MRH Solicitors Ltd v The County Court Sitting at Manchester & Ors

A judge should exercise extreme caution before making a conclusive finding of fraud or dishonesty against a person who has not had a proper opportunity to answer the allegation. The requirement reflects elementary fairness and helps prevent the court from falling into error. It applies where the person is absent from the proceedings and where allegations have not been pleaded against them. A third party criticised in a judgment may seek to be joined, apply for appropriate amendments to the judgment and, if necessary, appeal the refusal. Judicial review may nevertheless be available where the criticism is exceptionally serious and the alternative remedy is theoretical or impractical. The Administrative Court cannot rewrite a first-instance judgment, but may declare that an unlawful finding should be treated as having no effect. Firm and conclusory findings of dishonesty may also give rise to apparent bias in subsequent ancillary proceedings.

The County Court sitting at Manchester dismissed a personal injury claim after finding that a road traffic accident had been staged. The Recorder’s approved judgment also stated that MRH Solicitors Ltd, Apex Hire UK Ltd and Pennington Legal Ltd had been involved in fraud and dishonesty. None had been parties to the underlying claim, and the defence had expressly stated that no allegation was made against those companies.

MRH, Apex and Pennington sought judicial review, contending that the findings breached natural justice and unfairly impugned their integrity. The central issues were whether judicial review was available despite a possible joinder and appeal route, whether the Recorder had acted unfairly, what relief the Administrative Court could grant, and whether he should continue dealing with outstanding costs applications.

1. Jurisdiction and alternative remedy. The County Court was amenable to judicial review under section 31 of the Senior Courts Act 1981. Appeal would ordinarily be the more convenient remedy. A criticised third party could apply under CPR rules 19.2 and 19.4 to be joined, seek amendment of the transcript and appeal any refusal. The court nevertheless exercised its discretion to hear the claims because the findings of fraud were exceptionally serious, the alleged unfairness was egregious and the proposed alternative remedy was theoretical in the circumstances.
2. Unfair findings. The Recorder was entitled to express concerns or suspicions if the evidence warranted them. He was not entitled to make unqualified findings that MRH, Apex or Pennington had been fraudulent or dishonest without giving them a proper opportunity to answer the allegations. That conclusion was reinforced by the absence of any pleaded allegation against them and by the express disavowal of such allegations. The principle reflected the reasoning in Vogon International Ltd v the Serious Fraud Office [2004] EWCA Civ 104 and also protected against judicial error.
3. Relief. The court could not rewrite the Recorder’s judgment or excise selected passages as though they were parts of an order. It held that the Recorder was not entitled to make the conclusive findings and that MRH, Apex and Pennington were to be treated as having no such findings made against them. A further declaration was unnecessary.
4. Subsequent costs proceedings. The Recorder’s firm findings of dishonesty, which were not open to him, meant that a fair-minded and informed observer would regard him as having pre-determined the outstanding costs issues. He should therefore not determine those applications. The claims succeeded, but there was no order for costs because the claimants could have pursued the joinder and appeal route.

The judgment describes the underlying County Court trial before Recorder Osborne, who dismissed the personal injury claim on 13 October 2014 and later approved the transcript containing the impugned findings. The present proceedings were judicial review claims in the Administrative Court. The court declined to refuse relief on the basis of the possible joinder and appeal route.