Costs: SRA ordered to pay £40,000 on account
The Solicitors Disciplinary Tribunal (SDT) has taken the unusual step of making a costs order against the Solicitors Regulation Authority (SRA) for the “grave errors” it made in a case it eventually had to withdraw.
It ordered the SRA to make an interim payment on account of costs of £40,000 ahead of a detailed assessment.
The solicitor, Jamil Ahmud, is claiming £192,000, including VAT, in all.
The SRA alleged that he dishonestly sought to recover more costs in litigation than he was entitled to, but only interviewed Mr Ahmud’s client years after it started investigating the case. This led SRA to concede that it could not prove the allegations.
The general starting point is that the SRA is not liable for costs even if a prosecution fails, as it is exercising its functions in the public interest. This can be departed from for good reason.
The SRA received a report from a costs draftsman about the costs Mr Ahmud had sought to recover on behalf of ‘client A’, on the basis that he may have been in breach of the indemnity principle; he had been criticised by a costs judge.
The SRA closed the case in October 2016 and told Mr Ahmud it would take no further action. However, it reopened the matter the following February after complaints by the costs draftsman – but it waited for a year to tell Mr Ahmud.
In July 2018, the regulator referred the case to the SDT, including an allegation of dishonesty, without revealing that it had first closed the case. A different panel criticised the SRA for this when Mr Ahmud unsuccessfully tried to have it thrown out for abuse of process in September 2019.
The SRA had relied on documentary evidence to this point and finally decided to interview client A in January 2020.
It applied to withdraw the allegations six months later, because client A’s evidence did not support them.
The tribunal said it was “incumbent” on the SRA to take “reasonable investigatory actions” before bringing proceedings, particularly where it was accusing someone of dishonesty.
“In the circumstances of this case, taking a witness statement from client A was an obvious step and indeed one that was canvassed internally within the SRA as far back as December 2016.”
Though it had been reasonable for the SRA to investigate Mr Ahmud, the SDT said, it then made “a series of grave errors”.
As a result, the allegations were made “improperly and unreasonably”, the SDT ruled. “The tribunal concluded that all matters were infected from the outset with a regrettable injudicious and peremptory lack of professional assiduousness.
“Each of the failings identified was a serious matter and taken together the tribunal was entirely satisfied that [the SRA] had not acted reasonably in the way in which it had brought and pursued the proceedings.”
Therefore there was good reason to depart from the starting point and make an order for costs against the SRA.
It rejected the SRA’s contention that an order would have a ‘chilling effect’ on its work.
“On the contrary,” the tribunal said, “it may make it more likely that prosecutions would be undertaken and pursued in a more diligent manner than this one had.”
As well as making the costs order, the SDT refused the SRA’s suggestion that it should have its costs of the abuse of process application.
In June 2019, Mr Ahmud had offered to bear his own costs if the SRA withdrew the allegations. It did not reply to this or a similar letter two months later.
Mr Ahmud, a partner at central London firm Bloomsbury Law, said: “It is now clear that these baseless allegations should never have been pursued against me. Substantial costs have been incurred in defending these proceedings only for them to be withdrawn at the eleventh hour.
“The SRA’s ‘lack of diligence and transparency’ in this case has wasted the time of both the SDT and myself, as well as squandering the profession’s money.”