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England and Wales High Court (Administrative Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Bramall, R (on the application of) v The Law Society [2005] EWHC 1570 (Admin) (21 July 2005)
URL: http://www.bailii.org/ew/cases/EWHC/Admin/2005/1570.html
Cite as: [2005] EWHC 1570 (Admin)
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QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
| The Queen (on the application of Thomas John Bramall) |
Claimant |
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| - and - |
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| The Law Society |
Defendant |
____________________
Nicholas Peacock (instructed by Wright, Son & Pepper Solicitors) for the Defendant
Hearing date: 20 May 2005
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Crown Copyright ©
- The claimant, Mr Bramall, is a practising solicitor and is the sole principal of Talbot & Co. At the time to which these proceedings relate, Talbot & Co was a partnership between Mr Bramall and a Mr Simnett. In a decision dated 13 March 2004 an Adjudication Panel of the Compliance Board of the Law Society found that the service provided by Talbot & Co in handling a complaint by one of its former clients, Mrs West, was not of the quality that it is reasonable to expect as a solicitor, contrary to the requirements of section 37A of, and schedule 1A to, the Solicitors Act 1974. The Panel directed Talbot & Co to pay compensation of £250 to Mrs West.
- Mr Bramall brought judicial review proceedings to challenge that decision. Permission to apply was refused at first instance, but was granted on limited grounds by Auld LJ on an application to the Court of Appeal. Auld LJ directed that the substantive claim be heard by a single judge of the Administrative Court. Those are the circumstances in which the matter came before me.
- The main ground of challenge is that there was no basis upon which the Panel could reasonably have reached its decision on the material before it. A closely related issue is whether in reaching its decision the Panel failed to have regard to a relevant consideration. Unfortunately the resolution of those issues requires a detailed exposition of the regulatory framework and factual history. The subject matter of the decision under challenge formed only one small part of an extensive investigation into a complaint made by Mrs West. Although the substantive complaint was eventually dismissed, it is necessary to look at the wider context of the complaint and the investigation into it in order to deal with the issue that arose about the handling of the complaint.
- The relevant provisions of the 1974 Act were introduced by amendment by the Courts and Legal Services Act 1990. Section 37A of the 1974 Act as so amended provides:
- Schedule 1A provides in paragraph 1(1):
- The steps mentioned in paragraph 2 include a direction that the solicitor pay compensation. A direction is not directly enforceable. Paragraph 5 provides that if a solicitor fails to comply with such a direction, any person may make a complaint in respect of that failure to the Solicitors Disciplinary Tribunal, which may, if it thinks fit, direct that the direction be treated for the purposes of enforcement as if it were contained in an order made by the High Court.
- Paragraph 2(3) provides that the power of the Council to take any of the steps is not confined to cases where the client may have a cause of action against the solicitor for negligence.
- The Law Society regards the IPS jurisdiction as being of considerable value and importance, not only in order to compensate clients but also in order to encourage higher standards among solicitors. That view was endorsed by the court in R (Thompson) v. Law Society [2004] 2 All ER 113, at para 18. The Law Society's experience is that a substantial proportion of IPS complaints comes from poor communication between solicitor and client and that a complaints handling procedure operated by a solicitor in a constructive and sympathetic manner is the best means by which such IPS complaints can be reduced.
- As regards complaint handling, rule 15 of the Solicitors' Practice Rules 1990 states:
- Paragraph 7 of the Solicitors' Costs Information and Client Care Code 1999 ("the Code") concerns client care and complaints handling. It states:
- Rule 15 and the Code are both included in chapter 13 of The Guide to the Professional Conduct of Solicitors ("the Guide"). Paragraph 13.07 of the Guide gives additional guidance:
- The following are the basic elements of a complaints handling procedure:
- Keeping Clients, the document referred to in the passage just quoted, is lengthy. Even the chapter on complaints runs to seven pages. In his submissions for the Law Society, Mr Peacock has drawn attention to the following particular aspects of the advice given in it:
- Talbot & Co acted in relation to the estate of Mrs West's late husband. Mrs West was a residuary beneficiary and received a substantial amount from the estate. In 2000 she sought investment advice in respect of the sum of about £76,000 which she had inherited. She was referred by Talbot & Co to a firm of stockbrokers, Carr Sheppards Crosthwaite ("CSC"), through which she invested the money. Talbot & Co had a permitted referral arrangement with CSC.
- Mrs West became dissatisfied with the investment advice she had received. She obtained the assistance of a new financial adviser, Mr Lang, of Brian Mole Independent Financial Advisers Ltd. On 16 June 2001 Mr Lang wrote to Talbot & Co, requesting details of what Mrs West had been told about the suitability of the products sold to her and enclosing written confirmation from Mrs West that she wished to dispense with the services of Talbot & Co "on acting for me with regards to the investments that you advised me on last year". Talbot & Co replied on 19 June, stating that the firm "did forward to Mrs West the stockbrokers' recommendations" and asking whether that was what was required. The letter also stated that fees would be billed up to the date of closure of the file and requested Mrs West's instructions in connection with her holdings.
- On 22 June Mr Simnett met Mrs West at the firm's office and at her request provided her with a copy of her financial file. On 25 June Mrs West wrote to him, stating:
- Mr Simnett's response was to state in a letter of 27 June;
- Mr Lang wrote on 29 June acknowledging the letter of 27 June to Mrs West and indicating that Mrs West "feels that she has no option but to make a formal complaint in order to satisfy her doubts" concerning the advice originally given to her.
