ON APPEAL FROM THE QUEEN'S BENCH DIVISION
MR JUSTICE WALKER
Strand, London, WC2A 2LL
B e f o r e :
LADY JUSTICE BLACK
LORD JUSTICE CHRISTOPHER CLARKE
| Kanat Assaubayev and Others
|- and -
|Michael Wilson & Partners Limited
David Holland QC and Paul Joseph (instructed by Direct Access) for the Respondent
Hearing dates : 14th October 2014
Crown Copyright ©
LORD JUSTICE CHRISTOPHER CLARKE
i) a solicitor of the Senior Courts;
ii) a firm of solicitors of which at least one partner was a solicitor;
iii) a "recognised body" under section 9 of the Administration of Justice Act 1985; or
iv) an authorised person under the Legal Services Act 2007.
It could not have come within (i) or (ii) because it was a BVI registered company: see  below. It could not come within (iii) because it did not and could not comply with regulation 2.1 of the Solicitors Regulatory Authority ("SRA") Recognised Bodies Regulations in that, inter alia, it could not comply with Rule 14.03 of the Solicitors Code of Conduct 2007 since it was neither incorporated in England and Wales nor had a practising address there: see section 9 (1) (b) at  below. It could not have been an authorised person under the 2007 Act because the statutory scheme for authorisation under that Act did not come into force until 1 October 2011.
The Jenington Action
a) Ordinary relief claims:
i) An assessment of MWP's invoices at common law;
ii) An order that the entirety of the July and August Engagement Letters (i.e. the two Retainers), or parts thereof, be set aside; and
iii) A declaration that the Engagement Letters are unenforceable and/or that the fees invoiced are irrecoverable, with restitution for any overpayment.
b) Supervisory jurisdiction claims:
i) An assessment/moderation of MWP's invoices; and
ii) An order that the entirety of the Retainers, or parts thereof, be set aside, including the arbitration agreements.
The 1974 Act
The Act included the following provisions:
"1 Qualifications for practising as solicitor.
No person shall be qualified to act as a solicitor unless—
(a) he has been admitted as a solicitor, and
(b) his name is on the roll, and
(c) he has in force a certificate issued by the Society in accordance with the provisions of this Part authorising him to practise as a solicitor (in this Act referred to as a "practising certificate")
1A Practising certificates: employed solicitors.
A person who has been admitted as a solicitor and whose name is on the roll shall, if he would not otherwise be taken to be acting as a solicitor, be taken for the purposes of this Act to be so acting if he is employed in connection with the provision of any legal services—
(a) by any person who is qualified to act as a solicitor;
(b) by any partnership at least one member of which is so qualified;
(c) by a body recognised. under section 9 of the Administration of Justice Act 1985 (incorporated practices). or
(d) by any other person who, for the purposes of the Legal Services Act 2007, is an authorised person in relation to an activity which is a reserved legal activity (within the meaning of that Act)."
"20 Unqualified person not to act as solicitor.
(1) No unqualified person is to act as a solicitor.
(2) Any person who contravenes subsection (1) is guilty of an offence and liable on conviction on indictment to imprisonment for not more than 2 years or to a fine, or to both.
21 Unqualified person not to pretend to be a solicitor.
Any unqualified person who wilfully pretends to be, or takes or uses any name, title, addition or description implying that he is qualified or recognised by law as qualified to act as a solicitor shall be guilty of an offence and liable on summary conviction to a fine not exceeding the fourth level on the standard scale.
24 Application of penal provisions to body corporate.
(1) If any act is done by a body corporate, or by any director, officer or servant of a body corporate, and is of such a nature or is done in such a manner as to be calculated to imply that the body corporate is qualified or recognised by law as qualified to act as a solicitor—
(a) the body corporate shall be guilty of an offence and liable on summary conviction to a fine not exceeding the fourth level on the standard scale, and
(b) in the case of an act done by a director, officer or servant of the body corporate, he also shall be guilty of an offence and liable on summary conviction to a fine not exceeding the fourth level on the standard scale.
(2) For the avoidance of doubt it is hereby declared that in section 20 the reference to an unqualified person and the reference to a person both include a reference to a body corporate.
25 Costs where unqualified person acts as solicitor.
(1) No costs in respect of anything done by any unqualified person acting as a solicitor shall be recoverable by him, or by any other person, in any action, suit or matter.
