SRA v Khan [2021] EWHC 3765

The SRA intervened in Ms Khan's solicitors' firm for suspected dishonesty. She continued practising through a not-for-profit company, claiming entitlement under s.23 Legal Services Act 2007. The High Court granted injunctions restraining her from carrying on reserved legal activities without a valid practising certificate.

Facts

On 19 August 2021, the Solicitors Regulation Authority (SRA) resolved to intervene in the practice of Sophie Khan & Co Limited on grounds of suspected dishonesty by Ms Soophia Khan, the sole principal and director, and for her failure to comply with regulatory rules. The intervention had the statutory effect under s.15(1A) of the Solicitors Act 1974 of suspending Ms Khan’s practising certificate.

Attempts to take possession of the firm’s files were frustrated: Ms Khan did not attend the premises, and when the SRA eventually obtained an order from Adam Johnson J on 7 September 2021 (the First Order), they found the premises stripped of all client documents. A second order was obtained from Miles J permitting searches at Wimbledon premises, which also produced nothing. Neither order was complied with, and contempt applications were issued on 1 October 2021.

Ms Khan maintained that the firm’s business had been sold on 10 August 2021 to Just For Public Limited (JFP), a purported not-for-profit body of which she was sole director and employee, and that she was entitled to continue carrying on reserved legal activities through JFP. She continued to act in coronial inquiries, county court litigation, and appeals.

Issues

The principal issues were:

• Whether, as a director and employee of JFP (assumed for this hearing to be a not-for-profit body), Ms Khan was entitled under s.23 of the Legal Services Act 2007 to carry on reserved legal activities despite her practising certificate being suspended.
• Whether the SRA had standing to seek injunctions effectively restraining conduct which would amount to a criminal offence.
• Whether, as a matter of discretion, injunctions should be granted against Ms Khan and JFP.

Arguments

For Ms Khan and JFP

Mr James submitted that under s.13(3) and s.23 of the 2007 Act, a not-for-profit body’s entitlement to carry on reserved legal activities during the transitional period must extend to its employees, otherwise the entitlement was illusory. The individual steps Ms Khan had taken did not, viewed separately, amount to the conduct of litigation. Alternative remedies (contempt and criminal proceedings) were adequate, and the high threshold for civil injunctions to restrain criminal conduct was not met. An injunction would also create unacceptable uncertainty as to what Ms Khan could lawfully do.

For the SRA

Mr Allen submitted that s.15 and s.16 make clear that both employer and employee must be individually entitled to carry on reserved legal activities. The purpose of the proceedings was not mere criminal law enforcement but the furtherance of the SRA’s regulatory objectives and the protection of the public. Contempt proceedings had proved inadequate, and urgent relief was needed.

Judgment

Fancourt J rejected Ms Khan’s statutory construction argument. Reading ss.13, 14, 15 and 16 together, the court held that s.23 only exempts the not-for-profit body itself from the requirement to be authorised; it does not exempt individuals who carry on reserved legal activities on its behalf. Section 15(2) expressly provides that an employee who carries on a reserved legal activity in that capacity is still carrying it on personally, and s.16 makes it a criminal offence for an entitled body to carry on a reserved activity through an employee who is not so entitled. It would be a surprising outcome, contrary to the regulatory scheme, if unqualified persons could provide advocacy or probate services simply by being employed by a not-for-profit body.

On standing, the court applied the guiding principles set out by Bingham LJ in City of London Corporation v Bovis Construction Ltd [1992] 3 All ER 697 and approved in Birmingham City Council v Shafi [2009] 1 WLR 1961. The court accepted that the proceedings went beyond mere enforcement of criminal law and were properly directed at furthering the regulatory objectives of the 2007 Act and giving effect to the intervention. Contempt proceedings had not produced compliance, and an injunction was necessary.

On the evidence, including a tweet announcing the ‘takeover’, statements made at hearings, a complaint from Weightmans regarding a hearing before HHJ Sephton QC where Ms Khan sought to exercise rights of audience, a former client’s email, and documents issued in litigation signed by Ms Khan as director of JFP, the court found a real risk that Ms Khan would continue to carry on reserved legal activities and hold herself out as entitled to act as a solicitor. The specimen attendance note produced by Ms Khan was described as unconvincing.

The argument that individual steps did not separately amount to the conduct of litigation was rejected: Ms Khan was the only person capable of taking such steps for JFP, and by s.15(4), JFP’s carrying on of reserved legal activities occurred by virtue of her actions.

The court was satisfied it had jurisdiction over Ms Khan as a solicitor (inherent and under s.50 of the Solicitors Act 1974) and, following The Law Society v Shah [2015] 1 WLR 2094, could grant ancillary injunctive relief against JFP to render the relief effective. The injunctions sought were not unacceptably ambiguous, given the statutory definition of ‘conduct of litigation’ in paragraph 4 of Schedule 2 to the 2007 Act, and Ms Khan’s legal training.

Accordingly, injunctions were granted restraining Ms Khan from carrying on reserved legal activities or holding herself out as entitled to do so until she has a valid practising certificate, and restraining JFP from carrying on reserved legal activities through Ms Khan in her capacity as employee or director.

Implications

The judgment clarifies the interplay between s.13, s.15, s.16 and s.23 of the Legal Services Act 2007. The transitional entitlement of not-for-profit bodies under s.23 does not dispense with the separate requirement that individuals carrying on reserved legal activities must themselves be authorised or exempt. A suspended solicitor cannot lawfully circumvent that suspension by acting through a not-for-profit corporate vehicle.

The decision confirms that the SRA has standing to seek injunctive relief in aid of intervention where regulatory and contempt mechanisms have proved inadequate, provided the Bovis Construction criteria are satisfied. It also confirms that the court’s jurisdiction under s.50 of the Solicitors Act 1974 and its inherent jurisdiction extend to granting ancillary relief against a non-regulated third party (here JFP) where necessary to make the primary injunction effective, as in The Law Society v Shah.

For practitioners, the case illustrates the limits of attempts to continue practice through alternative corporate structures following intervention, and reinforces that rights of audience and the conduct of litigation are personal to the individual carrying them out, not simply attributes of the employing body. The judgment leaves open the point that in some cases the totality of activities by multiple employees of a not-for-profit body might amount to carrying on reserved legal activities by the body alone, but that could not apply where, as here, there was only one relevant employee.

Verdict: The court granted injunctions against Ms Khan restraining her from carrying on any reserved legal activity, or holding herself out as entitled to do so, unless and until she has a valid practising certificate, and granted an ancillary injunction against Just For Public Limited restraining it from carrying on any reserved legal activity through Ms Khan in her capacity as its employee or director.

Source: SRA v Khan [2021] EWHC 3765