England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
DIVISIONAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		10 February 2005

Lord Justice Thomas:

1. The interested party (Mr Shuman) is a foreign lawyer who practised in London and is registered as a foreign lawyer by the Law Society under the Courts and Legal Services Act 1990 (CLSA). On 25 July 2003, the Adjudication Panel of the Law Society decided to impose conditions on his registration.
2. He appealed against that decision to the Master of the Rolls under paragraph 14 of Schedule 14 to the CLSA. The narrow issue of construction determined on the appeal was the meaning of paragraph 2(3) of Schedule 14 to the CLSA:

"Any registration may be made subject to such conditions as the Society sees fit to impose."

It was accepted before the Master of the Rolls and in this Court that the provision was ambiguous, as it could mean either (1) the making of the registration (the initial making of the entry in the register) could be subject to such conditions as the Law Society sought to impose or (2) the entry that had been made in the register might be made subject to such conditions as the Law Society sought fit at any time to impose. The Master of the Rolls held that the phrase had the first meaning and the Law Society had no general power to impose the conditions save on the initial making of an entry on the register. There is no right of appeal from that decision.

3. The Law Society therefore apply to this Court for judicial review of that decision; although this is the first time such an application has been made by the Law Society, it is accepted that this Court has jurisdiction to hear that application; whether this is an appropriate way of challenging a decision that is itself an appeal from a tribunal is a matter that should receive further consideration, particularly in the light of the fact that there are further routes of appeal from the decision of this court. The Master of the Rolls has taken no part in the proceedings which have in effect been conducted as an appeal to this Court from his decision on the narrow point of construction in issue.

The factual background

4. As the point in issue is one of construction, the factual background can be briefly summarised:

i) Mr Shuman is an Attorney admitted to practise as an attorney in Texas.

ii) In 1999, he was registered as a foreign lawyer under the CLSA by the Law Society for 1999/2000.

iii) He entered into a professional association with Mr Periasamy Mathialagan, a solicitor who practised in a firm called Mathis in London. Although there is an issue as to the precise nature of that association (as Mr Shuman denies he ever became a partner), he was held out by Mr Mathialagan as a partner. Mr Shuman contends his association with the firm was very limited. In June 2002, his association with the firm ceased.

iv) Mr Shuman's registration was renewed for 2000/01 and 2001/02.

v) On 30 September 2002, the Forensics Investigation Unit of the Office of the Supervision of Solicitors (OSS), following an investigation, issued a report relating to "investment schemes" at Mathis that gave rise to concern. The OSS decided to intervene in the practice and take proceedings against Mr Mathialagan and Mr Shuman, although by that time Mr Shuman was no longer playing an active part in the practice of Mathis.

vi) On 14 October 2002, Mr Shuman wrote to the Law Society stating that he would not be seeking renewal of his registration when it expired at the end of October 2002. The Law Society decided not to cancel the renewal because it was thought that if it did so, there might be a challenge to its jurisdiction over Mr Shuman for the disciplinary proceedings that were contemplated.

vii) On 1 November 2002, the adjudication panel of the Law Society referred the conduct of Mr Mathialagan and Mr Shuman to the Solicitors' Disciplinary Tribunal; it also directed that the matters raised in the report be referred to the Office of the Supervision of Solicitors to consider whether conditions should immediately be imposed on Mr Shuman's registration as a Registered Foreign Lawyer.

viii) Mr Shuman made clear to the Law Society he did not wish to be registered or practise as a Registered Foreign Lawyer.

ix) On 25 July 2003, an adjudication panel of the Law Society decided to impose the following conditions on Mr Shuman's registration:

"2.1 That he shall not practise as a partner in or be employed by a Multi-national Partnership (MNP) or practise as an office holder and/or shareowner and/or employee and/or member of a company or Limited Liability Partnership (LLP) which is a recognised body without having first of all obtained the written approval of the Office for the Supervision of Solicitors to do so; and

2.2 That he shall not fulfil the role of a person qualified to supervise for the purposes of Practice Rule 13 of the Solicitors Practice Rules 1990 (as amended); and

