Andrew Roy Williams v The Law Society of England and Wales (solicitors Regulation Authority)
| Jurisdiction | England & Wales |
| Judge | Sir William Blackburne |
| Judgment Date | 30 July 2015 |
| Neutral Citation | [2015] EWHC 2302 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC2014001063 |
| Date | 30 July 2015 |
[2015] EWHC 2302 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
IN THE MATTER OF THE SOLICITORS ACT 1974
Royal Courts of Justice
Strand, London. WC2A 2LL
Sir William Blackburne
Case No: HC2014001063
Gregory Treverton-Jones QC and Richard Alomo (instructed by RadcliffesLeBrasseur) for the Claimant
Timothy Dutton QC (instructed by Russell-Cooke LLP) for the Defendant
Hearing dates: 12 May and 17 June 2015
Introduction
The claimant, Andrew Williams, brings this application to enforce the terms of a consent order in the Tomlin form made by me on 16 December 2014. He does so pursuant to a liberty to apply contained in the order.
Mr Williams is a solicitor. At the relevant time he was working as a solicitor in a practice carried on under the name Lillywhite Williams LLP ("the LLP"). This practice had been previously conducted in the name of and for the benefit of the partners in Lillywhite Williams & Co ("the Partnership") of which Mr Williams and Ian Lillywhite had been the sole partners. With effect from 1 February 2014, the practice had converted from the Partnership to the LLP with Mr Williams and Mr Lillywhite registered as sole members of the LLP (and with others registered as either consultants or in other capacities). From that date the Partnership ceased to hold professional indemnity insurance cover and Mr Williams and Mr Lillywhite were no longer authorised to practise as a partnership.
On 28 October 2014 the Solicitors Regulation Authority ("the SRA") resolved to intervene into the practice of the LLP and, separately, into the practice of Nationwide Solicitors LLP ("Nationwide"). In the case of the LLP it did so on three separate grounds: (1) under paragraph 32(1)(a) of Schedule 2 to the Administration of Justice Act 1985 (as amended) ("the 1985 Act") on the ground that a recognised body or manager of such a body had failed to comply with Rules applicable to the body or manager by virtue of section 9 of that Act, (2) under paragraph 32(1 )(d) on the ground that there was reason to suspect dishonesty on the part of a manger or employee of a recognised body in connection with that body's business and (3) under paragraph 32(1)(e) on the ground that it was necessary to exercise powers of intervention to protect the interests of clients. As part of the same decision the SRA also resolved to intervene into the individual practices of Mr Williams and Ian Lillywhite and into those of Naresh Chopra and Rehana Saeed as well. It did so pursuant to powers conferred by Part II of Schedule I to the Solicitors Act 1974 (as amended) ("the 1974 Act"). In the case of Mr Williams and Mr Lillywhite it did so under paragraph 1(1)(c) of Schedule 1 on the ground that a solicitor had failed to comply with the Rules made under sections 31 and 32 of the 1974 Act (namely, the SRA Code of Conduct 2011 and the SRA Accounts Rules 2011) and under paragraph 1(1)(m) on the ground that it was necessary to intervene into a solicitor's practice to protect the interests of clients or former clients. Those and the other powers set out in the Schedules to the two Acts, although conferred upon the Law Society of England and Wales ("the Society"), are exercised by the SRA on behalf of but wholly independently of the Society. It is for that reason that the defendant to this application is as shown in the title to these proceedings.
On 4 November 2014 Mr Williams issued an application for an order that the intervention be withdrawn. It resulted in the making of the consent order dated 16 December 2014. By that order, so far as relevant, it was agreed that the intervention should be withdrawn as regards Mr Williams' practice. This agreement had no effect on the intervention into the other practices. Another term of the order was that the suspension of Mr Williams' practising certificate should be set aside. (It had been automatically suspended as a result of the earlier intervention.) Mr Williams wished to be free to carry on in practice again, either on his own account or with another or others or, if that was not possible, in an employed capacity. He could not legally do so for so long as his practising certificate remained suspended.
