GADD v. THE UNITED KINGDOM
Inadmissible
Aleš Pejchal;Armen Harutyunyan;Kristina Pardalos;Krzysztof Wojtyczek;Linos-Alexandre Sicilianos
1. The applicant, Mr Christopher Adrian Gadd, is a British national who was born in 1969 and lives in Hampshire. He was represented before the Court by Mr E. Metcalf, a barrister at Monckton Chambers in London. 2. The British Government (“the Government”) were represented by their Agent, Ms M. Macmillan of the Foreign and Commonwealth Office. 3. The facts of the case, as submitted by the parties, may be summarised as follows. 4. The applicant qualified as a solicitor on 1 September 2006. He joined the firm WB Legal LLP (“WBL”) in March 2008. At that time WBL was a limited liability partnership with two members, namely MB, the managing partner, and a private company called WB Legal Training Limited (“WBLTL”). 5. On 31 August 2008 the applicant became a salaried partner of WBL and a director of WBLTL. 6. After he became a salaried partner of WBL and a director of WBLTL the applicant became aware that MB was defrauding clients and reported him to the Solicitor’s Regulation Authority (“SRA”). MB resigned from WBL and WBLTL in January 2009 and was later struck off the roll of solicitors. 7. Following MB’s resignation, the applicant continued to practice through WBL. As three years’ post-qualification experience was required before a solicitor could supervise a practice alone, another solicitor, PW, became a member of WBL and a director of WBLTL. 8. WBL remained in financial difficulty and was purportedly closed on 30 March 2009. On 2 April 2009 WBLTL, which was already authorised by the SRA to trade as a solicitor’s practice, was renamed Christopher Gadd Limited (“CGL”). Thereafter the applicant and PW practised through CGL, taking some of the client files of WBL with them. 9. On 3 April 2009 WBL was placed into administration by one of its creditors. 10. On 18 May 2009 the SRA wrote to the applicant reminding him that he and PW were responsible for the files, documents, and client money of WBL. In that letter it stated that it was satisfied, in light of assurances previously given by the applicant, that he and PW had attended to the closure of WBL correctly, but warned that the matter could be reinvestigated in future. 11. On 2 September 2009 PW resigned from CGL as the applicant, having achieved three years’ post qualification experience, was qualified to supervise the practice alone. 12. On 4 September 2009 the SRA informed the applicant that information received from WBL’s administrators suggested that the closure of the firm had not been dealt with in accordance with its regulatory requirements. 13. On 15 and 16 September 2009 members of the SRA’s Practice Standards Unit visited the offices of CGL to assess that firm’s compliance with the Solicitors’ Account Rules (“the Rules”), the Solicitor’s Code of Conduct (“the Code”) and other issued codes and guidance. The resulting report dated 28 September 2009 was sent to the applicant. It identified a number of breaches and requested confirmation that these would be rectified. 14. On 19 October 2009 the SRA’s Forensic Investigation Unit commenced an investigation into WBL. On 18 November 2009 a Forensic Investigation Report (“the Report”) concluded, inter alia, that CGL appeared to be the successor practice to WBL; that the administrators of WBL had complained that the applicant had not been helpful in effecting the administration of the firm; that the administrators had received a number of enquiries and complaints from former clients of WBL; and that the client account of WBL appeared to have a shortfall of almost GBP 240,000. 15. The Report formed the basis of a case-note submitted to the SRA’s Panel of Adjudicators. The case-note identified a number of breaches of the Rules and the Code in respect of WBL and recommended that the SRA exercise its powers of intervention in respect of WBL and any other firm or recognised body of which the applicant or PW were members, directors, managers or owners in order to protect the interests of the clients and former clients of WBL. The case-note indicated that due to the urgency of the matter no explanation had been sought from the applicant or PW. 16. On 7 December 2009 the Panel resolved to exercise its powers in accordance with the recommendations made in the case-note. As a result the accounts of both WBL and CGL were frozen and the applicant’s practising certificate was automatically suspended, leaving him unable to practise. Control of CGL passed to a nominated agent appointed by the SRA to manage the firm. The case was referred to the Solicitor’s Disciplinary Tribunal (“the Tribunal”). 17. The applicant was notified of the intervention by fax on the same day. The notice indicated the terms of the Panel’s resolution but the applicant was not provided with a copy of the Report or the case-note. In the course of a telephone call with the SRA on 7 December 2009 and a meeting on 8 December 2009 the applicant was informed that under paragraph 6(4) of Schedule 1 to the Solicitors’ Act 1974 (“the 1974 Act”) he was entitled to apply to the High Court within eight days of the service of the notice for an order directing its withdrawal. 