Shuman, Re Matter of the Solicitors' Admissions Regulations

LORD PHILLIPS, MR: This is an appeal by Mr Michael Shuman against the decision of an Adjudication Panel of the Law Society to impose conditions on Mr Shuman's registration as a registered foreign lawyer. The appeal is brought pursuant to paragraph 14 of Schedule 14 to the Courts and Legal Services Act 1990 (the Act). The conditions in question are set out in a letter from the Law Society dated 25 July 2003 as follows:

Mr Shuman was admitted as an Attorney at Law and a member of the Texas Bar on 11 May 1993. In 1999 he was introduced to a Mr Periasamy Mathialagan, who was practising as a solicitor in this country in a firm known Mathis. Mr Shuman entered into a professional relationship with Mr Mathialagan. The precise nature of his involvement in the firm of Mathis is in issue, but he was certainly held out by Mr Mathialagan as being a partner in that firm.

In September 2001 the OSS carried out an inspection of the accounts of Mathis. That led to a subsequent report by the Forensics Investigation Unit of the OSS dated 30 September 2002, which identified matters giving rise for concern involving the process of large amounts of money. Following that report, the OSS intervened and resolved to take proceedings against Mr Mathialagan and Mr Shuman before the Solicitors' Disciplinary Tribunal. By this time Mr Shuman was no longer playing an active part in the practice of Mathis.

The proceedings before the SDT have not yet taken place. Mr Shuman's initial registration as a foreign lawyer was for the year 1999/2000. He renewed that registration for the two following years. On 14 October 2002 he wrote to the Law Society informing them that he would not be renewing his registered foreign lawyer status, the renewal being due at the end of that month. At the time the registration was due for renewal, the Law Society could have cancelled it, but it has deliberately not done so because, if the registration was cancelled, the jurisdiction of the SDT would no longer prevail.

A number of different issues have been raised between Mr Shuman and the Law Society but Mr Hopper QC, who appears for Mr Shuman on this petition, has taken only one seminal point which is a challenge to the jurisdiction of the Law Society to impose conditions on Mr Shuman's registration.

The most important of the statutory provisions is Section 89 of the Courts and Legal Services Act 1990 which provides that:

Schedule 14 to the Act is divided into parts. Part I is entitled "REGISTRATION". Paragraph 1, under the heading "General", provides, so far as material:

The next paragraph "Application for registration" provides:

Part II of Schedule 14 bears the title "REGISTERED FOREIGN LAWYERS: SUPPLEMENTARY PROVISIONS". It deals with intervention in practices at some considerable length and then deals with the obligation to contribute to the Compensation Fund and the duty to provide Accountants' Reports. Paragraph 10 deals with the effect of bankruptcy, which is to suspend the registration of the foreign lawyer. Paragraph 11 deals with disciplinary action and the suspension of the registration where the registered foreign lawyer is struck off or suspended from practice.

By the authority in his own jurisdiction, paragraphs 12, 13 and 14 provide:

The narrow issue of construction relates to the true meaning of paragraph 2(3):

Both Mr Hopper, and Mr Giffin QC who appears for the Law Society, accept that this provision is ambiguous. One possible meaning is that the making of the registration (the initial entry into the register) may be made subject to such conditions as the Society sees fit to impose. The other possible meaning is that any entry in the register may be made subject to such conditions as the Society sees fit to impose. This ambiguity is in no way clarified by the definition of "registration", which is equally ambiguous; namely that registration means registration in that register.

Looking at the individual provisions of Schedule 14, registration plainly means the act of entry in the register (ie paragraph 2(4)(b) and others where registration plainly means the entry in the register, such as paragraph 3(4) where "registration" is used for the first time). Where, in paragraph 3(4)(a), registration is used for a second time, it has the other meaning.

Mr Hopper has submitted that there are a total of 14 reasons for giving the ambiguous phrase the meaning that "any entry into the register may be made subject to such conditions as the Society sees fit to impose". He submitted that this meaning applied equally to the initial entry in the register or what occurred when registration was renewed. Mr Giffin submitted that it was very hard to give it that meaning. I agree with him. If it means "the act of" in that subparagraph, it must refer to the initial entry into the register which occurs only once. Where registration is renewed, the entry remains in the register.

Mr Hopper's first point is that the overall scheme of Schedule 14 supports his submission that the first part is concerned with the "nuts and bolts" of registration; the second part is where any form of regulation or disciplinary action is provided for.

