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Cite as: [2012] EWHC 2843 (QB)

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Neutral Citation Number: [2012] EWHC 2843 (QB)
Case No: HQ 10 X 04631

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL
19th April 2012

B e f o r e :

MRS. JUSTICE SHARP
____________________

Between:
CHRISTOPHER ADRIAN GADD
Claimant
- and -

THE LAW SOCIETY
Defendant

____________________

Digital Transcription by Marten Walsh Cherer Ltd.,
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____________________

MR. JIDE LANLIHIN and MS. ALESSANDRA WILLIAMS (instructed by Society of Black Lawyers) for the Claimant
MR. TIMOTHY DUTTON QC (instructed by Messrs. Bevan Brittan) for the Defendant

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    MRS. JUSTICE SHARP:

  1. There are cross-applications before the court by the defendant, the Law Society, upon its adjourned application to strike out the claim pursuant to CPR 3.4(2) and/or for summary judgment pursuant to CPR 24.2 and by the Claimant, Christopher Gadd, a solicitor, for permission to amend the claim. Mr. Timothy Dutton QC appears on behalf of the Law Society. Mr. Jide Lanlihin and Ms. Alessandra Williams appear for Mr. Gadd.
  2. The claim as originally formulated had two prongs: first, a claim under section 8 of the Human Rights Act 1998 for damages for breach of Article 6 and Article 1 of the First Protocol to the European Convention on Human Rights and, second, for breach of statutory duty pursuant to section 28(3) of the Legal Services Act 2007.
  3. It arises from a "no notice" intervention made by the Solicitors Regulation Authority (the "SRA") into the Claimant's practice as a solicitor. The claim under the HRA is that the Claimant's Article 6 rights were breached by the statutory eight-day time limit to challenge the intervention which it is alleged precluded his access to the court and to an Article 6 compliant hearing (I shall call this "the limitation point") and a follow on claim that the unreasonable limitation period, by depriving the Claimant of a right to a hearing under Article 6, also deprived him of his property rights in the firm Christopher Gadd Limited in breach of Article 1 of the First Protocol: see Schedule 1 of the HRA.
  4. At a hearing before Master McCloud on 8th September 2011 the Master made certain orders in this matter by consent. The claims made by the Claimant under section 28 of the Legal Services Act 2007 were struck out following an application made by the defendant that they should be because they were plainly unarguable. This left one issue only to be determined which the Master directed should be dealt with by a High Court Judge, namely, whether the time limit contained in paragraph 6(4) of Schedule 1 to the Solicitor Act 1974 was incompatible with the HRA. The Master also directed that notice should be given with the Particulars of Claim by the Claimant to the Crown. This was done in a letter to the Treasury Solicitor dated 18th September 2011. In fact the response from the Treasury Solicitor in a letter dated 27th September 2011 was that the documents provided, including the pleadings, did not provide particulars of incompatibility and, in essence, that it would await the outcome of this application.
  5. There matters stood until last Friday, 13th April 2012, when the Claimant served on the defendant's solicitors an application for permission to amend the Particulars of Claim supported by a witness statement dated 12th April 2012 from Mr. Gadd. That application is opposed by the defendant. In summary it is said that this proposed amendment, vague as it is, is an attempt to get round the fact that the Claimant never sought to challenge the intervention into his practice, and is now casting around to find ways of making a claim, and that it should be refused on the ground that the prospects of success of the claims in the draft amended Particulars of Claim are not sufficient to justify the grant of permission; see CPR 17.3.6 and 24.2.
  6. By the proposed amendments the Claimant seeks to advance additional claims "pursuant to common law principles of natural justice and the rule of law; misfeasance in public office" and to reintroduce a claim for breach of statutory duty, but now by a claim under section 22 of the Legislative and Regulatory Reform Act 2006 and Schedule 1, Part I and section 1 and Part II s35 of the Solicitors Act 1974.
  7. Before dealing with the application itself I should refer, in addition, to the relevant statutory framework and regulatory background. The circumstances in which the Law Society, through the SRA, can intervene in a solicitor's practice are set out in Schedule 1 of the Solicitors Act 1974, the material parts of which are as follows:
  8. "(1) Subject to sub–paragraph (2), the powers conferred by Part II of this Schedule shall be exercisable where—
    (a) the Society has reason to suspect dishonesty on the part of—
    (i) a solicitor, or
    (ii) an employee of a solicitor, or
    (iii) the personal representatives of a deceased solicitor,
    in connection with that solicitor's practice or former practice or in connection with any trust of which that solicitor is or formerly was a trustee or that employee is or was a trustee in his capacity as such an employee;
    (aa) the Society has reason to suspect dishonesty on the part of a solicitor ('S') in connection with—
    (i) the business of any person of whom S is or was an employee, or of any body of which S is or was a manager, or
    (ii) any business which is or was carried on by S as a sole trader;
    (b) the Society considers that there has been undue delay on the part of the personal representatives of a deceased solicitor who immediately before his death was practising as a sole solicitor in connection with that solicitor's practice or in connection with any trust;
    (c) the Society is satisfied that a solicitor has failed to comply with rules made by virtue of section 31, 32 or 37(2)(c);
    (d) a solicitor has been adjudged bankrupt or has made a composition or arrangement with his creditors;
    (e) a solicitor has been committed to prison in any civil or criminal proceedings;
    (ee) the Society is satisfied that a sole solicitor is incapacitated by illness, injury or accident to such an extent as to be unable to attend to his practice;
    (f) a solicitor lacks capacity (within the meaning of the Mental Capacity Act 2005) to act as a solicitor and powers under sections 15 to 20 or section 48 of that Act are exercisable in relation to him;
    (g) the name of a solicitor has been removed from or struck off the roll or a solicitor has been suspended from practice.
    (h) the Society is satisfied that a ... solicitor has abandoned his practice;
    (i) the Society is satisfied that a sole solicitor is incapacitated by age to such an extent as to be unable to attend to his practice;
    (j) any power conferred by this Schedule has been exercised in relation to a sole solicitor by virtue of sub–paragraph (1)(a) and he has acted as a sole solicitor within the period of eighteen months beginning with the date on which it was so exercised;
    (k) the Society is satisfied that a person has acted as a solicitor at a time when he did not have a practising certificate which was in force;
    (l) the Society is satisfied that a solicitor has failed to comply with any condition, subject to which his practising certificate was granted or otherwise has effect, to the effect that he may act as a solicitor only —
    (i) in employment which is approved by the Society in connection with the imposition of that condition;
    (ii) as a member of a partnership which is so approved;
    (iii) as a manager of a body recognised by the Society under section 9 of the Administration of Justice Act 1985 and so approved; or
    (iv) in any specified combination of those ways.
    (m) the Society is satisfied that it is necessary to exercise the powers conferred by Part 2 of this Schedule (or any of them) in relation to a solicitor to protect—
    (i) the interests of clients (or former or potential clients) of the solicitor or his firm, or
    (ii) the interests of the beneficiaries of any trust of which the solicitor is or was a trustee.
    (1A) In sub-paragraph (1) 'manager' has the same meaning as in the Legal Services Act 2007 (see section 207 of that Act)."
  9. Carol Westrop is the Head of Legal Policy at the SRA. In a witness statement before the court she says this:
  10. "6. The power to intervene in a solicitor's practice is an important element of the SRA's overall regulatory scheme in that it enables the SRA immediately to take control of a solicitor's practiced where it is necessary to do so in the interests of clients and the public interest more generally.
    7. The effect of an intervention is necessarily draconian. It is, however, designed to enable the SRA to act swiftly where statutory grounds have arisen in order to protect clients' interests. The courts have considered the statutory powers on intervention on numerous occasions and in particular the Court of Appeal has done so in Holder v. The Law Society [2003] 1 WLR 1059.
    8. The purpose of an intervention is to:
    8.1 protect the interests of clients or prospective clients;
    8.2 enable the SRA to step in so as to prevent any escalation of default: i.e. to halt any serious problems that have arisen or may arise within the practice;
    8.3 protect members of the public; and
    8.4 protect the public interest and maintain the confidence in the provision of legal services."
  11. The statutory power to intervene in a solicitor's practice is delegated by the SRA to a Panel who adjudicate as a Sub-Committee and intervention can take place following the passing of a resolution to intervene by the Committee. Before making any such resolution to intervene in a solicitor's practice, the Committee must be satisfied that one or more of the statutory grounds for intervention exist and must balance the interests of the clients and the public with the inevitably serious consequences for the solicitor concerned.
  12. The statutory right of challenge provided is set out in paragraph 6(4) of Schedule 1. This provides as follows:
  13. "Within 8 days of the service of a notice under subparagraph (3), the person on whom it was served, on giving not less than 48 hours' notice in writing to the Society and (if the notice gives the name of the solicitor instructed by the Society) to that solicitor, may apply to the High Court for an order directing the Society to withdraw the notice."
  14. Pursuant to CPR 67.4 such challenges are reserved to the Chancery Division of the High Court and are to be made by way of a Part 8 claim.
  15. The factual background to the claim is as follows. Mr. Gadd was a member of WB Legal LLP ("WBL") between 31st August 2008 and 30th March 2009. On 3rd April 2009 WBL entered into administration. Mr. Gadd had also been a director of WB Legal Training Limited ("WBLTL") since 31st August 2008. WBLTL had been a member of WBL since 1st October 2007. On 2nd April 2009, that is at the same time as WBL entered into administration, WBLTL was renamed Christopher Gadd Limited ("CGL"). Thereafter Mr. Gadd practised as a solicitor through CGL as a recognised body under section 9 of the Administration of Justice Act 1985.
  16. In his witness statement to the Solicitors Disciplinary Tribunal, at a hearing which took place in 2010, Mr. Gadd said in relation to this matter as follows:
  17. "I then opened my own firm, Christopher Gadd Limited, using the vehicle of WBLTL which was already authorised by the SRA to trade as a solicitor's practice."

