HL Deb 22 October 1985 vol 467 cc969-85

6 After Clause 6 insert the following new clause—

".—(1) The Council may make rules.

Incorporated Practices

  1. (a) making provision as to the management and control by solicitors of bodies corporate carrying on businesses consisting of the provision of professional services such as are provided by individuals practising as solicitors;
  2. (b) prescribing the circumstances in which such bodies may be recognised by the Council as being suitable bodies to undertake the provision of any such services;
  3. (c) prescribing the conditions which (subject to any exceptions provided by the rules) must at all times be satisfied by bodies corporate so recognised if they are to remain so recognised; and
  4. (d) regulating the conduct of the affairs of such bodies.

(2) Rules made by the Council may also make provision—

  1. (a) for the manner and form in which applications for recognition under this section are to be made, and for the payment of fees in connection with such applications;
  2. (b) for regulating the names that may be used by recognised bodies;
  3. (c) as to the period for which any recognition granted under this section shall (subject to the provisions of this Part) remain in force;
  4. (d) for the revocation of any such recognition on the grounds that it was granted as a result of any error or fraud;
  5. (e) for the keeping by the Society of a list containing the names and places of business of all bodies corporate which are for the time being recognised under this section, and for the information contained in any such list to be available for inspection;
  6. (f) for rules made under any provision of the 1974 Act to have effect in relation to recognised bodies with such additions, omissions or other modifications as appear to the Council to be necessary or expedient;
  7. (g) for empowering the Council to take such steps as they consider necessary or expedient to ascertain whether or not any rules applicable to recognised bodies by virtue of this section are being complied with;
  8. (h) for the manner of service on recognised bodies of documents authorised or required to be served on such bodies under or by virtue of this Part.

(3) Notwithstanding section 24(2) of the 1974 Act (application of penal provisions to bodies corporate), sections 20, 22(1) and 23(1) of that Act (prohibition on unqualified person acting as solicitor, etc.) shall not apply to a recognised body; and nothing in section 24(1) of that Act shall apply in relation to such a body.

(4) Section 22(1), or (as the case may be) section 23(1), of that Act shall not apply to any act done by an officer or employee of a recognised body if—

  1. (a) it was done by him at the direction and under the supervision of another person who was at the time an officer or employee of the body; and
  2. (b) it could have been done by that other person for or in expectation of any fee, gain or reward without committing an offence under the said section 22 or (as the case may be) under the said section 23.

(5) A certificate signed by an officer of the Society and stating that any body corporate is or is not, or was or was not at any time, a recognised body shall, unless the contrary is proved, by evidence of the facts stated in the certificate; and a certificate purporting to be so signed shall be taken to have been so signed unless the contrary is proved.

(6) Schedule [Incorporated practices: supplementary provisions] (which makes provision with respect to the application of provisions of the 1974 Act to recognised bodies and with respect to other matters relating to such bodies) shall have effect.

(7) Subject to the provisions of that Schedule, the Lord Chancellor may by order made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament provide for any enactment or instrument passed or made before the commencement of this section and having effect in relation to solicitors to have effect in relation to recognised bodies with such additions, omissions or other modifications as appear to the Lord Chancellor to be necessary or expedient

(8) In this section— the 1974 Act" means the Solicitors Act 1974; the Council" and "the Society" have the meaning given by section 87(1) of the 1974 Act; and recognised body" means a body corporate for the time being recognised under this section

(9) Any rules made by the Council under this section shall be made with the concurrence of the Master of the Rolls.")

The Lord Chancellor

My Lords, I beg to move that this House do agree with the Commons in their Amendment No. 6. It may be convenient to deal with a number of related amendments—namely, Amendments Nos. 7, 28 to 35 inclusive, 41, 60, 66 to 90, 98 and 101.

After Clause 6 insert the following new clause: (Penalty for pretending to be a body recognised under section [Incorporated practices].

7.—(1) A body corporate shall not describe itself or hold itself out as a body corporate for the time being recognised under section [Incorporated practices] unless it is so recognised.

(2) Any body corporate which contravenes subsection (1) shall be guilty of an offence and liable on summary conviction to a fine not exceeding the fourth level on the standard scale.

(3) Where an offence under this section which has been committed by a body corporate is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, any director, manager, secretary or other similar officer of the body corporate, or any person purporting to act in any such capacity, he as well as the body corporate shall be guilty of the offence and shall be liable to be proceeded against and punished accordingly.

(4) In this section "the standard scale" has the meaning given by section 37 of the Criminal Justice Act 1982.").

28 Clause 28, page 23, line 39, leave out from ("rules") to end of line 9 on page 24 and insert—

  1. ("(a) making provision as to the management and control by licensed conveyancers (or by licensed conveyancers together with persons who are not licensed conveyancers) of bodies corporate carrying on businesses consisting of the provision of conveyancing services;
  2. (b) prescribing the circumstances in which such bodies may be recognised by the Council as being suitable bodies to undertake the provisions of such services;
  3. (c) prescribing the conditions which (subject to any exceptions provided by the rules) must at all times be satisfied by bodies so recognised if they are to remain so recognised; and
  4. (d) regulating the conduct of the affairs of such bodies.

(2) In this Part "recognised body" means a body corporate for the time being recognised under this section.

(3) Rules made by the Council may also make provision—

  1. (aa) for the manner and form in which applications for recognition under this section are to be made, and for the payment of fees in connection with such applications;
  2. (ab) for regulating the names that may be used by recognised bodies;
  3. (ac) as to the period for which any recognition granted under this section shall (subject to the provisions of this Part) remain n force;").