To this Mr Giffin replies that, on any footing, paragraph 2(3) deals with regulation. To a limited extent it seems to me that Mr Giffin is right. If Mr Hopper's contention is right, paragraph 2(3) does not merely cover the nuts and bolts of registration, but the imposition of a restriction by way of condition when the registration is initially made. Having said that, the remainder of Part I is unquestionably concerned with the nuts and bolts of registration. To a large extent "regulation" is to be found in Part II.

Mr Hopper relies upon the heading of paragraph 2 "Application for registration" as indicating what takes place at the initial entry into the register. Mr Giffin concedes that there is some force in that point. But he submits that headings are an aid for construction and are of limited value. I accept that submission.

The same is true of Mr Hopper's third point which relates to the overall title of Part I "REGISTRATION". He submits that all the matters in paragraph 2 relate to the process of registration. That submission, in my view, is essentially correct. Mr Giffin submits that in paragraph 2(4)(a) provision is made for alteration of entries that have already been made in the register. That is true. Plainly, the paragraph is not merely dealing with the initial moment of entry in the register. Nonetheless, even when it deals with alterations to the register, it seems to me that it relates to administrative matters and not with the exercise of any form of regulatory discretion.

That point is linked to Mr Hopper's next point that the regulations that have been drawn up in Part II are dealing with the process of registration. That is correct, but, again, the ambit of those regulations is not cogent to the interpretation of the provisions of Schedule 14 themselves. Mr Hopper submits that this is a matter of English language. The natural meaning of the ambiguous phrase is that the act of registration may be made subject to conditions. I do not agree with that point. Taking that subparagraph on its own, it is entirely ambiguous. In so far as a choice has to be made between meanings, that choice must be made on the basis of its all overall context having regard to the efficacy of the scheme.

Mr Hopper then focuses on the provisions of paragraph 14 that an appeal in relation to the condition imposed under paragraph 2(3) must be brought within the period of one month beginning with the date on which the Society notifies the applicant of its decision on its application. He submits that this simply cannot work in a situation where conditions are imposed in the absence of any application at all.

Mr Giffin counters that submission by pointing out that there are circumstances in which conditions can be imposed in the absence of any application. The revival or reinstatement of registration after a period of suspension provides the result. That is correct. It would appear that the draftsman anticipated that there would be some form of application to the Law Society in any situation where the imposition of conditions was involved. Realistically, this is likely to be the position in practice even if the application is not one for which express provision is made by the regulations.

Mr Hopper's remaining points carry the most weight. First, with some encouragement from myself, he submits that the express provisions in paragraphs 12 and 13 of Schedule 14 are superfluous if paragraph 2(3) has the ambit for which the Law Society contends. Mr Giffin did his best to meet this by submitting that the draftsman might have a concern that reinstatement or revival of registration under paragraphs 12 and 13 might oblige the Law Society to reinstate without the imposition of conditions.

In my view this is a somewhat fanciful explanation. When you look at paragraphs 12, 13 and 14 taken together, the draftsman is plainly contemplating three different situations in which conditions would be imposed: (a) under (2) and (3) at the time of the initial entry into the register; (b) where reinstatement occurs under paragraph 12; and (c) where registration is revived under paragraph 13. The express conferring of a power to impose conditions in the latter two events points quite strongly against giving 2(3) the wide ambit for which the Law Society contends.

Mr Hopper submits that it is unlikely that an unrestricted right to impose conditions on registration of a foreign lawyer should be granted to the Law Society when one compares the regime applicable to a qualified solicitor. Section 89(5) of the Act gives power to extend particular regulations to cover foreign lawyers, but that power has not been exercised in relation to section 12 and section 13A of the Solicitors Act 1974, which entitle the Law Society to impose conditions on the first occasion that a certificate is issued to a solicitor or in circumstances where a certificate is reissued following a period when it has not been in force. Conditions may only be imposed in certain specified circumstances when "alarm bells" ring.

There is good reason for circumscribing the power to impose conditions after a solicitor has entered into practice without restriction because. 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 his practice which 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.

There are undoubtedly arguments that weigh the other way. Mr Giffin says that, if Mr Hopper is right and conditions can only be imposed ab initio, then there is no express circumstances in which those conditions can be lifted. That is correct, but to an extent it is also true in relation to solicitors in practice. The Law Society will lift conditions if satisfied that there is good reason for so doing, but at the end of the day it may be there is a lacuna. No-one can suggest that the terms of Schedule 14 provide a clear scheme.

The more forceful point made by Mr Giffin is that it is surprising if the Law Society does not have additional powers to those expressly provided for in relation to suspension of registration in relation to foreign lawyers. I agree with him about that. It seems to me that there is an apparent lacuna, although there are plainly some practical steps the Law Society could take where concerned about the conduct of a registered foreign lawyer by way of representation to his own regulatory authority.

