Holder v The Law Society

An intervention in a solicitor’s practice under Solicitors Act 1974, Sch 1 must be assessed by the statutory scheme and the public-interest balance which that scheme requires. Article 1 of the First Protocol requires a fair balance, but affords a margin of judgment both to Parliament in creating the scheme and to the Law Society in applying it. A court should not hold an intervention disproportionate by comparing it with a hypothetical alternative remedy devised by the court.

On an application to withdraw an intervention notice, the court determines whether the statutory grounds exist and then balances public protection against the serious consequences for the solicitor. Article 6 does not require publicly funded representation unless the lack of it makes the civil claim practically impossible or produces obvious unfairness.

The Law Society intervened in the claimant solicitor’s practice after an inspection disclosed serious accounting failures, a substantial client-account deficit, debts to moneylenders and grounds to suspect dishonesty. The intervention was made under Sch 1 to the Solicitors Act 1974.

Master Price dismissed the claimant’s application to require withdrawal of the intervention notice. Peter Smith J allowed the claimant’s appeal and directed a trial, holding that there was a real prospect that the intervention had infringed Article 1 of the First Protocol because a receivership might have been a less intrusive alternative.

The Law Society appealed. The central issues were whether the statutory intervention regime or its use in this case was disproportionate under Article 1, and whether the claimant had been denied effective access to a court under Article 6.

1. Appeal allowed unanimously. Carnwath LJ, with whom Aldous LJ agreed, would restore the Master’s order. Sir Christopher Staughton likewise concluded that there was no prospect of the intervention being set aside.

2. An application under Sch 1 involves a two-stage review. The court first decides whether a ground for intervention is made out. If it is, the court conducts the required balance between protection of the public and the grave consequences for the solicitor, giving due evidential weight to the Law Society’s assessment as the professional regulator.

3. There was no breach of Article 6. Applying Pine v Law Society [2001] EWCA Civ 1574, the absence of legal assistance infringes Article 6 only in exceptional circumstances where pursuit of a civil claim is practically impossible or the proceedings are obviously unfair. The claimant was a litigation solicitor, knew the material facts, had admitted most of them, and faced no complex issue which he could not present.

4. The intervention interfered with possessions, but Article 1 proportionality includes an important margin of judgment. It applies both to Parliament’s choice of the statutory intervention regime and to the Law Society’s decision in an individual case. The longstanding Sch 1 regime, though draconian, embodied the same fair balance required by Article 1. There was no arguable basis for holding that Parliament had exceeded its margin.

5. The judge should therefore have assessed the Law Society’s action by the statutory procedure, rather than by a hypothetical court-appointed receiver or other alternative intervention. It was unnecessary to decide whether such a power existed. On the established facts, the statutory grounds and the public-interest balance decisively justified intervention. The posting of notice to arrive on the following Monday did not undermine the reasonable concern about further dissipation, particularly as the resolution vested the monies and notice to the bank was the critical protective step.

• Court of Appeal (Civil Division) — Allowed the Law Society’s appeal and restored the Master’s order: [2003] EWCA Civ 39.
• High Court, Chancery Division (Peter Smith J) — On 25 July 2002 allowed the solicitor’s appeal from the Master and directed that the claim proceed to trial.
• Master Price — On 30 August 2001 dismissed the solicitor’s claim for withdrawal of the intervention notice.