29 Page 24, line 12, leave out from ("that") to end of line 14 and insert ("it may undertake to provide as a recognised body, and for enabling such restrictions to be imposed by reference to criteria of general application.".).

30 page 24, leave out lines 15 to 17.

31 page 24, line 26, at end insert— ("(d) for empowering the Council to take such steps as it considers necessary or expendient to ascertain whether or not any rules applicable to recognised bodies by virtue of this section are being complied with;").

32 Page 24, line 33, leave out ("a person employed by") and insert ("an officer or employee of").

33 Page 24, leave out lines 38 to 40 and insert ("undertaking to provide as a recognised body by any restrictions imposed in pursuant of subsection (3)(a) of this section.").

34 Page 24, line 40, at end insert—

("(4A) Section 22(1) of that Act shall also not apply to any officer or employee of a body corporate by reason of any act done by him if—

  1. (a) the conditions specified in paragraphs (a) and (b) of the preceding subsection are satisfied in relation to that act; and
  2. (b) it was done by him at the direction and under the supervision of another person who was at the time an officer or employee of the body; and
  3. (c) it could have been done by that other person for or in expectation of any fee, gain or reward without committing an offence under the said section 22.").

35 Page 25, line 1, leave out ("as mentioned in") and insert "in pursuance of).

41 Clause 35, page 27, line 13, at end insert— (" "officer", in relation to a recognised body, includes a director, manager or secretary;").

60 After Schedule 1 insert the following new schedule:

Section (Incorporated practices).

("INCORPORATED PRACTICED: SUPPLEMENTARY PROVISIONS

Interpretation

1.—(1) Subject to sub-paragraph (2), references in this Schedule to a recognised body are references to a body corporate for the time being recognised under section [Incorporated practices] of this Act.

(2) References in this Schedule to a recognised body in relation to—

  1. (a) a complaint (other than such a complaint as is mentioned in paragraph 16(1)(a)); or
  2. (b) any such application as is mentioned in paragraph 15(2),

include references to a body corporate that was recognised under section [Incorporated practices] of this Act at the time when the conduct to which the complaint or application relates took place.

(3) References in this Schedule to an officer of a recognised body include references to a director, manager or secretary of that body.

(4) In section 87(1) of the 1974 Act the definitions of "client", "contentious business" and "non-contentious business" shall apply for the purpose of—

  1. (a) this Schedule; and
  2. (b) any provision of the 1974 Act in so far as it has effect in relation to a recognised body by virtue of this Schedule,

as if for any reference to a solicitor there were substituted a reference to a recognised body; and for those purposes "controlled trust", in relation to a recognised body, means a trust of which it is sole trustee or co-trustee only with one or more of its officers or employees.

(5) Subject to sub-paragraphs (3) and (4), any expression used in this Schedule which is also used in the 1974 Act has the same meaning as in that Act.

(6) In this Schedule "the 1974 Act" means the Solicitors Act 1974.

Appeal against refusal of Council to grant recognition

2.—(1) Where the Council refuse an application by any body corporate for recognition under section (Incorporated practices) of this Act, that body may appeal to the Master of the Rolls against that refusal within one month of being notified of it.

(2) On an appeal under this paragraph the Master of the Rolls may—

  1. (a) direct the Council to grant recognition of the body in question under section (Incorporated practices) of this Act; or
  2. (b) affirm the refusal of the Council; and he may make such order as to the payment of costs by the Council or by that body as he thinks fit.

(3) Rules made by the Council with the concurrence of the Master of the Rolls may make provision, as respects any application for recognition that is neither granted nor refused by the Council within such period as may be specified in the rules, for enabling an appeal to be brought under this paragraph in relation to the application as if it had been refused by the Council.

(4) The Master of the Rolls may make regulations about the procedure for appeals to him under this paragraph.

Account rules

3. Where rules made under section 32(1) or (2) of the 1974 Act are applied to recognised bodies in accordance with section [Incorporated practices] (2)(f) of this Act, the Council shall be at liberty to disclose a report on or information about a recognised body's accounts obtained in pursuance of any such rules to the Director of Public Prosecutions for use in investigating the possible commission of an offence by that body and, if the Director thinks fit, for use in connection with any prosecution of that body consequent on the investigation.

Interest on client's money

4.—(1) Where rules made under section 32 of the 1974 Act and containing any such provision as is referred to in section 33(1)(a) of that Act are applied to recognised bodies in accordance with section [Incorporated practices) (2)(f) of this Act, then, except as provided by the rules and subject to sub-paragraph (2), a recognised body which in pursuance of the rules maintains an account in which it keeps money received or held for or on account of its clients generally shall not be liable to account to any person for interest received by it on money in that account.

(2) Nothing in any such rules or in sub-paragraph (1) shall—

  1. (a) affect any arrangement in writing between a recognised body and any of its clients as to the 973 application of the client's money or interest on it; or
  2. (b) apply to money received by a recognised body being money subject to a trust of which the body is a trustee.

Accountant's reports

5.—(1) In section 34 of the 1974 Act—

  1. (a) subsections (1) and (2); and
  2. (b) subject to any rules made under that section and applied to recognised bodies in accordance with section [Incorporated practices] (2)(f) of this Act, subsection (3),

shall apply to a recognised body as they apply to a solicitor.

(2) A certificate under the hand of the Secretary of the Society shall, unless the contrary is proved, be evidence that a recognised body has or, as the case may be, has not delivered to the Society an accountant's report or supplied any evidence required under section 34 of the 1974 Act or under any such rules as are referred to in sub-paragraph (1)(b).

