Legal Services Bill [HL]

House of Commons

Session 2006 - 07
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Other Bills before Parliament

Legal Services Bill [HL]

Legal Services Bill [HL]
Schedule 14 — Licensing authority’s powers of intervention
215

(ii)
any trust of which that body is or was a trustee,
(iii)
any trust of which the manager or employee of the body is or
was a trustee in that person’s capacity as such a manager or
employee, or
(iv)
the business of another body in which the manager or
5
employee is or was a manager or employee, or the practice
(or former practice) of the manager or employee;
(e)
that the licensing authority is satisfied that there has been undue
delay—
(i)
on the part of the licensed body in connection with any
10
matter in which it is or was acting for a client or with any trust
of which it is or was a trustee, or
(ii)
on the part of a person who is or was a manager or employee
of the licensed body in connection with any trust of which
that person is or was a trustee in that person’s capacity as
15
such a manager or employee,

and the notice conditions are satisfied;
(f)
that the licensing authority is satisfied that it is necessary to exercise
the powers conferred by this Schedule (or any of them) in relation to
a licensed body to protect—
20
(i)
the interests of clients (or former or potential clients) of the
licensed body,
(ii)
the interests of the beneficiaries of any trust of which the
licensed body is or was a trustee, or
(iii)
the interests of the beneficiaries of any trust of which a person
25
who is or was a manager or employee of the licensed body is
or was a trustee in that person’s capacity as such a manager
or employee.
      (3)
For the purposes of sub-paragraph (2) a relevant insolvency event occurs in
relation to a licensed body if—
30
(a)
a resolution for a voluntary winding-up of the body is passed
without a declaration of solvency under section 89 of the Insolvency
Act 1986 (c. 45);
(b)
the body enters administration within the meaning of paragraph
1(2)(b) of Schedule B1 to that Act;
35
(c)
an administrative receiver within the meaning of section 251 of that
Act is appointed;
(d)
a meeting of creditors is held in relation to the body under section 95
of that Act (creditors’ meeting which has the effect of converting a
members’ voluntary winding up into a creditors’ voluntary winding
40
up);
(e)
an order for the winding up of the body is made.
      (4)
The notice conditions referred to in sub-paragraph (2)(e) are—
(a)
that the licensing authority has given the licensed body a notice
inviting it to give an explanation within such period (of not less than
45
8 days) following the giving of the notice as may be specified in it;
(b)
that the licensed body has failed within that period to give an
explanation which the licensing authority regards as satisfactory;
and

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Schedule 14 — Licensing authority’s powers of intervention
216

(c)
that the licensing authority gives notice of the failure to the licensed
body and (at the same time or later) notice that this Schedule applies
in its case by virtue of sub-paragraph (2)(e).
      (5)
Where this Schedule applies in relation to a licensed body by virtue of sub-
paragraph (1)(a) it continues to apply after the body’s licence has been
5
revoked or has otherwise ceased to have effect.
      (6)
For the purposes of this Schedule “licensed body” includes—
(a)
a body whose licence is suspended;
(b)
a body to whom this Schedule continues to apply by virtue of sub-
paragraph (5);
10
(c)
except in this paragraph, a body whose licence has ceased to have
effect as mentioned in sub-paragraph (1)(b).
Money: prohibition on payment
2     (1)
The licensing authority may apply to the High Court for an order under sub-
paragraph (2), and the High Court may make the order if it thinks fit.
15
      (2)
The order is that a person holding money on behalf of the licensed body may
not make any payment of the money, except with the leave of the court.
      (3)
An order under sub-paragraph (2) may take effect in relation to a person—
(a)
whether or not the person is named in the order;
(b)
however the money is held;
20
(c)
whether the money was received before or after the order was made.
      (4)
But an order under sub-paragraph (2) does not take effect in relation to a
person until the licensing authority—
(a)
has given the person a copy of the order, and
(b)
(in the case of a bank or other financial institution) has indicated the
25
branches at which it believes money to which the order relates is
held.
      (5)
A person is not to be treated as having disobeyed an order under sub-
paragraph (2) by making a payment of money if the court is satisfied that the
person—
30
(a)
exercised due diligence to ascertain whether it was money to which
the order related, and
(b)
failed to ascertain that the order related to it.
Money etc: vesting in licensing authority
3     (1)
The sums of money to which this paragraph applies, and the right to recover
35
or receive them, vest in the licensing authority if the licensing authority
decides that they should do so.
      (2)
This paragraph applies to all sums of money held by or on behalf of the
licensed body in connection with—
(a)
its activities as a licensed body,
40
(b)
any trust of which it is or was a trustee, or
(c)
any trust of which a person who is or was a manager or employee of
the licensed body is or was a trustee in that person’s capacity as such
a manager or employee.

