Mendes v Solicitors Regulation Authority [2014] EWHC 1996 (Ch)

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The claimant was admitted to the Roll of Solicitors on 1 June 2009. She commenced practice as a solicitor on 30 November 2010. In November 2012, the Solicitors Regulation Authority (SRA), without prior warning to the claimant, commenced an inspection of her practice.

The inspection took place over three days. The SRA then produced a forensic investigation report (the report), which identified a number of concerns including, among other things: (i) that the claimant was not recognised by the SRA as a sole practitioner, and had admitted that to the Investigator; (ii) that she stated that she had made an application for recognition, but the SRA had no record of such application and the claimant was unable to produce a copy of the same; (iii) that the claimant had apparently carried on practice from her residential address with a sign in the window that read 'Mendes Solicitors – Immigration and Civil Litigation'; and (iv) that the claimant had kept no books of account. There was evidence that the claimant had no proper professional indemnity insurance and that she had failed, at any time, to file an accountant's report.

The report highlighted breaches of the Solicitors Accounts Rules 1988, the Solicitors Accounts Rules 2011, the Solicitors Code of Conduct 2007, the SRA Code of Conduct 2011, the SRA Practice Framework Rules 2011, the Solicitors Indemnity Rules 2010 and the SRA Indemnity Insurance Rules 2011. Further, there was evidence before the SRA's panel of adjudicators (the panel) of misuse of the practice's client account. The panel decided to intervene into the practice, having found, among other things, that grounds for intervention existed under para 1(1)(a) of Pt 1 of Sch 1 to the Solicitors Act 1974 (the 1974 Act), as amended, because there was reason to suspect dishonesty on the part of the claimant in connection with her practice as a solicitor and having found breaches of the various rules.

Notice of the intervention was given to the claimant and the decision was published. No monies vested in the SRA on intervention as both client and office accounts had a zero balance. The claimant's 2012/3 practising certificate was automatically suspended on intervention. It was reinstated with conditions, but was then suspended again. The claimant's practising certificate for 2012/3 was expired.

The claimant issued proceedings in the Administrative Court. She was informed that the proceedings had to be issued in the Chancery Division. On 8 May 2013, the claimant brought a claim in the Chancery Division for the withdrawal of the notice of intervention into her practice. She did not give the SRA timely notice of the claim. The SRA applied to strike out the claim. It further or alternatively applied for summary judgment.

The SRA submitted that: (i) the claimant's challenge to the intervention could serve no useful purpose; and (ii) that the challenge had no substantive merit. Consideration was given to paras 1(1)(a), 6(4), 9(8), 9(9) and 13 of Pt 1 of Sch 1 to the 1974 Act, and to CPR 24.2.

The application would be allowed.

(1) Schedule 1 to the 1974 Act set out the SRA's statutory grounds for the exercise of the powers of intervention into a solicitor's practice, one of which was where there was reason to suspect dishonesty on the part of a solicitor in connection with that solicitor's practice. A solicitor might challenge an intervention by following the procedure set out in paras 6(4), 9(8) and 9(9) of Sch 1 of the 1974 Act. Where a solicitor made a challenge to an intervention the essential enquiry for the court was to decide: (i) if there were statutory grounds for the intervention; and (ii) whether the intervention notice should be ordered to be withdrawn (see [7]-[9] of the judgment).

The court was satisfied on the evidence produced by the SRA that the claimant's challenge to the intervention could serve no useful purpose. The claimant had failed to give the SRA timely notice of her challenge, she had issued the challenge in the wrong court, and had failed to take any steps to pursue her claim save for the issue of the claim Form. Paragraph 13 of Sch 1 to the 1974 Act provided that the intervened solicitor was liable for the intervention costs unless the court ordered otherwise. In all the circumstances, there was no prospect of the court making such an order and to continue the claim for that reason would serve no purpose whatsoever (see [21], [25], [26] of the judgment).

The first ground of the application was made out (see [26] of the judgment).

(2) The facts of the case, viewed individually and cumulatively, demonstrated that there was no reasonable prospect of the claimant being able to show good grounds for challenging the intervention. The SRA had established beyond any doubt that there were grounds for the decision to intervene, and that the challenge to the intervention had no real prospect of success. The claimant had no real prospect of succeeding in her claim and there was no other compelling reason why the case should be disposed of at a trial. In the light of that conclusion, it was consistent with the over-riding objective in CPR Pt 1 that the claim be dealt with summarily by giving summary judgment in favour of the SRA, pursuant to CPR 24.2. The court was satisfied for the same reasons that the claim form and the documents attached thereto, disclosed no reasonable grounds for bringing the claim. The claim was doomed to failure and there could be no possible benefit in allowing it to continue (see [37], [42], [43] of the judgment).

The claim would be struck out (see [43] of the judgment).

Sheikh v Law Society [2007] 3 All ER 183 applied.

Reproduced with kind permission of LexisLibrary.