  18. Mr. Mark Bronzite was a member of WBL between 9th May 2007 and 15th January 2009 and a Director of WBLTL between 25th September 2008 and 13th January 2009. He was struck off as a solicitor on 9th September 2009. Mr. Paul Windsor was a member of WBL from 15th January 2009 to 30th March 2009 and a Director of WBLTL/CGL between 30th January 2009 and 2nd September 2009.
  19. On 7th December 2009 an Adjudicating Panel of the Law Society resolved to intervene in the practices or former practices of Mr. Gadd and Mr. Windsor and intervene into WBL. The Law Society resolved to intervene into Mr. Gadd's practice because: (1) Mr. Gadd had failed to comply with the Solicitors' Accounts Rules 1998 and/or the Solicitors' Code of Conduct 1997; (2) it was satisfied that it was necessary to intervene to protect the interests of the clients of Mr. Gadd or his firm or the interests of beneficiaries of any property of which Mr. Gadd is or was a trustee.
  20. The relevant background to the intervention can be summarised as follows. The SRA convened an investigation into WBL, Mr. Gadd and Mr. Windsor on 18th November 2009. The investigation concluded, amongst other things, that: (1) CGL appeared to be the successor practice to WBL and that it was unclear how an orderly closure of WBL had been effected after it had entered into administration; (2) The name change from WBLTL to CGL appeared to be a "mechanism" by which CGL became the sole practice of Mr. Gadd initially operating from the premises of WBL before relocating elsewhere, and that WBL did not appear to have been effectively closed; (3) The administrator of WBL had reported to the SRA that Mr. Gadd had not been helpful in effecting the administration and that the administrators had received a number of enquiries and complaints from former clients of WBL; (4) The client account of WBL appeared to have a shortfall of almost £240,000.
  21. An SRA caseworker, Ms. Davinia Lea, then produced a case note of the basis of the investigation which had taken place and which had resulted in the Findings to which I have referred. The case note prepared by Ms. Lea concluded as follows:
  22. "(1) WBL was in administration and WBL's client account had been frozen by the administrators, Begbies Traynor, since June 2009 and was therefore under the control of a non-solicitor in breach of Rules 1, 6 and 27 of the Solicitors' Accounts Rules 1998 and Rules 1, 5.01 and 5.03 of the Solicitors' Code of Conduct 1997.
    (2) The client account of WBL had a minimum cash shortage of £237,881.80 as at the 19th October 2009 and that this shortfall had not been replaced in breach of Rules 1 and 7 of the Solicitors' Accounts Rules 1998.
    (3) Some of the client files of WBL had been uplifted by the administrators of WBL and a document storage company had exercised a lien over archived files until a debt owed to them by WBL was paid. This was specified as a breach of Rules 1, 4.01, 5.01 and 5.03 of the Solicitors' Code of Conduct 1997 since clients' confidential information was under the control of a non-solicitor.
    (4) There was accordingly a concern that WBL's books of account were not kept in accordance with the Solicitors' Accounts Rules 1998 and that client money and interests had not been properly protected."
  23. The case note also stated that:
  24. "Due to the urgency of this matter, namely that the firm's client account is not under the control of a solicitor and the client account shortage of £237,881.80, no more information has been sought of Mr. Gadd or his former member, Mr. Windsor."
  25. I note, although it is slightly out of chronological order at this point, that a Partnership Dissolution/Retirement Deed dated 19th January 2009 (of which there is only an incomplete copy before the court) between Mr. Bronzite and Mr. Gadd provided that all the assets of the partnership would belong to Mr. Gadd alone. In addition, Mr. Gadd was to say that he had no involvement with WBL's accounting records until he became a member in 2008 and even then he only saw the accounting records which his partner, Mr. Bronzite, permitted him to see. It is to be noted however that some of the accounting irregularities, identified by the SRA arose after Mr. Bronzite had resigned from WBL: see in particular matters LO171001 and GO147001 referred to in the Findings of the Disciplinary Tribunal.
  26. The intervention was carried out on the 8th December 2009. It had the effect of suspending the Claimant's practising certificate under section 15 of the Solicitors Act 1974. The Claimant applied for his practising certificate to be reinstated and on 4th January 2010 his practising certificate was restored subject to conditions which required that he could act as a solicitor only in employment which had first been approved by the SRA and other strict conditions which were laid down. These were he could:
  27. (1) Act as a solicitor only in employment which had been first approved by the Solicitors Regulation Authority;
    (2) He was not a sole practitioner or a manager or owner of a recognised body;
    (3) He did not hold, receive or have access to client monies save for receiving cheques payable to his SRA approved employer;
    (4) He was not a signatory to any client or office account and did not have the power to authorise electronic payments or transfers from any client or office account;
    (5) He did not act for any clients or accept any instructions in connection with personal injury matters;
    (6) He did not have any responsibility for nor was she involved in the training, supervision or support of any trainee solicitor;
    (7) He should immediately inform any actual or prospective employer of these conditions and the reasons for their imposition.
  28. The Claimant appealed the decision of the 4th January 2010 and on 24th February 2010 his appeal was allowed in part by varying Condition 6 only, but otherwise maintaining the conditions. The Claimant had a right of appeal to the High Court under section 13 of the Solicitors Act 1974, about which he was reminded by letter dated 24th February 2010, but he did not exercise his right of appeal.
  29. On 13th December 2010 the Solicitors Disciplinary Tribunal ordered that the Claimant be suspended from practice as a solicitor for a period of six months. The Claimant had admitted nine breaches of the rules governing his practice including breaches of Rules 1.05 of the Solicitors' Code of Conduct 2007 and Rule 32 of the Solicitors' Accounts Rules (failure to keep accounts properly written up); failing to act in his clients' best interests contrary to Rules 1.04, 1.05 and 1.06 of the Solicitors' Code of Conduct; permitting non-solicitor third parties to exercise control over the confidential client files at his practice, contrary to Rules 1.04, 1.06 and 4.01 of the Solicitors' Code of Conduct; permitting monies to be withdrawn from the client account otherwise than in accordance with Rule 22 of the Solicitors' Accounts Rules; failing to deal with the SRA in an open, prompt and co-operative manner, contrary to Rule 20.05 of the Solicitors' Code of Conduct; failing to pay professional disbursements, contrary to Rule 1.06 of the Solicitors' Code of Conduct; and failing to comply with a professional undertaking, contrary to Rules 10.05 and 1.06 of the Solicitors' Code of Conduct.
