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You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Legal Services Commission v Loomba [2012] EWHC 29 (QB) (17 January 2012) URL: https://www.bailii.org/ew/cases/EWHC/QB/2012/29.html Cite as: [2012] 2 Costs LR 367, [2012] 2 All ER 977, [2012] 1 WLR 2461, [2012] EWHC 29 (QB) |
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QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
Legal Services Commission |
Claimant |
|
- and - |
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Sham Loomba |
Defendant |
|
And |
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Legal Services Commission |
Claimant |
|
Ngozi Blessing Ulasi |
Defendant |
|
And |
||
Legal Services Commission |
Claimant |
|
-and- |
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Simon Anthony Carter and Others |
Defendant |
____________________
Peter Susman QC (instructed by Bindmans LLP) for the First Defendant
Peter Susman QC (instructed by Ngozi Blessing Ulasi) for the Second Defendant
Peter Susman QC (instructed by Howell-Jones) for the Third Defendant
Hearing dates: 21-23 November and 7 December 2011
____________________
Crown Copyright ©
Mr Justice Cranston:
INTRODUCTION
BACKGROUND
Civil legal aid: an overview
"(b) which is calculated to facilitate or is incidental or conducive to the discharge of it functions."
Section 6 of the 1988 Act obliged the Board to establish a legal aid fund. Sections 6(2) and (3) provided for payments from that fund:
"(2) Subject to regulations, there shall be paid out of the fund –
(a) such sums as are, by virtue of any provision of or made under this Act, due from the Board in respect of remuneration and expenses properly incurred in connection with the provision, under this Act, of advice, assistance, mediation or representation;
…
(3) Subject to regulations, there shall be paid into the fund –
… (b) any sum awarded under an order of a court or agreement as to costs in any proceedings in favour of any legally assisted party which is payable to the Board …"
As regards civil legal aid, section 15 of the 1988 Act governed payment for legal representation for those qualifying for it. Sections 15(6)-(7) covered the Board's obligation to pay legal representatives. In the absence of a contract with them, the Board was to make such payments as authorised by regulations made under the Act: s. 15(7)(b).
"11. A person who wished to obtain legal representation had to be granted a legal aid certificate ("a certificate") and, once it was granted, he or she became an "assisted person". An assisted person was, at least in principle, free to choose a solicitor, who was to be subject to the same obligations to the assisted client as would have applied had the instructions been private save for any specific exception provided for by the statutory scheme - see section 32 of the 1988 Act. One way in which the contractual relationship between solicitor and client was altered by the grant of legal aid was under section 9(5) of the 1988 Act, which provided that the assisted person was not required to pay his or her solicitor any charge or fee, save for any contribution provided for in the Regulations. Similarly, under section 31(3), the solicitor was not entitled to take any payment in respect of that representation other than as paid by the Commission or as authorised by the 1988 Act or by the Regulations.
…
13. The Commission could, and usually did, impose conditions limiting the ambit of the certificate and requiring further approval before any limitation could be amended. Costs incurred by an assisted person's legal representatives in those cases could only be paid for out of the Legal Aid Fund ("the fund") if they had been incurred during the currency of a valid certificate."
"(10) Where a solicitor or counsel has failed to comply with the time limit in paragraph (3A), the costs shall be assessed and the Area Director shall consider what, if any, reduction is reasonable and proportionate in all the circumstances; provided that costs shall not be reduced unless the solicitor or counsel has been allowed a reasonable opportunity to show cause in writing why the costs should not be reduced."
Payment on account
"A solicitor acting for a client under a certificate to which this regulation applies may submit a claim to the Commission on a form approved by the Commission for the payment of sums on account of profit costs incurred in connection with the proceedings to which the certificate relates."
From financial year 1995-1996, the maximum payment on account for each claim was 75 percent. Regulations 100(3) and 100(4) then set out the time limits in which application for payment on account, and the payment itself, could be made.
100. Payment on account
…
"(7) The making of a payment under this regulation shall not release a solicitor from any obligation under these Regulations to submit his costs and counsel's fees for detailed assessment or assessment under regulation 105 on conclusion of the case.
(8) Where, after detailed assessment or assessment under regulation 105, payments made under this regulation are found to exceed the final costs of the case, the solicitor or counsel (if any) shall, on demand, repay the balance due to the fund and, where the total costs exceed any payments made under this regulation, the balance shall be paid from the fund."
Recoupment of losses and excesses
….
