The Solicitors Regulation Authority (“the SRA”) was investigating the First Claimant (“Carter-Ruck”) and one of its partners in relation to its conduct while acting for the Second Claimant (“Mr Amersi”). The SRA issued three production notices to Carter-Ruck under s.44B of the 1974 Act (as amended) (“the 1974 Act”) requiring the production of documents in relation to client files held by the firm for Mr Amersi. The Claimants objected to the production of documents which were the subject of Mr Amersi’s legal privilege (“LPP”). Mr Amersi indicated that while he did not waive privilege he was prepared to assist the SRA subject to appropriate assurances that his documents would not be shared with any third parties. The SRA provided details of its procedures to safeguard privilege, but no agreement was reached in respect of the provision of documents [5]-[6].
The SRA subsequently withdrew the first of its notices but required Carter-Ruck to comply with the second and third notices promptly. The Claimants issued proceedings in the High Court seeking a declaration that the SRA was not entitled in law, under s.44B of the 1974 Act, to require the production of material subject to LPP [7]-[8].
Whether a statutory notice under s.44B of the 1974 Act can require regulated persons to produce documents or information which is subject to their clients’ legal professional privilege (“LPP”).
Mr Justice Butcher granted a declaration in favour of the Claimants, ruling that a notice under s.44B of the 1974 Act cannot require regulated persons to produce documents or information subject to their clients’ LPP, if the client does not waive that privilege.
The Judge considered the two bases on which the SRA contended that it had power to require production of documents subject to LPP: (1) “statutory override”, namely that by necessary implication s.44B provided a power to override LPP; and (2) a “no infringement” argument, that LPP was not infringed or was permissibly infringed if the relevant documents/information were provided to a legal regulator for the purposes of SRA investigations, rejecting both.
The Claimants made an alternative case that even if, on its ordinary construction, s.44B abrogated the client’s LPP, the statutory scheme would be incompatible with Article 8 ECHR, and, since it was possible to construe the section in a way which was compatible with Article 8, the court was obliged to do so pursuant to s.3(1) of the Human rights Act 1998. As the Judge had concluded that s.44B did not abrogate LPP, however, the issue did not arise for decision [153]-[154].
“Statutory Override”
First, the Judge considered the construction of s.44B without regard to the Parliamentary material relating to the Legal Services Act 2007 Act (which brought in the current version of s.44B) or authority [92]-[125]. He held that s.44B did not provide for the override of LPP for five reasons, summarised at [124]:
“(1) It does not expressly provide for that, notwithstanding the status of LPP as a fundamental right.
(2) It could easily have been provided for had that been intended.
(3) It is not easy to see how, by a process of implication, the provision to be implied is such as to override the client’s LPP, but not the solicitor’s own LPP.
(4) The other provisions of the statutory scheme do not compel a conclusion that s.44B does provide for a statutory override. On the contrary, I consider that s.46(11) tends to suggest the opposite.
(5) I am not persuaded by the various other arguments advanced by the SRA as to necessary implication for the reasons given above.”
Secondly, the Judge considered whether Parliamentary material relating to the 2007 Act was relevant [126]-[133]. He addressed the admissibility of this material, and considered it to be established (see R v Forsyth (Richard Charles) [2011] 2 AC 69 at [10]) that, in a case in which it is contended that a provision was intended to override fundamental rights or permit fundamental rights to be overridden, the court can look at Parliamentary material to see whether there was a clear statement that it was intended that the right should be overridden [130]. He noted that an amendment had been proposed to the Legal Services Act 2007 in the House of Lords by the Shadow Lord Chancellor which would unequivocally have permitted the SRA to require the production of documents which were confidential or subject to LPP, but that this had been opposed by the Government minister, who had referred to the “real sensitivities in relation to allowing a regulator to override professional privilege or have unfettered access to material of a confidential nature in the way proposed”. As a result the amendment was withdrawn, the issue not reverted to and no provision of this nature was included in the 2007 Act [131]-[132]. This indicated an absence of an intention to override LPP, and reinforced the Judge’s construction of s.44B.
Thirdly, the Judge considered whether there was binding or persuasive authority against his construction of s.44B, concluding that there was not [134]-[147].
