UK: The Legal Ombudsman – A Fine Line Between "Fair And Reasonable" And Irrationality?

The Legal Ombudsman ("LeO") for England and Wales was set up by the Office for Legal Complaints in October 2010, under the auspices of the Legal Services Act 2007. LeO is "an independent, consumer focused ombudsman scheme set up to resolve complaints about lawyers in England and Wales", and provides a free complaints resolution service to consumers such as members of the public, small businesses, charities and trusts.

Although LeO has been running for almost four years, there have been only four legal challenges to its decisions in that time – three of them in the last six months. In this Legal Update, we focus on the successful challenge in R (Crawford) v The Legal Ombudsman (2014), in which the High Court has confirmed that, although LeO is afforded a wide discretion to decide what is fair and reasonable (based sometimes on limited evidence), decisions will be overturned if an applicant shows that the decision making process is not logically capable of supporting the conclusion.

The Applicant, Lincoln Crawford OBE (a barrister), sought to challenge by way of judicial review, LeO's decision in respect of a complaint by a former client of Mr Crawford, Mr Noor. Mr Noor initially complained via the complaints system of Mr Crawford's chambers, but his complaint was rejected and he pursued matters through the ombudsman. The complaint was reviewed by a LeO caseworker, who advised that it should be dismissed on the grounds that a reasonable level of service had been provided. Mr Noor challenged this decision and it was referred to the Deputy Chief Legal Ombudsman for review.

LeO final decision

The Deputy held that the advice provided at a conference between Mr Crawford and Mr Noor was limited and that, as a result, Mr Crawford should return half of his fee to Mr Noor. This decision was based on the fact that Mr Crawford had failed to provide LeO with a copy of his note of the conference with Mr Noor (Mr Crawford argued that it was for Mr Noor to provide evidence in support of his claim).

The Deputy's expectation was that Mr Crawford would have taken notes at the conference, including details of any advice provided, and would then have followed up the conference with a written note, so there could be no confusion as to what advice had been given. In the absence of such a note, the Deputy was unable to say with any certainty what was discussed at the meeting and whether any advice was provided. As Mr Crawford had had ample opportunity to produce evidence to the contrary the Deputy found that it was reasonable to infer that Mr Noor was provided with little substantive advice.

In reaching this decision, the Deputy accepted that, as Mr Noor had prematurely left the conference while Mr Crawford was out of the room, Mr Crawford did not have an opportunity to provide any kind of summation of the advice given. Further, he worked on the basis that Mr Crawford would have done some preparatory work/reading before the conference. In light of the fact that some advice was deemed to have been given and some work carried out, it was appropriate that, although there had been poor service which required a remedy, Mr Crawford was only required to return half of his professional fee.

It is important to note that the final finding of poor service did not relate to the legal content of the advice given but rather to the failure to provide more than limited advice, having accepted instructions to provide initial advice and having been paid by Mr Noor to do so.

Mr Crawford sought to challenge LeO's decision by way of application to the High Court for judicial review.

The High Court decision

In determining the application, the Court first examined the scope of LeO's remit, by reference to the relevant statutory provisions under Part 6 of the Legal Services Act 2007 ("the Act"), namely:

  • Section 113(1) the purpose of the LeO scheme is to enable complaints to be resolved quickly and with the minimum formality and by an independent lay person (legally qualified or not)
  • Section 137(1) a complaint to is to be determined "by reference to what is, in the opinion of the ombudsman making the determination, fair and reasonable in all the circumstances of the case"

The court also referred to the following Scheme Rules ("the Rules") pursuant to the Act:

  • Rule 5.24 – which provides that, amongst other things, LeO may include/exclude evidence which would be inadmissible/admissible in court, make a decision based on what has been supplied, and draw inferences from any party's failure to provide information requested
  • Rule 5.37 – which provides that, in determining what is fair and reasonable, LeO will take into account (but is not bound by) a) what decision a court might take b) the relevant Approved Regulator's Rules of Conduct and c) what the ombudsman considers to have been good practice at the time of the act/omission

The Court concluded that LeO is intended to resolve complaints swiftly and informally such that individual ombudsmen will often have to do the best they can on limited material and without hearing detailed evidence. To assist in these objectives, LeO may therefore rely on evidence which would not be admissible in court and may draw adverse inferences from a failure to provide information or documents, and is afforded considerable latitude of discretion when he assesses what is fair and reasonable in the circumstances. It is notable that LeO is not bound by the Approved Regulator's Code of Conduct (although he must take account of it) and he may apply his own standards of what he considers to have been good practice at the time.

