Stenhouse v The Legal Ombudsman & Anor

A Legal Ombudsman has wide latitude to decide what is fair and reasonable, and the court reviews the determination on public-law grounds rather than substituting its own view. The determination must nevertheless remain within the Ombudsman’s jurisdiction, comply with natural justice, and be rational. The Ombudsman may consider both what legal services were provided and how they were provided, including complaint handling. But the Ombudsman may determine only complaints properly made and notified, and cannot finally determine a county-court costs issue outside the complaint. A determination may be read benevolently, yet unclear reasoning cannot justify findings made without notice or conclusions outside the range of reasonable responses.

The claimant, a barrister, sought judicial review of a Legal Ombudsman determination arising from a client’s complaint about legal services provided under a conditional fee agreement. The Ombudsman rejected most complaints but upheld an aspect concerning the claimant’s aggressive response to the client’s complaint and awarded £600 plus VAT. It also criticised the claimant’s handling of his fees, including issuing county-court proceedings, and ordered payment of £2,609 including VAT for the client’s county-court defence costs.

The central issues were whether the Ombudsman had jurisdiction to make those findings and award those sums, whether the process was procedurally fair, and whether the determination was irrational.

1. Outcome. The claim succeeded in part. The determination was upheld insofar as it concerned the claimant’s response to the client’s complaint letter of 6 September 2014 and the award of £600 plus VAT. The remainder, including the award of £2,609 for county-court costs, was quashed. There was no order as to costs.
2. The court reviews a Legal Ombudsman determination on ordinary public-law grounds. It does not substitute its own view of what is fair and reasonable. The Ombudsman has considerable latitude, and an error will justify quashing only where the decision is irrational in the proper sense or outside the range of reasonable conclusions open to the decision-maker. The determination should be read benevolently and practically.
3. The Ombudsman’s jurisdiction covers acts and omissions arising from services provided, including how those services were provided. The distinction between service and conduct cannot be used to exclude consideration of the manner in which a lawyer dealt with a client or handled a complaint. The possibility that a professional regulator might also have jurisdiction does not remove the Ombudsman’s jurisdiction.
4. The finding concerning the claimant’s letter of 6 September was within jurisdiction. It was sufficiently connected with the client’s complaint about the manner in which the services were provided, and the claimant had an opportunity to address it in responding to the investigating officer’s report. The finding that the letter was aggressive, discourteous and distressing was rationally open to the Ombudsman. The Ombudsman was not required to follow the professional regulator’s threshold or to treat the regulator’s likely response as determinative.
5. The findings concerning the claimant’s fee claim were different. They did not form part of the eight complaints identified in the report and determination, were not properly notified, and were not clearly raised in the investigating officer’s report. The Ombudsman therefore acted without jurisdiction and in breach of natural justice by making them for the first time in an unappealable determination.
6. The related compensation order was also defective. The Ombudsman had no jurisdiction to determine liability for costs in the separate county-court proceedings. In any event, the findings that payment of the original fee note should have ended the matter, that the claimant gave no adequate explanation, and that issuing proceedings was unwarranted were irrational and unsupported by the evidence. The claimant was entitled to seek fees subject to proof and the client’s counterclaim; the Ombudsman’s process did not require him to await its conclusion before pursuing remuneration.

The judgment describes an earlier refusal of permission on 21 July 2015 and the grant of permission by Lang J at an oral hearing on 4 November 2015. This was a first-instance judicial review in the Administrative Court.