Sritharan v Law Society

On an application to withdraw an intervention notice, the court must first decide whether the statutory ground for intervention is made out. It must then assess whether the intervention should continue, balancing public protection against the serious consequences for the solicitor.

Where an intervention for suspected dishonesty was well founded, the court should not substitute a different regulatory regime. Under Solicitors Act 1974, Schedule 1, paragraph 6(5) confers only consequential powers after withdrawal of the notice. It gives no free-standing power to restore a practising certificate or appoint a receiver. Paragraph 9(11) does not supply such a power.

The Law Society intervened in the appellant solicitor’s practice on suspicion of dishonesty. It contended that substantial and persistent transfers from client account to office account had created a serious unrepaired deficit.

Hart J refused to order withdrawal of the intervention notices, restoration of the practising certificate, access to practice files, or discharge of a freezing injunction, save that he reduced the frozen amount. His principal judgments were reported at [2004] EWHC 2932 (Ch) and [2004] EWHC 3127 (Ch).

The appeal concerned whether the intervention should continue and whether the High Court could replace it with an alternative, less intrusive arrangement.

1. Appeal dismissed. The finding that there was reason to suspect dishonesty was not challenged. The evidence of repeated unauthorised client-account transfers, a substantial deficit and misleading mortgage certificates amply justified continued intervention.
2. On an application under Schedule 1, paragraph 6(4) to Solicitors Act 1974, the court first determines whether the ground for intervention is established. If it is, the court must decide whether the intervention should continue, balancing protection of the public against the severe effect on the solicitor. The Law Society’s regulatory judgment is a material evidential consideration.
3. Where the original intervention was well founded, withdrawal is appropriate only if further information or a material change of circumstances means that restraint of the vested practice monies is no longer necessary. The court should be very slow to replace the statutory intervention regime with a remedy of its own devising.
4. Paragraph 6(5) permits consequential orders only after the court directs withdrawal of the paragraph 6(3) notice. It is not a free-standing power to restore a practising certificate or to appoint a receiver. A restoration of the certificate could, if necessary, be consequential upon a valid withdrawal order, but withdrawal cannot be ordered merely to create that consequence.
5. Schedule 1, paragraph 9(11) must be read in the context of applications concerning practice documents. It likewise gives no independent power to restore a practising certificate or appoint a receiver over monies vested in the Law Society.
6. The intervention, suspension, retention of files and freezing injunction therefore remained in place. May and Rix LJJ agreed with Chadwick LJ.

• Court of Appeal (Civil Division): dismissed the solicitor’s appeal: [2005] EWCA Civ 476.
• High Court, Chancery Division (Hart J): refused withdrawal of the intervention notices, restoration of the practising certificate, access to files and discharge of the freezing injunction: [2004] EWHC 2932 (Ch); [2004] EWHC 3127 (Ch).