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Schedule 14 — Licensing authority’s powers of intervention
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      (3)
Sub-paragraph (1) applies whether the sums were received by the person
holding them before or after the licensing authority’s decision.
      (4)
Those sums and that right are held by the licensing authority—
(a)
on trust to exercise the powers conferred by this Schedule in relation
to them, and
5
(b)
subject to that and to rules under paragraph 6, on trust for the
persons beneficially entitled.
      (5)
The licensing authority must give the licensed body, and any other person
in possession of sums of money to which this paragraph applies—
(a)
a copy of the licensing authority’s decision, and
10
(b)
a notice prohibiting the payment out of those sums.
      (6)
A person to whom a notice under sub-paragraph (5) is given may apply to
the High Court for an order directing the licensing authority to withdraw
the notice.
      (7)
An application under sub-paragraph (6) must be made within 8 days of the
15
licensing authority giving the person notice under sub-paragraph (5).
      (8)
The person must give not less than 48 hours notice of any application under
sub-paragraph (6)—
(a)
to the licensing authority, and
(b)
if the notice under sub-paragraph (5) gives the name of a solicitor
20
instructed by the licensing authority, to that solicitor.
      (9)
If the court makes the order, it may make any other order it thinks fit with
respect to the matter.
     (10)
It is an offence for a person to whom a notice has been given under sub-
paragraph (5) to pay out sums of money at a time when such payment is
25
prohibited by the notice.
     (11)
A person who is guilty of an offence under sub-paragraph (10) is liable on
summary conviction to a fine not exceeding level 3 on the standard scale.
4     (1)
Any rights to which this paragraph applies shall vest in the licensing
authority if the licensing authority decides that they should do so.
30
      (2)
This paragraph applies to any right to recover or receive debts due to the
licensed body in connection with its business.
      (3)
Any sums recovered by the licensing authority by virtue of the exercise of
rights vested under sub-paragraph (1) vest in the licensing authority and are
held by it—
35
(a)
on trust to exercise the powers conferred by this Schedule in relation
to them, and
(b)
subject to that and to rules under paragraph 6, on trust for the
persons beneficially entitled.
      (4)
The licensing authority must give the licensed body, and any other person
40
who owes a debt to which the order applies a copy of the licensing
authority’s decision.
5     (1)
If the licensing authority takes possession of any sum of money to which
paragraph 3 applies or by virtue of paragraph 4, it must pay it into a special

