Keeping regulators right

In Bartos, the Inner House raised doubts about the competency of the Scottish Legal Complaints Commission categorising a single complaint or a single issue as “hybrid”, in other words that it was treated both as a complaint about service and a complaint about conduct. The practice of treating issues as “hybrid” predated the creation of the SLCC by the Legal Profession and Legal Aid (Scotland) Act 2007. The lawfulness of that practice was raised as a live issue in Anderson Strathern LLP. The Inner House decided in that case that when the SLCC is carrying out its role in managing complaints, it has to decide whether a complaint is a complaint about service or about conduct. The 2007 Act did not allow a single issue complaint to be both. 

The decision in Anderson Strathern LLP left the SLCC and the Society with a dilemma – what was to happen to other complaints that had not yet been finally determined and so remained “live”, but had been wrongly categorised as hybrid? The SLCC took the view that it should correct the mistake and began to recategorise those complaints. The Society considered that this was outside the SLCC’s powers under the 2007 Act and that hybrid issues should simply be allowed to make their way through the system – being investigated from a conduct perspective by the professional body and through a service lens by the SLCC. 

The two bodies tried to agree on a solution to the problem, but ultimately it proved necessary to seek a court ruling. Against that backdrop, the Society appealed decisions of the SLCC to recategorise various complaints as service only. It was agreed that one appeal would run as a test case to allow the substantive issue to be determined. The key issue in the appeal was an unusual and difficult legal question: when is a regulator entitled to alter decisions that it has taken in live cases where its previous course of action has been found by the courts to have been wrong?

 

All members of the court – comprised of Lady Paton, Lord Glennie and Lord Turnbull – agreed that live cases could not follow two “tracks”, and had to be dealt with as either a service or a conduct matter. The court considered it would have been an error of law and ultra vires for the SLCC to continue with live hybrid cases on a “two track” basis (Lady Paton, para 64). However, there was a difference of view on the appropriate mechanism for recategorising complaints. Lady Paton concluded that the SLCC was not entitled “at its own hand” to embark on a recategorisation exercise, but could do so if the court made an order requiring that. Lords Glennie and Turnbull, by contrast, considered that the 2007 Act was broad enough in its terms to encompass a power to recategorise in the very specific circumstances of this case.

The majority judges took the view that when the SLCC is categorising an issue of complaint as services or conduct it is exercising an administrative function and not a judicial or quasi-judicial function (Lord Glennie, para 74; Lord Turnbull, para 95). Of particular interest to public lawyers will be Lord Glennie’s comments at para 77, where he considers more generally the ability of an administrative decision-maker to review and reconsider decisions it has made in circumstances where its original decision is shown to be wrong in law. He observed that as a general rule it was difficult to see why an administrative decision-maker should not have the power to correct mistakes. The alternative is that a wrong decision could only be corrected by an appropriate appeal mechanism, which would be expensive and inconvenient to the decision-maker and to the individual aggrieved by the decision. 

Lords Glennie and Turnbull also considered that the SLCC's decision to recategorise hybrid issues represented the SLCC “acting properly in response to a court ruling that its initial hybrid categorisation was unlawful and ultra vires” (Lord Glennie, para 86; Lord Turnbull, para 102). The SLCC’s approach was “in keeping with the requirements of good administration”, and “the unattractive alternative would have been for the Commission to leave all the parties affected by the mistaken earlier decisions to bring individual proceedings to correct them” (Lord Turnbull, para 99).

However, the judgment is not to be read as suggesting that the SLCC has any general power to reconsider and change decisions that it has made: the particular circumstances of this case, in that the Inner House had already decided that hybrid categorisations were unlawful, was a key difference between this decision and others (Lord Glennie, para 89). A decision to recategorise issues that had already been partly determined by one body or another might be challengeable on grounds of Wednesbury unreasonableness, but that would depend on the particular circumstances of the case (Lord Glennie, para 87).

In relation to decided and closed cases, the court said that these should not be disturbed by the ruling in Anderson Strathern or the ruling in this case (Lady Paton, para 62), and any attempt to open a decided and closed case by raising a challenge concerning its categorisation as “hybrid” should not be granted an extension of time for a late appeal (Lady Paton, para 63).

As to the Society’s obligation to investigate, Lord Glennie expressed the view that a decision by the SLCC to recategorise a hybrid issue “may, almost certainly will, result in the duty previously placed on one or other body to investigate the complaint flying off” (para 86). Lord Turnbull expressed the matter more strongly: “any duty on the part of the Law Society to investigate flies off” (para 102), when the SLCC recategorises a hybrid issue.

 

While Lady Paton found that the SLCC did not have the power to recategorise hybrid issues “at its own hand”, she made it clear that the court had not found that the SLCC had been “unreasonable and irrational” in going ahead with recategorisation (para 42).

Lady Paton’s solution in relation to outstanding hybrid issues in live cases would have been to have late appeals allowed by the court, with the court making a formal order requiring recategorisation (para 64). Those appeals would have inevitably resulted in a formal order for recategorisation because she had acknowledged that it was unacceptable to allow complaints to continue down two tracks.

Lady Paton was also of the view that the correct mechanism for challenging decisions of the SLCC on hybrid categorisation is using the appeal process provided for in s 21 of the 2007 Act. Neither a petition to the nobile officium nor a petition for judicial review would have been competent in this case. Lord Glennie left open the possibility that a petition to the nobile officium might have been appropriate had he reached a different conclusion on the main issue.

 

This is a significant case about the powers and duties of statutory bodies and how they should respond when the courts have found an earlier course of conduct to have gone wrong. What can then be done will depend crucially on the statutory framework under which they operate.

On 25 April 2017 the Scottish Government announced an independent review of the regulation of legal services. The review has been established with the aim to “support a modern and effective legal sector”. The review will make independent recommendations to reform and modernise the statutory framework for the regulation of legal services and complaints handling.
As is demonstrated by the decisions in Bartos, Anderson Strathern and the present case, the current legal framework continues to present both legal regulators in Scotland with difficult questions. Care will need to be taken to ensure that changes to the statutory framework support a proportionate and consistent approach to regulation, in keeping with the principles of best regulatory practice, whilst at the same time striking an appropriate balance between consumer interests and the profession. 

 

Christine O’Neill (as solicitor advocate) and Niall McLean of Brodies LLP acted for the Scottish Legal Complaints Commission in the appeal.