18. On 17 December 2009 the SRA disclosed the Report to the applicant and requested his explanation of the issues identified within it. 19. The applicant subsequently applied to the SRA for his practising certificate to be reinstated. On 4 January 2010 it was restored subject to a number of restrictive conditions. However, CGL remained under the control of the SRA’s nominated agents and was eventually placed into administration on 16 April 2010. The applicant was unable to obtain alternative employment as a solicitor due to the outstanding disciplinary proceedings against him. 20. The professional disciplinary proceedings against the applicant came before the Tribunal on 13 December 2010. The Tribunal found that there had been breaches of the Code and the Rules in respect of both WBL and CGL but it did not find that the applicant had been dishonest or reckless. It ordered that the applicant be suspended from practice as a solicitor for a period of six months commencing on 13 December 2010 and recommended to the SRA that following the end of the suspension period he should only practise in approved employment. 21. On 6 December 2010 the applicant had issued a claim for damages against the SRA in the High Court under the Human Rights Act 1998 (“HRA 1998”). In respect of the applicant’s Convention rights, the particulars of claim asserted that his Article 6 § 1 rights had been breached by the provision of the eight-day limitation period, which precluded effective access to the courts; that as a consequence, he had been deprived of his property rights in CGL, in breach of Article 1 of Protocol No. 1; and that he was entitled to damages for the loss of an opportunity to challenge the intervention. He further complained that the intervention had been contrary to section 28 of the Legal Services Act 2007. 22. At a hearing on 8 September 2011 the claims concerning the Legal Services Act 2007 were struck out by consent. This left a single issue for determination by the High Court; namely, whether the eight-day time-limit contained in paragraph 6(4) of Schedule 1 to the Solicitors Act 1974 was incompatible with the applicant’s human rights. 23. The SRA applied to strike out the applicant’s claim and/or for summary judgment to be entered in its favour. 24. On 13 April 2012 the applicant applied for permission to amend his particulars of claim to assert, inter alia, that there had been a breach of the principle of natural justice, a breach of the rule of law and misfeasance in public office. He also sought to reintroduce a claim for breach of statutory duty. In respect of his Convention complaints, the amended particulars of claim averred that even if the intervention regime was in general compatible with the HRA 1998, the manner in which it was operated by the SRA – and in particular the process which led to the decision to intervene in CGL – had breached his Convention rights on the specific facts of his case. 25. Both applications came before Mrs Justice Sharp on 19 April 2012. She identified three reasons why the claim in relation to the statutory timelimit was hopeless and doomed to failure. First of all, the domestic courts had established that the statutory scheme for intervention was compatible with the Convention (see, for example, the decision of the Court of Appeal in Holder v. The Law Society [2003] 1 WLR 1059, Sheikh v. the Law Society [2006] EWCA (Civ) 1577 and Adams v. The Law Society [2012] EWHC 980 (QB)). Secondly, as the eight-day time-limit was prescribed by statute and not by The Law Society, the SRA could not be held liable for damages or for any breaches of the applicant’s human rights that might result from it. Thirdly, the applicant’s claim was academic since he had not sought to challenge the intervention within any other period which he himself considered reasonable but instead had waited twelve months before bringing a claim by a different and inappropriate procedure (the claim under the HRA 1998). 26. The judge noted that all other matters complained of were 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)”. As such, his claim was “a collateral challenge to the intervention process by other means” and an attempt “to circumvent the statutory limitation on the right of challenge”. It was not open to the applicant to do this and, in the circumstances, his attempt to do so was an abuse of the process. 27. In conclusion, the judge noted that the applicant had been well aware of the eight-day time-limit, and there was “no evidence at all” that he had lacked sufficient resources to challenge the intervention when all that would have been required in the first instance was the court fee to issue a claim. Had he been genuinely unable to pay the fee it would have been open to him to apply to the SRA’s nominated agent for the release of some of CGL’s frozen practice money to use for that purpose. 28. With regard to the application to amend the grounds of appeal, the judge found that the claim for breach of statutory duty was misconceived; the common law principles of natural justice did not apply to the intervention process and, in any case, any procedural unfairness in the process leading to the intervention could have been raised in a statutory challenge to the intervention; the newly advanced claim for breaches of his human rights was only notified to the SRA in April 2012, and the limitation period for bringing such a claim had been one year from the date of the alleged breach; a “ breach of the rule of law” was not a pleading known to English law, but insofar as he was claiming that The Law Society acted ultra vires, such a challenge could have been made under the statutory procedure; and finally, the claim for misfeasance in public office was not maintainable in the circumstances. 