ADVERSE INFERENCES DRAWN WHEN SOLICITOR DID NOT GIVE EVIDENCE: IF YOU’VE HAD £22 MILLION YOU NEED TO EXPLAIN IT

In The Lord Chancellor v Blavo & Co Solictors Ltd & Anor [2018] EWHC 3556 (QB) Mr Justice Pepperall found it was appropriate to draw adverse inferences when key  participants did not give evidence.  It is another example of the principles in Wisniewski v. Central Manchester Health Authority [1998] PIQR P324  being applied.

THE CASE

The Lord Chancellor was seeking to recover £22 million paid in legal aid to a firm of solicitors. The allegation, in essence, was that the claims were for cases that were “fabricated” and did not involve real clients.  The defendant solicitor served eight witness statements, including one from himself and his brother (who was also involved in the management of the firm).  However only two witnesses were called by the claimant.

THE JUDGMENT ON THE FAILURE TO CALL EVIDENCE

The judge considered the consequences of the defendant failing to call two key witnesses who had served witness statements.

“£MR BLAVO’S FAILURE TO CALL AVAILABLE EVIDENCE

1. 1. Had Mr Blavo given evidence at trial, I should therefore have started from the position that I should give significant weight to any apparently credible explanations that he might have been able to give for the discrepancies in this case. However, on the morning of Monday 8 October 2018, Mr Bourne told me that he would not be calling Mr Blavo, his brother Frederic Blavo, Rodney Addy, Koshi Barna, Emmanuel Osae or Leslie Kisseih. Consequently, the only defence witnesses called at trial were Mrs Frampton-Anderson and Mr Goldie.

   2. Plainly, the principal effect of Mr Blavo’s failure to give evidence himself or to call all of his witnesses is that on a number of important factual issues the Lord Chancellor’s evidence is unchallenged. In addition, however, Ms Sleeman invites the court to draw adverse inferences.

   3. In Wisniewski v. Central Manchester Health Authority [1998] PIQR P324, Brooke LJ said at page 340:

“1. In certain circumstances a court may be entitled to draw adverse inferences from the absence or silence of a witness who might be expected to have material evidence to give on an issue in an action.

2. If a court is willing to draw such inferences, they may go to strengthen the evidence adduced on that issue by the other party or to weaken the evidence, if any, adduced by the party who might reasonably have been expected to call the witness.

3. There must, however, have been some evidence, however weak, adduced by the former on the matter in question before the court is entitled to draw the desired inference: in other words, there must be a case to answer on that issue.

4. If the reason for the witness’s absence or silence satisfies the court then no such adverse inference may be drawn. If, on the other hand, there is some credible explanation given even if it is not wholly satisfactory, the potentially detrimental effect of his/her absence or silence may be reduced or nullified.”

1. 1. Applying this guidance in Jaffray v. Society of Lloyd’s [2002] EWCA Civ 1101, Waller LJ said, at [406]:

“on aspects where the evidence points in a direction against Lloyd’s in an area which could have been dealt with by Mr Randall the judge should have drawn an adverse inference from Lloyd’s failure to call Mr Randall to deal with it. This does not mean that any allegation that the names make against Mr Randall must be accepted because he did not give evidence. It simply means that where the evidence points in a certain direction, an adverse inference can be drawn from a failure to call a witness to deal with it.”

1. 1. In his closing submissions, Mr Bourne argued that Mr Blavo had little or nothing to add to the facts of the case. I do not accept that analysis. I am satisfied that Mr Blavo and his brother Frederic could reasonably have been expected to have relevant evidence to give on a number of important issues of fact:

113.1 Mr Blavo was the Managing Director and sole shareholder of Blavo & Co. Solicitors Limited. His witness statement described him as the firm’s COLP (Compliance Officer for Legal Practice) and COFA (Compliance Officer for Finance & Administration). He made a 42-page statement in which he dealt with, among other matters:

a) the incorporation and growth of the law firm;

b) the issue of new matter starts;

c) the storage and retrieval of files;

d) the Official Investigation;

e) the alleged impossibility of the deadlines set by the LAA;

f) the steps taken by the law firm to answer the LAA’s requests and to co-operate with the LAA and SRA investigations;

g) the effects of the vendor hold;

h) the alleged break-in;

i) the termination of the legal aid contracts; and

j) the SRA intervention and the ultimate winding-up of the company.

113.2 Importantly, if called, Mr Blavo was going to assert that he did not believe that any “improper” claims had been made and that “given the time and opportunity [he believed] that a proper examination of all the files would reveal that all claims actually made by the Company had been properly made.”

113.3 Frederic Blavo was the firm’s Practice Manager and responsible for inputting the firm’s claims for payment on to the CWA portal. He made a statement dealing with, among other matters:

a) procedures for opening and closing files;

b) the billing of files and the operation of the CWA portal;

c) the storage and retrieval of files;

d) the Official Investigation;

e) the alleged impossibility of the deadlines set by the LAA; and

f) the alleged break-in.

113.4 If called, Frederic Blavo was going to state that he had “no reason” to doubt the validity of the claims entered on CWA and that all claims came directly from instructions given by fee earners. He would also have confirmed in general terms the levels of mental health work carried out by the firm.

1. 1. While it would not be reasonable to have expected the Blavo brothers to have knowledge of each and every file in a busy firm, they could, in my judgment, be expected to have relevant evidence to give as to the central proposition in the Lord Chancellor’s case, namely that the true level of mental health tribunal hearings undertaken by the firm was of the order of 1,000 cases per annum and nowhere near the almost 9,000 cases for which it claimed payment from the LAA. Or put in financial terms, that the true level of fees payable to the firm for mental health tribunal hearings was of the order of £750,000 and not over £8 million per annum.

   2. Further, one would expect Mr Blavo and his brother to have something to say about the serious irregularities identified in a number of files; specifically:

115.1 the startling similarities between the files of MC and PL where, although Mr Blavo was not the fee earner, he was recorded in the client care letters as the supervising partner; and

115.2 the LAA’s findings upon detailed investigation of the 42 files (referred to at paragraphs 38-41 above) and why it might be that claims for payment have been made in respect of alleged clients where not only does HMCTS have no record of their cases, but the relevant NHS Trusts equally had no record and where, in some cases, the tribunal members could simply not have sat on the dates and at the venues indicated on the firm’s files.

1. Even if they could not have dealt with specifics, one would expect the brothers to have wanted to give evidence to deny their knowledge of or involvement in any fraud upon the legal aid fund.

2. As will become clear below, I am satisfied that there was a case to answer on these issues and that no good reason has been offered for Mr Bourne’s decision not to call Mr Blavo or his brother. In my judgment, I am therefore entitled to, and do, draw the adverse inference that the Blavo brothers did not give evidence because they had no satisfactory explanation to give. I do not, however, decide this case either solely or mainly upon such inference.

3. I do not draw any inferences from the failure to call Mr Blavo’s other witnesses.”

THE RESULT

The judge found that the claimant had proven its case. The claimant was entitled to judgment in the sum of £22,136,001.71.