Compensation Fund

6.—(1) On an application for recognition under section [Incorporated practices] of this Act a body corporate—

  1. (a) shall pay to the Society with any fee required to be paid by virtue of subsection (2)(a) of that section a contribution to the Compensation Fund of such amount as the Council may from time to time determine; and
  2. (b) where it appears from the application that the body has held or received clients' money at any time during a particular period specified in the application, shall also if so required by the Society, pay to the Society a further contribution to that fund of such amount as the Council may from time to time determine;

and Schedule 2 to the 1974 Act shall apply to amounts paid to the Society in pursuance of paragraph (a) or (b) of this sub-paragraph as if they were annual contributions or special levies paid in pursuance of paragraph (a) or (b) of paragraph 2(1) of that Schedule.

(2) Where the Council are satisfied—

  1. (a) that a person has suffered or is likely to suffer loss in consequence of dishonesty on the part of an officer or employee of a recognised body in connection with that body's business (or purported business) as a recognised body or in connection with any trust of which it is or formerly was a trustee; or
  2. (b) that a person has suffered or is likely to suffer hardship in consequence of failure on the part of a recognised body to account for money which has come into its possession in connection with that body's business (or purported business) as a recognised body or in connection with any trust of which it is or formerly was a trustee; or
  3. (c) that a member of a recognised body has suffered or is likely to suffer loss or hardship by reason of his liability to any of that body's clients in consequence of some act or default of any officer or employee of that body in circumstances where, but for the liability of that member, a grant might have been made out of the Compensation Fund to some other person.

the Council may make a grant out of the Compensation Fund for the purpose of relieving that loss or hardship.

(3) Subsections (3) to (7) of section 36 of the 1974 Act shall apply in relation to grants under sub-paragraph (2) as they apply in relation to grants under subsection (2) of that section; and accordingly the reference in subsection (3) of that section to a grant under subsection (2)(c) shall be construed as including a reference to a grant under sub-paragraph (2)(c).

Solicitor who is justice of the peace not to act in certain proceedings

7. In section 38 of the 1974 Act references to any partner of a solicitor shall be construed, in relation to a solicitor who is an officer of a recognised body, as references to any other solicitor who is an officer of that body.

Prohibition on acting as agent for unqualified person

8. Section 39(1) of the 1974 Act shall apply to a recognised body as it applies to a solicitor.

Restriction on employment of person struck off roll or suspended

9. Section 41 of the 1974 Act (except subsection (4)) shall apply to a recognised body and its business as such as it applies to a solicitor and his practice as such.

Failure to disclose fact of having been struck off or suspended

10. Section 42(1) of the 1974 Act shall apply in relation to employment by a recognised body in connection with its business as it applies in relation to employment by a solicitor in connection with his practice.

Control of employment of persons convicted of offences of dishonesty and certain other persons

11.—(1) Where a person who is or was employed by a recognised body but is not himself a solicitor—

  1. (a) has been convicted of a criminal offence which discloses such dishonesty that in the opinion of the Society it would be undesirable for him to be employed by a recognised body in connect ion with its business; or
  2. (b) has, in the opinion of the Society, occasioned or been a party to, with or without the connivance of any director of the recognised body by which he is or was employed, an act or default in relation to that body's business which involved conduct on his part of such a nature that in the opinion of the Society it would be undesirable for him to be employed by a recognised body in connection with its business,

an application may be made to the Tribunal with respect to that person by or on behalf of the Society.

(2) Subsection (2) of section 43 of the 1974 Act shall apply in relation to an application under sub-paragraph (1) as it applies in relation to an application under subsection (1) of that section, but, in relation to an application under either of those provisions, any reference in subsection (2) of that section to a solicitor or to his practice as a solicitor shall be construed as including a reference to a recognised body or to its business as such a body.

(3) Any reference in subsection (5) of that section to a solicitor shall be construed as including a reference to a recognised body.

Offences in connection with orders under section 43(2) of the 1974 Act

12.—(1) In section 44 of the 1974 Act

  1. (a) any reference in subsection (1) to a solicitor or to his practice shall be construed as including a reference to a recognised body or to its business; and
  2. (b) subsection (3) shall apply in relation to proceedings under this Schedule as it applies in relation to proceedings under that section.

Powers of Council in respect of inadequate professional services

13.—(1) In section 44A of the 1974 Act (except subsections (7) and (9))—

  1. (a) any reference to a solicitor shall be construed as including a reference to a recognised body; and
  2. (b) any reference to professional services provided by a solicitor in connection with any matter in which he or his firm had been instructed by a client shall be construed as including a reference to professional services provided by a recognised body in connection with any matter in which it had been instructed by a client.

(2) The powers conferred on the Council by section 44A(1)(a) shall be exercisable in relation to a body corporate in accordance with this paragraph notwithstanding that it is no longer a recognised body.

(3) If a body corporate fails to comply with a direction given to it by the Council by virtue of this paragraph, any person may make a complaint in respect of that failure to the Tribunal; but no other proceedings whatever shall be brought in respect of it.

Examination of files

14.—(1) where the Council are satisfied that it is necessary to do so for the purpose of investigating—

  1. (a) any such complaint as is mentioned in paragraph (b), (c) or (d) of paragraph 16(1) of this Schedule; or
  2. (b) any complaint made to the Society and relating to the quality of any professional services provided by a recognised body.

the Society may give notice to the recognised body to which the complaint relates requiring the production or delivery to any person appointed by the Society, at a time and a place to be fixed by the Society, of all documents in the body's possession in connection with the matters to which the complaint relates (whether or not they relate also to other matters).