(2) Nothing in subsection (1) shall prevent the recovery of money paid or to be paid by a solicitor on behalf of a client in respect of anything done by the solicitor while acting for the client without holding a practising certificate in force if that money would have been recoverable if he had held such a certificate when so acting."
The 1985 Act
"(1) The Society may make rules—
(a) making provision as to the management and control of legal services bodies;
(b) prescribing the circumstances in which such bodies may be recognised by the Society as being suitable bodies to undertake the provision of any solicitor services or other relevant legal services;
(c) prescribing the requirements which (subject to any exceptions provided by the rules) must at all times be satisfied by bodies corporate so recognised if they are to remain so recognised; and
(d) regulating the conduct of the affairs of such bodies.
(3) Despite section 24(2) of the 1974 Act, section 20 of that Act (prohibition on unqualified person acting as solicitor) does not apply to a recognised body; and nothing in section 24(1) of that Act applies in relation to such a body.
(6) Schedule 2 (which makes provision with respect to the application of provisions of the 1974 Act to recognised bodies and with respect to other matters relating to such bodies) shall have effect.
(8) In this section –
"legally qualified" and "legal services body" have the meaning given by section 9 A;
"recognised body" means a body … for the time being recognised under this section;
9A Legal Services Bodies
There follows an extensive definition. A legal services body may, but need not, be a body corporate,
10 Penalty for pretending to be a body recognised under section 9
(1) A body shall not describe itself or hold itself out as a body for the time being recognised under section 9 unless it is so recognised.
(2) Any body which contravenes subsection (1) shall be guilty of an offence and liable on summary conviction to a fine not exceeding the fourth level on the standard scale.
LEGAL SERVICES PRACTICES: SUPPLEMENTARY PROVISIONS
Costs: general modification of provisions of Part III of 1974 Act
22 (1) In the provisions to which this paragraph applies
(a) any reference to a solicitor or to a client of a solicitor shall be construed as including a reference to a recognised body or to a client of such a body; and
(b) any reference to a client's solicitor shall be construed as including a reference to any recognised body acting for a client.
(2) This paragraph applies to the following provisions of the 1974 Act (which relate to the remuneration of solicitors in respect of contentious and non contentious business)…"
Various provisions of Part III of the 1974 Act are then set out.
The Legal Services Act 2007
"12 Meaning of "reserved legal activity" and "legal activity"
(1) In this Act "reserved legal activity" means–
(a) the exercise of a right of audience;
(b) the conduct of litigation;
(2) Schedule 2 makes provision about what constitutes each of those activities.
(3) In this Act "legal activity" means–
(a) an activity which is a reserved legal activity within the meaning of this Act as originally enacted, and
(b) any other activity which consists of one or both of the following–
(i) the provision of legal advice or assistance in connection with the application of the law or with any form of resolution of legal disputes;
(ii) the provision of representation in connection with any matter concerning the application of the law or any form of resolution of legal disputes.
13 Entitlement to carry on a reserved legal activity
(1) The question whether a person is entitled to carry on an activity which is a reserved legal activity is to be determined solely in accordance with the provisions of this Act.
(2) A person is entitled to carry on an activity ("the relevant activity") which is a reserved legal activity where–
(a) the person is an authorised person in relation to the relevant activity, or
(b) the person is an exempt person in relation to that activity.
14 Offence to carry on a reserved legal activity if not entitled
(1) It is an offence for a person to carry on an activity ("the relevant activity") which is a reserved legal activity unless that person is entitled to carry on the relevant activity.
(2) In proceedings for an offence under subsection (1), it is a defence for the accused to show that the accused did not know, and could not reasonably have been expected to know, that the offence was being committed.
(3) A person who is guilty of an offence under subsection (1) is liable–
(a) on summary conviction, to imprisonment for a term not exceeding 12 months or a fine not exceeding the statutory maximum (or both), and
(b) on conviction on indictment, to imprisonment for a term not exceeding 2 years or a fine (or both).
(4) A person who is guilty of an offence under subsection (1) by reason of an act done in the purported exercise of a right of audience, or a right to conduct litigation, in relation to any proceedings or contemplated proceedings is also guilty of contempt of the court concerned and may be punished accordingly.