2.3 That he shall not hold, receive, or have responsibility for client's money; and

2.4 He shall not be a signatory to any client or office account cheque; and

2.5 He shall not be involved, directly or indirectly, in any transaction or purported transaction of a nature similar to those High Yield Investment Schemes/Capital Enhancement Schemes identified in the Forensic Investigations Report dated 30 September 2002 which bore certain of the hallmarks of fraud as set out in the Law Society's guidance on banking instrument fraud and raised issues referred to in the Law Society's guidance on money laundering, nor in any litigation, arbitration or other legal work directly or indirectly related to such transactions; and

2.6 That any employer or prospective employer who is a principal in a MNP or in a company or a LLP which is a recognised body will be informed of those conditions."

x) Its reasons for doing so were expressed to be for the protection of the public and ensuring public confidence pending the resolution of disciplinary proceedings; it was satisfied that the issues raised by the report were such that it was in the interests of the public and for the good repute of the solicitors' profession that Mr Shuman should only practise subject to a degree of supervision and in an environment that could provide a high level of support.

xi) Although the Law Society sought to impose the conditions in July 2003, it did not commence the disciplinary proceedings against Mr Shuman until 21 September 2004. The allegations made are vigorously disputed by Mr Shuman.

5. That is the factual context in which the dispute has arisen over the attempt by the Law Society to impose conditions on Mr Shuman's registration; it is next necessary to set out the legislative provisions.

The Courts and Legal Services Act 1990

6. S.89 of the CLSA imposes upon the Law Society a duty to maintain a register of foreign lawyers – those who are not solicitors or barristers but who are members of a legal profession of a jurisdiction outside England and Wales and entitled to practise as such:

"(1) The Law Society shall maintain a register of foreign lawyers for the purposes of this section.

(2) A foreign lawyer who wishes to be registered under this section must apply to the Society in accordance with the requirements of Part I of Schedule 14.

(3) The power to make rules under-

(a) the following provisions of the Solicitors Act 1974-

(i) section 31 (professional practice, conduct and discipline);

(ii) section 32 (accounts and trust accounts);

(iii) section 34 (accountants' reports);

(iv) section 36 (Compensation Fund); and

(v) section 37 (professional indemnity); and

(b) section 9 of the Administration of Justice Act 1985 (incorporated practices),

shall also be exercisable in relation to registered foreign lawyers."

7. Schedule 14 to the CLSA contains the detailed provisions for registration:

"PART I: REGISTRATION.

General

"1. In this schedule –

"the register" means the register maintained by the Society under section 89;

"registration" means registration in that register."

Application for registration

2 (1) An application for registration or for renewal of registration-

(a) shall be made to the Society in such form as the Council may prescribe; and

(b) shall be accompanied by such fee as the Council may, with the concurrence of the Master of the Rolls, prescribe.

(2) Where such an application is duly made by a foreign lawyer, the Law Society may register the applicant if it is satisfied that the legal profession of which the applicant is a member is one which is so regulated as to make it appropriate—

(a ) for solicitors to enter into multi-national partnerships with members of that profession; and

(b) for members of that profession to be officers of recognised bodies.

(3) Any registration may be made subject to such conditions as the Society sees fit to impose.

(4) The Council may make regulations, with the concurrence of the Master of the Rolls, with respect to—

(a) the keeping of the register (including the manner in which entries are to be made, altered or removed); and

(b) applications for registration or renewal of registration.

(5) The register may be kept by means of a computer."

Duration of registration

"3. (1) Every registration shall have effect from the beginning of the day on which it is entered in the register.

.....

(4) Where a foreign lawyer is registered, the Society may cancel his registration if—

(a) the renewal date for his registration has passed but he has not applied for it to be renewed; or

(b) he has applied to the Society for it to be cancelled."

