“The powers conferred by Part II of Schedule 1 shall be exercised in the circumstances specified in Part I of that Schedule.”
“(1) Subject to sub-paragraph (2), the powers conferred by Part II of this Schedule shall be exercisable where- (a) the Society has reason to suspect dishonesty on the part of- (i) a solicitor, or (ii) an employee of a solicitor, or (iii) the personal representatives of a deceased solicitor, in connection with that solicitor’s practice or former practice or in connection with any trust of which that solicitor is or formerly was a trustee or that employee is or was a trustee in his capacity as such an employee; (aa) the Society has reason to suspect dishonesty on the part of a solicitor (“S”) in connection with- (i) the business of any person of whom S is or was an employee, or of any body of which S is or was a manager, or (ii) any business which is or was carried on by S as a sole trader;… (m) the Society is satisfied that it is necessary to exercise the powers conferred by Part 2 of this Schedule (or any of them) in relation to a solicitor to protect- (i) the interests of clients (or former or potential clients) of the solicitor or his firm, or (ii) the interests of the beneficiaries of any trust of which the solicitor is or was a trustee.” (a) the Society has reason to suspect dishonesty on the part of- (i) a solicitor, or (ii) an employee of a solicitor, or (iii) the personal representatives of a deceased solicitor, in connection with that solicitor’s practice or former practice or in connection with any trust of which that solicitor is or formerly was a trustee or that employee is or was a trustee in his capacity as such an employee; (aa) the Society has reason to suspect dishonesty on the part of a solicitor (“S”) in connection with- (i) the business of any person of whom S is or was an employee, or of any body of which S is or was a manager, or (ii) any business which is or was carried on by S as a sole trader;… (m) the Society is satisfied that it is necessary to exercise the powers conferred by Part 2 of this Schedule (or any of them) in relation to a solicitor to protect- (i) the interests of clients (or former or potential clients) of the solicitor or his firm, or (ii) the interests of the beneficiaries of any trust of which the solicitor is or was a trustee.”
“Subject to any order for the payment of costs that may be made on an application to the court under this Schedule, any costs incurred by the Society for the purposes of this Schedule, including, without prejudice to the generality of this paragraph, the costs of any person exercising powers under this Part of this Schedule on behalf of the Society, shall be paid by the Solicitor or his personal representatives and shall be recoverable from him or them as a debt owing to the Society.”
“32(1) Subject to sub-paragraph (2), where-… (d) the Society has reason to suspect dishonesty on the part of any manager or employee of a recognised body in connection with- (i) that body’s business, (ii) any trust of which that body is or was a trustee, (iii) any trust of which the manager or employee is or was a trustee in his capacity as such a manager or employee, or (iv) the business of another body in which the manager or employee is or was a manager or employee or the practice (or former practice) of the manager or employee;… (e) the Society is satisfied that it is necessary to exercise the powers conferred by Part 2 of Schedule 1 to the 1974 Act (or any of them) in relation to a recognised body to protect– (i) the interests of clients (or former or potential clients) of the recognised body, (ii) the interests of the beneficiaries of any trust of which the recognised body is or was a trustee, or (iii) the interests of the beneficiaries of any trust of which a person who is or was a manager or employee of the recognised body is or was a trustee in that person’s capacity as such a manager or employee; the powers conferred by Part II of Schedule 1 to the 1974 Act shall be exercisable in relation to the recognised body and its business in like manner as they are exercisable in relation to a solicitor and his practice… 35 In connection with the application of Part II of Schedule 1 to the 1974 Act for the purposes of this Schedule, in that Part of that Schedule- (a) any reference to the solicitor or to his practice shall be construed as including a reference to the body in relation to which the powers conferred by that Part of that Schedule are exercisable by virtue of paragraph 32…of this Schedule or to its business (or former business) as a recognised body; (b) any reference to paragraph 1 of that Schedule shall be construed as including a reference to paragraph 32…of this Schedule;… (d) paragraph 6(2)(a) of that Schedule is to be construed as including a reference to sums of money held by or on behalf of the recognised body in connection with any trust of which a person who is or was a manager of the recognised body is or was a trustee in his capacity as such a manager; (e) paragraph 9 of that Schedule is to be construed- (i) as if sub-paragraph (1) included a reference to documents in the possession or under the control of the recognised body in connection with any trust of which a person who is or was a manager or employee of the recognised body is or was a trustee in his capacity as such a manager or employee, and (ii) as applying to such a manager or employee and documents and property in his possession or under his control in connection with such a trust as it applies to a solicitor and documents and property in the possession or under the control of the solicitor;…”