- Mr Simnett responded on 2 July:
- On 3 July Mr Lang wrote again on Mrs West's behalf, stating (with original emphasis):
- Mr Simnett's reply, dated 6 July, was in these terms:
- On 9 July 2001Mr Lang wrote a letter of formal complaint on behalf of Mrs West to the Office for Supervision of Solicitors ("the OSS") at the Law Society, expressing the view that Talbot & Co was to blame for the investment made and requesting compensation.
- That initiated the first stage of the relevant procedure. At that stage an OSS caseworker will carry out an investigation, obtaining evidence and information from both the solicitor and the client, and will try to broker a settlement between the solicitor and the client. In default of settlement, the caseworker will prepare a formal report, termed an Agenda Note, in which will appear the caseworker's conclusions and recommendations based upon the evidence and information acquired during the investigation.
- On 15 January 2002 the OSS caseworker forwarded to Talbot & Co a copy of Mrs West's complaint, identified six allegations to be investigated, and requested a full answer to the complaint together with certain specified information. It was emphasised that the reply would be disclosed to the complainant, and attention was drawn to the sanctions available under section 12(1)(e) of the 1974 Act in the event of failure to provide a satisfactory explanation. The letter did not identify any allegation that Talbot & Co's handling of Mrs West's complaint to the firm had been inadequate.
- In a lengthy letter dated 25 January 2002, Talbot & Co replied to the OSS in combative vein. For example:
- Mrs West wrote to the OSS on 24 February, stating that she had been advised by Mr Bramall of Talbot & Co to invest her money in stocks and shares and raising questions concerning Mr Bramall's personal and professional integrity.
- On 13 May the OSS caseworker wrote to Talbot & Co seeking further clarification, sending a copy of Mrs West's letter of 24 February and raising a further issue arising out of that letter. Talbot & Co replied on 22 May, responding to the specific matters raised by the caseworker and denying each of the allegations made in Mrs West's letter.
- The caseworker's report was dated 27 July 2002. Section 1 was a summary of complaints/allegations. It listed one allegation of professional misconduct and four allegations concerning professional services. It made no reference to the complaints handling procedure. Section 5, however, did deal with that topic, under the heading "Rule 15 compliance":
- Section 8 stated that "[i]t is for the Adjudicator to decide the following issues, on the evidence presented". Those issues did not include an issue concerning the complaints handling procedure. Section 9 contained the caseworker's views in outline on the issues in section 8. The caseworker expressed the opinion that Mr Bramall was guilty of professional misconduct in one respect and that the services provided by Talbot & Co were inadequate in a number of respects. Again, no reference was made to the complaints handling procedure.
- The report was sent to Talbot & Co and to Mrs West on 31 July for them to make comments if they wished, in order that at the next stage the Adjudicator might take those comments into account when considering the report.
- Mr Lang made representations to the OSS on 9 August on behalf of Mrs West, making a number of detailed comments and further allegations arising out of matters covered in the report. One of the comments made was that Mrs West "feels let down by Talbot & Co, and is now more annoyed than upset". No reference was made to the complaints handling procedure.
- On 12 August Talbot & Co sent representations to the OSS in the form of an opinion from counsel, Mr Stanley Best. Paragraph 5 of the opinion expressed the view that the comment in Mr Lang's letter of 9 July 2001 that Talbot & Co were to blame in some way for the investment was an "entirely wrongheaded claim", and that "what should have been regarded as a veritable storm in a teacup" had been given impetus by advice given to Mrs West by Mr Lang. Paragraph 12 stated that "[t]his is a storm in a teacup by a disappointed investor who should take her complaints elsewhere", and that if Mrs West had a complaint it "should be directed to the stockbrokers, whose advice she acted upon, and not to Mr Bramall, who carried out her instructions to him to the full".
- On 23 August Talbot & Co sent an additional note from counsel, referring to a recently reported case concerning breach of trust. The caseworker wrote to Talbot & Co on 5 September, observing in relation to counsel's additional note that the OSS could not consider issues relating to a legal action in negligence. The letter also responded to a faxed enquiry seeking confirmation that fresh allegations raised in Mr Lang's representations on the report would not be considered by the Adjudicator. The caseworker confirmed that it was not the usual practice to consider additional allegations, but stated that Mr Lang's representations on the report would be seen by the Adjudicator. This was followed, on 11 September, by a letter from Talbot & Co enclosing a further advice from counsel, concerning the contents of the caseworker's letter.
- The procedure then moved to its second stage, at which an Adjudicator makes a decision based on the caseworker's report and the parties' observations. The Adjudicator's decision in this case was made on 14 October 2002. That decision started by listing the one complaint of professional misconduct and the four complaints concerning professional service which the Adjudicator said he had considered. The list did not include criticism of the handling of Mrs West's complaint. The Adjudicator then dismissed the complaint of professional misconduct but upheld the four complaints concerning professional service. At that point he also made a finding that the service provided was not of the quality which it is reasonable to expect of a solicitor because Talbot & Co "failed to operate an adequate complaint handling procedure". His reasons and comments in relation to that finding were as follows:
- The third stage of the procedure was a review of the Adjudicator's decision by an Adjudication Panel consisting of three members. Talbot & Co applied for such a review by a letter of 4 November, enclosing detailed grounds. In relation to the Adjudicator's statement that the solicitor's attitude had been defensive and at times antagonistic, the grounds stated that it was perhaps hardly surprising that Talbot & Co, faced many months later with the OSS's letter reporting Mrs West's complaint, "should be concerned to find that their good name was being impugned. Why should they not be vexed?" This particular complaint raised by the Adjudicator was submitted to be a nonsense.