  30. It is right to record at this point some earlier matters which related to Mr. Gadd and the SRA. There had been an earlier investigation into WBL by the SRA which was begun on 7th August 2007. The outcome of the inspection was reported in a Forensic Investigation Report dated 20th November 2008. It recorded that there had been a number of breaches of the Solicitors' Accounts Rules 1998 in relation to WBL's accounts including a minimum cash shortage of £58,098.66 on the client account. On 1st June 2009 an Adjudicator considered the first FIR and found Mr. Gadd in breach of the Solicitors' Accounts Rules 1998 although this finding was attributable in part to the fact that Mr. Gadd had become personally responsible for the rectification of previous breaches of the Solicitors' Accounts Rules when he became a principal of WBL. The Adjudicator issued a severe reprimand to Mr. Gadd in respect of these breaches.
  31. On 20th August 2009 an Adjudicator also decided that WBL, and specifically Mr. Gadd, had provided inadequate professional services to a client, Ms. H. On 6th November 2009 further matters were considered in relation to Mr. Gadd. These were allegations that: (1) Mr. Gadd had failed to pay fees due to Premex Services Limited, ("PSL") resulting in a County Court judgment against WBL; (2) Mr. Gadd had failed to comply with an undertaking dated 24th February 2009 to pay 15 instalments in respect of fees due to PSL; (3) Mr. Gadd had failed to co-operate with the SRA by failing to respond to letters of enquiry and further correspondence.
  32. In the result the Adjudicator decided to refer Mr. Gadd's conduct to the Solicitor's Disciplinary Tribunal. These matters, together with the matters which arose as a result of the investigation which took place on 18th November 2009, were all matters which were considered and adjudicated upon by the Solicitor's Disciplinary Tribunal on 13th December 2010.
  33. In the event, four of the matters which Mr. Gadd had admitted related to the second Forensic Investigation Report which had taken place in November 2009. Specifically these were: (1) that Mr. Gadd had failed to take adequate steps to effectively close down the practice of WBL and, in particular, to safeguard client moneys and/or practice papers following the appointment of administrators in April 2009; (2) Mr. Gadd had permitted non-solicitor third parties (that is the administrators of WBL) to exercise control over confidential files; (3) that WBL/CGL had failed to keep adequate accounting records in accordance with Rule 32 of the Solicitors' Accounts Rules 1998; and (4) Mr. Gadd had acted in breach of the Solicitors' Accounts Rules by permitting funds to be withdrawn from client account otherwise than in accordance with Rule 22 of the Solicitors' Accounts Rules and/or he failed to rectify previous breaches of the rules and/or had failed to account for sums due to clients.
  34. Against that background I turn to the matters directly in issue before me. First, to the limitation point. Mr. Dutton submits that the claim that the Claimant's human rights have been breached because there is an 8-day period within which an application must be made to the court to challenge the intervention is hopeless and doomed to failure.
  35. I agree for the three reasons he advances, which can be encapsulated as follows. First, it is established law that the statutory scheme for intervention is compatible with the ECHR: see Holder v. The Law Society [2003] 1 WLR 1059 at paragraphs 24 to 27 and 31 to 33 per Carnwath LJ. See also Sheikh v. The Law Society [2006] EWCA (Civ) 1577 and, most recently, Adams v. The Law Society [2012] EWHC 980 (QB), a decision of Foskett J on 17th April 2012 at paragraph 21.
  36. Second, in any event the limitation period for challenging an intervention is prescribed by statute not by the Law Society, so the Law Society cannot be held liable for damages or any breaches of human rights that might entail.
  37. Third, the claim is academic. No claim was brought within eight days or within any period which the Claimant himself suggests would be a reasonable period of limitation. The claim form was issued on 6th December 2010. The Claimant says in paragraph 138 of his witness statement of 9th April 2012: "If I was asked to suggest a period I would invite the court to adopt six months although three months is tenable." He waited however, for a period of 12 months before challenging the intervention and then did so by a wholly different and, in the circumstances, inappropriate procedure.
  38. I should add that cogent reasons are given by Ms. Westrop in her witness statement of 26th January 2012 as to why it is in the public interest (and in particular, in the interests of intervening solicitor's clients, the intervening solicitor and the SRA) to set a time limit on the solicitor's right to challenge an intervention. At paragraph 12 to 14 she says as follows:
  39. "12. It is in the public interest to set a time limit on a solicitor's right to contest the intervention. To do otherwise would not be practical or fair to the intervened solicitor's clients but also to the intervened solicitor. Upon an intervention the following need to be attended to as soon as possible:
    12.1 Client accounts need to be investigated and, where necessary, reconciled;
    12.2 Client files and papers need to be managed by the intervention agents which will normally include dealing with any urgent matters and arranging for non urgent matters to be returned to the clients or their new solicitors;
    12.3 Client funds, which vest automatically in the Law Society, need to be dealt with;
    12.4 Clients need to be informed of the position and once the position of the client account determined, funds returned to clients as necessary;
    12.5 Any applications to the Compensation Fund need to be looked into.
    13. There is in any solicitor's practice a degree of urgency about matters which need to be attended to. For example, clients may have transactions due for completion, trials which are imminent, deportation orders, or funds deposited with a solicitor for a house sale and purchase where a family is in the process of moving and so on. Further, the SRA as a regulator exercising statutory powers and acting in the public interest needs to be able to distribute the monies which it holds on statutory trust, and to discharge its other duties, knowing that when doing so it is acting lawfully and that the intervention is not liable to be set aside. Of necessity these two important public interests require that the time within which a challenge is made to the High Court is necessarily a short one.
