England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		06/05/2010

The Hon. Mr. Justice Saunders:

1. This is an application for Judicial Review to quash a decision of the Defendant that the Claimant provided inadequate professional services to the Interested Party, Thandie Tobo. In consequence of that finding, the Claimant was directed: (a) to release those documents, belonging to the Interested Party, over which it was exercising a lien; (b) to pay a total of £7,538.92 in compensation to the Interested Party and (c) to pay costs of £840 to the Defendant. These findings were made by an Adjudicator on behalf of the Defendant and it is her decision given in writing on 6^th March 2009 which is challenged in these proceedings.
2. There are three grounds for the challenge:

i) The Adjudicator had no power to make the order that she did.

ii) The Adjudicator did not give adequate reasons for her decision.

iii) Her decision was Wednesbury unreasonable.

3. Before dealing with the statutory regime, I shall briefly set out the material facts. In October 2007, the Interested Party instructed the Claimant to apply to the Home Office for indefinite leave to remain on her behalf. There is a dispute between the Interested Party and the Claimant as to the fee which was agreed for this work. That dispute has been rightly referred to the Solicitors Regulatory Authority because it includes cross-allegations that documents which are not genuine have been used to support the accounts which have been given. For the purpose of her decision, the Adjudicator acted on the basis that the Interested Party agreed to pay £600 to the Claimant for the work done. It is agreed that £100 was paid at the time the instructions were given, leaving £500 outstanding.
4. The application to the Home Office was successfully completed and the necessary documentation recording the indefinite leave to remain was sent by the Home Office to the Claimant. The Interested Party refused to pay £500 as she said she had not agreed to pay that amount and the Defendant exercised a lien over the documents to ensure that payment was made.
5. On the 18^th March 2008, the Interested Party complained, inter alia, to the Defendant that the Claimant was retaining documents which prevented her from claiming benefits and it was important that they were returned as the financial support she was getting as an immigrant would cease on 24^th March. She said that she had tried to get help from a number of different sources but even with assistance she was unable to get the documents back from the Claimant. There is no evidence that by the time of this complaint the Interested Party had suffered any loss. This part of the complaint made by the Interested Party was treated by the Defendant as a complaint that the Claimant had not provided adequate professional services to the Interested Party.
6. In accordance with the Defendant's normal procedure, a Caseworker, Susan Khaira, was appointed to investigate the complaint. On 21^st May 2008, Ms. Khaira concluded that the Claimant had provided adequate professional services to the Interested Party and said that the file would be closed in the absence of further documents to support the complaint. In effect she decided that the Claimant was entitled to exercise a lien on the documents. The letter concluded, 'On the information provided to me, I am satisfied that you have been provided with an adequate professional service. However, if there is any further information that you would like me to consider, please provide this to me by 28^th May 2008. If I do not hear from you by this date, I will be closing the file on the basis that the firm have provided an adequate professional service.' The Interested Party did not provide further information within that period and accordingly the file was closed.
7. As far as I can see from the correspondence, the Claimant thought the matter had been concluded until it received a letter sent by the Defendant dated 15^th September. That informed the Claimant that the matter had been re-opened because the letter of the 21^st May 2008 had not been received by the Interested Party until much later and, accordingly, she had been given an extension to make further representations, which she had done on 14^th July. Part of those further representations impliedly alleged that the Claimant had falsified documents in order to justify his demand for £500.
8. A different Caseworker had been assigned to the case, Joanne Elliott, and she informed the Claimant that the case had been re-opened on 15^th September 2008. On 19^th November Joanne Elliott wrote to the Claimant saying that the Interested Party was unable to claim benefits without the documents which had been retained under the lien, and asking that they be delivered up to the Defendant. On 26^th November the Claimant replied, refusing to do so and pointing out that the previous Caseworker had come to the conclusion that the Claimant was entitled to rely on a lien to retain the documents.
9. The matter was then referred to an Adjudicator, Emma Boothroyd, for decision. She decided to refer to the Solicitors Regulation Authority (SRA) the issue of what was originally agreed as to the fees. That reference is not disputed. I am told that the SRA have not dealt with that matter because they are awaiting the outcome of this hearing. I do not understand why that has been necessary.
10. In dealing with the other aspect of the complaint, that is the retention of the documents, the Adjudicator dealt with that on the basis that there was a proper bill for £500 which had not been paid by the Interested Party. She also accepted that the Claimant was entitled in law to exercise a lien over the documents to ensure payment of the bill. The Defendant makes the same concession at this hearing.
11. Allegations of inadequate professional services are investigated by the Legal Complaints Service operated by the Defendant. The statutory regime for the investigation and determination of such allegations is to be found in Section 37A and Schedule 1A of the Solicitors Act 1974. The relevant parts of Schedule 1A are as follows:

Para. 1 (1) 'The Council may take any of the steps mentioned in para.2 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.