17 Offence to pretend to be entitled
(1) It is an offence for a person–
(a) wilfully to pretend to be entitled to carry on any activity which is a reserved legal activity when that person is not so entitled, or
(b) with the intention of implying falsely that that person is so entitled, to take or use any name, title or description.
(2) A person who is guilty of an offence under subsection (1) is liable–
(a) on summary conviction, to imprisonment for a term not exceeding 12 months or a fine not exceeding the statutory maximum (or both), and
(b) on conviction on indictment, to imprisonment for a term not exceeding 2 years or a fine (or both)."
18 Authorised persons
(1) For the purposes of this Act "authorised person", in relation to an activity ("the relevant activity") which is a reserved legal activity, means –
(a) a person who is authorised to carry on the relevant activity by a relevant approved regulator in relation to the relevant activity (other than by virtue of a licence under Part 5), or
(b) a licensable body which, by virtue of such a licence, is authorised to carry on the relevant activity by a licensing authority in relation to the reserved legal activity.
Conduct of litigation
4 (1) The "conduct of litigation" means–
(a) the issuing of proceedings before any court in England and Wales,
(b) the commencement, prosecution and defence of such proceedings, and
(c) the performance of any ancillary functions in relation to such proceedings (such as entering appearances to actions).
(2) But the "conduct of litigation" does not include any activity within paragraphs (a) to (c) of sub-paragraph (1), in relation to any particular court or in relation to any particular proceedings, if immediately before the appointed day no restriction was placed on the persons entitled to carry on that activity."
a) Did MWP act as, or pretend to be, a solicitor when unqualified?
b) Did MWP carry on, or pretend to be entitled to carry on, a reserved legal activity when not entitled to do so?
c) If the answer to any of the above is in the affirmative does the Court have any supervisory jurisdiction over MWP given that it is neither a solicitor nor a person entitled to carry on a reserved legal activity?
d) If it does, was the judge wrong to stay the Appellants' claim under the ordinary jurisdiction for arbitration, rather than exercise the Court's own supervisory jurisdiction?
The Court's supervisory jurisdiction
"…the Court has a punitive and disciplinary jurisdiction over solicitors, as being officers of the Court, which is exercised not for the purpose of enforcing legal rights, but for the purpose of enforcing honourable conduct on the part of the Court's own officers…the Court has a right to see that its own officer does not act contrary to his duty"
"indeed extraordinary, being based upon the right of the court to see that a high standard of conduct is maintained by its officers acting as such… It is, in a sense, a domestic jurisdiction to which solicitors are only amenable because of their special relationship with the court and it is designed to impose higher standards than the law applies generally".
Per Sir John Donaldson MR in John Fox v Bannister King & Rigbeys  QB 925.
"…the Court has in these matters as much jurisdiction over a person who is not a solicitor as it has over a solicitor. Here the person who is not a solicitor has assumed the privileges of a solicitor, has obtained the custody of documents, has been entrusted with money, and has carried on legal proceedings as an officer of the Court. The Court finds this person in the possession of money and documents which, if he were a solicitor, he would be bound to hand over to his client. It seems to me that his not being a solicitor can make no difference. If this person were a solicitor the Court could compel him to restore the money and documents, and the Court must have the same power when he is shown to have obtained possession of the money and documents by fraudulently pretending to be a solicitor. The case is completely covered by the authority cited by my learned brother".
"an illustration of the exercise of jurisdiction by the Court to protect its duly authorised officers, solicitors on the roll, from imposition by persons representing that they are solicitors when they are not".
"having, by means of such wrongful assumption of a privilege to which he was not entitled, obtained from the Court orders which he could only have obtained in that particular capacity, was estopped from setting up any such pleas to the jurisdiction as that he was not a solicitor as he pretended to be and by means of which pretence he obtained the money".
"you must show that the act which is the basis of the application is an act done by the man as a solicitor unqualified in fact but representing himself in the transaction to be a solicitor and, more than that, obtaining by that representation either some property of which it is sought to divest him, or doing some act for which a remedy is sought which the Court can summarily give".
"that the man has, by virtue of his assumption of the position and privilege of a solicitor, either obtained something which he ought not to have obtained (I do not desire to limit it – there may be other cases, but broadly that would be generally the case), and therefore the restitution of which is just, or done some act for which there would be a remedy in the Court if it were an act done by an officer of the Court, and if the man has done the act or obtained the property by the assumption of the privilege and position of a solicitor. In such a case the Court will exercise the power which it would be right to exercise if the man were an officer of the Court; and in such a case the man cannot be allowed to say that he is free from the jurisdiction of the Court because he is not in fact, a solicitor, and therefore not an officer of the Court."