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account in the name of the licensing authority or a person nominated on its
behalf.
      (2)
A person nominated under sub-paragraph (1) holds that sum—
(a)
on trust to permit the licensing authority to exercise the powers
conferred by this Schedule in relation to it, and
5
(b)
subject to that and rules under paragraph 6, on trust for the persons
beneficially entitled.
      (3)
A bank or other financial institution at which a special account is kept is
under no obligation to ascertain whether it is being dealt with properly.
6     (1)
The licensing authority may make rules governing its treatment of sums
10
vested in it under paragraph 3 or 4(3).
      (2)
The rules may, in particular, make provision in respect of cases where the
licensing authority, having taken such steps to do so as are reasonable in all
the circumstances of the case, is unable to trace the person or persons
beneficially entitled to any sum vested in the licensing authority under
15
paragraph 3 or 4(3) (including provision which requires amounts to be paid
into or out of any fund maintained by the licensing authority in connection
with its compensation arrangements).
Money: information
7     (1)
The licensing authority may apply to the High Court for an order requiring
20
a person to give the licensing authority—
(a)
information about any money held by the person on behalf of the
licensed body, and the accounts in which it is held, or
(b)
information relevant to identifying any money held by the licensed
body or by another person on its behalf.
25
      (2)
The High Court may make the order if it is satisfied that there is reason to
suspect—
(a)
in a case within sub-paragraph (1)(a), that the person holds money
on behalf of the licensed body, and
(b)
in a case within sub-paragraph (1)(b), that the person has the
30
information in question.
      (3)
This paragraph is without prejudice to paragraphs 2 to 6.
Notice to produce or deliver documents
8     (1)
The licensing authority may give notice to the licensed body requiring it to
produce or deliver all documents in its possession or under its control in
35
connection with—
(a)
its activities as a licensed body,
(b)
any trust of which it is or was a trustee, or
(c)
any trust of which a person who is or was a manager or employee of
the licensed body is or was a trustee in that person’s capacity as such
40
a manager or employee.
      (2)
The notice may require the documents to be produced—
(a)
to any person appointed by the licensing authority;
(b)
at a time and place to be fixed by the licensing authority.

Legal Services Bill [HL]
Schedule 14 — Licensing authority’s powers of intervention
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      (3)
The person appointed by the licensing authority may take possession of any
such documents on behalf of the licensing authority.
      (4)
It is an offence for a person having possession of such documents to refuse,
neglect or otherwise fail to comply with a notice under sub-paragraph (1).
      (5)
Sub-paragraph (4) does not apply where an application has been made to the
5
High Court under paragraph 9(1)(a).
      (6)
A person who is guilty of an offence under sub-paragraph (4) is liable on
summary conviction to a fine not exceeding level 3 on the standard scale.
Order to produce or deliver documents
9     (1)
The High Court may, on the application of the licensing authority, make an
10
order for production or delivery—
(a)
in relation to a person required to produce documents under
paragraph 8 and the documents the person was required to produce;
(b)
if it is satisfied that there is reason to suspect that documents in
relation to which the powers in paragraph 8 are exercisable have
15
come into the possession or under the control of some person other
than the licensed body, in relation to that person and those
documents.
      (2)
An order for production or delivery is an order—
(a)
requiring a person to produce or deliver documents to any person
20
appointed by the licensing authority, at a time and place specified in
the order, and
(b)
authorising the appointed person to take possession of the
documents on behalf of the licensing authority.
      (3)
The court may, on the application of the licensing authority, authorise a
25
person appointed by the licensing authority to enter any premises (using
such force as is reasonably necessary) to search for and take possession of—
(a)
any documents to which an order for production or delivery relates;
(b)
any property—
(i)
in the possession of or under the control of the licensed body,
30
or
(ii)
in the case of an order under sub-paragraph (1)(b), which was
in the possession or under the control of that body and has
come into the possession or under the control of the person in
respect of whom the order is made,
35

which the licensing authority reasonably requires for the purpose of
accessing information contained in any such documents,

and to use property obtained under paragraph (b) for that purpose.
      (4)
It may do so on making the order for production or delivery, or at any later
time.
40
Taking possession of documents etc under notice or order
10    (1)
This paragraph applies where the licensing authority takes possession of
documents or any other property under paragraph 8 or 9.
      (2)
On taking possession, it must give a notice to—
(a)
the licensed body, and
45

Legal Services Bill [HL]
Schedule 14 — Licensing authority’s powers of intervention
220

