Law Society v Shah [2015] EWHC 4382 (Ch), Tim Kerr QC sitting as a Deputy High Court Judge.Do regulators have an inherent right to seek preventative injunctions preventing unregistered, suspended and
Law Society v Shah [2015] EWHC 4382 (Ch), Tim Kerr QC sitting as a Deputy High Court Judge.
Do regulators have an inherent right to seek preventative injunctions preventing unregistered, suspended and struck off/erased practitioners from either holding themselves as being able to provide regulated services or from performing protected functions? The recent case of Shah suggests not, and that such preventative injunctions may only be granted on the basis of specific statutory provisions.
Facts
In February 2009 Shah was struck off the roll of solicitors for employing N as a solicitor while knowing that N was suspended from practice. This contravened s.41 of the Solicitors Act 1974. Shah was made bankrupt in August 2002 on the petition of the Law Society. In December 2010, Shah was convicted of mortgage fraud unrelated to his legal practice and was sentenced to five and a half years in jail. He was released in June 2012.
In June 2013, F established her own legal practice, 'Trinity'. Shah moved into Trinity's offices and the court found that Shah actively counselled and assisted F in responding to a client complaint, including by attending a meeting with the complainant. The Law Society investigated Trinity and found Shah at the offices. Digital and hard copy documents suggested that Shah was the author of several documents relating to client matters. The Court was satisfied that the evidence suggests that Shah was involved in the management of a solicitors' firm without SRA approval, contrary to the Solicitors Act 1974. Consequently, F and Trinity were themselves in breach of the regulatory regime and the court was satisfied that F had employed Shah knowing that he was disqualified from practice.
High Court proceedings
The Law Society applied to the High Court for a permanent injunction on the basis that there was a real danger that, without restraint, Shah would (a) commit criminal offences by engaging in activities reserved to registered solicitors and (b) would cause a breach of the regulatory regime by others. Counsel for the Law Society argued that the Law Society, as a front-line regulator is effectively one of the 'Attorneys-General of the legal profession' and has sufficient standing to seek such an injunction to protect the public. Counsel also advanced a number of alternative grounds, the most relevant being that s.41(4)(c) allows the High Court to make 'such other order as it thinks fit' in cases where a solicitor (in this case F) employs a struck off or suspended solicitor disqualified from practice.
The Court rejected the argument that the Law Society has an inherent right to invoke the jurisdiction of the High Court to restrain wrongs within its regulatory sphere. Gouriet v Union of Post Office Workers [1978] AC 435 is authority for the proposition that only the Attorney-General himself can seek an injunction to protect the public against a public wrong or a criminal act, unless otherwise mandated by a specific statutory provision (e.g. s.222 of the Local Government Act 1972, see Stoke on Trent Council v B&Q Ltd. [1984] 1 AC 754). While the Court noted counsel's submissions about the Law Society's role as the overseer of the profession, it concluded that this was insufficient to discharge the Gouriet principle.
Notwithstanding this, the court concluded that the provision in s.41(4)(c) of the Solicitors Act (that the court can make any such order as it thinks fit where it is satisfied that a solicitor has employed a struck off or suspended solicitor disqualified from practice) should be interpreted widely enough to allow the Law Society to seek an injunction in the present case. It would not be in the public interest to restrict the provision to only apply to those such as F who employed those who are disqualified from practice, rather than those such as Shah where there is a risk that they will deliberately flout the regulatory regime.
Discussion
The case provides welcome clarification about the scope of the remit of statutory regulators. While the judge's finding in relation to s.41(4)(c) indicates that the Court may adopt an expansive approach to 'catch-all' statutory provisions such as 'any other order the court sees fit', the decision in relation to the inherent jurisdiction argument makes clear that regulators will be restricted to enforcing matters that are sufficiently referenced within their governing legislation. Unless regulators can point to a specific statutory provision that may be interpreted in such a way, they will need to wait for criminal offences to be committed before they can take action under the relevant legislation (even if there is a prima facie case that a person is likely to act in contravention of the relevant legislation).
s.41(4)(c) is not a provision that has analogues within the legislation of statutory regulators such as the GMC and HCPC. This means that few of the statutory healthcare regulators will be able to pray in aid of similar catch-all provisions so that they can take preventative measures in relation to rogue individuals. Injunctions are draconian and will rarely be appropriate. However, as Shah's case makes clear, there may be circumstances where injunctions have their part to play. An inherent power for regulators to seek injunctions would potentially provide a timely means to prevent unregistered practice on the basis of prima facie evidence that an individual may, without restraint, expose the public to risk. Breach of such an injunction would only need to be proved to the civil, rather than the criminal standard, strengthening the regulator's hand. The court's judgment in present case suggests that, in contrast to the old medical maxim, most regulators will not be able to focus on prevention, only cure.