In that case, as he pointed out, Jones had not obtained the money from Evans on the faith of any representation that he was a solicitor; and with regard to the earlier applications for money he was representing himself to be acting for the solicitor on the record.
Jurisdiction over non-solicitors
"(1) Any person duly admitted as a solicitor shall be an officer of the Senior Courts;
(2) Subject to the provisions of this Act, the High Court, the Crown Court and the Court of Appeal respectively, or any division or judge of those courts, may exercise the same jurisdiction in respect of solicitors as any one of the superior courts of law or equity from which the Senior Courts were constituted might have exercised immediately before the passing of the Supreme Court of Judicature Act 1873 in respect of any solicitor, attorney or proctor admitted to practise there."
The disputes overall
"that the man has, by virtue of his assumption of the position and privilege of a solicitor, either obtained something which he ought not to have obtained … or done some act for which there would be a remedy in the Court if it were an act done by an officer of the Court, and ... the man has done the act or obtained the property by the assumption of the privilege and position of a solicitor"
then a body corporate which has presumed to act as a solicitor and to charge for so doing, if that is what has been done, should, as it seems to me, come within the ambit of the jurisdiction since he has obtained or sought to obtain something qua solicitor. The jurisdiction is, in essence, one of the Court's creation and its application in those circumstances does not appear to me to exceed the proper bounds of curial creativity.
"if the active claimants are granted the relief which they seek, it will not be necessary for them to continue to invoke the court's inherent supervisory jurisdiction. To the extent that they are not granted such relief, and consider that nevertheless there is some good basis for continuing to invoke the inherent supervisory jurisdiction, then the court will have the advantage of being able to consider what the arbitrator may have said on relevant aspects. On that basis it seems to me that the claims to relief in paragraphs 5 to 9 should be stayed, as a matter of case management under the inherent stay jurisdiction pending the arbitration."
It is thus not apparent - the Appellants say - whether the judge contemplated that a decision of the arbitrator would simply be something for the Court to consider; or whether it would be binding in some way, and, if so, on whom.
"(1) A party to an arbitration agreement against whom legal proceedings are brought (whether by way of claim or counterclaim) in respect of a matter which under the agreement is to be referred to arbitration may (upon notice to the other parties to the proceedings) apply to the court in which the proceedings have been brought to stay the proceedings so far as they concern that matter.
(4) On an application under this section the court shall grant a stay unless satisfied that the arbitration agreement is null and void, inoperative, or incapable of being performed."
"Any remaining claim in the Amended Claim Form is stayed pursuant to section 9 (4) of the Arbitration Act 1996."
At present paragraph 5 of the order imposes a stay pursuant to the inherent jurisdiction upon which the judge found it necessary to rely in the light of the argument, no longer maintained, to which I refer at paragraph 63 above.
Lady Justice Black
Lord Justice Aikens
Note 1 In fact there appear to have been 27. 15 were for work under the July retainer, including one for an engagement fee of US $ 301,000 and another for a success fee of US $ 2,688,042.98. 2 others were for very small amounts and had been paid. 10 were for work under the August retainer. The 10 invoices totalled US $ 713,340.79, of which at least US $ 600,000 had been paid. [Back] Note 3 The Court of Appeal and the House did, however, contemplate that, after the 12 month period, the Court could still investigate professional misconduct based on excessive over charging and, as a step in the determination of any overcharge, refer the bill in question to the taxing master (now costs judge). [Back]
Note 1 In fact there appear to have been 27. 15 were for work under the July retainer, including one for an engagement fee of US $ 301,000 and another for a success fee of US $ 2,688,042.98. 2 others were for very small amounts and had been paid. 10 were for work under the August retainer. The 10 invoices totalled US $ 713,340.79, of which at least US $ 600,000 had been paid. [Back]
Note 3 The Court of Appeal and the House did, however, contemplate that, after the 12 month period, the Court could still investigate professional misconduct based on excessive over charging and, as a step in the determination of any overcharge, refer the bill in question to the taxing master (now costs judge). [Back]