- Mrs West had made her own application for a review by letter of 28 October. On 12 November Talbot & Co made submissions in response to Mrs West's application.
- The Adjudication Panel notified its decision on the review on 7 January 2003. It allowed Mr Bramall's application and dismissed Mrs West's cross-application. The Adjudicator's decision was rescinded. In its reasons the Panel stated inter alia that sufficient information had been obtained by Talbot & Co from Mrs West prior to the investment and that "[i]t was the responsibility of the stockbroker to provide the advice and for Talbot & Co to carry out instructions provided". The Panel's decision made no express reference to the Adjudicator's finding that there had been an inadequate complaint handling procedure.
- Mrs West then complained to the Legal Services Ombudsman about the way in which the OSS had dealt with her complaints. By a decision dated 20 June 2003 the Ombudsman rejected the complaint, subject to one point. She accepted the Adjudication Panel's view that advice about the appropriateness of the investment and the duty to ensure that relevant enquires were made of Mrs West before giving her that advice were matters for the stockbroker, not for Talbot & Co. The one point that the Ombudsman resolved in Mrs West's favour was this:
- In response to the recommendation, the OSS referred that one point to a freshly constituted Adjudication Panel ("the Reconsideration Panel") consisting of two members. Further representations were made at this stage by the parties. In particular, in a letter of 25 July 2003 Talbot & Co made representations taking issue inter alia with the Adjudicator's references to defensiveness and antagonism:
- The Reconsideration Panel's decision was dated 13 March 2004 but notified on 31 March. The Panel resolved:
- The Panel considered that Mrs West "clearly suffered distress and inconvenience as a result of the inadequacy". Taking into account all the circumstances the Panel considered the appropriate level of compensation to be £250, and it directed Talbot & Co to pay that sum to Mrs West.
- That is the decision challenged in these proceedings.
- Mr Soole QC, for the claimant, submitted that references to rule 15 of the Rules and paragraph 7 of the Code are in a sense misleading, since no actual breach of them is alleged. The only relevant test is under the terms of section 37A and schedule 1A of the 1974 Act. As to that, the question is not whether the Panel would have done the same themselves but whether the services are not of a quality which "it is reasonable to expect" of solicitors. It is akin to a Bolam test, looking at the standards of the profession as a whole (see Bolam v. Friern Hospital Management Committee [1957] 1 WLR 582). Mr Soole also took me to a passage in Hansard in support of a suggestion that the statutory provisions were directed at "shoddy work" by solicitors. I doubt very much whether the material was admissible (a point on which I was not addressed) and I did not find it helpful.
- Mr Peacock, for the Law Society, accepted that the only relevant obligation is that under section 37A and schedule 1A, but submitted that the decision-maker, when deciding on the quality of the service, was entitled to take into account the 1990 Rules, the Code and any relevant guidance provided to Solicitors.
- Although those submissions reflect a difference of emphasis, I did not understand there to be a disagreement of substance on this point. It is no part of the claimant's case that the Panel erred in law by applying the wrong legal test or by taking into account irrelevant material in the form of the Rules, the Code and the guidance. In any event I would accept Mr Peacock's submissions on the point and need say no more about it.
- In truth the sole issue for the Panel was whether, in the terms of section 37A and paragraph 1(1) of schedule 1A, the services provided by Talbot & Co or its partners were in the relevant respect "not of the quality which it is reasonable to expect of them" as solicitors. The members of the Panel were the judges of the relevant professional standards: cf. White v. Office for the Supervision of Solicitors [2001] EWHC Admin 1149, where Lightman J stated that "[t]he Adjudicator and the Appeals Committee are the judges of the professional standards which solicitors must maintain". The court will interfere with the Panel's decision only on conventional public law grounds, including irrationality and failure to take into account relevant considerations. It will be slow to interfere in a matter that is so heavily dependent on the professional experience and expertise of the members of the Panel.
- The one legal issue on which there was a disagreement of substance between the parties concerned the relevance of the exchanges of correspondence after the point when Mrs West complained to the OSS.
- Mr Soole submitted that the only relevant material is that relating to the internal complaints handling by Talbot & Co up to the time of Mrs West's complaint to the OSS. At that point an external regime took over, which is sanctioned by and has the force of statute. That regime involves investigation, the obtaining of evidence, the availability of sanctions in the event of failure to co-operate, and a process that can lead to a disciplinary procedure. The solicitor is dealing directly with his professional body, and his ability to practise and his professional standing are at risk. He must be entitled to defend himself vigorously without risk of a further charge arising out of the way he has defended himself. It cannot be right that he is subject at this stage to guidance to the effect that, for example, he should value unjustified complaints and should not be defensive.
- Mr Soole submitted that paragraph 13.07 of the Guide (quoted above) and various passages in Keeping Clients support the existence of a dividing line between internal complaints handling and the procedures that are engaged once a complaint is made to the OSS. The emphasis in both documents is on the solicitor resolving complaints himself and avoiding the stage where the OSS becomes involved. That was also the emphasis in the report dated 27 July 2002 by the OSS caseworker, paragraph 5.3 of which stated: "I am not satisfied that the firm have taken reasonable steps to resolve this complaint without the need for recourse to this office ...".
- Mr Peacock disputes the existence of any clear dividing line between the periods before and after a complaint is made to the OSS. He points out that (as appears in chapter 30.02 of the Guide) in a case concerning inadequate professional standards the OSS will first establish whether the complaint has been dealt with by the firm and, if not, will require the complainant to refer it to the firm under the firm's internal complaints procedure in accordance with rule 15. If the matter cannot be resolved speedily by the firm, the OSS will attempt to conciliate it. If this procedure fails, a formal decision will be made. Failure by the firm to attempt to resolve a complaint under rule 15 may result in additional compensation being awarded if a formal decision has to be made. All this is said to underline the absence of any clear cut-off at the point when a complaint is made to the OSS and therefore to run counter to the case advanced on behalf of the claimant.