(2) Sub-paragraphs (2) to (12) of paragraph 9 of Schedule 1 to the 1974 Act (intervention in solicitor's practice), together with paragraphs 12 to 16 of that Schedule, shall apply in relation to the powers conferred by sub-paragraph (1) of this paragraph as they apply in relation to the powers conferred by sub-paragraph (1) of paragraph 9, and accordingly in those provisions—

  1. (a) any reference to the solicitor shall be construed as including a reference to the body with respect to which the powers are exercisable by virtue of subparagraph (1) of this paragraph;
  2. (b) any reference to a person appointed, or to a requirement, under paragraph 9(1) shall be construed as including a reference to a person appointed, or to a requirement, under sub-paragraph (1) of this paragraph; and
  3. (c) any reference to any such documents as are mentioned in paragraph 9(1) shall be construed as including a reference to any such documents as are mentioned in sub-paragraph (1) of this paragraph.

Lay observers

15.—(1) Subsection (1) of section 45 of the 1974 Act shall apply in relation to a complaint about a recognised body or an officer or employee of such a body as it applies in relation to a complaint about a solicitor or an employee of a solicitor.

(2) Where it appears to a lay observer, in examining any such allegation as is mentioned in subsection (1) of that section—

  1. (a) that there arises out of the complaint in respect of which the allegation has been made both—
    1. (i) a question as to the conduct of a recognised body, being conduct capable, in his view, of forming the subject-matter of any such complaint as is mentioned in paragraph (b), (c) or (d) of paragraph 16(1) of this Schedule; and
    2. (ii) a question as to the quality of any professional services provided by the body as a recognised body; and
  2. (b) that it would be appropriate for the latter question to be considered by the Tribunal with a view to determining whether to exercise in relation to the body any of the powers conferred on the Tribunal by paragraph 19 of this Schedule,

the lay observer may make an application to the Tribunal with respect to the body.

Complaints to Tribunal with respect to recognised bodies

16.—(1) The tribunal shall have jurisdiction to hear and determine any of the following complaints made to it under this paragraph with respect to a recognised body, namely—

  1. (a) a complaint that the body has (while a recognised body) been convicted by any court in the United Kingdom of a criminal offence which renders it unsuitable to be recognised under section [Incorporated practices] of this Act;
  2. (b) a complaint that the body has failed to comply with section 34 of the 1974 Act or with any rules applicable to it by virtue of section [Incorporated practices] of this Act;
  1. (c) a complaint that the body has acted in contravention of section 39 or 41 of the 1974 Act or of any conditions subject to which a permission has been granted under section 41 of that Act; or
  2. (d) a complaint that the body has knowingly acted in contravention of any such order as is mentioned in section 44(2) of the 1974 Act or of any conditions subject to which a permission has been granted under such an order.

(2) A complaint may be made to the Tribunal under this paragraph by any person.

Procedure on applications and complaints

17.— (1) In subsections (7) to (11) of section 46 of the 1974 Act—

  1. (a) any reference to an application or complaint shall be construed as including a reference to any such application as is mentioned in paragraph 11 (1), 15(2) or 21(1) or any such complaint as is mentioned in paragraph 13(3) or 16(1);
  2. (b) any reference to an application or complaint made under that Act shall be construed as including a reference to any such application or complaint as aforesaid made under this Schedule; and
  3. (c) in the case of subsection (10)(c), any reference to a solicitor shall be construed as including a reference to a recognised body.

Powers of Tribunal with respect to recognised bodies

18.—(1) Where on the hearing of any complaint made to it under this Schedule the Tribunal is satisfied that a recognised body—

  1. (a) has been convicted as mentioned in paragraph (a) of paragraph 16(1); or
  2. (b) has failed to comply with section 34 of the 1974 Act or with any such rules as are mentioned in paragraph (b) of paragraph 16(1); or
  3. (c) has acted as mentioned in paragraph (c) or (d) of that provision; or
  4. (d) has failed to comply with any direction given to it by the Council by virtue of paragraph 13,

the Tribunal may, if it thinks fit, make one or more of the orders referred to in sub-paragraph (2).

(2) Those orders are—

  1. (a) an order revoking the recognition under section (Incorporated practices) of this Act of the body to which the complaint relates;
  2. (b) an order directing the payment by the body of a penalty not exceeding £3,000, to be forfeited to Her Majesty;
  3. (c) an order requiring that body to pay the costs incurred in bringing against it the proceedings before the Tribunal or a contribution towards those costs, being a contribution of such amount as the Tribunal considers reasonable.

(3) On the hearing of a complaint under paragraph 13(3) relating to a direction given by the Council, the Tribunal may, if it thinks fit (whether or not it makes any order on the hearing under this paragraph), direct that the Council's direction shall be treated, for the purpose of enforcement, as if it were contained in an order made by the High Court.

(4) Subsections (4) and (5) of section 47 of the 1974 Act (power to increase maximum amount of penalty) shall have effect in relation to the sum specified in subparagraph (2)(b) of this paragraph as they have effect in relation to the sum specified in subsection (2)(c) of that section.

Powers of Tribunal in respect of inadequate professional services

19.—(1) The powers conferred on the Tribunal by section 47 A of the 1974 Act shall be exercisable on the hearing of—

  1. (a) any complaint made to the Tribunal under this Schedule by or on behalf of the Society with respect to a recognised body; or
  2. (b) any application made to the Tribunal under paragraph 15(2) of this Schedule by a lay observer with respect to a recognised body.

in like manner as they are exercisable on the hearing of any complaint or application made as mentioned in section 47A(1) with respect to a solicitor.

(2) Accordingly, in section 47A as it applies in relation to any such complaint or application as is mentioned in sub-paragraph (1) (a) or (b)—

  1. (a) any reference to a solicitor shall be construed as including a reference to a recognised body; and
  2. (b) any reference to professional services provided by a solicitor in connection with any matter in which he or his firm had been instructed by a client shall be construed as including a reference to professional services provided by a recognised body in connection with any matter in which it had been instructed by a client.