“The court may grant the application if- (a) the debtor appears to have a counterclaim, set-off or cross demand which equals or exceeds the amount of the debt or debts specified in the statutory demand; or (b) the debt is disputed on grounds which appear to the court to be substantial; or (c) it appears that the creditor holds some security in respect of the debt claimed by the demand, and either Rule 6.1(5) is not complied with in respect of it, or the court is satisfied that the value of the security equals or exceeds the full amount of the debt; or (d) the court is satisfied, on other grounds, that the demand ought to be set aside.” (a) the debtor appears to have a counterclaim, set-off or cross demand which equals or exceeds the amount of the debt or debts specified in the statutory demand; or (b) the debt is disputed on grounds which appear to the court to be substantial; or (c) it appears that the creditor holds some security in respect of the debt claimed by the demand, and either Rule 6.1(5) is not complied with in respect of it, or the court is satisfied that the value of the security equals or exceeds the full amount of the debt; or (d) the court is satisfied, on other grounds, that the demand ought to be set aside.”
“Clementi proposed that, as a consequence of permitting alternative business structures (ABSs), regulation of legal services would have to shift towards entities: “It will be evident that the proposals in this Chapter [i.e. the Chapter of the Clementi Report dealing with Alternative Business Structures] shift the balance of regulation significantly towards regulation of the economic unit, beyond regulation of the individual practitioner. The proposed regulatory system focuses principally on who runs the practice and how. This is not intended to lessen the responsibility of each individual lawyer to meet the high standards to be expected of his profession. But it recognises the business reality that, in a practice of any size, the Regulator would be particularly interested in the competence of the senior Managers who ran the firm and the management systems they employed…. It follows that the prime focus of each recognised body, authorised to act as the front-line regulator of LDPs, would be upon the practice itself; and that it would be best if each lawyer Manager, irrespective of the branch of the legal profession he came from, were subject to the same recognised body as his lead Regulator…” “Under the LSA 2007, the entity will become the unit for regulation, in the sense that the entity itself must be authorised and (as a result of s.52 of the LSA 2007) the entity regulator’s rules, including conduct rules for managers and employees, will predominate in any case where there is inconsistency with the rules of any other approved regulator from whom those individuals hold a practising certificate. “Note, however, that Clementi says “beyond” regulation of the individual, not “instead of”, and that is significant. The LSA 2007 introduces entity regulation in parallel with, and not as a replacement for, regulation of individual lawyers. Once you permit lawyers who hold their practising certificates from different regulators to come together to work within a given entity, and all the more so once you permit them to join forces with non-lawyers, it is necessary (a) to regulate the entity and (b) to have a means of resolving any regulatory clashes between the regime applicable to the entity and other applicable regulatory regimes (including those of external regulators, such as the accountancy profession, whose members might become involved in such arrangements). Otherwise, the likelihood of unintended regulatory gaps or conflicts, and the lack of clarity as to who was responsible for regulating what, would create significant risks to the public and be a huge obstacle to realising Clementi’s vision of liberalising the structures through which legal services can be delivered…”