- Mr Peacock submitted that in dealing with an OSS investigation a solicitor is still providing professional services and must still observe standards of the quality which it is reasonable to expect of him. How he is to be judged depends on what is being investigated and the stage of the process reached. He is perfectly free to defend himself properly. He can be as aggressive or robust as he likes with the OSS, which can look after itself. He may also be entitled to take a firm line with the complaint: it is perhaps no longer necessary to be conciliatory as regards the substance of the complaint. He remains obliged, however, not to be aggressive or to use intemperate language towards the client whose complaint is being investigated.
- This ties in with the Law Society's concern about the number of complaints with which it has to deal and the importance it attaches to expeditious resolution of complaints once the OSS has become involved. Understandably, that is said to be assisted by restraint and the avoidance of unnecessary raising of the temperature by the solicitors concerned.
- My conclusions on this issue are as follows:
- With those points in mind I turn to examine the Reconsideration Panel's decision in this case.
- It is helpful to look back at the way in which the case against Talbot & Co on the complaint handling issue developed:
- In my judgment there are several flaws in the approach taken by the Adjudicator and reflected in the Panel's decision. First, it is not made clear how the solicitors' handling of the subsequent OSS investigation was considered to be relevant to the finding that the solicitors had failed to operate an adequate internal complaint handling procedure. Secondly, and more importantly, it appears that the Adjudicator and the Panel examined the solicitors' handling of the OSS investigation without taking account of the fact that different standards are appropriate to the assessment of conduct in the course of such an investigation. There is no sign of any recognition that a solicitor is entitled to be "defensive", sometimes perhaps even "antagonistic", when defending himself in a formal investigation into a complaint against him. There is nothing to show that, in concluding that the solicitors' response could and should have been "more balanced and helpful", any distinction was drawn between the responses made at the time of Mrs West's initial complaint to the firm and those made in the course of the OSS investigation, or that the conciliatory approach set out in the guidance was applicable to the former but not to the latter.
- Those flaws are in my judgment a sufficient basis for quashing the Panel's decision. In particular, the failure to have regard to the different standards applicable to the assessment of the solicitors' conduct at the different stages amounts to a failure to have regard to a relevant consideration.
- In the circumstances, however, I think it right to go on to consider the claimant's contention that the decision was in any event an unreasonable one on the material before the Panel.
- I shall deal first with what happened after the OSS became involved, leaving to the end the exchanges of correspondence between Mrs West (or her adviser Mr Lang) and Talbot & Co which preceded the complaint to the OSS.
- Mr Soole submitted that the way in which the solicitors conducted themselves in the course of the OSS investigation was a proper and robust defence of their position. These were serious allegations and they were responded to reasonably. Mr Peacock, on the other hand, picked out four documents as revealing an approach at this stage which was simply unacceptable.
- First, Mr Peacock submitted that Talbot & Co's initial response of 25 January 2002 overstepped the mark in so far as it cast aspersions on the complainant and her advisers, including the threat to report Mrs West's new financial adviser. Mr Soole, by contrast, drew attention to the fact that Talbot & Co made the correct central point that any complaint should be directed to the stockbroker, not to Talbot & Co, since Talbot & Co had not given discrete investment advice. He submitted that Talbot & Co was not only entitled to make criticisms of the delay on the part of the OSS and to refer to the letter as "misguided", but was also entitled to criticise Mrs West's new financial adviser. In a letter dated 27 February 2002 the Law Society's Senior Investment Business Officer told the caseworker that he shared the concerns expressed by Talbot & Co on this point.
- The second document picked out by Mr Peacock is counsel's opinion as submitted with Talbot & Co's letter of 12 August 2002. It is submitted that to refer to Mrs West's claim as "entirely wrongheaded" and to describe the matter as a "storm in a teacup" was exactly the sort of thing that should not be said. Although that was said in counsel's opinion, the covering letter adopted the opinion as the firm's representations. Mr Soole submitted that the solicitors' reliance on counsel was a point in their favour, and that the expressions used were in any event simply clichés which could not form the basis for an adverse finding.
- The third document is Talbot & Co's letter of 4 November 2002 applying for a review, and in particular the enclosed grounds which asked "why should they not be vexed?" by the complaint. Mr Soole submitted that this was a perfectly reasonable question, given that the solicitors had been faced with allegations of impropriety. In her letter of 24 February 2002 to the OSS, Mrs West had made a direct attack on Mr Bramall's professional integrity, accusing him of lying and raising the question whether "everything is up and above board".
- The fourth document is the letter of 25 July 2003 making further representations after the matter was referred to the Reconsideration Panel. Objection is taken to language such as the description of the claim as "baseless". Mr Soole's straightforward submission was this was a proper stance to take.
- In relation to all that material I accept the submissions of Mr Soole on behalf of the claimant. These were representations made to a professional body in defence of a professional position. They were made with the advice of counsel and in some cases consisted of counsel's opinion; and it must not be forgotten that the defence to the substantive complaint was ultimately upheld. It is understandable that forceful language was used, even though many people would have expressed themselves more moderately. The fact that the representations were going to be copied to Mrs West does not mean that the firm was required to pull its punches. Some conduct, such as the making of gratuitous insults, might be objectionable, but in my view what was said did not go too far. Accordingly, I take the view that nothing that happened after the complaint to the OSS could reasonably support the Panel's adverse finding. To the extent that the Panel relied on such material in support of its finding, it again fell into error.