Powers of Tribunal in respect of legal aid complaints

20.—(1) Where the Tribunal makes any such order as is referred to in subsection (2A) of section 47 of the 1974 Act in the case of a solicitor who is an officer or employee of a recognised body, the Tribunal may, if it thinks fit, order that any solicitor who is for the time being a director of that body shall be excluded (either permanently or for a specified period) from legal aid work.

(2) The reference in sub-paragraph (1) to a person being excluded from legal aid work shall be construed in accordance with section 47(6) of the 1974 Act.

Revocation of recognition by reason of default by director

21.—(1) Where—

  1. (a) any order is made by the Tribunal under section 47 of the 1974 Act in the case of a director of a recognised body; or
  2. (b) an order is made by the High Court or the Court of Appeal that the name of a director of a recognised body be struck off the roll or that such a director be suspended from practice as a solicitor; or
  3. (c) any such order as is mentioned in paragraph (a) or (b) is made in the case of a person employed by a recognised body and the act or omission constituting the ground on which the order was made was instigated or connived at by a director of the recognised body or, if the act or omission, was a continuing act or omission a director of the body had or reasonably ought to have had knowledge of its continuance,

the Tribunal may, on an application made with respect to the recognised body by or on behalf of the Society, by order revoke its recognition under section (Incorporated practices) of this Act.

(2) The Tribunal shall not take a case into consideration during any period within which proceedings by way of appeal may be brought which may result in sub-paragraph (1) being rendered inapplicable in that case, or while any such proceedings are pending.

(3) Any reference to a director of a recognised body in any of paragraph (a) to (c) of sub-paragraph (1) includes a reference to a person who was a director of the body at the time of the conduct leading to the making of the order referred to in that paragraph.

Costs: general modification of provisions of Part III of 1974 Act

22.—(1) In the provisions to which this paragraph applies—

  1. (a) any reference to a solicitor or to a client of a solicitor shall be construed as including a reference to a recognised body or to a client of such a body; and
  2. (b) any reference to a client's solicitor shall be construed as including a reference to any recognised body acting for a client.

(2) This paragraph applies to the following provisions of the 1974 Act (which relate to the remuneration of solicitors in respect of contentious and non-contentious business), namely—

Orders as to remuneration for non-contentious business

23. In relation to an order under section 56 of the 1974 Act regulating (in accordance with paragraph 22) the remuneration of recognised bodies in respect of non- contentious business, subsection (5) of that section shall have effect as if—

  1. (a) in paragraph (a), for "the solicitor" there were substituted "the recognised body"; and
  2. (b) in paragraph (d), for "the solicitor" there were substituted "any solicitor, being an officer or employee of the recognised body.".

Effect of contentious business agreements

24. A provision in a contentious business agreement made between a recognised body and a client that the body shall not be liable for the negligence of any of its officers or employees, or that it shall be relieved f rom any responsibility to which it would otherwise be subject in the course of carrying on its business as a recognised body, shall be void.

Effect on contentious business agreement of supervening incapacity of recognised body to act for client

25.—(1) If, after some business has been done under a contentious business agreement made between a recognised body and a client but before the body has wholly performed it, the body ceases to be capable of wholly performing it by reason of one of the following events, namely—

  1. (a) the body ceases (for any reason) to be a recognised body;
  2. (b) a winding-up order is made with respect to the body or a resolution for voluntary winding up is passed with respect to the body (other than a resolution passed solely for the purposes of its reconstruction or of its amalgamation with another body corporate); or
  3. (c) the client terminates the retainer or employment of the body in favour of another recognised body or a solicitor (as, notwithstanding the agreement, he shall be entitled to do),

any party to, or the representative of any paru to, the agreement may apply to the court, and the court shall have the same jurisdiction as to enforcing the agreement so far as it has been performed, or setting it aside, as the court would have had if the recognised body w ere still capable of wholly performing it.

(2) The court, notwithstanding that it is of the opinion that the agreement is in all respects fair and reasonable, may order the amount due in respect of business under the agreement to be ascertained by taxation, and in that case—

  1. (a) the taxing officer, in ascertaining that amount, shall have regard so far as may be to the terms of the agreement; and
  2. (b) payment of the amount found by him to be due may be enforced in the same manner as if the agreement had been wholly performed.

(3) If in such a case as is mentioned in sub-paragraph (1)(c) an order is made for the taxation of the amount due to the recognised body in respect of the business done under the agreement, the court shall direct the taxing officer to have regard to the circumstances under which the termination of the body's retainer or employment has taken place, and the taxing officer, unless he is of the opinion that there has been no default, negligence, improper delay or other conduct on the part of any officer or employee of the body affording the client reasonable ground for terminating its retainer or employment, shall not allow to the body the full amount of the remuneration agreed to be paid to it.

Taxations with respect to contentious business

26. Subject to the provisions of any rules of court, on every taxation of costs in respect of any contentious business done by a recognised body, the taxing officer may—

  1. (a) allow interest at such rate and from such time as he thinks just on money disbursed by the body for the client, and on money of the client in the possession of, and improperly retained by, the body; and
    2. 979
  2. (b) in determining the remuneration of the body, have regard to the skill, labour and responsibility on the part of any solicitor, being an officer or employee of the body, which the business involved.

Power of court to order delivery of bill of costs, etc.

27. Any jurisdiction—

  1. (a) of the High Court to make any such orders as are referred to in subsection (1) of section 68 of the 1974 Act in relation to a solicitor (whether or not business has been done by him in the High Court); or
  2. (b) of the county court to make any such orders as are referred to in subsection (2) of that section in relation to a solicitor,

shall be exercisable in like manner in relation to a recognised body.