“Between 1992 and 1995 C was a student at the defendant higher education corporation, which had been established under theEducation Reform Act 1988 and had the full status of a university although it had no charter and no provision for the supervisory jurisdiction of a visitor. For her final examination C submitted a paper which the board of examiners failed for plagiarism. The finding of plagiarism was subsequently abandoned but the paper was then given a mark of zero and C failed to overturn that decision on appeal. In 1998 C brought proceedings against the university for breach of contract, claiming that it had misconstrued the meaning of plagiarism and had awarded a mark beyond the limits of academic convention. On the university’s application, the judge struck out the claim on the ground that alleged breaches of contract by a university towards a student were not justiciable by the courts. On appeal, C was allowed to amend her pleadings to claim breaches of contractual rules under the university’s student regulations. The university contended that, in any event, C should have brought proceedings for judicial review and it was an abuse of process for her to bring an action for breach of contract long after the three-month limitation period for bringing judicial review proceedings had expired. On C’s appeal- Held, allowing the appeal,…(2) That a claim against a public body for breach of contract should not be struck out merely because an application for judicial review might have been more appropriate; that theCPR 1998 enabled the court to prevent the unfair exploitation of the longer limitation period for civil suits than for judicial review; that the court could strike out an action, notwithstanding the currency of the limitation period, if the entirety of circumstances, including the availability of judicial review, demonstrated that the court’s processes were being misused or if it was clear that because of the lapse of time or other circumstances no worthwhile relief could be expected; but that, in the circumstances, it would not be right to strike out C’s action on that ground; and that, accordingly, the action would be restored…”
“…the ground has shifted considerably since 1982 when O’Reilly v. Mackman was decided. The critical decision for present purposes was in fact not O’Reilly v. Mackman, where the issues were purely public law ones and the problem therefore entirely procedural, but the companion case of Cocks v. Thanet District Council[1983] 2 AC 286 which decided that where private law rights depended on prior public law decisions they too must ordinarily be litigated by judicial review. That this could not, however, be a universal rule was established not long afterwards by their Lordships’ decision in Wandsworth London Borough Council v. Winder[1985] AC 461 in relation to public law defences to private law actions, notwithstanding the availability of collateral challenge. And in Roy v. Kensington and Chelsea and Westminster Family Practitioner Committee[1992] 1 AC 624 their Lordships made it clear that it was not necessarily an abuse of process to elect to sue in contract for statutory payments where the public law element was not dominant. The present class of case is if anything stronger from this point of view than Roy’s case, for where in Roy’s case a statutory relationship happened to include a contractual element, here it is a contractual relationship which happens to possess a public law dimension. Both are a long way from the situation in Cocks v. Thanet District Council[1983] 2 AC 286 . “There is a useful discussion of the present situation in the current edition of de Smith, Woolf & Jowell’s Judicial Review of Administrative Action, 5th ed. (1995), pp.199-201, paragraphs 3-078 to 3-083. Since it was published theCPR 1998 have given substance to its suggestion that the mode of commencement of proceedings should not matter, and that what should matter is whether the choice of procedure (which will now be represented by the identification of the issues) is critical to the outcome. This focuses attention on what in my view is the single important difference between judicial review and civil suit, the differing time limits. To permit what is in substance a public law challenge to be brought as of right up to six years later if the relationship happens also to be contractual will in many cases circumvent the valuable provision of RSC, Ord.53, r.4(1) – which, though currently due to be replaced by a new Civil Procedure Rule, is unlikely to be significantly modified – that applications for leave must be made promptly and in any event within three months of when the grounds arose, unless time is enlarged by agreement or by the court. Until the introduction of the CPR this was a dilemma which could be solved only by forbidding the use of the contractual route – a solution which, as Roy[1992] 1 AC 624 demonstrated, could not justly be made universal. But, as Lord Woolf MR explains in his judgment, the CPR now enable the court to prevent the unfair exploitation of the longer limitation period for civil suits without resorting to a rigid exclusionary rule capable of doing equal and opposite injustice. Just as on a judicial review application the court may enlarge time if justice so requires, in a civil suit it may now intervene, notwithstanding the currency of the limitation period, if the entirety of circumstance – including of course the availability of judicial review – demonstrates that the court’s processes are being misused, or if it is clear that because of the lapse of time or other circumstances no worthwhile relief can be expected.”