I have reached the conclusion that Mr Hopper's submissions are correct and the preferable construction of the ambiguous phrase is that it entitles the Law Society to impose conditions where a foreign lawyer's entry is first entered on the register, but does not give the Law Society power at any time thereafter to impose conditions. For that reason this petition is allowed.

MR HOPPER: Will you allow the petition with costs? There is a schedule if your Lordship is minded to deal with the matter by way of summary assessment.

LORD PHILLIPS, MR: What do you say about costs Mr Giffin?

MR GIFFIN: As far as the principle is concerned, I cannot resist an award of the majority of the costs.

LORD PHILLIPS, MR: I do not have my hand on the schedule. (Handed)

MR GIFFIN: The petition was concerned with issues other than the point of construction, which ultimately were not pursued. I accept that that will not be a basis for resisting the majority of the costs but I invite your Lordship to make some appropriate percentage deduction to allow for the fact that at least some of the evidence and argument was directed to other issues.

My Lord has read the papers and can form an assessment of the appropriate percentage. The other point concerns quantum. My Lord sees that our costs are, excluding VAT, just under £6,000, whereas the petitioner's costs, excluding VAT, are just under £16,000. That, in my submission, seems rather high for a matter within a fairly narrow compass. It is difficult for us to submit where the excess lies because the division of responsibilities between Mr Hopper and those of his instructing solicitors is perhaps not so sharp as between solicitors and counsel. Mr Hopper was responsible for the correspondence, but either Mr Hopper has been effectively doing all the work in which case his fee is very reasonable but the charges of the solicitors instructing him seem rather excessive, or else it is the other way round. I invite your Lordship either to reduce the figure to something much closer to ours, and then by a further percentage, or alternatively to send the matter for detailed assessment.

MR HOPPER: My Lord, on those points, so far as some matters not being pursued are concerned, we had to bring the petition and place all matters that were of genuine concern in that petition. In the result a great deal of the effort has been concentrated on the matter upon which your Lordship encouraged us to place it, so there has been very little in terms of wastage there, even if it is appropriate, and we say it is not, to give a deduction. It is not a question of the point being taken with abandon, it is part of them being taken as part necessary parts of argument needing to be argued.

LORD PHILLIPS, MR: I am not persuaded of that. I have read through the voluminous material. It is plain that you have done a lot of work in this case, but a lot of it does focus on matters quite separate from the narrow interest of construction.

MR HOPPER: All I can say is that, so far as my work in the matter has been concerned, and I have done a great deal of the drafting so the petition is my product and the skeleton argument, it was necessary for my instructing solicitors to amass some response and to obtain a great deal of information from the client because this was a case which had to be presented, to a degree, in a vacuum in that if we had a case a disciplinary case to meet we would have addressed that, but for the purposes of these proceedings we had to do something that was economic. That inevitably involved getting all the information from the client and willowing it to the point where it was proper in volume for the purposes of these proceedings. But that does not devalue from the fact that a lot work had to be done to get all the information in the first instance. Those are my points.

LORD PHILLIPS, MR: The statement of costs on each side are startlingly disparate, but I am satisfied that is, to quite a large extent, true that a lot of work has been done on matters which have not been before me. I am going to make a summary assessment and order costs in the sum of £13,000.

MR GIFFIN: Is that inclusive or exclusive of VAT?

LORD PHILLIPS, MR: Inclusive.

MR GIFFIN: I am told that the Society's processes make payment within the normal 14 days difficult, would 28 days be all right?

MR HOPPER: I am familiar with the dates within which the Society is encouraged to pay.

LORD PHILLIPS, MR: Twenty-eight days.

MR GIFFIN: Your Lordship will know better than I. I think my understanding is that if the Society wished to pursue the construction point further, the process is not by way of any appeal against your Lordship's judgment but we might have to seek judicial review?

LORD PHILLIPS, MR: I have not been judicially reviewed yet, but there is always a first time.

MR GIFFIN: Unless your Lordship thinks it is plain there is no right of appeal, I would formally apply for it.

LORD PHILLIPS, MR: I do not think there is a right of appeal.

MR GIFFIN: There is no point asking.

LORD PHILLIPS, MR: I am not sure who you would imagine appealing to.

MR HOPPER: I do not know whether your Lordship would or would not think it appropriate to give any indication for the purposes of a judicial review application, if one were made, as to whether you would think it is a point of sufficient substance and importance that it might merit further consideration?

LORD PHILLIPS, MR: I think I will leave the question of whether to judicially review my decision to whoever has to make that decision.