    14. It would accordingly not be in either the public interest or solicitor's interest to leave the matter in abeyance. If an intervention is successfully contested within a reasonable timeframe then the intervention can 'unravel' and client monies and client files can be returned to the solicitor who can continue to practise at the firm. It is therefore in the interests of the clients, the solicitor, and the SRA that the time scale for the exercise of the right of challenge to be a short one.
  40. She also sets out cogent reasons why the eight-day period is a reasonable and proportionate one. At paragraph 15 of her witness statement she says as follows:
  41. "The 8 day time limit to challenge the intervention is entirely reasonable and proportionate in the circumstances and can therefore not be deemed a breach of a solicitor's human rights for the following reasons:
    15.1 It is set by statute and accordingly is primary legislation;
    15.2 By virtue of the Administration of Justice Act 1985 the time limit was in fact reduced from 14 days to 8 days. Prior to the amendment to the Solicitors Act 1974 the reduction would have been the subject of careful consideration and significant consultation by the government;
    15.3 An 8 day time limit has, by virtue of the Legal Services Act 2007, also been recently applied by parliament in relation to a Licensed Body's ability to challenge the Licensing Authority's decision to intervene;
    15.4 The time limit of 8 days gives a solicitor sufficient time to take stock of the situation, to obtain representation, if necessary, and make an application to the High Court;
    15.5 Such application is not prescriptive in what it must allege (other than to notify the court that the intervention is contested) and there is no reason why it cannot be brief and later amended or added to by way of supplementary evidence;
    15.6 The application may be made to any UK district registry and/or same day service may be effected by fax or by hand;
    15.7 It would not be in the public interest, for the reasons set out in paragraphs 12 and 13 above, to leave the period of challenge any longer."
  42. Mr. Lanlihin's response, as I understand it, is this, if I may summarise. He says this is a unique case. He says that Mr. Gadd is not challenging the intervention as such, particularly not in terms of the detail, but the process and the decision-making which led up to the intervention and, in particular, into the intervention into CGL, as to which he says there were no grounds whatever for intervening.
  43. I have in mind the many points made about this in the skeleton argument prepared by Mr. Gadd and in his witness statement for this application including the following. Mr. Gadd says he was, in effect, a whistle-blower in respect of the wrongdoing by Mr. Bronzite at WBL and had co-operated with the SRA. He says the defaults were all or effectively all those committed by Mr. Bronzite/WBL. CGL had none of the clients of WBL save for a few in relation to conveyancing and probate matters which the administrators of WBL had asked him to deal with. CGL had been given a clean bill of health by the SRA and there was nothing which justified any intervention into it. He refers in particular to a report of September 2009 by the Practice Standards Board Unit (the "PSU") of the SRA into CGL and its findings which he submits did not give rise to anything which would have warranted an intervention into CGL. In so far as files of former clients of WBL were handed to the administrators, he said he had no choice in all the circumstances. He says, in addition, that the case note which was put before the Panel by Ms. Lea was partial and inaccurate. Moreover, The Panel was or may have been biased in a number of ways. In addition he said it failed to scrutinise or assess the case for intervention against him and/or CGL. In the event the defalcations for which he was held responsible by the SRA were those of WBL and not of CGL save in some minor respects. He says there was no ground for the Panel concluding that client files or client moneys would be put at risk if he was notified in advance of the concerns of the SRA either by being given the case note or the separate Forensic Investigation Report which had been conducted into WBL/CGL. And he should therefore have been given the opportunity to see and comment on the Reports before they were acted upon by the Panel of adjudicators in the way that they did.
  44. When I asked Mr. Lanlihin during the course of argument why these matters could not have been raised via the statutory procedure, he said Mr. Gadd was effectively disabled from making an application because the effect of the intervention was to freeze the assets of CGL and thus he did not have the means to do so.
  45. None of the matters raised disturb in the slightest the compelling grounds which I have already referred to for concluding this aspect of the Claimant's claim is unarguable. The distinctions that Mr. Lanlihin seeks to draw between a challenge to the intervention and a challenge to the processes which led to it or even to its consequences are, in my view, distinctions without a difference. I also do not accept the distinction sought to be drawn between the position of WBL and CGL. It is plain from the caseworker's note before the Panel and its resolution that the Panel knew Mr. Gadd was practising through CGL: that the Panel resolved to intervene into Mr. Gadd's former and existing practice as a solicitor, that it decided to suspend his practising certificate (having considered whether to exercise its discretion by making an order under section 15(1)(b) of the Solicitors Act 1974 not to: see Resolution (iii)) and that since Mr. Gadd was the sole principal of CGL at the time it necessarily followed, as night follows day, that there would be an intervention into CGL too. The Panel was well aware, of the position of Mr. Gadd vis a vis CGL and of the effect therefore of the resolution that was passed.
  46. That is sufficient to deal with the point. But I should add that there is nothing surprising or "unique" in any of this. A solicitor can, after all, practise as a principal of a company or an LLP if he has a practising certificate. As a matter of practical reality, if there is evidence that as a matter of history he has been in breach of the Solicitors' Accounts Rules or other rules, then a decision to intervene will inevitably mean his practice will be intervened into. The suggestion that Mr. Gadd's position, having regard to the history, could be somehow be detached so as to permit him to carry on practising through CGL, particularly having regard to the concerns raised that CGL was a successor practice to WBL is, in my judgment, misconceived.
  47. All the other matters of which complaint is made are matters which could and should have been dealt with by a challenge to the intervention via the statutory procedure and within the time limit laid down by Parliament (and in the course of which disclosure would have been provided of the documents Mr. Gadd has since been given or asked for). I do not accept there is anything to be found in the judgment of Staughton LJ in Holder v. The Law Society which casts doubt on the proposition that the statutory scheme is compatible with the ECHR. As I have already indicated, this is sufficient to dispose of the argument made by Mr. Gadd on this aspect of his claim.
