The Law Society of England & Wales v Shah [2014] EWHC 4382 (Ch)

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Between 1998 and 2000, the defendant, S, who was then a qualified solicitor, was an active equity partner in a group of legal practices that traded together (together, Brandons). The claimant Law Society of England and Wales intervened in Brandons and, in February 2002, S was struck off the roll of solicitors for having employed an individual, B, as a solicitor while knowing that B was suspended from practice.

In 2013, F, a solicitor, established a practice (Trinity). S made payments to Trinity's account and moved into its premises. He assisted F in drafting a response to a complaint. In March 2014, the Law Society opened an investigation into Trinity and visited its premises.

In May, the court granted an interim order which prohibited S from: (i) holding himself out as a solicitor; (ii) undertaking any reserved legal activities (as defined in s 12 of the Legal Services Act 2007) through anybody authorised by the Solicitors Regulation Authority; or (iii) being employed by or remunerated by, or managing or controlling the practice of, a solicitor or anybody regulated by the Law Society without the prior written permission of the Law Society being given to such solicitor or body. The Law Society applied for an injunction making those prohibitions permanent.

The issues were, amongst other things, first, whether S had committed criminal acts, and whether, unless he was restrained, there was a real danger that he would engage in activities that would either involve the commission of criminal acts by him, or breaches of the regulatory regime by others, to the detriment of those with whom he or future associates might have dealings. Secondly, whether the Law Society could invoke the court's supervisory jurisdiction over S to obtain the relief that it sought. Thirdly, whether s 41(4)(c) of the Act could be interpreted widely enough to encompass the relief sought in the present case.

The court ruled:

(1) The evidence showed that S had had a management role at Trinity, and that it had been in breach of its obligation to prevent him having such a role. It also raised a prima facie case that he might have committed criminal acts, either by carrying on a reserved legal activity without authorisation or by holding himself out as a solicitor. However, no finding would be made that S had committed those crimes, as he had not had the opportunity to deal with the allegations in cross-examination. On the evidence, though, unless S was restrained, there was a real danger that he would engage in activities that would either involve the commission of criminal acts by him, or breaches of the regulatory regime by others, to the detriment of those with whom he or future associates might have dealings, and against the public interest (see [57], [59] of the judgement).

(2) There was no doubt that the Law Society acted in two distinct capacities, public and private, and that when acting in its public capacity in the exercise of statutory functions and pursuant to rules and regulations having the effect of delegated legislation, it did so for the protection of the public or, more specifically, that section of the public that might be in need of legal advice, assistance or representation. It was appropriate to see the Law Society as a front line regulator acting as guardian of the public interest and maintainer of standards within the solicitors' profession, with the function of enforcing the law within its regulatory sphere and preventing public wrongs within that sphere. However, there was no authority to support the proposition that the Law Society had a general power of enforcement of the criminal law and regulatory regime. Nor was the existence of such a general power shown by the fact that only some provisions in the statutory scheme expressly conferred standing on the Law Society to make an application to the court, yet the Law Society was recognised as having standing to apply under others which did not (see [74], [75], [77], [78] of the judgement).

On the facts, the Law Society could not invoke the court's supervisory jurisdiction over S to obtain the relief that it sought. The reason was that it had not been shown convincingly, on the facts, that S had held himself out as a solicitor or had pretended to be one. The evidence suggested that he might have done so and a real risk that he might do so in future, but there was no proof to the civil standard that he had done so in the past (see [86] of the judgement).

(3) It was appropriate to interpret s 41(4)(c) of the Act as wide enough to encompass the relief sought in the present case. The power was to be construed in a broad and purposive manner so as to give effect to the policy of protecting the public. It would not be in the public interest to adopt a narrow construction (see [103] of the judgement).

The relief sought by the Law Society would be granted in the exercise of the court's power under s 41(4)(c) of the Act (see [107] of the judgement).

Reproduced with the kind permission of LexisNexis.

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