- That leaves the exchange of correspondence before Mrs West made her complaint to the OSS. As to that, Mr Soole's submissions for the claimant were as follows. The fact is that Talbot & Co had not been providing discrete investment advice or services, whereas Mrs West's essential complaint was about the investment advice and the investments themselves. She was under the misconception that the solicitor had been giving investment advice. It was made clear in Talbot & Co's letter of 27 June 2001 that the firm did not give such advice. When a formal complaint was made, it was again made clear in the letter of 6 July 2001 that it was not for the firm to justify the stockbroker's advice. It is submitted that there was nothing that could properly support a finding that Talbot & Co had behaved in an antagonistic or defensive manner, or that the firm should have been more balanced and helpful; and there was nothing to justify an adverse conclusion under section 37A. The most that could be said was that some people might have responded differently. Mrs West did not complain about the way her complaint had been handled, but complained about the substance of the matter. There was nothing more the firm could do about that.
- For the Law Society, Mr Peacock submitted that in the initial exchanges Talbot & Co did not make its position clear. Then, Mrs West's letter of 25 June 2001 showed that she regarded Talbot & Co as having advised her in relation to the investments, and requested a review and a meeting. The response of 27 June did not provide the review requested and turned down the request for a meeting unless the firm was re-instructed. The formal complaint, dated 29 June, was again written on the basis that Mrs West thought that she was being given investment advice by the firm. The reply of 2 July might be of very little meaning to someone not conversant with the relevant practice rules and did not meet Mrs West's point that she considered the solicitor to have been involved in advising her. The detailed letter of complaint dated 3 July showed that the position had still not been understood and continued to treat the solicitor as responsible for giving the advice. The reply of 6 July did not answer the concerns and did not explain enough.
- In short, Mr Peacock submitted that a solicitor must understand and consider the complaint and explain clearly his position in relation to it. That was not done in this case. Had it been explained in more detail, the matter might not have snowballed in the way it did. The basic misconception continued for years. In those circumstances it was open to the decision-maker to form the judgment that something different should have been done.
- I accept what Mr Peacock says about the need for a solicitor to understand and consider a complaint and explain his position clearly in relation to it. That is strongly supported by the general tenor of the guidance. On the particular facts of the present case, however, it seems to me that Talbot & Co did understand the complaint being made and did explain its position in relation to it, which was in essence that the investment advice had been the responsibility of the stockbrokers and not the solicitors. It did not handle the matter particularly well, and no doubt the position could have been explained more clearly and tactfully and more could have been done to try to get the message across. But did it deal with the matter so badly as to warrant a finding of inadequate professional services?
- For reasons already given, I do not think that the Panel made a finding on that narrow question, in that it also took into account the conduct of the OSS investigation. But with some hesitation, and after making due allowance for the expert nature of the Panel, I have concluded that such a finding would not in any event have been reasonably open to the Panel. It seems to me that to base a finding of inadequate professional services on the responses made by Talbot & Co to letters from Mrs West and Mr Lang over a period of two to three weeks (let alone on a single exchange of letters, if one proceeds by reference to the formal complaint dated 2 July 2001) would be unreasonable. It is not without significance that Mrs West made no complaint to the OSS about the way her complaint had been handled by Talbot & Co. Her complaint related only to the substantive issue of the investment advice. Moreover, the history of the case as a whole shows that there was no realistic prospect of dispelling the misconception under which Mrs West and her adviser laboured as regards that substantive complaint. They were simply unwilling to accept that the investment advice was the responsibility of the stockbrokers. Even when the Adjudication Appeal had so ruled, Mrs West would not let the matter rest but pursued it to the Legal Services Ombudsman. So the suggestion that more conciliatory handling of the complaint to Talbot & Co might have resolved the matter without the intervention of the OSS is, on the particular facts, unsustainable.
- One of the factors that has helped me to overcome my hesitation about reaching a conclusion on whether Talbot & Co's handling of Mrs West's complaint could reasonably found a finding of inadequate professional services is my view that this entire matter has gone on far too long. On the issue considered in this judgment, it really has made a mountain out of a molehill. I recognise that in the light of the conclusions reached by the Legal Services Ombudsman, the Law Society had no alternative but to refer the matter to the Reconsideration Panel. Having concluded that the Panel's decision was flawed and must be quashed, I am anxious to avoid this leading to yet another round of representations and a fresh decision which, in turn, might be the subject of further challenge in the courts.
- For the reasons given, I shall order that the Panel's decision be quashed. Mr Soole submitted that, in the circumstances that have arisen, I myself should take the decision to which the claim relates, pursuant to CPR 54.19(3), rather than remit it to the Panel, since no useful purpose would be served by remitting it. I would be minded to adopt that exceptional course if an appropriate form of words could be agreed between the parties. Otherwise I would remit the matter to the Panel with a direction to reach a decision in accordance with the judgment of this court, on the basis that the Panel's subsequent decision would be a formal matter and the risks adverted to at the end of the previous paragraph would not arise.
- The parties should endeavour to agree the terms of an Order, failing which I will hear counsel on the matter when this judgment is handed down.
Mr Justice Richards :
The regulatory framework
"Schedule 1A shall have effect with respect to the provision by solicitors of services which are not of the quality which it is reasonable to expect of them."
Services which are not of the quality which it is reasonable to expect of a solicitor are referred to in the side note to section 37A and elsewhere as "inadequate professional services". That is sometimes abbreviated to "IPS".