7. Supplementary and more detailed provisions relating to registered foreign lawyers are contained in Part II of the Schedule. Paragraph 5 provides for intervention in practices, paragraphs 6 and 7 set out the obligation to contribute to the Compensation Fund and paragraph 8 imposes the duty to provide Accountants' Reports. Paragraph 10 deals with the effect of bankruptcy:

"(1) The registration of any foreign lawyer against whom a bankruptcy order is made shall be suspended on the making of that order

(2) The suspension of any registration by reason of a bankruptcy shall terminate if the order is annulled …"

8. Paragraphs 11, 12 and 13 provide for disciplinary action:

"Effect of disciplinary action

11 (1) Where a foreign registered lawyer is struck off, or suspended, his registration shall be suspended

(2) …..

Reinstatement of disciplined foreign lawyer

12 (1) Where a person's registration has been suspended by virtue of paragraph 11, it shall be revived –

(a) if his right to practise in the jurisdiction in question is restored; and

(b) a copy of the instrument restoring his right, certified to be a true copy by an officer of the appropriate court in the jurisdiction in question, or the professional body concerned, is served on the Society.

(2) Where a person whose registration is suspended by virtue of paragraph 11 applies to the Society for the suspension to be terminated, the Society may terminate it subject to such conditions, if any, as it thinks fit to impose.

Effective date of revived registration

13. Where a foreign lawyer's registration is revived (whether as the result of the termination of its suspension, restoration by order of the Tribunal or for any other reason), that revival shall take effect on such date, and subject to such conditions, as the Society may direct."

9. The provision as to appeals to the Master of the Rolls is contained in paragraph 14.

"Appeal against conditions or refusals

14(1) Any foreign lawyer may appeal to the Master of the Rolls against—

(a) the refusal of the Society to register him or to renew his registration;

(b) the refusal of the Society to terminate the suspension of his registration on an application made by him under paragraph 12;

(c) the failure of the Society to deal with any application by him for registration, renewal of registration or the termination (under paragraph 12(2)) of a suspension within a reasonable time; or

(d) any condition imposed by the Society under paragraph 2(3), 12(2) or 13.

(2) An appeal under sub-paragraph (1)(a), (b) or (d) must be brought within the period of one month beginning with the date on which the Society notifies the applicant of its decision on his application.

(3) On an appeal to him under this paragraph, the Master of the Rolls may make such order as he thinks fit."

Submissions

10. It was common ground that in the provisions of schedule 14 the word "registration" is used in the two different senses set out in paragraph 2 above. In paragraph 2(4)(b) of the Schedule it means the initial making of the entry and in paragraph 3(4) it means the entry that has been made.
11. On behalf of the Law Society it was contended that the meaning of registration in paragraph 2(3) was the register entry showing the current status of the Registered Foreign Lawyer and not the process of his becoming registered:

i) Although it is accepted that the word could bear either of the two meanings and there were instances of uses in both senses in Schedule 14, as a matter of language paragraph 2(3) reads more naturally as referring to the entry. If the draftsman had intended to refer to the process of entry, he would not have used the term "may be made subject to" as that was an unnatural and stilted use of language; he would have said "the making of any registration may be subject to conditions" or "the registration may be subject to any conditions". Furthermore the phrase would be tautologous if it meant the process of registration because the process included the making.

ii) It was in any event necessary to give the paragraph a purposive construction. If there was no power to impose conditions after the making of the entry where there was cause for concern about the conduct of the registered foreign lawyer, then there would be a lacuna in the regulatory scheme. The Law Society would not normally be in a position to enter into an informed consideration of whether conditions were needed when registration was first made; the power was needed later, particularly upon renewal. Without the power, the Law Society might on renewal be driven to refuse renewal when the right answer might be to renew on conditions, though it was accepted that this was a theoretical difficulty rather than a real one, as the entry could always be cancelled and a new entry made with conditions. Nor could the Society relax conditions which it had imposed, even if they had become burdensome, though again, for the same reasons, it was accepted that this was theoretical rather than real.

12. Short written submissions were provided on behalf of Mr Shuman in order to save costs; essentially the submissions sought to uphold the reasoning of the Master of the Rolls, rather than to re-argue points which had not advanced the case.