Ground of Judicial Review

Mr Crawford submitted that LeO's decision was unreasonable within the meaning of the principles laid down in Associated Provincial Picture Houses Ltd v Wednesbury Corporation (1948). In particular, Mr Crawford maintained that the decision was irrational in the proper sense of the word, namely that LeO's reasoning was so illogical as to be incapable of supporting the conclusion reached. The Court reiterated that this was a high threshold, especially in the context of a scheme intended to resolve complaints swiftly and informally, and where the decision maker was afforded wide discretion.

The Honourable Mr Justice Popplewell held that the decisions of LeO "are to be read with a degree of benevolence" and were not to be construed as if they were statements or judgments or "subjected to pedantic exegesis". However, he found it impossible to read the final decision of LeO in any other way than as adopting an illogical process of reasoning as the sole basis for its conclusion.

The court found that LeO had taken an adverse inference from the absence of a contemporaneous note of the conference while also recognising that Mr Crawford was entitled not to have made such a note, and that no such note may have been taken in any event (as claimed by Mr Crawford).

Therefore, the court held that, as LeO had recognised the possibility that Mr Crawford had not taken a note at the conference, no inference could logically be drawn from the failure of Mr Crawford to provide a note to LeO as to a) what a note would have revealed had one been taken (or as to what occurred at the conference) and b) the extent of the advice actually given by Mr Crawford. As LeO had used the failure to provide a note as the only ground for concluding that the advice was limited, the decision was therefore irrational and failed under the test of Wednesbury reasonableness.

Comment

There have been two further judicial reviews of LeO decisions since Crawford: R on the application of Hariz & Haque Solicitors v Legal Ombudsman & Tahira Quereshi (2014), and R (on the application of Rosemarine) v The Office for Legal Complaints [2014].

In Hariz & Haque the decision of LeO was overturned in relation to a dispute over solicitor's fees going to the standard of service the interested party had received. In this case, there was a dispute as to whether attendance notes seemingly supporting the solicitors' position had been received by LeO. The Court held that, in the absence of any evidence to indicate that the attendance notes had not been received by LeO (and LeO had not provided a witness statement confirming the position), the Court would assume that LeO had received the notes, on the balance of probabilities. The Court held that the attendance notes supported the position of the solicitors as to what services were agreed with the client within the fixed fee arrangement, and found LeO's decision to be contrary to those attendance notes. As such the decision was irrational and illogical, and failed the test of Wednesbury reasonableness.

In Rosemarine, a barrister alleged bias by LeO in considering a complaint, and challenged the reasonableness, fairness and jurisdiction of LeO's decision. LeO had actually dismissed the substantive complaint over Mr Rosemarine's handling of an immigration matter, but found that he had provided poor service in refusing to respond to the complaint pending receipt of various papers from his client, which LeO found to be "unnecessary and obstructive" and amounting to poor service, in light of a straightforward complaint.

Further, LeO said the final response Mr Rosemarine did eventually send was "offensive and unprofessional in tone" and included "repeated allegations of illegality and criminality", and also amounted to poor service. The Court found that the final response could be read in two ways, either as concealed allegations of fraud and criminality or as innocent observations. Because there were two possible ways of construing the response, the Court found that the decision of LeO could not be outside a range of reasonable conclusions and, therefore, failed the test of showing irrationality or illogical decision making. It is interesting to note that a similar decision was reached in the first judicial review of a LeO decision; in R (Layard Horsfall Ltd) v Legal Ombudsman [2013], whilst it was acknowledged that a Court may find a decision by LeO irrational if there is a misunderstanding or incorrect analysis as to the facts, in the circumstances of the case, the ombudsman's decision was not wrong, let alone irrational.

The more recent decisions confirm that the discretion conferred on LeO by the "fair and reasonable" jurisdiction is a broad one, which accords with its primary objectives, being the quick and informal resolution of disputes by an independent layperson. However, this discretion is not unlimited and, if the sole basis for a decision is founded on illogical reasoning, it can be overturned for irrationality.

It is, perhaps, only to be expected that there should be challenges to the decisions of a relatively youthful organisation in its early years, although four judicial reviews in a matter of months may be something of a record – in contrast, there have been just two judicial reviews of the decisions of the Financial Ombudsman Service ("FOS") in the last 12 months. This may of course be a result of FOS casehandlers being more practiced and secure in their decision making - LeO has only been in existence for a relatively short length of time and its case-handlers and decision makers are still adjusting to their role and remit, and to the exercise of their wide discretion. In such circumstances, it is notable that only two of the four judicial reviews have successfully overturned the LeO decisions. Nevertheless, it remains to be seen how long the process of adjustment and bedding-in will take, and we await judicial review number five with interest.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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