The SRA had contended that Parry-Jones v Law Society [1969] 1 Ch 1 was binding Court of Appeal authority to the effect that s.44B provided for an override. The Judge recognised that Parry-Jones remained binding on the narrow points it decided concerning rule 11 of the Solicitors’ Accounts Rules 1945, and whether that rule was ultra vires the scope of the rule-making powers in s.29 of the Solicitors Act 1957. He held, however, that it was not possible to discern in Parry-Jones any rule of law by which the words of a statute in the terms of s.44B of the 1974 Act must or could be construed as overriding LPP, if LPP were otherwise applicable. But even if this were part of the ratio decidendi, it had not been part of Mr Parry-Jones’ argument that a rule expressed in general terms such as rule 11 did not override privilege; and it did not appear that there had been any argument based on the general principle of legality, which was in a less developed state at the time. Thus the court would not be bound by it, applying FSHC Group Holdings Ltd v GLAS Trust Corporation Ltd [2020] Ch 365 at [136]. As to the subsequent Court of Appeal decision in Sports Direct International plc v Financial Reporting Council [2021] Ch 457, where brief reference was made to the result in Parry-Jones being “… entirely consistent with the test for implied override set out by Lord Millett in [B v Auckland District Law Society [2003] 2 AC 736]”, it could not be said to be any part of the ratio of Sports Direct itself that rule 11 of the Solicitors Accounts Rules 1945 (the rule at issue in Parry-Jones) overrode client privilege.
As to Simms v Law Society [2005] EWHC 408 (Admin), this was a case which involved the powers of the SRA to obtain documents on an intervention under Schedule 1, Part II of the 1974 Act, not under s.44B. The Judge did not consider that the single reference to s.44B which the SRA relied upon formed part of the ratio decidendi of the case, and noted that if he was mistaken, and Simms was authority for s.44B constituting a statutory override of LPP, he considered it to be wrong.
“No Infringement”
The SRA argued, in the alternative, that even if there was no statutory override of LPP by s.44B, the provision of documents and information subject to LPP to the SRA was not an infringement, or was a permissible (‘technical’) infringement, of LPP. The SRA accepted that the court was bound by Sports Direct to reject this argument, and the Judge dealt with the matter briefly on this basis, noting that it would also be anomalous and contrary to other authority for LPP to be subject to an exception in the case of a legal regulator [148]-[152].
There are a number of interesting aspects of this Judgment.
First, it provides welcome clarity on a matter of legal uncertainty. It may be noted that for decades the SRA has proceeded on the basis that s.44B gives it the power to override privilege, relying on Parry-Jones and Simms. It is perhaps surprising that it has taken so long for this construction to be challenged in the High Court.
Secondly, it is an important reminder of the high threshold required for a statute to override fundamental human rights such as LPP under the ‘principle of legality’, either by express language or necessary implication. It is not enough for the court to hold that the purpose behind a statutory provision would be impeded without the override: it has to be satisfied that a ‘major plank’ of the statutory purpose would be ‘stultified’ (the test enunciated by Lord Millett in B v Auckland [2003] 2 AC 736 and further elaborated in R (Black) v Justice Secretary [2018] AC 215 at [49] by Lady Hale). In the present case the Judge was of the view that in most cases it would make no difference to the ability of the SRA properly to investigate alleged misconduct, either because the client would have waived privilege, or because of the iniquity exception, or because privileged documents/information would not be crucial [121]-[123].
It may be noted that the SRA had argued that it needed to be able to override LLP in order to investigate (inter alia) so-called ‘SLAPPs’. However, the SRA’s own evidence did not support this argument: although the SRA had routinely been compelling production of privileged documents since it first started investigating alleged SLAPPs in 2022, it could not point to a single example of a successful prosecution of a solicitor for SLAPP-related conduct since 2022, let alone a prosecution which had depended upon the production of privileged material.
Thirdly, the Judgment is a (relatively rare) application of the principle recognised in R v Forsyth (Richard Charles) [2011] 2 AC 69 that the court can look at Parliamentary materials to see whether there was or was not a clear statement that in enacting a statutory provision it was intended that a fundamental right should be overridden. This is an extension of the rule in Pepper v Hart.
Finally, the Judgment contains a rigorous application of the doctrine of precedent: (1) on the question of what constitutes the ratio of a decision and in what circumstances the decision of a higher court on a proposition of law is not binding even where it is part of the ratio: see [138]-[141] and the reference to FSHC Group Holdings Ltd v GLAS Trust Corporation Ltd [2020] Ch 365 at [136]; (2) on the question of how a single judge should approach the decisions of a Divisional Court: although he should generally follow the decisions of such a court, in an exceptional case he may depart from them [145].