The meaning of paragraph 2(3)

13. It is first convenient to consider the language of the Schedule. The provisions of paragraphs 12(2) and 13 give the Society express power to impose conditions when suspension is terminated or a registration is revived; if the Society had power to impose conditions at any time, that express power would be superfluous. Although in certain circumstances, arguments on surplusage may sometimes carry little weight (see The Starsin [2003] UKHL 12 at paragraph 112 (as for example in the construction of a bill of lading)), the strength of the argument depends on the context. In the present context, I consider that the express power to impose conditions in a statutory scheme regulating lawyers would have been carefully considered, and is unlikely to have been thought necessary, if there was a general power which would result from the Law Society's construction. This therefore supports the argument that registration means the initial entry
14. It was submitted by the Law Society that the express provisions in these paragraphs were necessary to avoid any argument that the revival of a registration might require a return to the original position before the suspension; it relied upon the dissenting judgments of Lord Bingham at paragraphs 17- 21 and Lord Hoffman (who agreed with Lord Bingham) in R (L) v Governors of J School [2003] UKHL 9 in support of the contention that such an argument could be made. It was ingenious to have considered that this was a consideration, but highly unlikely in the context of this legislation. Reinstatement is an ordinary word whose meaning depends on the context. If paragraph 2(3) had the meaning contended for by the Law Society and there was a power to impose conditions at any time, the meaning of reinstatement taken from the dissenting judgments would not have precluded the imposing of conditions; there would have been no need for the express provisions.
15. It is next convenient to consider the right of appeal to the Master of the Rolls under paragraph 14(1)(d) in respect of the scope of any conditions imposed by the Law Society; this expressly refers to paragraphs 12(2) and 13 as well as paragraph 2(3). This strongly indicates that the draftsman contemplated only the three specific events; these are the specific provisions dealing with conditions. It would, again, have been unnecessary to refer to the specific occasions on termination of suspension and revival of registration, if paragraph 2(3) bore the meaning contended for by the Law Society.
16. The two considerations which I have set out in the preceding paragraphs were important considerations which led the Master of the Rolls to the view he formed; I agree with his views. There is, however, a further related point which did not persuade the Master of the Rolls, but which, in my view, also supports the view reached. Paragraph 14(2) makes it clear that the appeal under sub paragraph (1)(d) must be brought within one month of the date on which the Law Society notifies the applicant of its decision on his application. This use of language suggests that each of the three grounds set out in that sub-paragraph was dependent on an application by the registered foreign lawyer; that would be consistent with paragraph 2(3) referring to the initial entry. I accept that there are circumstances, such as under paragraph 13, where conditions could be imposed without any application, but the draftsman seems to have contemplated that it was likely that there would generally be an application where conditions had been imposed. That would not be the case if the Law Society had a general right to impose conditions (such as where they had concerns about a lawyer); that would be inconsistent with the provisions of paragraph 14(2).
17. It was contended by the Law Society that s. 12(1) of the Interpretation Act 1978 supported its contention:

"Where an Act confers a power or imposes a duty it is implied, unless the contrary intention appears, that the power may be exercised, or the duty is to be performed, from time to time as occasion requires "

I do not consider that this helps; if the power is stated to exist at a specific time, this provision does not have the effect of making it exercisable at other times. It therefore does not assist in the construction of the phrase where the point at issue is whether the power is exercisable at a specific time.

18. It was, as I have mentioned, contended by the Law Society that the language of paragraph 2(3) itself supports their construction and must be considered stilted or tautologous if it were to bear the other meaning. I do not accept this contention. The wording is such as to bear either meaning and that is why it is important to look at the language of the other provisions (as set out above) and the purpose of the provisions in their wider context.
19. It is therefore convenient to consider the arguments as to the purpose of the provisions in the wider context of the regulation of solicitors and registered foreign lawyers. The Law Society's powers in relation to the power to impose conditions are set out in the Solicitors Act 1974; it has these powers:

i) Under s. 12 on the first occasion when a certificate is issued or certain other similar occasions such as when a certificate is reissued following a period when it has not been in force.

ii) In certain other circumstances specified in s. 12 (d) – (l) and 13A of the Solicitors Act 1974; these include the situation where the solicitor is asked to give an explanation of a matter relating to his conduct and fails to give one which is considered satisfactory.