Para. 2 (1) The steps are- (and I include only those which are relevant to this application)

(c) directing him to pay such compensation to the client as the Council sees fit to specify in the direction.

(d) directing him to take, at his expense or that of his firm, such other action in the interests of the client as they may specify.

12. By s. 31(1) of the Act the Defendant has power to provide a Code of Conduct to regulate the conduct of Solicitors. Rule 2 of the Code sets out the requirement to advise a client of the Solicitor's right in certain circumstances to exercise a lien for unpaid costs. The Defendant has issued Guidance to assist Solicitors in understanding how they should conduct their business in accordance with the code. Para 11 of the Guidance to Rule 2 states: 'When you cease acting for a client, you will need to consider what should be done with the paperwork. You must hand over the client's file promptly on request subject to your right to exercise a lien in respect of outstanding costs. You should try and ensure the client's position is not prejudiced, and should also bear in mind his or her rights under the Data Protection Act 1998. Undertakings to secure the costs should be used as an alternative to the exercise of a lien if possible. There may be occasions where it is unreasonable to exercise a lien, for example where the amount of the outstanding costs is small and the value or importance of the matter is very great. In any dispute over the ownership of documents you should refer to the law. Further advice about the law of lien or the ownership of documents can be found in Cordery on Solicitors or other reference books on the subject.'
13. In reaching her decision, the Adjudicator relied on para. 11 of the Guidance to Rule 2. She decided that it was unreasonable in all the circumstances of the case for the Claimant to exercise a lien on the passports and the other documents that the Interested Party needed to make her claim for benefit. The basis for her decision is to be found at para. 2.15 of her decision where she says: 'In these circumstances Miss Tobo has been unable to apply for tax credit or child benefit. Miss Tobo has three children and is in a very difficult financial position. As a consequence of the Solicitors failure to release the documents she has lost £6,538.92 in benefits. In these circumstances I consider that the firm unreasonably exercised a lien over the passports and this is inadequate professional service.' She then determined that Miss Tobo had suffered a loss of £6,538.92 and ordered reimbursement of that amount. That is the total loss from the date in March when the complaint was first made. She also required the Claimant to hand over the documents to the Interested Party.
14. The Claimant asserts that there are two errors of law to be found in the adjudication. It is submitted in effect that it can never be unreasonable to exercise a lien and that that part of the Guidance is wrong. I am reminded in support of that submission that the Solicitor has a legal right to exercise a lien and it is plain that a lien will only be effective if it is exercised over some property which has some value to the client. If, it is argued, the sentence in the Guidance, which says it may be unreasonable to exercise a lien, is read subject to the last three lines, which recommend the practitioner to go to the legal textbooks for guidance on the law, it can never be unreasonable to exercise a lien. That is because the legal textbooks make it clear that a solicitor has an absolute legal right to exercise a lien over the property of a client who has failed to pay the bill. Further it is argued that the Adjudicator had no power to order the delivery up of the documents the subject of the lien. Again the legal right of the Claimant to exercise the lien is relied on as well as a number of cases where the Court has said that it (i.e. the court) has no power to order the handing over of documents which are the subject of a lawful lien. If the Court has no such power, it is argued, how can the Defendants?
15. I do not accept either of those submissions. The whole basis for the legal complaints procedure is that the services provided by the Solicitor should be of a quality which it is reasonable to expect of him. In my judgment, there may well be circumstances where it would be unreasonable to exercise a lien, even bearing in mind that the more valuable the property withheld then the more likely it is that payment would be obtained. The mere fact that it is legal for the Solicitor to exercise a lien does not mean that it cannot be unreasonable to do so nor is there any reason why the Defendant should not regulate those occasions. That is in my judgment encompassed in the power given to the Defendant in the Solicitors Act. It does not make sense to me to read the Guidance in the way which is suggested by the Claimant. If the exercise of a lien may, in certain circumstances, be unreasonable, then there is no reason why the Defendants should not have the power to direct the Solicitor to return those items which it was unreasonable to retain. Such a power comes within the wording of para. 2(1)(d) of Schedule 1A of the Solicitors Act 1974 and I see no justification for not giving those words their natural meaning. If the Solicitor fails to comply with that direction, then he can be referred to the Solicitors Regulation Authority which can then decide what, if any, further action should be taken.
