothing odd in transferring liability for a complaint to another firm from the consumer protection perspective. If a sole practitioner's practice is wholly transferred to the other firm thereby taking over its goodwill and assets there is no unfairness in the firm also taking on the responsibility to deal with outstanding complaints.
Discussion and conclusions
- At the heart of the current dispute is the interpretation of section 132(2) LSA and rule 2.10 of the Scheme Rules.
- It is important though to put those provisions into context. The LSA Part 6 introduced, for the first time, the concept of a Legal Ombudsman to deal with complaints within its jurisdiction, against the legal profession fairly and with the minimum of formality. In discharging its functions the defendant must, so far as reasonably practicable, act in a way in which it considers is compatible with its regulatory objectives: see section 116.
- The regulatory objectives include the protection and promotion of the public interest, protection and promotion of the interests of consumers and the promotion of the maintenance of adherence to professional principles: pursuant to section 1(1). Professional principles include section 1(3) that authorised persons should maintain proper standards of work and that authorised persons should act in the best interests of their clients.
- It is within the context of consumer protection, public interest and the maintenance of appropriate standards that the relevant statutory provisions have to be interpreted. Section 132(2) was devised, in my judgment, as a consumer protection provision. It is entitled "Continuity of complaints". It was designed to ensure that the public was protected and that a complainant was not left without a remedy because the respondent to their complaint, person A, has ceased to exist, and another person, B, had succeeded to A's business in whole or in part. I do not accept, as the claimant submitted, in his skeleton argument that the subsections under section 132 are to be read entirely separately. They are to be read bearing in mind the heading "Continuity of complaints" and are to provide consumer protection in the event of changes effecting the respondent.
- The concern of the legislature was clear in that the scheme rules were required to make provision for circumstances seen as a potential lacuna in providing redress or the opportunity of redress to a consumer.
- Rule 2.10, made under section 132 clarifies, in the event of any doubt, that a person against whom a complaint is to be made is an "authorised person". That is someone defined under rule 1.7 as "someone authorised in England and Wales to carry out a reserved legal activity at the time of the relevant act or omission." As set out above under section 18 (1) of the LSA an "authorised person" means "(a) "a person" who is authorised to carry on the relevant activity by a relevant approved regulator in relation to the relevant activity…."
- The claimant submits, on a literal interpretation, that if Parliament had intended section 132 (2) to refer to the business of person A it would not have drawn the distinction it does within the section. A practising name is required for a sole practitioner to achieve authorisation under regulation 4 of the Solicitors Regulatory Authority Practising Regulations 2011. What has happened here is that PL has adopted a name for the firm in which he practised as a sole practitioner, namely, PS Levy & Co.
- On a purposive interpretation the claimant submits that proper accountability means that the person who gave rise to the complaint should be responsible for it whilst they exist. Section 131 of the LSA shows that there is accountability on the part of a lawyer; as an individual as well as on their practice. It cannot be right that a sole practitioner can move to a different firm and be in a better position in terms of avoiding accountability than they would be as an individual.
- In my judgment those submissions do not fully comprehend the nature of the statutory scheme. It is one to establish a statutory ombudsman. An ombudsman's concern, as reflected in Part 6, is to provide redress or the opportunity for redress for the consumer, when that is appropriate. Where, in the course of the investigation, conduct may be discovered which would warrant investigation in a different disciplinary context a referral is to be made to the relevant regulatory body. The scheme is not dealing with matters of professional discipline and accountability to the profession. It is dealing with consumer complaints.
- An "authorised person" is given a broad description under both rule 1.7 of the scheme rules and section 18 of the LSA. In my judgment, that is quite deliberate and is to cover the range of situations in which lawyers could organise themselves after the coming into effect of the LSA. Its broad reach shows that a "person" is not restricted to an individual human being.