20. The judgment of the Master of the Rolls at paragraphs 24 and 25 makes it clear that there is good reason to circumscribe the power to impose conditions on a solicitor who had entered into practice without conditions:

"It is in those circumstances that the imposition of conditions can have, and usually in my experience does have, a draconian effect in that it precludes a solicitor continuing with the practice he was carrying on prior to the imposition of those conditions

The same is true in relation to a registered foreign lawyer. The effect of subjecting that lawyer to conditions, once he has begun to practise in this country without restriction, is more draconian than simply requiring him to observe conditions ab initio "

21. The Law Society contended that the circumstances in ss. 12 and 13A of the Solicitors Act 1974 are so broadly defined that they would apply to any realistic situation where the Law Society would apply conditions after initial entry; as they were almost unrestricted, it was unlikely that an unrestricted power in relation to Registered Foreign Lawyers would be of any practical different effect. As under s.12(1)(e) and s.13A(2)(a) of the Solicitors Act conditions could be imposed where a solicitor had failed to give a satisfactory explanation of matters relating to his conduct, there could be no objection to exercising a like power over foreign registered lawyers.
22. But that is not in point. What is important is that Parliament properly circumscribed the power in relation to solicitors and it cannot be inferred that it was intended that there be an unrestricted power over registered foreign lawyers, subsequent to the initial registration. There is no reason for such a distinction. It was contended, however, that the position with regard to solicitors and registered foreign lawyers was so different that no conclusion should be drawn from the fact that solicitors and registered foreign lawyers were treated differently; in the light of the views expressed by the Master of the Rolls from his wide experience, I cannot accept this; my own much more limited experience strongly suggests that in modern commercial practice (particularly in London which has for some time been the centre of so much international work), the position of solicitors and foreign lawyers is very little different in transactional work. It seems to me, therefore, it is unlikely Parliament would have chosen to circumscribe a power in relation to solicitors and not to circumscribe it for registered foreign lawyers.
23. It is said that this would leave a lacuna; that is so. I do not, however, accept that it is nearly as significant as is asserted on behalf of the Law Society. The Law Society contends that a power which only enabled them to impose conditions on first registration was of very limited value, as at that time the Law Society would know very little about the candidate (save in unusual cases) and that it would be impracticable to impose a standard set of conditions in a manner which would provide safeguards without unduly interfering with Registered Foreign Lawyers' working arrangements. It must be remembered, however, that the primary body responsible for a foreign lawyer is the body within the jurisdiction in which that lawyer was admitted and if the subsequent conduct of a lawyer in this jurisdiction gives rise to concern, there is no reason why the Law Society cannot, as other regulators do as a matter of course, report the matter to the regulators in the jurisdiction which has primary responsibility. This point was made by the Master of the Rolls in his judgment at paragraph 27; the answer of the Law Society through Mr Middleton, the Head of Investigation and Enforcement, was that the taking of such a step depends upon the nature of the jurisdiction in question and that it was far from certain that the Law Society would receive a swift and effective response in all cases. The evidence does not disclose the steps taken in this case to confer with the authorities in Texas or give any particulars as to why this is not an effective remedy or might not, in 1990, have been thought by Parliament to be such.
24. One answer to the present lacuna is s.89(5) of the Act which gives power to extend particular provisions and regulations made under the 1974 Act to foreign lawyers. That power has not so far been exercised; the Law Society has, since the Master of the Rolls gave his judgment, considered applying to the Lord Chancellor to exercise the power under s.89(5) to specify the application of s.13A applicable to the registration of foreign lawyers. The matter is still under consideration. It will rightly be for decision by the Executive and Legislature whether this is a power that should be given, taking into account international arrangements between regulators and any issues of comity and international arrangements for legal services that might arise.

Conclusion

25. For these reasons, therefore, which rely both on the language and the broader context and purpose of the scheme of registration, I entirely agree with the judgment of the Master of the Rolls that the meaning of registration in paragraph 2(3) is the first of the alternatives – the making of the entry in the register.
26. I would therefore refuse the application for judicial review.

Mr Justice Richards:

27. I agree.

Mr Justice Fulford:

28. I also agree.