“…there is the reference to the costs being recoverable “as a debt owing to the society”
“23 A “liquidated sum” has never been defined in any [relevant] legislation and appears to be the codification in the 1869 Act of earlier decisions of the courts as to what constituted a good petitioning creditor’s debt…”
“35 Finally in this context I should mention Truex v Toll[2009] EWHC 396 (Ch) which concerned an attempt by a solicitor to bankrupt a client who had not paid the solicitor’s fees. Although the client had made a belated attempt to have the bills taxed, the registrar held that the sum due must on any view exceed the statutory minimum and that the client had in any event accepted the bills as payable. The debtor’s appeal was allowed on the basis that a claim for solicitor’s fees not judicially assessed was not a claim for a liquidated sum under s.267 of the 1986 Act and that there had been no binding admission of the debt. Proudman J at paragraphs 36-7 said that: “36 In my judgment whether a sum is liquidated and whether there is a defence to the claim are separate issues and the first must be determined before the second is addressed. Accordingly any admission, acknowledgment or agreement converting the amount claimed from an unliquidated to a liquidated sum must be one from which the client has bound himself not to resile. A mere acknowledgment would be insufficient to bind him to forego judicial assessment or determination. “37 On this basis it was not possible to say that any part of the work done by Mr Truex had been quantified, or was quantifiable by the bankruptcy court as a mere matter of arithmetic. It seems to me that the Chief Registrar conflated the issue of whether there was a genuine dispute about a liquidated debt with that of whether the sum claimed was liquidated in the first place. The bill as a whole was capable of challenge as to quantum, was thus for an unliquidated sum and did not fulfil the requirement of s.267. The same point applies to the Chief Registrar’s alternative finding that there could not be a genuine dispute as to at least£750 of the costs.” “36 These authorities indicate and I think establish that adebt foraliquidatedsummustbeapre-ascertainedliabilityunder theagreementwhichgivesrisetoit. This can include a contractual liability where the amount due is to be ascertained in accordance with a contractual formula or contractual machinery which, when operated, will produce a figure. Ex parte Ward is the obvious example of that. Claims in tort are invariably unliquidated because they require the assistance of a judicial process to ascertain the amount due by way of damages. In some cases the calculation of the award will be straightforward and obvious but the unliquidated nature of the claim excludes it from being a good petitioning creditor’s debt which satisfies the requirements of s.267. “37 The most obvious use of the term “liquidated” has been in relation to liquidated damages. “Liquidated” has been defined judicially as meaning the sum which the parties have by their contract assessed as the damages to be paid for its breach: see Wallis v Smith(1882) 21 Ch D 243 at 267 per Cotton LJ. If a genuine pre-estimate of loss the provision is enforceable according to its terms. I would therefore regard a claim for liquidated damages as one for a liquidated sum within the meaning of s.267 unless a claim in damages is excluded by the use of the word “debt”. “38 Another familiar context in which the word “liquidated” appeared was RSC O.13 which governed when a plaintiff could enter final judgment against a defendant who failed to give notice of intention to defend. Final judgment could only be entered when the writ was endorsed with a claim for a liquidated demand: see RSC O.13; r.1. Claims in debt or for liquidated damages fell within this rule but it did not include claims in tort where the damages were necessarily unliquidated or those for contractual damages where the measure of liability was not specified in the contract itself. “39 The authorities in the field of bankruptcy as to what constitutes a liquidated sum are consistent with this approach. In Re Broadhurst the measure of liability under the contract was readily calculable but that did not make it a liquidated claim. As Maule J put it in his judgment, there was no specific sum engaged to be paid to the creditor… “42 The issue therefore in relation to guarantees is whether the liability of the guarantor can be treated as one which is reduced to a specified and agreed sum by the guarantee itself. Where the guarantee on its proper construction contains a promise by the guarantor to pay the principal sum due and interest in the event of the debtor failing to pay no difficulty arises. The claim is one in debt and as such is necessarily in a pre-agreed amount. But guarantees containing a see to it liability give rise on Lord Diplock’s analysis in Moschi v. Lep Air Services Ltd. to a claim for unliquidated damages. Although the measure of the guarantor’s liability is the amount of the debt, that is not the same as an obligation to pay a sum of money under the contract whether as a debt or agreed damages. “43 Therefore, as a matter of general principle and ordinary language, Mr Arden is, I think, right in his submission that the liability under a guarantee of the see to it type would not constitute a debt for a liquidated sum…”
