The Solicitors Regulation Authority’s decision to intervene into solicitor Soophia Khan’s Leicester practice was fundamentally flawed because the regulator elevated a technical issue into grounds for suspecting dishonesty, the High Court has heard.

Khan, currently in prison after being found liable for contempt earlier this month for breaching two High Court orders requiring her to deliver up client files, is seeking an order requiring the SRA to withdraw its intervention from last August into herself and her Leicester practice Sophie Khan & Co over suspicions of dishonesty and alleged rule breaches.

Yesterday, Sir Gerald Barling, sitting as a judge of the Chancery Division in the Rolls Building, heard submissions from Khan’s barrister, Mark James, on why the SRA’s intervention was ‘fundamentally flawed and also disproportionate’, and was taken through the regulator’s grounds for suspecting dishonesty.

One of the ‘sub grounds’ was ‘mixed money paid into the office account’, the court heard.

James said the SRA’s complaint seemed to be that Khan ‘should have followed procedures to the letter’. However, he told the court this was ‘not an occasion where Ms Khan dipped her hand into client money and made off with it, a classic dishonesty case’.

He said: ‘The SRA have elevated a technical issue into dishonesty. They have not taken account of a solicitor’s equitable charge over the fruits of the litigation.’

Another ‘sub ground’ related to delivery of files to the SRA. James said this ground turned on an earlier court finding that Khan had not proven that she had delivered case files to the SRA’s Birmingham office by May 2019.

James said there was no finding of dishonesty by the master. ‘Secondly, we say [the master] would have reached a different conclusion if she had looked at different evidence which she ruled inadmissible because Ms Khan did not produce it at the hearing. There was no evidence from the receptionist who, on Ms Khan’s case, received delivery of the original files.’

The hearing is expected to conclude today. However, Barling indicated he is likely to reserve judgment.