The decision of the SRA which gave rise to the interventions contained the usual term that any sums of money to which paragraph 6 of Part II of Schedule I ("paragraph 6") applied, and the right to recover or receive them, should vest in the Society and be held by the Society on trust to exercise in relation to them the powers conferred by Part II and subject thereto and to rules under paragraph 6B upon trust for the persons beneficially entitled to them ("the statutory trust"). Those rules, the Intervention Powers (Statutory Trust) Rules 2011 ("the 2011 Rules"), contain terms which, broadly stated, require the SRA to identify and, subject to verification, distribute to all persons who have a potential beneficial interest in them the monies held in the statutory trust accounts for which they provide.
The issue
The issue which has arisen and given rise to this application is over the scope of the statutory trust. Does it extend to monies which can be shown to belong to the practice when it was conducted in the name of the Partnership? Mr Williams, who has appeared by Gregory Treverton-Jones QC and Richard Alomo, contends that it does not and, accordingly, that any monies belonging to the partnership which the SRA holds are held by it on bare trust for those entitled to the assets of the Partnership and should be paid over accordingly. The SRA, for whom Michael McLaren QC appeared when the matter was before me on 12 May and for whom Timothy Dutton QC appeared when it came back for further hearing on 17 June, contends that such monies are caught by the trust (including therefore the 2011 Rules) and should be administered and dealt with accordingly.
The practical importance of this issue has been that on Monday 13 April the SRA received payment from the Legal Aid Agency ("the LAA") of £62,826.12. It was Mr Williams' contention that the bulk of that sum was money to which the Partnership was entitled. Having been informed that the payment had been received and after attending at the offices of the SRA's solicitors on Friday 17 April to review various files held pursuant to the intervention, he asserted a claim to £41,604.84 of the sum so received. He contended that that amount represented money to which the (former) Partnership was entitled as it represented payment for work carried out by him (rather than by his then co-partner, Mr Lillywhite) while the Partnership was still in being. On Sunday 19 April he wrote to the solicitors for the SRA requesting that the sum in question be paid to him by 3pm on 22 April. They replied on Monday 20 April raising a number of issues. They invited him to respond and provide evidence to support his claims. Instead, on Thursday 23 April those acting for Mr Williams emailed the solicitors with a draft of the application which is now before me. His contention was that the money in question belonged to the (former) Partnership and was not therefore subject to the intervention powers (including in particular the statutory trust). Instead, he maintained, it was held upon a bare trust for the Partnership and should be released to him. Mr Williams said, and I have no reason to doubt, that he urgently needed the money if he was to be able to continue in practice. The SRA demurred. It contended, and continues to contend, that the money was subject to the statutory trust and, accordingly, that it fell to be dealt with by the SRA pursuant to the 2011 Rules.
In fact, since the matter came before me on 12 May and, in part as a result of matters which could be agreed in the course of that day, the SRA was able to agree that Mr Williams should be paid sums totalling £22,552.04 by the close of business on the Friday of that week, as duly happened. The order that I made at that hearing reflected that agreement. Since then agreement has been reached for a further payment of £22,108.74 to be released to Mr Williams. Several matters have held this up. One of them has been the SRA's concern in case the LAA should seek to recoup any part of the overall sum it had paid. The basis for this concern, as I understood it, is that in part the payment related to work which Mr Williams had carried out after the Partnership, with whom the franchise agreement with the LAA had been made, had ceased to be authorised and been replaced by the LLP and its professional indemnity insurance cover transferred to the LLP so that the Partnership no longer had cover. (Under section 37 of the 1974 Act all solicitors and the bodies through which they act must have professional indemnity insurance in accordance with the SRA Indemnity Rules 2011.) It seems that although the LAA had been informed of the change of status from the Partnership to the LLP with effect from 1 February 2014 no steps had been taken to novate the franchise agreement to the LLP. Correspondence to bring this about took place between the LAA and Mr Williams but by early May 2014, despite reminders from the LAA, the matter had ground to a halt. On 19 May 2014 Mr Williams eventually responded. He apologised for the delay, mentioned that he had had some health problems but then stated that he was not sure at the time of writing whether he wished to proceed with the matter "because I am currently reviewing my future plans." The matter was not thereafter taken up again and the franchise agreement was never transferred to the LLP. This meant that the LLP never had the benefit of the franchise agreement and the Partnership ceased from the end of January 2014 to be authorised to practise as a partnership...
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