“…The Act of 1843 introduced a taxation procedure, because it was regarded as more convenient and advantageous for the client, and perhaps for both parties, than the existing procedures were. Nothing in the Act, or its successors, takes away the need for the solicitor to prove that his fees are reasonable, if they are challenged, absentanyexpress agreementastowhattheyshouldbe. The Court of Appeal has held, three times, that the common law or “ordinary jurisdiction” of the court is not excluded, and these judgments are not in any way inconsistent, in our view, with the decision of the House of Lords in Harrison v. Tew[1990] 2 AC 523 . Nor do we consider that the solicitor is disadvantaged by the possibility that the client is entitled to have the reasonableness of the charges assessed by the court after the statutory periods for taxation have expired. He can himself claim an order for taxation under section 70(2), without any time limit, and obtain a form of summary judgment when the taxation certificate is issued: section 72(4). The present issue arises only when that is not done. “(3) Nature of claim Mr Downes takes what is essentially a pleading point. He submits that the solicitor’s right to claim a reasonable sum for his services is governed by special requirements relating to his status as a solicitor, and secondly, that it is always subject to the terms of the express agreement made in the particular case. The term he relies upon in the present case is the agreement made in October 1996 that Mr Spencer’s services would be charged at£180 per hour. It follows from this, he submits, that the client agreed to pay that amount for every hour which Mr Spencer devoted to the matter in question, regardless of how many hours he might spend. He accepts that a solicitor who proceeded more slowly than a competent solicitor could be deprived of his charges for the excess period which, on that hypothesis, would be due to his own failure to act as a reasonably competent solicitor would. But that, he submits, is a matter for counterclaim, alleging negligence, and no counterclaim is made here. “Mr Morgan submits that the legal basis for the solicitor’s claim is found insection 15 of the Supply of Goods and Services Act 1982 in any case where a contract exists between the solicitor and client. The contract contains a statutory implied term “that the party contracting with the supplier will pay a reasonable charge,” and what is a reasonable charge is a question of fact. This has to be read, in the case of a solicitor, subject to the terms of the retainer in the particular case and subject also to the statutory provisions which give the solicitor, as well as the client, certain additional rights. Butwedonotsee anydifficultyinholdingthatthesolicitor’sclaimisforareasonablesum,whetherbystatuteoratcommonlaw,andnotforaliquidatedsum. Again in accordance with general principles, the burden of proving that the sum is reasonable rests upon him. This is supported, if authority is needed, by the judgments in In re Park, 41 ChD 326 and Jones & Son v. Whitehouse[1918] 2 KB 61 which I have quoted above. “The submission that a counterclaim is necessary, where an hourly rate is agreed, seems to us to be contrary to the basic rule that the solicitor is entitled to claim no more than a reasonable remuneration for the work that he was retained to do. As Mr Morgan put it, the solicitor would normally be required to prove the reasonableness both of the number of hours spent and of the hourly rate which he has charged. When the hourly rate is agreed, he is left to prove the former but not the latter. There could, of course, be a case where the client agreed to pay for as many hours as the solicitor in fact worked, notwithstanding that he would or might devote more time to the matter than a reasonably competent solicitor would. However, that is not the present case, and in our judgment the deputy High Court judge was entitled to hold that a triable issue as to the reasonableness of the charges was raised by the defence evidence in the circumstances of this case”