29. Having found that the applicant’s claim had no real prospect of success, the judge refused the application for permission to amend the particulars of claim and ordered summary judgment to be entered in favour of the SRA. 30. On 10 May 2012 the applicant applied for permission to appeal the judge’s order on the ground that it was arguable that at least in exceptional cases a challenge to an intervention could be brought outside the eight-day time-limit, and the present case was exceptional on account of his impecuniosity and the fact that he had not been provided with reasons for the intervention until 21 December 2009. Permission was refused on the papers. The application was then renewed orally before the Court of Appeal on 6 June 2013 but permission to appeal was again refused. 31. In refusing permission to appeal, the Court of Appeal found that even if it were to assume that the eight-day time limit could be read down to allow for out-of-time applications in exceptional cases, this was not an exceptional case. First, impecuniosity was not a justifiable basis for not having brought a statutory challenge in time. The proceedings in the present case were not especially complex and the applicant was a solicitor who should have been well able to deal with the allegations against him. It was therefore not arguably necessary that he should have been provided with legal assistance. Secondly, although it was “difficult to understand” why the Report and the case-note had not been disclosed to the applicant prior to the expiry of the eight-day time limit, and there was some merit in the contention that it may have been difficult for him to have pursued proceedings without the Report, on the facts of the case the court did not consider this to be a ground for reading down the eight-day time limit. In particular, it noted that the basis of the applicant’s complaint was essentially that he had acted in good faith and co-operated with the authorities in relation to the wind-up of WBL, and those were matters which had been known to him when he received the original notice of intervention. Furthermore, even if some departure from the eight-day period was justified by reference to Convention principles, it had plainly been critical for the applicant to have acted very speedily thereafter. However, while he did take steps to get himself put back on to the register so that he could practice as a solicitor, he had taken no steps in relation to the intervention for twelve months. There was no reasonable prospect for saying that the time-limit should be read down so as to allow a challenge so long after the expiry of that period. 32. The Law Society is the governing body of the solicitors’ profession. It has a regulatory function and regulatory powers under the Solicitor’s Act 1974 (“the 1974 Act”), which it exercises through the SRA. Under section 35 of the 1974 Act, The Law Society is given the power to intervene in a solicitor’s practice in circumstances specified in Part I of Schedule 1 to the 1974 Act by exercising any or all of the powers set out in Part II of Schedule 1. 33. Paragraph 1(1) of Part I to Schedule 1 provides that The Law Society may exercise its right of intervention where, inter alia, it has reason to suspect dishonesty on the part of a solicitor in connection with that solicitor’s practice or in connection with any trust of which that solicitor is or formerly was a trustee; where it is satisfied that a solicitor has failed to comply with rules as to professional practice, conduct and discipline; and where it is satisfied that it is necessary to protect the interests of clients (or former or potential clients) of the solicitor or his firm. 34. Part II of Schedule 1 sets out the powers available to The Law Society upon intervention. Under paragraph 6, The Law Society has the power to take control of the practice’s accounts. 35. Finally, section 15 of the 1974 Act provides for the suspension of the solicitor’s practising certificate in the event of an intervention. 36. The 1974 Act allows an intervened-upon solicitor to apply to the High Court to request the withdrawal of an intervention. Under paragraph 6(4) of Schedule 1, a decision to take possession of the practice monies can be challenged within eight days of the service of the notice by application to the High Court for an order directing The Law Society to withdraw the notice, with not less than forty-eight hours’ notice to The Law Society. Paragraph 6(5) provides that upon an application under paragraph 6(4) the High Court may make such an order as it thinks fit. 37. Section 3 (1) of the HRA 1998 requires, so far as possible, that primary legislation and subordinate legislation be read and given effect in a way that is compatible with Convention rights. 38. Section 7(1) of the HRA 1998 further provides that a person who claims to be a victim of an unlawful act by a public authority may either bring proceedings against the authority under that Act in the appropriate court or tribunal, or rely on the Convention rights concerned in any legal proceedings. Subject to any rule imposing a stricter time limit in relation to the procedure in question, proceedings brought under the HRA 1998 should be brought within the period of one year beginning with the date on which the act complained of took place, or such longer period as the court or tribunal considers equitable having regard to all the circumstances. 