16. It was, in my judgment, open to the Adjudicator, if this was an appropriate case on the facts, to make the finding and give the directions that she did. I also accept that the setting of the standard of what is reasonable is for the Adjudicator and not for me. It is for solicitors, not me, to decide the appropriate standards to be followed in the provision of services by the profession. However, that is subject to the Adjudicator adequately setting out her reasons for her decision and that her decision is not Wednesbury unreasonable. The Claimant asserts that the Adjudicator did not give clear reasons and, in the absence of reasons to explain it, the decision is Wednesbury unreasonable.
17. I accept that this is intended to be a summary procedure. I also accept that it is unnecessary for the reasons to be lengthy and, where a decision is being made between two different factual situations, it is not necessary to explain in detail why one is accepted rather than the other. The requirement is to give sufficient reasons for the decision so that the parties can understand why it has been reached. I do not believe that that proposition is disputed.
18. In this case the Adjudicator appears to have concluded that it was unreasonable for the Claimant to have retained the documents at all. I say that because part of her order was that all the benefit that could not be claimed had to be paid in compensation by the Claimant. Before any such conclusion could be reached, a finding would have to be made that the Claimant knew from the outset that by retaining the documents the Interested Party would be unable to get benefits. It may be that the Claimant did know that from the outset but there is no direct evidence of it and, if the Adjudicator did reach that conclusion, she does not say so. If the Claimant did not know that, then how could it be said to be unreasonable of him to retain the documents? Had the Interested Party suffered any sort of loss when the Claimant first retained the documents? Was it unreasonable for the Claimant to continue to retain the documents when the case worker employed by the Defendant had decided that, on the evidence with which she had been supplied, there was no basis for the complaint that the Claimant should not have exercised a lien over the documents? It seems to me that those questions needed to be answered by the Adjudicator. Otherwise how could the Claimant know from the written reasons why it was unreasonable not to have handed over the documents as soon as they were received from the Home Office and if it wasn't unreasonable then, when did it became unreasonable. None of that is made clear in the reasons.
19. It was not until 19^th November 2008 that the new Caseworker wrote to the Claimant asking for the documents to be forwarded to her so that the Interested Party could claim benefits. It seems to me that it was incumbent on the Adjudicator to indicate when it became unreasonable for the Claimant to exercise a lien over the documents and why. If from the outset, what matters made it unreasonable to retain the documents. If it only became unreasonable at a later stage then she should have identified the stage and what had happened to make it unreasonable.
20. Alternatively, it is submitted that the decision is Wednesbury unreasonable. In the absence of proper reasons given for the decision which was reached, it is impossible to say whether the decision is irrational or not. It seems to me that the proper basis for the attack of this decision is the inadequacy of the reasons given. I would be reluctant to make a finding that the decision was irrational without having the opportunity to consider whether there are reasons which justify it.
21. The Defendant reasonably complains that the basis on which I have made this decision has not been pleaded and therefore the Adjudicator has not had any opportunity of dealing with it in a statement. That is despite a previous adjournment which gave the Claimant every opportunity to properly plead the case. This matter came for hearing before Charles J. on 28^th October 2009. It was adjourned on terms following an indication from the Judge that a reasons claim should be included. The Grounds for Judicial Review were amended to add such a claim but the substance of those grounds related to factual disputes between the parties. Those amended grounds do not identify the areas which I have identified where reasons should have been given. While I accept that this is an unsatisfactory position so far as the Defendant is concerned, I am unwilling to ignore what I consider to be the unsatisfactory nature of the Adjudicator's decision. Further, I do not consider that this is a case where the defects in the reasoning were capable realistically of being cured by a further statement from the Adjudicator.
22. For those reasons the decision of the Adjudicator is quashed.