“None of the Thomas Watts & Co., the Turner & Co. or the Joseph cases concerned a bankruptcy petition. However it wouldseemtofollowasamatterofprinciplethataclaimfor solicitors’feesnotasyetjudiciallyassessedordeterminedis notaclaimforaliquidatedsumwhichcanbethesubjectofabankruptcypetitionundersection267oftheInsolvencyAct 1986, even if the period for challenge under the 1974 Act has expired. Commentators (e.g. Muir Hunter on Personal Insolvency) therefore express the view that the earlier decisions to the contrary are inconsistent with the decisions of the higher courts and have been overtaken by them. “It is indisputable that the sum claimed becomes a liquidated sum once the fees have been assessed by the costs judge or determined in an action. The issue in the present case is as to what else can convert a solicitor’s unassessed bill into a debt capable of founding a bankruptcy petition. “In what circumstances is the sum claimed in a solicitor’s bill converted from unliquidated to liquidated? Mr Macpherson, counsel for the debtor, submitted that it was insufficient to find a bare admission, agreement or acknowledgement that Mr Truex’s invoices were correct. Where a debt is of an unliquidated sum because it has not been judicially assessed or determined that sum can only become liquidated if the client is bound by the admission, agreement or acknowledgment relied upon. Thus Mr Macpherson said that one must look for a waiver of the right to assessment or determination. In order to constitute such a waiver, the client’s conduct must be supported by consideration or give rise to an estoppel. “Doubtless a bare admission coupled with failure over a long period to challenge the bill would be strong evidence that the bill was reasonable. However, submitted Mr Macpherson, such conduct would not be enough to convert the amount of the bill from an unliquidated to a liquidated sum. In In re Park; Cole v. Park 41 ChD 326, Stirling J said of similar conduct that it did not preclude investigation of the bill, despite the fact that without further explanation the circumstances “would probably be held to be conclusive against” the client. In re Park was a strong case in which the late client had taken delivery of the bill more than 12 months before he died, had made no objection to it and had paid a large proportion of it on account. Even so, his executors were held to be entitled to dispute it. “I tested Mr Macpherson’s proposition by asking Mr Preston in what circumstances a client could change his mind about paying a bill, in other words, what in the absence of consideration or estoppel would constitute waiver of the right to assessment or determination? He responded that the client could change his mind, but only on reasoned grounds and where the dispute as to the bill was a genuine one. If that were right, the sum claimed would start life as unliquidated and then, because the client admitted it, it would become liquidated and then the next day, month or year (if the client changed his mind on reflection or advice) it would revert to being unliquidated. To my mind Mr Preston’s answer conflates the prerequisite that the debt founding the petition must be for a liquidated sum with the separate issue whether, on the hearing of that petition, there is a genuine dispute about the debt. “It seems to me that there is logic in Mr Macpherson’s submission that an agreement converting an unliquidated debt into a liquidated one must be a binding agreement. Thatwould meananagreementforconsideration,thatistosayanagreementastoafixedamount,oranagreementastohourly ratesandtimespentinconsiderationoffutureservices,oracompromiseagreement,orconductgivingrisetoanestoppel accordingtoestablishedprinciples… “Despite Mr Preston’s submission to the contrary, it seems to me that the kind of agreement that the Court of Appeal had in mind [in Turner] was a prospective agreement. I derive this from the example considered on the following page (p.367) of the report, namely where the hourly rate has been agreed and where the client expressly agreed to pay for as many hours as the solicitor in fact worked. Where an agreement of that kind, or an agreement to pay a fixed sum, is made at the outset, or where further work is only undertaken on condition that the client agrees to pay outstanding invoices, there is consideration for the agreement and the client cannot resile from it… “In my judgment whether a sum is liquidated and whether there is a defence to the claim are separate issues and the first must be determined before the second is addressed. Accordinglyany admission,acknowledgmentoragreementconvertingthe amountclaimedfromanunliquidatedtoaliquidatedsummust beonefromwhichtheclienthasboundhimselfnottoresile.A mereacknowledgmentwouldbeinsufficienttobindhimtoforegojudicialassessmentordetermination”
“[The] costs [falling within the paragraph in this case] plainly include the intervention costs, which, as I say, the Society has discharged to its intervention agent’s firm. It follows, therefore, that the [sum claimed for intervention costs] is a statutory debt due by Mr Pyke to the Law Society. Assuchitisliquidatedin amountandispresentlypayable”
“But there may – and I say no more than may – be some residual power in the court to allow a challenge to be mounted see Turner v. Palomo [2000] 1 WLR at p.37. I have not heard argument on that, and I say no more than that it might be possible. But in the absence of any application to have the bills taxed, and in the absence of any grounds indicating that there are special circumstances why even now, after the lapse of so many months, a court should order a taxation, the court is entitled to proceed, and in my judgment the District Judge was entitled, at any rate as to the vast bulk of the bills, to proceed, on the footing that the intervention costs constitute a debt fully due and owing.”