39. Under section 16(3), a solicitor may, at any time before the expiry of his practising certificate, apply to The Law Society to have the suspension of the certificate terminated. Under section 16(4), upon receipt of an application The Law Society may terminate the suspension either unconditionally or subject to such conditions as it may think fit. 40. If The Law Society refuses the application or terminates the suspension subject to conditions, the solicitor may appeal against that decision. 41. In Holder v. Law Society [2003] 1 WLR 1059 ,[2003] EWCA Civ 39 the Court of Appeal accepted that an intervention under the 1974 Act gave rise to an interference with a solicitor’s right to peaceful enjoyment of his possessions under Article 1 of Protocol No. 1 to the Convention. However, having regard to issues of proportionality and the margin of appreciation it concluded that both the legislation itself and the approach taken by The Law Society had struck the fair balance required by Article 1 of Protocol No. 1. 42. Sir Christopher Staughton, who agreed with the leading judgment of Lord Justice Carnwath, observed: “38. In the exercise of its powers of intervention the Law Society must of course comply with the Human Rights Convention. I can imagine circumstances where the Law Society might be found not to have complied with the Convention, or with the Human Rights Act 1998. After all, a solicitor whose practice is the object of an intervention loses his practising certificate, and in all probability his livelihood as well. The provisions for bringing an intervention to an end are very unlikely to restore the solicitor’s goodwill and his prosperity. If it comes about that the intervention was mistaken or unjustified, there is a risk that the solicitor will suffer a substantial loss without recourse to any remedy. In practice this may never happen; but it is a cause for concern. However, not in this case.” 43. In Sheikh v. Law Society [2007] 3 All ER 183, [2006] EWCA Civ 1577 Chadwick LJ, at the end of his leading judgment, made further obiter comments regarding the summary process for bringing a statutory challenge to an intervention and its compliance with claimants’ Convention rights of in light of the decision in Holder: “110... In Holder v Law Society [2003] EWCA Civ 39, [2003] 1 WLR 1059, this Court considered – and rejected – an argument that the procedure for which Parliament had made provision was incompatible with the solicitor’s Convention rights. It rejected that argument (inter alia) on the basis that the court’s power to consider whether a fair balance has been struck between the demands of the general interest of the community and the protection of the individual’s fundamental rights met the requirements of Article 1 of the First Protocol. But it is clear that, unless the matter can be determined by the court within a short time of the intervention, the solicitor is likely to be denied an effective remedy. That is because the consequences of intervention – if the intervention continues for more than a short time – are likely to be irreversible. The solicitor’s clients will have to take their affairs elsewhere; the staff will have found other employment; and the practice will be destroyed in any event. 111. There is an obvious tension between the need to have an application to the court determined speedily and the need for the court to give full and fair consideration to the task which it has been set under the 1974 Act and, now, the Human Rights Act 1998. This case illustrates the need for the Society to give thought as to how that tension can be resolved... 112...The Society should, I think, give thought to the need for Panel resolutions to identify, with much more specificity than in this case, the reasons which (in the Panel’s view) make intervention necessary. If those reasons are not identified at an early stage, there is a danger that the solicitor will be denied the effective protection which Parliament plainly intended a summary process to provide. 113. There will, of course, be many cases in which the solicitor who has suffered intervention will be in no doubt as to the Society’s concerns. And, as I have said, there will be cases where the solicitor wishes to challenge the validity of the resolution on public law grounds. But, in cases where, although the solicitor knows what material was before the Panel, there is genuine doubt as to the matters which the Society regards as sufficiently serious to justify intervention, it seems to me that the court should be ready to assist – on an early application for directions following the issue of an application under the schedule 1 procedure – by requiring the Society to state the grounds upon which (on the material then known to it) the application will be resisted. Such a statement would enable the solicitor to address the Society’s concerns in a focused response. And, in the light of that response, the Society can explain to the court why it takes the view (if it does) that the concerns have not been met. 114. I appreciate that the process suggested in the previous paragraph may require the court to adopt a more pro-active role on applications under schedule 1 to the 1974 Act than hitherto; and that the need for an early determination of such applications will place demands on the court’s resources which it may be difficult to meet. But, as it seems to me, the court will be ready to meet those demands in order to ensure that the solicitor does obtain the effective protection which the Convention requires and which the 1974 Act was plainly intended to provide.”