Pievsky: Capacity decision irrational
The Legal Ombudsman (LeO) was wrong to find that a law firm failed to adequately assess a client’s capacity and should pay her £15,700 in compensation, the High Court has ruled.
But it upheld LeO’s separate finding that London family law firm Aina Khan Law (AKL) should pay the client £35,500 for failing to update her on the escalating costs of her divorce proceedings.
Sitting as a deputy High Court judge, David Pievsky KC said that notwithstanding “the wide latitude” Parliament had given LeO to decide what was fair and reasonable in all the circumstances of a particular case, “I am unable to accept that the conclusions about capacity in the decision were rational”.
AKL acted for ‘CXV’ in sensitive proceedings in 2020 and the following year the client complained to LeO about poor service.
Though the initial investigator concluded that the firm’s service had been of “a reasonable standard”, on review an ombudsman decided that it was not. She said the firm had not adequately assessed CXV’s litigation capacity and the costs were excessive.
The ombudsman set the compensation at £51,200, made up of a £35,500 refund of the costs paid – “as a remedy for the impact of the firm’s poor service relating to costs” – and a further fee reduction of £15,700, 20% of the net fees paid by CXV, over the capacity issue.
AKL sought a judicial review. Judge Pievsky found that the ombudsman conflated indications of mental health conditions with those of a lack of capacity, “or at best failed to keep the critical distinction between those concepts in mind”.
LeO said it was clear from the outset that CXV was suffering from mental health issues. But, the judge ruled, it did not address “whether those ‘issues’ had consequences such as to require a reasonable solicitor to have doubts about the potential client’s capacity, and if so why”.
LeO relied in particular on the facts that the client had been referred to a psychiatrist and was taking amphetamines for ADHD, but these did not indicate a loss of capacity, he went on.
There was also no evidence that LeO “had regard to or grappled with” the urgency of the matter, and “that divorce and family proceedings often involve individuals who present from the outset as distressed, emotionally raw, depressed, or even (in some cases) delusional”.
Further, LeO failed to explain why it was not “adequate” or “reasonable” for Ms Khan, an experienced family law practitioner, to have considered that the client did have capacity, albeit she was in distress and had some mental health issues, and to have checked her own view with that of leading counsel.
On the costs, however, AKL failed to show that LeO had acted irrationally. The ombudsman said the firm twice told CXV that the original £43,500 costs budget for her case had been substantially exceeded – first topping £65,000 and then £89,000 – but on each occasion this was inadequate.
LeO said the firm should have informed and explained the costs position at an earlier stage, and that the failure to do so amounted to poor service.
Judge Pievsky said: “Other than by arguing that the entire decision was infected by the defendant’s unlawful approach to capacity, the claimant has not specifically provided the court with any reason to think that those particular findings were in themselves irrational. I do not consider that they were.”
While the £15,700 award had to be quashed along with the finding on capacity, the award of £35,500 was not “infected”, the judge concluded.
“It is a stand-alone finding, in the final analysis squarely based on the defendant’s view that the claimant did not provide [CXV] with timely costs updates.”
AWL sought £47,590 for its costs of the judicial review. Judge Pievsky said he would have awarded 60% of this on the basis that it was the overall winner, but reduced this to 40%, or £19,036, “to reflect the court’s disapproval of the claimant’s failure to have filed the relevant evidence in this case at the appropriate time”, a failure which led to the substantive hearing being adjourned.
He also refused AWL permission to appeal.
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