"The Council may take any of the steps mentioned in paragraph 2 ('the steps') with respect to a solicitor where it appears to them that the professional services provided by him in connection with any matter in which he or his firm have been instructed by a client have, in any respect, not been of the quality which it is reasonable to expect of him as a solicitor."
"Solicitors shall:
(a) give information about costs and other matters, and(b) operate a complaints handling procedure,
in accordance with a Solicitors' Costs Information and Client Care Code made from to time by the Council of the Law Society with the concurrence of the Master of the Rolls, but subject to the notes.
Notes
(i) A serious breach of the code, or persistent breaches of a material nature, will be a breach of the rule, and may also be evidence of inadequate professional services under section 37A of the Solicitors Act 1974.
(ii) Material breaches of the code which are not serious or persistent will not be a breach of the rule, but may be evidence of inadequate professional services under section 37A.
...
(iv) Non-material breaches of the code will not be a breach of the rule, and will not be evidence of inadequate professional services under section 37A. ..."
"Information for clients
(a) Every solicitor in private practice must ensure that the client:
...
(iii) is told whom to contact about any problem with the service provided ...
Complaints handling
(b) Every principal in private practice ... must:
(i) ensure the client is told the name of the person in the firm to contact about any problem with the service provided;
(ii) have a written complaints procedure and ensure that complaints are handled in accordance with it; and
(iii) ensure that the client is given a copy of the complaints procedure on request."
"1. Paragraph 7(b) [of the Code] applies to firms; paragraph 7(a) applies to all solicitors in private practice. The firm's complaints handling procedure should be in writing, and all staff should be aware of the procedure. If a complaint is made to [the OSS] a firm will have to explain its procedure and whether it has been followed. Keeping Clients, a Client Care Guide for Solicitors, published by OSS, contains advice on compliance with the Code ....
(a) Clients should be told that if they have any problem with the service provided, they should make it known.
(b) Clients should be told whom to inform in the event of such a problem ....
(c) The procedure should ensure that any complaint is investigated promptly and thoroughly, that an explanation of the investigation is given to the client and any appropriate action taken. It is advisable to keep a record at all stages.
(d) Clients should be given details in writing of the firm's response to the complaint. If the client is not satisfied (or if there is any doubt) the client should be given information about the OSS ...."
i. Solicitors are advised to be positive about complaints, even to value unjustified complaints (page 69).
ii. Solicitors are advised to "be aware that most complaints start life as minor expressions of concern, confusion or dissatisfaction and often, due to the fee earner's lack of communication and listening skills enabling them to identify when things are not quite right, those expressions go unaddressed early on and grow into complaints" (page 69).
iii. Solicitors are advised when operating their complaints procedure to be fair and to offer explanation and effective remedies (page 70).
iv. Solicitors are advised to ensure that the person dealing with complaints should be capable of doing so "in a tactful and non-adversarial fashion" (page 71).
v. Solicitors are advised to remember that clients may be confused and ignorant, even poorly educated, but that they will not relish being told that they are confused and ignorant and, accordingly, that solicitors should talk the matter through with the client and make suggestions as to how the complaint can be made in the right quarter (page 72).
vi. In the relevant checklist solicitors are advised to be positive, open-minded and frank and not to be aggressive, defensive or suffer wounded pride (pages 75-76).
The factual background and the complaint to Talbot & Co
"I am extremely grateful in the consideration and manner in sparing me the time within your busy schedule to see me on Friday and providing me with a copy of my financial file.
I have been deeply concerned of late as to the great fall in share prices and needed to check items of correspondence within the portfolio file regarding these investments.
Since my late husband's death and on taking your company's advice the financial markets have provided little but sleepless nights, stress and worry over my initial capital investment which has now caused me to seek medical attention.
On reading the correspondence, regrettably this has caused me further anxiety as reading your company's letter from Mr Tom Bramall dated 7th September 2000 the investments I asked for and were agreed in that letter 'quote' low risk with growth and income. This regrettably has not proven to be the case ....
I would like to ask you personally to review the initial advice and whether it was suitable to invest my capital in 'blue chip' companies, and for you personally to offer your co-operation in this matter.
May I ask for an immediate up to date valuation of my portfolio assets ....
On receiving the up to date valuation of the portfolio and reviewing these I would be extremely grateful if we are able to arrange a meeting between ourselves, to assure me my initial capital is secure. Also there are several points I wish to discuss with you personally regarding the portfolio."
"I have some difficulty in answering the points in your letter for the following reasons. Firstly, Talbot & Co does not itself give advice on specific investments but instead obtains advice for its clients. In your case, of course, advice was obtained from Carr Sheppards Crosthwaite. Secondly, I see by your letter to my firm which was received on 19th June 2001 under cover of Brian Mole Independent Financial Advisers Ltd's letter of 16th June 2001 that you say you wish to dispense with my firm's services in acting for you in connection with your investments.
If you wish to withdraw your cancellation of instructions and re-instruct my firm then I will be delighted to consider the matter further and obtain advice as necessary and meet with you ...."
"If Mrs West would like to make a formal complaint then she may wish to contact me with the details of the complaint which I shall then deal with. I can however confirm that my firm complies fully with the requirements in the conduct of investment business laid down by the Law Society."
"I do feel that the previous letter did make Mrs West's intention clear but to reiterate please act on the following.
Who originally provided the advice, if any.
Why were Stocks and Shares recommended when the letter from Mr Bramall to Carr Sheppards Crosthwaite dated 07 Sept 2000 clearly stated LOW RISK. (This letter does conform to giving advice.) Please remember at this point Mr Bramall was acting for Mrs West on her recently deceased husband's estate.