  48. It is submitted and, in my view with justification, that what is being attempted here is a collateral challenge to the intervention process by other means and to circumvent the statutory limitation on the right of challenge. It is simply not open to the Claimant to do this. His attempts to do so amount, in the circumstances, to an abuse of the process.
  49. I should add that the Claimant was well aware that if he wished to challenge the intervention he should do so within the eight-day time limit. I refer in this context to the evidence of Ms. Westrop at paragraph 16 of her witness statement, in particular relating to communication between Mr. Rinesh Pankhania, an Intervention Officer at the SRA, and Mr. Gadd by telephone on 7th December 2009 and at a meeting on 8th December 2009 attended by Mr. Pankhania, Ms. Dryden of Blake Lapthorn, solicitors who were instructed by the SRA as the intervention agent, and Mr. Gadd; and to a detailed attendance note which refers to a discussion of the "right to challenge the intervention". All that was required was the lodging of the Part 8 claim.
  50. As to resources, as Mr. Dutton points out, there is in fact no evidence at all before the court that Mr. Gadd was a person who lacked the resources to challenge the intervention, in particular when all that was required, at least in the first instance, was the court fee to make a Part 8 claim. But in any event it would have been open to Mr. Gadd, (had he wished to do so and being genuinely unable to fund the court fee or other requirements from his own resources) to apply to the SRA's nominated agent dealing with the affairs of CGL for the release of some of the frozen practice money of CGL which he would have been entitled to use for this purpose.
  51. The argument is not therefore one which, to put it colloquially, can get off the ground on the facts, and it seems to me that Mr. Dutton is correct in submitting that in reality Mr. Gadd did not think about mounting a challenge until late 2010 and this amounts to an ex post facto excuse for not going down the appropriate statutory route.
  52. Finally, it is also right to record that perhaps not surprisingly, the court's attention has been drawn to some of the underlying facts in relation to some of the matters raised by Mr. Gadd as the Law Society simply does not accept that his overall characterisation of some of the matters he relies on is accurate. It is said, for example, that the PSE did not give CGL a clean bill of health. It is also said that in the circumstances (and in particular the fact that Mr. Gadd had already been referred to the SRA by the time of the intervention for independent matters, some of which he subsequently admitted) his presentation of himself as someone with a good compliance record is simply wrong. It is further said that the intervention was fully justified on the facts having regard to the evidence of the investigation of the second FIR and the public interest considerations which arose, when balanced against the serious consequences of the intervention for a solicitor. All these matters it is said were carefully considered having regard to the two-stage test applied by the courts in determining whether to accede to an intervention challenge: see Dooley v. The Law Society (unreported, 15th September 2000) per Neuberger J, as he then was. It is further said that it was plainly appropriate for the Law Society to intervene in Mr. Gadd's practice and therefore, incidentally, into that of CGL and WBL as a matter of urgency in order to protect the interest of the former clients of WBL.
  53. In the event, it is not necessary for me to express a view about these matters for the purpose of this application given the conclusion I have already reached.
  54. I turn next, therefore, to the application for permission to amend and to consider whether Mr. Gadd's prospects for success are any better by reference to his claim as reformulated or added to. In my judgment they are not.
  55. First, the claim for damages for breach of statutory duty under Part 2, section 21(2)(a) and (b) and section 22 of the Legislative and Regulatory Reform Act 2006 (see paragraph 102 and following of the proposed amendment). Mr. Lanlihin did not, in the event, advance any argument at all in opposition to the points made by the Law Society as to why such a claim was unsustainable. In my view he was right not to do so as the claim is simply misconceived.
  56. I can deal therefore with the matter very briefly. The relevant principles which apply before a litigant can bring a claim under private law for alleged breach of statutory duty are set out in Clerk & Lindsell on Torts, 20th edition, paragraphs 9-11 to 9-44 to which reference may be made if necessary. It is established law that the statutory regime for interventions as laid down by Schedule 1 of the Solicitors Act 1974 is a self-contained and exhaustive regime into which the law of tort does not intrude; and that the Law Society does not owe any private law duty to a solicitor in relation to an intervention or decision to intervene: see Miller v. The Law Society [2002] EWCA 145 (Ch) paragraphs 35 to 36 of the judgment of Geoffrey Vos QC, as he was then (subject to an argument to which I shall come shortly) in relation to an action for misfeasance in public office.
  57. None of the principles which might enable a litigant to bring a private law claim for breach of statutory duty apply to the Legislative and Regulatory Reform Act 2006 which contains principles intended to guide regulators.
  58. Second the claim in paragraph 59 of the draft pleading in which the Claimant alleges that there was a "breach of the common law principles of natural justice". It is submitted on behalf of the Law Society, and rightly in my view, that the common law principles of natural justice do not apply to the intervention process which is a statutory process enabling a challenge to be made in the High Court as provided for in Schedule 1 to the Solicitors Act 1974: see Giles v. The Law Society [1996] 8 Admin LR 105 and Miller v. The Law Society [2002] All ER (D) 312. At 120E of Giles Sedley J (as he then was) said this:
  59. "… it seems to me that the want of any provision in Schedule 1 for notice to be given to the solicitor of particulars of a suspected breach other than a failure to comply with certain specified rules demonstrates not an omission which … it is for the justice of the common law to supply, but an intelligible scheme of professional self-regulation for the protection of clients and the public which defers, but does not deny, a due opportunity for the solicitor to know the case against him or her and to challenge it and its consequences before a court of law."
