Further details have emerged about the demise of London-headquartered firm Blavo & Co Solicitors, which was shut down by the Solicitors Regulation Authority in October.
Mr Justice Garnham continued a freezing order against the firm’s former managing director John Blavo in a High Court judgment handed down on 28 January. A freezing order was first made against Blavo on 26 November.
In October, the Legal Aid Agency referred concerns about the firm to the Metropolitan Police after terminating all its legal aid contracts. A company winding-up order filed with Companies House shows that Blavo & Co Solicitors Limited was wound up on 30 November 2015 under the provisions of the Insolvency Act 1986.
Garnham’s judgment states that the firm was asked to provide 23,173 files by 17 August 2015. The firm provided files on four clients the following month.
The lord chancellor terminated the firm’s 2014 civil contract and other contracts from 1 October.
‘Following that termination, the applicant assessed the claims on the remaining mental health files at nil,’ the judgment states.
‘In consequence of that assessment, the sum of £22,371,521.38 became payable by [Blavo & Co] to the applicant [the lord chancellor] pursuant to the 2014 Civil Contract. That is the sum the applicant claims from the first defendant in these proceedings.’
According to an affidavit from Mark Stewart, an investigator in the LAA’s counter-fraud team, the team analysed 49 files to verify information on the files. The team found that HM Courts and Tribunals Service had no record of tribunal proceedings in respect of the individual client or on the date the file indicated in 42 of the 49 files.
Other findings by the team included:
- In a further comparison of all mental health tribunal claims against the HMCTS system, the firm submitted 24,658 claims for attendance at tribunals of which 1,485 tribunals were recorded by HMCTS as having taken place;
- The LAA team used an electronic sampling tool to randomly select 144 cases for further investigation across the last three complete financial years. Only 3% could be evidenced from HMCTS records;
- 101 NHS trusts were contacted to confirm HMCTS’s records. There were two cases where the trusts could say the client was in hospital at the time the firm submitted its claims for work to the LAA;
- In relation to the 98 other cases, the trusts had no record of the client being a patient. One trust said that, at the relevant time, it had no mental health facilities. In another case, Stewart’s investigations confirmed that the mental health facility had closed in 2008 and had burnt down in 2010, so was not operational at the time the tribunal allegedly took place.
Responding to the allegations, Blavo pointed to the four cases for which files had been found and submitted to the lord chancellor, where it was accepted that there had been work done on the files and nil assessments were rescinded.
Discrepancy between the number of claims made and the number of references to the firm and its predecessors in the records of HMCTS ‘may lie in the fact that the first defendant expanded, in large part, by merging with, or taking over, other firms who had initially had conduct of the cases before the tribunal’, Olivier Kalfon, representing Blavo, argued.
Kalfon also referred to Blavo’s evidence ‘as to the extreme difficulty he has had providing the required files to the applicant’ and that the applicant required 23,000 files to be provided ‘according to a strict timetable’.
However, Garnham said it was ‘surprising in the extreme that a firm of solicitors the size of [Blavo & Co] could not provide the files in respect of which they had submitted claims for payment as requested by the claimant’.
He said it was ‘extraordinary that the first defendant could not recover a far greater number of files than in fact they did, if such files existed.’
Garnham said he appreciated that the firm had submitted 976 files on 18 August 2015, ‘but none of these files were requested by the LAA to be provided on 10 August 2015’.
Garnham concluded that there was a ‘strongly arguable case’ that Blavo was ‘party to an arrangement whereby false claims were submitted to the LAA in many thousands of cases’.
He said there was ‘furthermore, evidence of a less than scrupulous approach by the respondent to his duty of disclosure to the court in response to this claim for injunctive relief and some evidence of a recent attempt improperly to put property beyond the reach of the applicant.’
Garnham said it was ‘just and convenient’ to continue the freezing order.
But he emphasised that it was not necessary, ‘and it would not be appropriate, for me to reach any concluded judgment on the merits of the underlying dispute in this case or on any of the issues discussed above’.
He said: 'In particular, I am making no definitive findings of fraud, dishonesty or deliberate impropriety against the respondent (or indeed against the first defendant, Blavo & Co Solicitors Ltd) in relation to any of the matters considered above.
‘My observations on these issues go to the questions whether there is an arguable case and whether there is a risk of dissipation.
‘It will be for the court hearing the claim itself, when the case is properly pleaded and after the evidence is tested in cross-examination, to decide the facts.’
A spokesperson for the Legal Aid Agency said: 'The LAA has successfully obtained a freezing order against the assets of Blavo & Co's sole director to preserve assets held by [John] Blavo until such time as the LAA's claim against him is determined.
'Following the identification of significant concerns about this firm, the [agency] terminated all legal aid contracts with them and referred the matter to the Metropolitan Police.
'The LAA continues to assist the Metropolitan Police with its enquiries into the matter.'