Do regulators have an inherent right to seek preventative injunctions preventing unregistered, suspended and struck off/erased practitioners from either holding themselves as being able to provide regulated services or from performing protected functions? The recent case of Shah suggests not, and that such preventative injunctions may only be granted on the basis of specific statutory provisions.
Facts
In February 2009 Shah was struck off the roll of solicitors for employing N as a solicitor while knowing that N was suspended from practice. This contravened s.41 of the Solicitors Act 1974. Shah was made bankrupt in August 2002 on the petition of the Law Society. In December 2010, Shah was convicted of mortgage fraud unrelated to his legal practice and was sentenced to five and a half years in jail. He was released in June 2012.
In June 2013, F established her own legal practice, 'Trinity'. Shah moved into Trinity's offices and the court found that Shah actively counselled and assisted F in responding to a client complaint, including by attending a meeting with the complainant. The Law Society investigated Trinity and found Shah at the offices. Digital and hard copy documents suggested that Shah was the author of several documents relating to client matters. The Court was satisfied that the evidence suggests that Shah was involved in the management of a solicitors' firm without SRA approval, contrary to the Solicitors Act 1974. Consequently, F and Trinity were themselves in breach of the regulatory regime and the court was satisfied that F had employed Shah knowing that he was disqualified from practice.
High Court proceedings
The Law Society applied to the High Court for a permanent injunction on the basis that there was a real danger that, without restraint, Shah would (a) commit criminal offences by engaging in activities reserved to registered solicitors and (b) would cause a breach of the regulatory regime by others. Counsel for the Law Society argued that the Law Society, as a front-line regulator is effectively one of the 'Attorneys-General of the legal profession' and has sufficient standing to seek such an injunction to protect the public. Counsel also advanced a number of alternative grounds, the most relevant being that s.41(4)(c) allows the High Court to make 'such other order as it thinks fit' in cases where a solicitor (in this case F) employs a struck off or suspended solicitor disqualified from practice.
The Court rejected the argument that the Law Society has an inherent right to invoke the jurisdiction of the High Court to restrain wrongs within its regulatory sphere. Gouriet v Union of Post Office Workers [1978] AC 435 is authority for the proposition that only the Attorney-General himself can seek an injunction to protect the public against a public wrong or a criminal act, unless otherwise mandated by a specific statutory provision (e.g. s.222 of the Local Government Act 1972, see Stoke on Trent Council v B&Q Ltd. [1984] 1 AC 754). While the Court noted counsel's submissions about the Law Society's role as the overseer of the profession, it concluded that this was insufficient to discharge the Gouriet principle.
Notwithstanding this, the court concluded that the provision in s.41(4)(c) of the Solicitors Act (that the court can make any such order as it thinks fit where it is satisfied that a solicitor has employed a struck off or suspended solicitor disqualified from practice) should be interpreted widely enough to allow the Law Society to seek an injunction in the present case. It would not be in the public interest to restrict the provision to only apply to those such as F who employed those who are disqualified from practice, rather than those such as Shah where there is a risk that they will deliberately flout the regulatory regime.
Discussion
The case provides welcome clarification about the scope of the remit of statutory regulators. While the judge's finding in relation to s.41(4)(c) indicates that the Court may adopt an expansive approach to 'catch-all' statutory provisions such as 'any other order the court sees fit', the decision in relation to the inherent jurisdiction argument makes clear that regulators will be restricted to enforcing matters that are sufficiently referenced within their governing legislation. Unless regulators can point to a specific statutory provision that may be interpreted in such a way, they will need to wait for criminal offences to be committed before they can take action under the relevant legislation (even if there is a prima facie case that a person is likely to act in contravention of the relevant legislation).
s.41(4)(c) is not a provision that has analogues within the legislation of statutory regulators such as the GMC and HCPC. This means that few of the statutory healthcare regulators will be able to pray in aid of similar catch-all provisions so that they can take preventative measures in relation to rogue individuals. Injunctions are draconian and will rarely be appropriate. However, as Shah's case makes clear, there may be circumstances where injunctions have their part to play. An inherent power for regulators to seek injunctions would potentially provide a timely means to prevent unregistered practice on the basis of prima facie evidence that an individual may, without restraint, expose the public to risk. Breach of such an injunction would only need to be proved to the civil, rather than the criminal standard, strengthening the regulator's hand. The court's judgment in present case suggests that, in contrast to the old medical maxim, most regulators will not be able to focus on prevention, only cure.