  60. Further, if there were any procedural unfairness leading to the intervention, this could and should have been dealt with by the Claimant making an application to challenge the intervention under the statutory procedure provided for: see further Buckley v. The Law Society [1983] 2 All ER 1031 at 1043 referred to at paragraph 38 of Miller (supra).
  61. There is a further limitation problem in relation to this aspect of Mr. Gadd's newly advanced case which I should mention. The limitation period in which to bring a claim for breaches of human rights is one year from the date of the breach. The breaches are alleged to have occurred on 7th or 8th December 2009 i.e. when the intervention occurred but were not notified to the SRA until 30th April 2012. In the event, however, it is unnecessary to say anything further on the point having regard to my views on the merits.
  62. Third, the new claim made in the proposed amendment is contained in paragraph 66 of the draft where it is pleaded that there has been a "breach of rule of the law". As Mr. Dutton points out, this is not a pleading in a cause of action known to English law. So far as Mr. Gadd is now claiming (see paragraph 68 of the draft) that the Law Society acted "ultra vires", his challenge should have been made under the statutory procedure provided for.
  63. Finally, at paragraph 70 and following of the proposed amended Particulars of Claim Mr. Gadd makes a claim for "Misfeasance in Public Office". At paragraph 71 and 72 the draft pleading say this:
  64. "71. The Claimant contends that the defendant is vicariously liable for the actions of their employees, principally case worker Davinia Lea, whose collective conduct clearly constitutes something other than mere negligence or incompetence and satisfies both grounds for a finding of misfeasance in public office.
    72. Specifically the Claimant will point to the following from quite an exhaustive list:
    (i) the defendant's failure to warn the Claimant as to their long-standing experience or investigation into MIB which dated back to 2006;
    (ii) the active assistance in coaching the defendant by the Claimant in first forcing MIB from the profession and second establishing his own firm;
    (iii) the acquiescence of the defendant in allowing WBL [to go] into administration without warning the Claimant of the potential breaches of the rules;
    (iv) the failure of the defendant to take control of the client account of WBL despite the administration of WBL repeatedly asking the defendant to do so (and then citing the non-solicitor control of WBL's client account as one of the reasons for the emergency non-disclosure intervention);
    (v) the biased and misleading case note sent to the Adjudication Panel … with a recommendation for intervention which made no mention in the history of WBL and the part that the Claimant had played in forcing a dishonest solicitor from the profession nor that the Claimant had a new firm with 25 staff and 2000 clients which, if intervened, would suffer loss, is a disproportionate response, contrary to the public interest;
    (vi) the recommendation into the case note to intervene into any other practice of which the Claimant was a member and/or manager and/or owner when the defendant well knew that the Claimant had not done anything wrong;
    (vii) the failure to affirm the FIR and the case note to the Claimant prior to the decision to intervene purportedly justified by the defendant on public interest grounds and urgency when no such factors existed;
    (viii) the failure to disclose the fact that there was no possibility of the Claimant accessing the client account or client files of WBL as they had been in the control of the administrator since April 2009."
  65. In Adams v. The Law Society Foskett J was prepared to accept that it was arguably open to a solicitor to mount a private law challenge to an intervention outside the statutory scheme, if I may so describe it by making a claim for misfeasance in public office. Whether that is so or not, it has not been the subject of any argument before me. Mr. Dutton would wish to reserve such an argument to the Court of Appeal if necessary, but, for present purposes Mr Gadd's application is made on more conventional lines.
  66. In the course of his submissions as I understand it, Mr. Lanlihin said that the Claimant's case here constituted "targeted malice" on the part of the Law Society. That would involve conduct specifically to injure the victim. In Three Rivers District Council v. Bank of England (No. 3) [2003] 2 AC 1 at 191 Lord Steyn said as follows:
  67. "The case law reveals two different forms of liability for misfeasance in public office. First there is the case of targeted malice by a public officer i.e. conduct specifically intended to injure a person or persons. This type of case involves bad faith in the sense of the exercise of public power for an improper or ulterior motive. The second form is where a public officer acts knowing that he has no power to do the act complained of and that the act will probably injure the plaintiff. It involves bad faith inasmuch as the public officer does not have an honest belief that his act is lawful."
  68. As Foskett J points out in Adams at [37] in either form – targeted or untargeted – but most particularly in its targeted form, the evidential threshold for establishing the tort is high.
  69. As he went on to say at paragraph [39], however, in the context of an application for summary judgment, that does not, of course, mean that in a proper case the threshold may not be crossed.
  70. Against that background one must examine the proposed pleading to see whether it could give rise to a properly arguable case for misfeasance in public office.
  71. Mr. Dutton submits that since the defendant's use of its powers to intervene were plainly and unarguably open to it, because the Solicitors' Accounts Rules breaches which the Claimant admitted founded the jurisdiction to intervene, the Claimant has to show targeted malice. Indeed as I have already indicated, during the course of argument, it was said by Mr. Lanlihin that it was the Claimant's intention to allege targeted malice.
  72. The first difficulty, however, is this: no improper purpose, so far as I can tell is pleaded or relied on. On the contrary, the purpose alleged is a proper purpose. I refer in particular to what is pleaded in paragraphs 25 and 26 of the proposed amended draft. Under the heading "The True Purpose of the Intervention into WBL" the following is pleaded:
  73. "25. Uniquely, the purpose of the intervention into WBL was not to stop a solicitor from continuing to breach the rules. The perpetrator of the breaches, MIB, had been stopped from practising as a result of the 'whistle blowing' actions of the Claimant and was subsequently struck from the Roll in September 2009 …
    26. The purpose of the intervention into WBL was in fact to secure the client account and protect the interests of WBL's clients (even though in essence this should have been done by the defendants nine months earlier)."