(b)
any other person from whom the documents or property were
received or from whose possession they were taken.
      (3)
The notice must state that possession has been taken and specify the date on
which possession was taken.
      (4)
A person to whom a notice under sub-paragraph (2) is given may apply to
5
the High Court for an order directing the licensing authority to deliver the
documents or other property to such person as the applicant requires.
      (5)
An application under sub-paragraph (4) must be made within 8 days of the
licensing authority giving the person notice under sub-paragraph (2).
      (6)
The person must give not less than 48 hours notice of the application—
10
(a)
to the licensing authority, and
(b)
if the notice under sub-paragraph (2) gives the name of a solicitor
instructed by the licensing authority, to that solicitor.
      (7)
The court may make any order it thinks fit.
Mail and other forms of communication
15
11    (1)
The High Court, on the application of the licensing authority, may from time
to time make a communications redirection order.
      (2)
A communications redirection order is an order that specified
communications to the licensed body are to be directed, in accordance with
the order, to the licensing authority or any person appointed by the licensing
20
authority.
      (3)
For the purposes of this paragraph—
(a)
“specified communications” means communications of such
description as are specified in the order;
(b)
the descriptions of communications which may be so specified
25
include—
(i)
communications in the form of a postal packet;
(ii)
electronic communications;
(iii)
communications by telephone.
      (4)
A communications redirection order has effect for such time not exceeding
30
18 months as is specified in the order.
      (5)
Where a communications redirection order has effect, the licensing
authority or the person appointed by the licensing authority may take
possession or receipt of the communications redirected in accordance with
the order.
35
      (6)
Where a communications redirection order is made the licensing authority
must pay to the designated payee the like charges (if any) as would have
been payable for the redirection of the communications to which the order
relates if the addressee—
(a)
had permanently ceased to occupy or use the premises or other
40
destination of the communications, and
(b)
had applied to the designated payee to redirect the communications
as mentioned in the order.
      (7)
For this purpose “the designated payee” means—

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(a)
in the case of an order relating to postal packets, the postal operator
concerned, and
(b)
in any other case, the person specified in the order as the designated
payee.
      (8)
The High Court may, on the application of the licensing authority, authorise
5
the licensing authority, or a person appointed by it, to take such steps as may
be specified in the order in relation to any website purporting to be or have
been maintained by or on behalf of the licensed body, if the High Court is
satisfied that the taking of those steps is necessary to protect the public
interest or the interests of clients (or potential or former clients) of the
10
licensed body.
      (9)
In this paragraph “postal operator” and “postal packet” have the meaning
given by section 125(1) of the Postal Services Act 2000 (c. 26).
     (10)
This paragraph does not apply where the powers conferred by this Part of
this Schedule are exercisable by virtue of paragraph 1(2)(e).
15
Use of documents in licensing authority’s possession
12    (1)
The licensing authority may apply to the High Court for an order as to the
disposal or destruction of any document or other property in its possession
by virtue of paragraph 8, 9 or 11.
      (2)
The court may make any order it thinks fit.
20
13    (1)
The licensing authority may take copies of or extracts from any documents
in its possession by virtue of paragraph 8, 9 or 11.
      (2)
If the licensing authority proposes to deliver such documents to any person,
it may make the delivery conditional on the person giving a reasonable
undertaking to supply copies or extracts to the licensing authority.
25
      (3)
Sub-paragraphs (1) and (2) are subject to any order made by the court under
paragraph 10 or 12.
Trusts
14    (1)
If the licensed body is a trustee of any trust, the licensing authority may
apply to the High Court for an order for the appointment of a new trustee in
30
substitution for it.
      (2)
If a person who is a manager or employee of the licensed body is a trustee of
any trust in that person’s capacity as such a manager or employee, the
licensing authority may apply to the High Court for an order for the
appointment of a new trustee in substitution for that person.
35
      (3)
The Trustee Act 1925 (c. 19) has effect in relation to an appointment of a new
trustee under this paragraph as it has effect in relation to an appointment
under section 41 of that Act.
General powers of licensing authority
15
The powers conferred by this Schedule in relation to sums of money,
40
documents or other property may be exercised despite any lien on them or
right to their possession.