The Law Society v Karim & Ors

A party relying on confidential evidence to obtain an order must ordinarily disclose that evidence to the person affected, particularly where the evidence may be relevant to costs. Statutory investigative procedures may create a limited exception to that general rule, but they do not confer an absolute right of confidentiality. Where the evidence was relied on and disclosure is sought, the burden shifts to the party withholding it to justify continued secrecy. A general desire for confidentiality is insufficient. The court may order disclosure of both the contents of the evidence and the identity of its source.

The Law Society intervened in the practice of Karim Solicitors and obtained a search order under Schedule 1 to the Solicitors Act 1974. The order was based partly on a confidential exhibit identifying premises where files were believed to be located. The search recovered documents, but they did not materially advance the Society’s case.

The defendants later sought disclosure of the confidential exhibit and, potentially, the informant’s identity. They argued that the material might be relevant to the costs of the search and subsequent investigative steps. The central issue was whether the Law Society’s regulatory functions justified withholding evidence relied on to obtain the order.

In a separate judgment, the court also addressed summary judgment for an account and an interim payment arising from the solicitors’ handling of client money.

1. Summary judgment and interim payment. The defendants accepted liability to account for money received into the client account. There was therefore no defence to the claim for an account, and summary judgment was entered. For interim-payment purposes, the court adopted a broad-brush approach and fixed interest at 5.75 per cent on the relevant sums. Simple interest, rather than compound interest with yearly rests, was ordered.
2. General disclosure principle. The starting point is that a person affected by an order should ordinarily see the information placed before the judge, have an opportunity to comment on it, and challenge it. That principle was stated in Re K (infants) [1963] Ch 381 and applied in the context of search orders in WEA Records Ltd v Visions Channel 4 Ltd [1983] 1 WLR 721.
3. Statutory exceptions. The general principle is subject to limited, principally statutory, exceptions. The court accepted the reasoning in Re British and Commonwealth Holdings PLC [1992] Ch 342 and Re Murjani (a bankrupt) [1996] 1 WLR 1498, which recognised that statutory investigative procedures may permit confidential material to be relied on without immediate disclosure.
4. Burden of justification. The Law Society’s regulatory role could attract an analogous exception, but it did not create an absolute entitlement to secrecy. Once the Society had relied on the confidential exhibit to obtain the search order, and the defendants sought disclosure for costs purposes, the defendants had shown sufficient reason to inspect it. The burden then returned to the Society to justify withholding the material. A general desire for confidentiality did not discharge that burden.
5. Order. The Law Society had not shown that confidentiality of either the exhibit or the informant’s identity was necessary. Disclosure of both was ordered.