Power of court to order recognised body to pay over clients' money

28. Any jurisdiction of the High Court to make, in the case of a solicitor who is acting or has acted as such for a client, an order requiring the payment or delivery up of, or otherwise relating to, money or securities which the solicitor has in his possession or control on behalf of the client shall be exercisable in like manner in the case of a recognised body which is acting or has acted as such for a client.

Actions to recover costs

29. Subsection (2) of section 69 of the 1974 Act shall have effect in relation to a bill of costs delivered by a recognised body as if—

  1. (a) for the words from "by the solicitor" to "the firm" there were substituted "on behalf of the recognised body by any officer or employee of the body authorised by it to do so"; and
  2. (b) for "the solicitor" (where last occurring) there were substituted "the recognised body".

Power of Society to inspect files relating to certain proceedings

30. Section 83 of the 1974 Act shall apply in relation to proceedings which have been brought with respect to a recognised body for any of the following purposes, namely—

  1. (a) for the winding up of the body:
  2. (b) for the appointment of a receiver or manager of property of the body; or
  3. (c) for the making of an administration order under Part II of the Insolvency Act 1985,

as it applies in relation to proceedings in bankruptcy which have been taken against a solicitor.

Bank accounts

31. Where rules made under section 32(1) or (2) of the 1974 Act are applied to recognised bodies in accordance with section (Incorporated practices) (2)(f) of this Act, section 85, of the 1974 Act shall apply in relation to a recognised body which keeps an account with a bank in pursuance of any such rules as it applies in relation to a solicitor who keeps such an account in pursuance of rules under section 32.

Intervention by Society

32.—(1) Subject to sub-paragraph (2), where—

  1. (a) the Council are satisfied that a recognised body has failed to comply with any rules applicable to it by virtue of section (Incorporated practices) of this Act; or
  2. (b) a person has been appointed receiver or manager of property of a recognised body; or
  3. (c) a winding-up order, or an administration order under Part II of the Insolvency Act 1985, has been made with respect to a recognised body or a resolution for voluntary winding-up has been passed with respect to a recognised body (other than a resolution passed solely for the purposes of its reconstruction or of its amalgamation with another body corporate); or
  4. (d) the Council have reason to suspect dishonesty on 980 the part of any officer or employee of a recognised body in connection with that body's business or in connection with any trust of which that body is or formerly was a trustee,

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.

(2) Those powers shall only be exercisable by virtue of sub-paragraph (1)(a) if the Society has given the recognised body notice in writing that the Council are satisfied that the body has failed to comply with the rules specified in the notice and also (at the same or any later time) notice that those powers are accordingly exercisable in its case by virtue of sub-paragraph (1)(a).

33. The powers conferred by Part II of Schedule 1 to the 1974 Act shall also be exercisable as mentioned in paragraph 32(1) of this Schedule where—

  1. (a) a complaint is made to the. Society that there has been undue delay on the part of a recognised body in connection with any matter in which it was instructed on behalf of a client or with any controlled trust; and
  2. (b) the Society by notice in writing invites the body to give an explanation within such period following the giving of the notice as may be specified in it, being a period of not less than eight days; and
  3. (c) the body fails within that period to give an explanation which the Council regard as satisfactory; and
  4. (d) the Society gives notice of the failure to the body and (at the same or any later time) notice that the powers conferred by Part II of Schedule 1 to the 1974 Act are accordingly exercisable in its case by virtue of this paragraph.

34.—(1) Where the recognition of a body corporate under section (Incorporated practices) of this Act—

  1. (a) has been revoked by an order of the Tribunal under this Schedule; or
  2. (b) has expired and no further recognition of that body has been granted under that section,

the powers conferred by Part II of Schedule 1 to the 1974 Act shall be exercisable in relation to the body corporate and its former business as a recognised body as they are exercisable in relation to a solicitor and his practice.

(2) Where the powers conferred by Part II of Schedule 1 to the 1974 Act are exercisable in relation to a recognised body in accordance with paragraph 32 or 33 of this Schedule they shall continue to be so exercisable after that body's recognition under section (Incorporated practices) of this Act has been revoked or has otherwise ceased to be in force.

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—

  1. (a) any reference to the solicitor or to his practice shall be construed as including a reference to the body corporate in relation to which the powers conferred by that Part of that Schedule are exercisable by virtue of paragraph 32, 33 or 34(1) of this Schedule or to its business (or former business) as a recognised body;
  2. (b) any reference to paragraph 1 of that Schedule shall be construed as including a reference to paragraph 32 or 34(1) of this Schedule; and
  3. (c) any reference to paragraph 3 of that Schedule shall be construed as including a reference to paragraph 33 of this Schedule

Privilege from disclosure etc.

36.—(1) Any communication made to or by a recognised body in the course of its acting as such for a client shall in any legal proceedings be privileged from disclosure in like manner as if the body had at all material times been a solicitor acting for the client.

(2) Any enactment or instrument making special provision in relation to a solicitor or other legal representative as to the disclosure of information, or as to the production, seizure or removal of documents, with respect to which a claim to professional privilege could be maintained shall, with any necessary modifications, have effect in relation to a recognised body as it has effect in relation to a solicitor

(3) In the following provisions, namely—

  1. (a) sections 481(3) and 490(3) of the Income and Corporation Taxes Act 1970; and
  2. (b) section 30(5) of the Finance Act 1980,

any reference to a solicitor's client shall, in relation to a solicitor who is an officer or employee of a recognised body, be construed as a reference to a client of that body.

Modification of enactments relating to conveyancing etc.