- Regulation 4 of the Solicitors Regulatory Authority Practising Regulations sets out the authorisation procedures for sole practitioners. Under regulation 4.2 a sole practitioner may be authorised (under regulation 4.2(a)(iii)) if, amongst other requirements, the applicant has adopted a name under which his or her firm is to be recognised and which will comply with chapter 8 of the SRA code of conduct (publicity). The regulation sets out what is needed on the part of a sole practitioner to be authorised and thus able to pursue legal practice. As a result of the authorisation the sole practitioner's firm becomes subject to the solicitors' regulatory regime. That process is entirely distinct from the status of sole practitioner as a human being.
- Similarly, the phrase "ceasing to exist" has to be read in context. In my judgment, it means the cessation of the firm or legal entity subject to the regulatory regime and/or if different (and I do not think that there is a difference) the "authorised person". It is unrealistic to read the statutory provisions as referring to an individual human being.
- The consequence of the claimant's argument would be that the only way a sole practitioner would cease to exist would be upon death. I accept the defendant's submission that Parliament cannot have intended such a quixotic result.
- Further, under section 137 where a determination is made under the ombudsman's scheme that may contain a direction that the respondent make an apology to the complainant, a direction that fees to which the respondent was entitled are limited to an amount as may be specified in the direction, a direction that the respondent pay compensation, a direction that the respondent secure the rectification at its expense of any such error, omission or deficiency arising in connection with the matter investigated and a direction that the respondent take at its expense such other action in the interests of the complainant as the ombudsman may specify. All of those requirements, with the exception of an apology, assume that the respondent remains an "authorised person" practising in the legal business. The requirements would make little sense in relation to a retired sole practitioner. That illustrates the fallacy in the claimant's submissions.
- It is of note that in the email from the Solicitors Regulatory Authority of 30 May 2013 that their records show that PL practised at two firms between August 1995 and June 2010. Both firms closed on 30 July 2012 when PS Levy & Co amalgamated with another firm, Kerman & Co LLP. Mr Levy himself said in an email of 29 August 2013 that the trust administration on the Emanuel Davis Will Trust was carried out entirely by PS Levy & Co. That entity, it is common ground, ceased to exist on its closure. As from 1 August 2012 the merger agreement between PL, PS Levy & Co, Kerman & Co LLP and Kerman & Co Management Ltd came into effect. The consequence of that was that Kerman & Co LLP acquired the business of PS Levy & Co. There can be no doubt, therefore, that Kerman & Co LLP acquired the business or most of it of PS Levy & Co and that PS Levy & Co ceased to exist on 30 July 2012. That was the end of that "authorised person".
- The remaining question is whether the continued existence of PL as a human being beyond 30 July 2012 affects the position which would otherwise be clear, namely, that Kerman & Co LLP would be the proper respondent to the complaint due to the transfer of business from PS Levy & Co to Kerman & Co LLP. As Kerman & Co LLP received the benefit and goodwill of the business it cannot be unfair, in my judgment, if they also have to accept the burden, which in this case is the complaint of Mrs Schroeder. If there is an adverse determination of the complaint it is said that the damage to Kerman & Co LLP is reputational. It is within the discretion of the defendant as to whether it publishes its decisions. It may be that, if there were such an outcome, the defendant would exercise its discretion in the circumstances of this case, not to publish such a finding or, if it did so, the publication would be in such terms as to make it clear that the finding arose from PL's previous employment before he joined Kerman & Co LLP. It seems to me that there are ways to temper the concern expressed by the claimant.
- Section 132 of the LSA is not the most pellucid piece of drafting. The Scheme Rules do not clarify its meaning to any great extent, if at all. On analysis though its meaning is discernible. It is not intended to have the artificial and strained meaning placed upon it by the claimant in this action. Should, at any time the Scheme Rules be revised, it may be sensible to consider clarifying rule 2.10.
- I have taken into account all the other points raised in argument but they do not assist on the narrow point at issue between the parties.
- In my judgment it is clear that the defendant has jurisdiction in which to proceed to investigate the complaint in which Kerman & Co LLP is the appropriately named respondent.
- I invite submissions on the final order and costs.
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