Why on a hand written letter by a member of your practice does it state that after five years investing in Stocks and Shares, Mrs West should seek the advice of an Independent Financial Advisor. Should this not have been suggested in the first place. ...
From the file that you kindly let Mrs West have we are also extremely concerned as to how can Monies be invested of this sum, or any sum for that matter, without adequate fact finding being carried out, unless Execution Only which this clearly was not.
Any form of fact finding that was carried out is dated well after the monies were invested, which is obviously to[o] late.
I could go on with regard to the questions that we have but I feel that you can see from the above and a thorough examination of the content of the file by yourself, that action should be taken as to;
Justifying the recommendation to Mrs West
Satisfying Mrs West's concerns (namely the loss of a substantial sum of money in such a short space of time from a Low Risk Investment).
I hope that the content of this letter makes the position of Mrs West very clear ...
I trust that you will deal with this as a Formal Complaint and deal with it in the appropriate manner."
"Thank you for your letter of 3rd July 2001 which in accordance with your request I am treating as a formal complaint.
I can confirm that having reviewed the matter my firm's conduct in connection with Mrs West's investment complies fully with the Law Society requirements. Furthermore, you will appreciate that it is not for my firm to attempt to justify the recommendations of Carr Sheppard Crosthwaite. I would also add that it is clear from the file that before Mrs West gave instructions to proceed with Carr Sheppard Crosthwaite's recommendation she was informed that alternative advice could be taken from a financial adviser."
The complaint to the Law Society
"Your requirement for us to respond within two weeks is in stark contrast to your own tardiness in dealing with the matter. You have taken over six months to contact us following receipt by you of the complaint. Yet you say that complaints dealt with quickly are more likely to be resolved amicably. There is clearly now no chance of that. We also suspect you are in breach of the solicitor's duty to deal with correspondence in a timely fashion. We may bring your conduct to the attention of the legal ombudsman.
Furthermore, as will become apparent from this letter you will see that your letter is misguided and your detailed questions misdirected. We did not give nor seek to give nor appear to give discrete investment advice. We asked Carr Sheppards Crosthwaite who are financial advisors to do that. You should have immediately written back to Brian Mole Independent Financial Advisors Limited and confirmed to them that we had complied fully with your requirements as we have already told them ....
In response to your largely irrelevant numbered points ....
... If anybody's advice should be questioned it is that of Brian Mole Independent Financial Advisors Limited. Mole Limited are not stockbrokers and are not qualified to give advice on direct stock market investments. Yet it appears Mole Limited advised Mrs West to sell her portfolio after a short period of time and at a loss to her and reinvest in what we suspect are so called bonds. Are you going to report Mole Limited to the Personal Investment Authority or are we going to have to?"
"5.1 Rule 15 of the Solicitors Practice Rules, 1990 states that all firms of solicitors should operate a complaints procedure, and that the firm should ensure that clients are informed of whom to approach in the event of any problem with the service provided. This Office expects firms to demonstrate that they have informed their client of the name of the complaints handling partner and that the firm have taken reasonable steps to resolve the complaint using their internal complaints handling procedures.
5.2 In this particular case, Talbot & Co's response to the formal complaint made by Mr Lang on behalf of Mrs West was that Talbot & Co had complied with the conduct requirements of The Law Society. Talbot & Co did not explain in more detail why they considered that they were complying with the requirements of The Law Society. Mr Simnett did offer to meet Mrs West if she wished to re-instruct Talbot & Co. However, he did not respond to Mrs West's request for a meeting to discuss the way that her investments had been handled.
5.3 I am not satisfied that the firm have taken reasonable steps to resolve this complaint without the need for recourse to this office and therefore recommend that a further finding of inadequate professional service is made on the basis that the firm have not satisfied the requirements of Rule 15."
"The solicitors' attitude to this complaint has, all along, been defensive and at times antagonistic. I am surprised that they cannot put themselves in Mrs West's shoes and see how their actions led directly to a loss of confidence. She has subsequently found out that the solicitors were in contact with the stockbrokers before she knew about it. She also found out that her money had been sent to the stockbrokers before she had given her written consent or any signature on authorisation documents. Once the money had been invested she was not unnaturally alarmed to see the value of her investments falling. It was reasonable for her to place the blame for this at the feet of the solicitors. Like other clients, she had relied on their advice and integrity, she trusted them. Some of that trust might have been preserved if the solicitors had dealt with the complaint more sympathetically, perhaps by offering a full or partial refund of fees. Instead they appear to have regarded Mrs West's genuine complaint as an assault upon their professional integrity. I note in particular that the solicitors have failed to send Mrs West a client care letter in relation to this transaction and I shall take that into account."
Consequent upon his findings, the Adjudicator directed the payment of £500 compensation to Mrs West and made certain other directions.
"Unfortunately, there is one aspect of the Adjudicator's decision that the Adjudication Panel did not address – at least, not explicitly. At first instance, the Adjudicator expressed the view that Talbot & Co's reaction to your complaints had been defensive and (as he put it) 'antagonistic'. Accordingly, he made a finding to the effect that the firm had failed to operate an adequate internal complaints procedure. The Adjudication Panel made no reference to that finding in its written decision and, in the circumstances, there has to be some doubt about whether the matter was actually considered at the review stage.
It seems to me to be undesirable that any such uncertainty should exist and, that being so, I see no alternative but to recommend that the OSS reconsider your complaints, with a view to rectifying the Panel's omission. I therefore so recommend, in accordance with Section 23(2)(a) of the Courts and Legal Services Act 1990."