    As Mr. Dutton points out, the purpose there identified is a proper purpose.

  74. The second difficulty in relation to this part of the claim is this. The allegation of misfeasance focuses, as already indicated, on the conduct of the case worker, Davinia Lea. However, the decision to intervene was not made by her but by a Panel which resolved to exercise its powers of intervention. Even if it were to be alleged that she was responsible for the intervention, it would be necessary to identify what improper purpose she was indulging in, in using her lawful powers to harm Mr. Gadd. There is nothing, however, in the pleadings which does so. There is, in short, no properly sustainable pleaded case against her of bad faith in paragraph 72 of the pleadings, whether the particulars set out there are looked at on their own or together.
  75. In my view that is obvious from a simple reading of paragraph 72 of the pleading. But a few points can be made about the various particulars set out in paragraph 72. As to (i) there is no duty and was no duty to warn the Claimant of any investigation into the conduct of Mr. Bronzite. But in any event, it is apparent from Mr Gadd's witness statement before the Solicitors Disciplinary Tribunal that he knew of these matters or some of them, at least by 2008: see in particular paragraph 15 where he said this:
  76. "Having joined the Partnership I obviously had increased access to a lot of the firm's books and records and rapidly became horrified at what I was finding. It was quite clear that not only was MIB dishonest in the way that he was drawing down funding but also that the investigation by the SRA was much more serious than what he had allowed me to believe."
  77. So far as (ii) is concerned, there is nothing in the allegation that assisting the Claimant to force a dishonest solicitor from the profession or in establishing his own firm would be evidence of bad faith. Be that as it may, the only document identified by Mr. Lanlihin which relates to this particular is an e-mail from Ms. Davinia Lea dated 16th January 2009 to Mr. Gadd. There is nothing in that document which could begin to substantiate an allegation of active assistance or "coaching" as is alleged. On the face of the document Ms. Lea simply asks Mr. Gadd to confirm certain practical matters as a matter of urgency and no more.
  78. As to (iii), the defendant was under no duty, it seems to me, to warn the Claimant. There is nothing pleaded about the effect of administration of the business which could ground a claim for misfeasance in public office. Similarly with regard to (iv).
  79. As to (v) the duty of a person writing a case note is to present the facts relevant to the question of a breach which might arise. It is plain when one looks at the note that this is what it did. It focuses on matters of concern in the FIR and draws attention to the alleged breaches which were, it is to be emphasised, subsequently found to have been well founded by the Solicitors Disciplinary Tribunal (and indeed were admitted by Mr. Gadd). It also drew attention to the fact that neither Mr. Gadd nor Mr. Windsor had received any notice of those matters. There is nothing in it which could, in my judgment conceivably give rise to a claim for misfeasance in public office.
  80. Similarly with regard to (vii) and (viii), what is pleaded, in my view is nothing to the point. The allegation of lack of urgency, I have to say, is also somewhat surprising in view of the shortfall that was identified of over £200,000.
  81. Be that as it may, in summary at best this part of the claim amounts to an allegation of negligence, and these are all matters which could have been raised by way of challenge to the intervention. Mr. Dutton draws attention to the witness statement from Mr Windsor served on the Law Society the day before yesterday which said as much, and I agree.
  82. A further point arises. The defendant submits that Mr. Gadd could not bring a claim in respect of any loss suffered by CGL as a separate corporate entity nor can he bring a claim in respect of loss which is merely "reflective" of loss suffered by CGL: see Johnson v. Gore Wood & Co. (No 1) [2002] 2 AC 1 at 34-38 per Lord Bingham. It is also said there cannot be any reasonable doubt that Mr. Gadd's claim is in respect of reflective loss: see, for example, what is said in the particulars of claim as amended at paragraph 46.
  83. The cause of Mr. Gadd's individual loss could only be the fact that he could not practise. But the reason he could not was because of the qualifications on the practising certificate. I have already referred to the history briefly but, in short, it was restored to him on 4th January 2010 with conditions which he appealed. These were dealt with by Ms. Webb on 24th February 2010 when the conditions were varied. This was a decision which Mr. Gadd did not appeal. Significantly, he accepted the condition that he should be supervised from which it follows that he could not then operate the practice of CGL. If an action for misfeasance in public office were to be maintainable in the circumstances, it would have to be extended to those who dealt with the issue of the practising certificate on 4th January and on 24th February 2010, which it does not.
  84. Mr. Dutton has put before the court a note on the issue of immunity and absolute privilege, arguments which he wishes to keep open, though it has not been necessary for them to be dealt with before me.
  85. For the reasons given, therefore, the claim by Mr. Gadd has no real prospect of success. The application for permission to amend in the form of the draft which is put before the court is refused. The Law Society is entitled to summary judgment against Mr. Gadd.
  86. MR. DUTTON: Would it help if we provide – and obviously we will circulate – a draft order?