(37). In the following provisions, namely—

  1. (a) sections 10(2), 48 and 182 of the Law of Property Act 1925;
  2. (b) sections 113 and 144(1)(vi) and (xxiv) of the Land Registration Act 1925;
  3. (c) section 12 of the Land Charges Act 1972;
  4. (d) section 13 of the Local Land Charges Act 1975; and
  5. (e) sections 4(3) and 6(2) of the Matrimonial Homes Act 1983,

any reference to a solicitor shall be construed as including a reference to a recognised body, and any reference to a person's solicitor shall be construed as including a reference to a recognised body acting for that person.")

66 Schedule 5, page 58, line 25, at end insert—

("Construction of references to recognised bodies)

.—(1) Subject to sub-paragraph (2), references in this Schedule to a recognised body are references to a body corporate for the time being recognised under section 28.

(2) In relation to any such allegation or complaint as is mentioned in paragraph 2(1)(a) (ii) or (b) of this Schedule references in this Schedule to a recognised body include references to a body corporate that was recognised under section 28 at the time when the conduct to which the allegation or complaint relates took place").

67 Page 58, line 39 leave out ("subsection (3) of').

68 Page 59, line 3, after ("an") insert ("officer or").

69 Page 59, line 5, leave out sub-paragraph (3).

70 Page 60, line 1, leave out sub-paragraph (4).

71 Page 60, line 6, leave out ("apply") and insert ("have effect").

72 Page 60, line 12, leave out from beginning to second ("is") in line 14 and insert— ("(b) any such order").

73 page 60, line 18, leave out ("an") and insert ("the").

74 page 60, line 27, leave out ("any of paragraphs (a) to (c) ") and insert ("paragraph (a) or (b)").

75 page 60, line 30, leave out (", or (as the case may be) to the conviction,").

76 page 60, line 38, at end insert—

("Revocation of recognition on grounds of fraud or error

5 A.—(1) Where the Discipline and Appeals Committee are satisfied that the recognition of a body corporate under section 28 was granted as a result of any error, or as a result of fraud on the part of that body, the Committee may, if they think fit, by order revoke that body's recognition.

(2) A body corporate may be granted recognition under that section notwithstanding that any recognition previously granted to it has been revoked under this paragraph; but if any such recognition was so revoked on the ground of fraud that body shall not be granted recognition under that section except on an application made in that behalf to the Committee.

Appeal against decision of Council in relation to grant of recognition

5B.—(1) Where, in the case of any body corporate, the Council—

  1. (a) refuses an application by that body for recognition under section 28; or
  2. (b) decides to grant recognition of that body under that section subject to any restrictions, 982 that body may appeal to the Discipline and Appeals Committee against that refusal or decision within one month of being notified of it.

(2) On an appeal under this paragraph the Discipline and Appeals Committee may—

  1. (a) by order direct the Council to grant recognition of the body in question under section 28, either without restrictions or subject to such restrictions falling within subsection (3)(a) of that section as may be specified by the Committee in the direction; or
  2. (b) affirm the refusal or decision of the Council; and the Committee may make such order as to the payment of costs by the Council or by that body as they think fit.

(3) Rules made by the Council may make provision, as respects any application for recognition that is neither granted nor refused by the Council within such period as may be specified in the rules, for enabling an appeal to be brought under this paragraph in relation to the application as if it had been refused by the Council.").

77 page 60, line 40, leave out sub-paragraph (1).

78 page 61, line 1, after ("Paragraphs"), insert ("1(2),").

79 page 61, line 2, after ("3") insert ("or 4").

80 page 61, line 10, leave out (" (3) ").

81 page 61, line 10, at end insert— (" (aa) a person has been appointed receiver or manager of property of a recognised body; or").

82 page 61, line 11, after ("order"), insert (" or an administration order under Part II of the Insolvency Act 1985,").

83 page 61, leave out lines 16 to 18 and insert— (" (c) the Council has reason to suspect dishonesty on the part of any officer or employee of a recognised body in connection with that body's business,").

84 page 61, line 19, leave out ("that Part of that Schedule") and insert ("Part II of Schedule 4").

85 page 61, line 43, leave out ("his") and insert ("its").

86 Page 61, leave out lines 45 and 46 and insert—

("8A.—(1) Where the recognition of a body corporate under section 28—

  1. (a) has been revoked by an order of the Discipline and Appeals Committee under this Schedule; or
  2. (b) has expired and no further recognition of that body has been granted under that section,

the powers conferred by Part II of Schedule 4 shall be exercisable in relation to the body corporate and its former business as a recognised body as they are exercisable in relation to a licensed conveyancer and his practice.

(2) Where the powers conferred by Part II of Schedule 4 are exercisable in relation to a recognised body in accordance with paragraph 7 or 8 of this Schedule they shall continue to be exercisable after that body's recognition under section 28 has been revoked or has otherwise ceased to be in force.

9. In connection with the application of Part II of Schedule 4 for the purposes of this Schedule, in that Part of that Schedule— (aa) any reference to the licensed conveyancer or to his practice shall be construed as including a reference to the body corporate in relation to which the powers conferred by that part of that Schedule are exercisable by virtue of paragraph 7, 8 or 8A(1) of this Schedule or to its business (or former business) as a recognised body;").

87 page 62, line 2, after ("7") insert ("or 8A(1)").

88 page 62, line 38, leave out sub-paragraph (3).

89 page 63, line 9, leave out ("behalf) and insert ("account").

90 Page 63, line 10, after ("to") insert ("account to").

98 Schedule 8, page 65, line 16, at end insert— ("Orders modifying provisions so as to apply to incorporated practices

4B. Any provision made by an order under subsection (7) of section (Incorporated practices) after the commencement of that section may be made with retrospective effect as from that commencement or any later date.").