"... We say that when unjustly complained about, as we were by Mrs West, it is only to be expected that we should be defensive. Ours is an ancient and honourable profession, and it was baselessly claimed, inter alia, that we had improperly taken advantage of Mrs West. Were we not entitled to defend ourselves with all the power we could command? It has been said that 'A lie can travel halfway round the world before the truth has got its boots on'. By the same token, are we not entitled to say that baseless allegations may acquire a spurious legitimacy, particularly in a small provincial town like Burton upon Trent, unless vigorously and comprehensively denied? As to antagonism, we say that we displayed no more hostility to Mrs West and her claims than was justified and entirely understandable in the circumstances. We are surprised that it should be thought wrong. Our responses were measured and responsible, and when and after the matter reached the OSS we were guided by Counsel ...."
"1. The Panel considered the Legal Services Ombudsman's Report of 20 June 2003 and decided that the only matter that it was required to address and consider was whether Talbot & Co had operated an adequate complaints handling procedure.
The Panel noted that the Adjudicator at first instance had found that the solicitors had failed to operate an adequate complaints handling procedure and had noted also the Adjudicator's reasons for such a finding.
2. The Panel was satisfied that in this particular case the solicitors may have had ground to contest the complaint raised by Mrs West. The Panel was of the view that the solicitors' response could and should have been more balanced and helpful to their client and in this regard agreed with the Adjudicator's reasons. In the circumstances the Panel FOUND that the service provided in this case was not of the quality that it is reasonable to expect of a solicitor."
The legal test
The relevance of correspondence after the involvement of the OSS
i. I accept the submission for the Law Society that there is no clear dividing line between the period before a complaint is made to the OSS and the period after such a complaint is made. Section 37A and schedule 1A apply to both and it is possible in principle for a finding of IPS to be based in whole or in part on a solicitor's conduct after the OSS has become involved.
ii. The guidance, however, is directed towards the internal complaints handling procedure operated by the solicitor's firm, not towards the firm's conduct in the course of an investigation by the OSS. The guidance shows the solicitor how he should seek to placate complainants and resolve complaints, with a view to avoiding any need for involvement by the OSS at all. It is true that if the OSS does become involved and requires the complaint to be dealt with by the solicitor because the internal procedure has not previously been utilised, then the guidance is still applicable to the way in which the solicitor deals with the complaint. But it is not applicable to the way in which the solicitor deals with the OSS investigation itself.
iii. Nor could guidance in those terms apply appropriately to the OSS investigation. That is a formal process which can lead to the imposition of sanctions. As it seems to me, there can be no obligation on the solicitor to be conciliatory with the OSS. He must be free to defend himself vigorously. It may be prudent to observe restraint in the language he uses to describe the client or the client's complaint, and indeed in the language he uses to describe the OSS's analysis of the matter, but I do not think that any sensible dividing line can be drawn between a permissible "firm" defence and an impermissible "aggressive" defence. If the solicitor's position is that the complaint lacks substance, he is entitled to express that in the terms he judges best calculated to bring out the lack of substance, even if it involves saying harsh things about the client. The fact that, in the interests of procedural fairness, the representations are copied to the client does not mean that the sensitivities of the client must prevail over the solicitor's rights of defence.
iv. I see no inconsistency between what I have said in paragraph (iii) and the view expressed in paragraph (i) that section 37A and schedule 1A apply at the stage of the OSS investigation as well as before it. In principle, as it seems to me, it is possible for things said or done by the solicitor in the course of an OSS investigation to go beyond the proper exercise of rights of defence and to be relied on in support of a finding that the professional services provided by the solicitor are not of the quality which it is reasonable to expect. What is important, however, is that the things said or done should be viewed in their proper context and that the solicitor's conduct of his defence in the course of an OSS investigation should not be assessed by the different standards applicable, in accordance with the guidance, to the solicitor's internal complaints handling procedure.
The lawfulness of the decision
i. Mrs West herself made no complaint to the OSS about the manner in which her complaint had been handled by the firm. Her complaint to the OSS related to the substance of the firm's conduct in relation to her investments.
ii. The point about the complaints handling procedure first emerged in the caseworker's report of 27 July 2002 and was put on the basis that the firm had not taken reasonable steps to resolve the complaint without the need for recourse to the OSS. The caseworker's remarks were plainly directed to the firm's internal complaint handling procedure prior to Mrs West's recourse to the OSS.
iii. The Adjudicator's decision of 14 October 2002 picked that up, making a finding of inadequate professional services because " they failed to operate an adequate complaint handling procedure".
iv. But it seems to me that the Adjudicator's reasons in respect of that issue encompassed not just the complaint handling procedure but also the handling of the OSS investigation. That is the natural reading of what is said to the effect that the firm's attitude to the complaint "has, all along, been defensive and at times antagonistic"; the expression of surprise that the firm "cannot put themselves in Mrs West's shoes"; and the observation that "they appear to have regarded Mrs West's genuine complaint as an assault upon their professional integrity".
v. The Reconsideration Panel's decision of 13 March 2004 must be taken to have adopted the Adjudicator's reasoning when it states that "[t]he Panel was of the view that the solicitors' response could and should have been more balanced and helpful to their client and in this regard agreed with the Adjudicator's reasons".
vi. As regards (iv) and (v), Mr Peacock conceded that the Adjudicator appeared to have looked at all of the material and that, although the language used by the Panel suggests that it may not have stood four square with the Adjudicator, it too might have looked at the entirety of the material. In my view the concession was rightly made and I go one step further, in concluding that it is very likely that the Panel took into account the entirety of the material in reaching its decision.
Conclusion