    MRS. JUSTICE SHARP: Yes.

    MR. DUTTON: My Lady, there is a typographical error which I meant to correct yesterday. The Solicitors' Code of Conduct in one of the witness statements had been mistyped as 1997. Most of the documents have it correct so when the transcript emerges it should be 2007 throughout.

    MRS. JUSTICE SHARP: Yes.

    MR. DUTTON: I should have pointed that out to you yesterday. Nothing turns on it. In fact the documents before the Panel were all correctly dated.

    MRS. JUSTICE SHARP: Thank you.

    MR. DUTTON: The Law Society seeks its costs.

    (Discussion followed)

    MRS. JUSTICE SHARP:

  87. I am asked to assess costs. Plainly in this matter there is no dispute that the defendant is entitled to its costs. A schedule of costs has been prepared by the Law Society. It relates both to the costs of the application before me and the reserved costs of the hearing before Master McCloud.
  88. I should have asked, Mr. Dutton, are these the entire costs of the action?

    MR. DUTTON: Yes, they are.

    MRS. JUSTICE SHARP:

  89. The schedule reflects the entire costs of the action. The total amount claimed is £40,500.20.
  90. Mr. Dutton, on behalf of the Law Society, draws attention to a letter of 9th September 2011 (such letter was after the adjournment of the hearing before Master McCloud) in which an offer was made by the SRA to dispose of the claim at that stage on the basis that Mr. Gadd would withdraw the claim and that each side would bear its own costs. That offer was rejected.
  91. Ms. Williams, on behalf of Mr. Gadd, takes a number of points on the schedule. First, she points out that there is an apparent difference of rate for Ms. Bushell or the solicitors involved for the Law Society: some of the hours are claimed at £140 and some at £133. She objected to what was apparently an increase in the rate per hour. In fact it seems that the differential was to the advantage of Mr. Gadd rather than the other way round because the lower rate reflects the later work done because of the volume of work which was done by the solicitors concerned acting for the Law Society.
  92. The second point to which objection is taken is the number of hours that were spent in particular on attendance on the Claimant and attendance on documents. The third specific matter to which objection is taken is the fee for Mr. Dutton attending court at the giving of the judgment today.
  93. Mr. Dutton said that this is a case in which it was appropriate to instruct leading counsel having regard, in particular, to the serious allegations that were being advanced against the Law Society: misfeasance in public office and bad faith; that his involvement was kept to a minimum but it was necessary, unfortunately, because the offer made by the SRA was not accepted, for him to become more involved and, in the event, to attend the hearing today. In respect of the number of hours he also said that the claim, having regard to the nature of this case and some background (which I have not been troubled with in relation to various things that have been going on and also the way the matter has been dealt with by Mr. Gadd), and the overall cost is proportionate and reasonable.
  94. So far as his own position is concerned, he has now been here for an hour and a half, for which I have to take the responsibility rather than counsel. I gave judgment for just over an hour. He said that the time for his attendance was put in the schedule on an estimate that he would be attending somewhere in the region of two hours.
  95. I have to say that although in most cases one would consider it appropriate to reduce – and sometimes by a very significant amount – the costs which are claimed in particular cases, it seems to me that the costs here, having regard to the volume of documentation, the nature of the issues that were raised in the claim, the way that the case has been advanced by Mr. Gadd and the additions to it, in particular, in the proposed amendments are reasonable and proportionate.
  96. I can see no ground, therefore, for reducing the amount that is claimed save I will round it down to £40,000 to take account of the short point that Mr. Dutton's attendance has been required for an hour and a half rather than two hours. As I say, I have seen a large number of cases in which costs considerably in excess of this have been claimed for cases which do not involve anything approaching the level of documentation or difficulty or detail of the matters which have arisen.
  97. Accordingly, the defendant shall have its costs in the action summarily assessed in the sum of £40,000.
  98. I should have added that in my view the case did merit the attendance of leading counsel for the reasons Mr. Dutton has submitted and if and in so far as these costs have to be paid, I am afraid, that the responsibility for that has to be accepted by Mr. Gadd who had the opportunity to retreat and should have retreated in my view at the time the opportunity was presented to him after the hearing before Master McCloud.
  99. MR. DUTTON: My Lady, I will draw up an order and have it sent around.

    MRS. JUSTICE SHARP: Thank you.

    (The court rose then reconvened)

    MS. WILLIAMS: I apologise, my Lady, I should have spoken a little bit quicker. I apologise for having to bring you back. I do have an application to make or it could be two or three. My first application is for permission to appeal.

    MRS. JUSTICE SHARP: Do you want to make all of the ----

    MS. WILLIAMS: My second application is for a certificate of the High Court.

    MRS. JUSTICE SHARP:

  100. Dealing with this first matter first, permission to appeal is refused. You will have to make your application to the Court of Appeal on the ground that in my view this is a very clear case in which there is no realistic prospect of a successful appeal.
  101. Does that have any bearing with regard to the second thing you ask for?

    MS. WILLIAMS: Yes, a certificate of the High Court. I must confess I have not asked for this before.

    MRS. JUSTICE SHARP: What is it?

    MS. WILLIAMS: It is a certificate in order to allow my client to appeal to the Supreme Court. The reason why he is asking for this is because it was mentioned yesterday and also in your judgment that if my client wishes to appeal ----

    MRS. JUSTICE SHARP: You are asking for a leapfrog?

    MR. DUTTON: It is a leapfrog, as I understand it.

    MS. WILLIAMS: Yes. As I have already pointed out, this is the first time I have asked for this, so I apologise as to my ignorance. As your Ladyship ----

    MRS. JUSTICE SHARP: You are trying to get before the Supreme Court? Is that it?

    MS. WILLIAMS: Absolutely.

    MRS. JUSTICE SHARP:

  102. That is refused as well. If you want to make such an application you will have to go to before those who are in a greater position than me.
  103. MS. WILLIAMS: Do I take it then, that the application for permission to appeal to the Supreme Court is equally refused?

    MRS. JUSTICE SHARP:

  104. I think it is one and the same. I do not think I could do more than say this is not a suitable case and if you wish to pursue the matter it will have to be elsewhere.
  105. MS. WILLIAMS: I am grateful.

    MRS. JUSTICE SHARP: Is there anything else?

    MS. WILLIAMS: No, my Lady. Thank you.

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