101 In the Title, line 3, after (" 1974;") insert ("to regulate the provision of solicitors' services in the case of incorporated practices;").

Despite what the noble and learned Lord on the Cross-Benches said and what my noble friend Lord Renton said, this was referred to in detail in this House before it went to the Commons; there was an undertaking about an amendment of this kind in another place, and that is all that has been done.

May I say to the noble and learned Lord on the Cross-Benches that again he has not done his homework, and I wish that he would. He is absolutely wrong in thinking that the purpose of the amendment is to introduce limited liability. That is not so. The Law Society does not intend—and the council would not make rules to that effect—to allow incorporation with limited liability. The Bill does not require limited liability. The intention is that incorporation should be with unlimited liability. As I say, it was perfectly well discussed before in this House.

It really was rather discourteous of both my noble friend and the noble and learned Lord not to give me prior notice of their intention to put forward this absolutely bogus point.

Lord Renton

My Lord—

The Lord Chancellor

My Lords, may I put the Question now?

Moved, That the House do agree with the Commons in their Amendment No. 6.—(The Lord Chancellor.)

Lord Renton

My Lords, I wish to make a full and sincere apology to my noble and learned friend the Lord Chancellor. Although I take full responsibility for it, and for the mistake which I made, what I said at the beginning of the proceedings was based upon information which I had not checked and in the circumstances would not have had time to check. I agree with him that in the circumstances it would have been much better if I had checked the information and given notice to him of what I was going to say. I am sorry that I did not do so. I therefore wish to withdraw unreservedly what I said at an earlier stage. However, having said that, I greatly look forward to hearing from the Lord Chancellor a fairly full and detailed explanation of the proposals which he is about to give to the House.

Lord Denning

My Lords, as my noble friend Lord Renton has apologised, its is equally for me to do so if I have not done my homework. I had only a short time and I did not have time to go through the entire thing. I apologise.

I agree that Lord Benson's Commission recognised that it would be a good thing for companies with unlimited liability to be sanctioned, but where do we find a word of that in this amendment to limit the provision? Let us look at the provision: The Council may make rules… as to the management and control by solicitors of bodies corporate carrying on businesses consisting of the provision of professional services such as are provided by individuals practising as solicitors". I may not have done my homework and the noble and learned Lord and my noble friend may say I am wrong. But it is for the council to make all those provisions. There it is: delegated legislation. That is why I raise my objection. If this is not limited to cases where there is unlimited liability, the observations made by Lord Benson's Commission are pertinent.

3.30 p.m.

Paragraph 30.16 of the Benson Report says: The traditional method by which professional people carry on business is as sole practitioners or in partnership firms. This is so in the overwhelming majority of professional practices in this country and abroad. Practice in this form signifies the total commitment of the practitioner to his client because all the partners in a firm are jointly and severally responsible to the firm's clients to the full amount of their partnership and their private assets. Paragraph 30.22 states: We consider, therefore that incorporation of a solicitor's firm as a limited liability company should not be permitted. Paragraph 30.23 goes on: This view is shared by the Law Society which … does not seek authority for solicitors to carry on business as limited liability companies. The Society does not think that the profession at large would be in favour of practice with limited liability, and this is borne out by the evidence of a number of provincial law societies and by the Young Solicitors' Group of Law Society. There it is. It may be that I am under a misunderstanding, but I should like it to be made clear in the clause that it is only in regard to corporations with unlimited liability, and if that is so, I would not have any further objection.

The Lord Chancellor

My Lords, I am very grateful to my noble friend Lord Renton for what he has said most generously and very aptly, and if I seemed slightly nettled I can only apologise to the House. I can only say to my noble and learned friend on the Cross-Benches that if he had consulted me beforehand I would have told him everything about it.

In fact, the situation is that the amendments relate to incorporated practices in respect both of solicitors and licensed conveyancers, who approach the matter pari passu with solicitors. The amendments are concerned to provide, as the noble Lord pointed out, rule-making powers by the Law Society who have hitherto and for hundreds of years governed their own profession with perfect propriety and absolute responsibility. Really, there is no reason to suppose they were intending to introduce limited liability any more than my own bank has done so, and there is no reason to fear it in future.

I would agree it is probably an undesirable thing, but I think the solicitors' profession ought to be trusted to make their own rules and to govern themselves. This is simply an enabling section, and in preparing the new provisions contained in Amendments Nos. 6 and 60 it became apparent that improvements could be made in the way in which provisions already in the Bill for licensed conveyancers were drafted. A number of amendments, none of any great substance, are therefore also made in Clause 28 and Schedule 5.

My Lords, the matter was fully debated in the other place, so imagine my astonishment when, having been briefed that they were neither complicated nor controversial, I had this outburst from the noble and learned Lord on the Cross-Benches who had not bothered to consult me.

Lord Mishcon

My Lords, may I now enter the completely peaceful arena and merely say that I did raise this matter in your Lordships' House at the instance of the Law Society. The noble and learned Lord in his courtesy said what he has repeated to your Lordships; and I can say this to your Lordships—and I hope it will completely satisfy the noble and learned Lord, Lord Denning, and the noble Lord, Lord Renton—that in all my discussions with the Law Society there was not the slightest doubt but that unlimited liability would be the ground upon which registration would be authorised; that limited liability at no time would be countenanced. Your Lordships will see that anybody who pretends to be a licensed incorporated body will under these amendments in fact commit a criminal offence.

The Lord Chancellor

My Lords, I am very grateful to the noble Lord, Lord Mishcon, who has put the matter rather better than I did, but then he is in a position to do so and his experience speaks for itself.

On Question, Motion agreed to.