"(2) Where, for whatever reason a solicitor has been paid an amount greater than that to which he is entitled, the Commission may recover the excess either by way of repayment by the solicitor or by way of deduction from any other sum which may be due to him."
Recoupment and nil assessment
"[The Commission] will discharge the certificate and/or close the case by entering a zero value bill that will automatically recoup the payments made on account."
The Focus article continued that a timely response would prevent unnecessary recoupment.
"I regret that, in view of the age of the payments outstanding I will require your response within 42 days of this letter ... In certificated cases, I will assume that discharge is appropriate. If discharge takes place, and no final bill has been processed, the case will be closed on the basis there is no claim on the fund. Any outstanding payments on account will then be recouped. If such action is inappropriate, it is important you return form UPOA/2 detailing the current position for each certificate or other payment."
A second letter would be sent as a reminder requiring a response within 21 days. In default of a reply to the latter, Commission staff would discharge the certificate or close the cases by entering a zero value bill (nil assessment). That would automatically recoup any payments on account. Where there were responses they were to be dealt with in different ways, depending on their nature. For example, where practitioners chose the response "No action taken and no claim on the fund", if satisfied that this were the case the Commission staff were to discharge the certificate and "nil assess" the costs by recouping the payments on account. But other responses triggered different actions.
"Where it is impossible to support a claim for costs with the file, because it has been lost or destroyed for example, we will consider a claim made without the file if as a minimum, the financial ledger for the case and contemporaneous evidence of time recording can be produced. If these are sufficient to demonstrate that the payment on account made was reasonable we will not seek to recover the amount paid, but any claim for additional costs will be refused."
The leaflet continued that where a file was not available, and there was insufficient alternative evidence to demonstrate that the payment on account was reasonable, any claims for costs would be nil assessed and the payment on account would be recoverable. Late claims would attract a discount. The Commission might agree to assess costs in cases where proceedings had commenced, and the total claim exceeded £2,500, even though normally that would be subject to detailed assessment. The leaflet concluded:
"If however, we face a refusal to cooperate or to provide necessary information within a reasonably allowed time, we believe our statutory duty obliges us to make nil assessments and recoveries or, under CPR rule 47.8, to seek to have detailed assessments made through the court."
"[w]e will consider a claim made without the file if, as a minimum, the financial ledger for the case and contemporaneous evidence of time recording can be produced as an alternative. If these are sufficient to demonstrate that the payment on account made was reasonable, we will not seek to recover the amount paid, but a claim for additional costs will be refused."
THE PRESENT CLAIMS
Loomba & Co
Ulasi & Partners
Simon Carter and others (Howell-Jones and Partners)
"I do not feel it is fair or proper for LSC to expect us to repay these amounts after so long and I was pleased to read recently that LSC will look at old cases on an individual basis with a view to offering assistance to solicitors."
"We are holding funds in this case and would like to clear this case with you. Would you please let me know how much is required and I will send you a cheque."
The letter then asked for an explanation of the increase in the debit balance. The Commission replied immediately, explaining that, in the absence of a reply from the firm, it had recouped payments on account to counsel in the Byrne matter and that the firm would need to account to counsel for fees. It also explained the recoupment of the £19,000 from the firm.
COMMISSION'S STATUTORY CLAIMS
Section 4(1)(b)
"[Counsel for the Commission] submits that … Section 4(1)(b) of the Legal Aid Act 1988 gives the defendants a statutory power to operate a running account. This however does not in my judgment give a right to relocate or move money that has been earned and paid in case 'A' to case 'B' or to recoup money:" [33].
In the course of his judgment Scott Baker J also said that the regulations were defective and the simple solution would be to redraft them: [34]. In the result, regulation 102 B was introduced.
"Where Parliament has expressly enacted provisions which define the means by which local authorities are to carry out their functions, section 111(1) of the Act of 1972 cannot be relied upon in support of performance of those functions by other means not expressly empowered by the relevant provisions:" (p. 584).
It was inconceivable that Parliament had ever intended by section 111 to confer the power to incur a financial obligation where it had so clearly, and in such detail, regulated a local authority's power to grant financial assistance (p. 584).
"Where the Act provides a framework built on by contemporaneously prepared regulations, the latter may be a reliable guide to the meaning of the former:" 194B.
Hanlon is binding authority: regulations are an aid to the construction of an Act if "contemporaneously prepared". That accords with constitutional principle. If Parliament, in passing a Bill, knows of the putative regulations to be made under it when enacted, the Parliamentary intention behind the Bill is formed with that background knowledge. The regulations are thus a reliable guide to the meaning of the Act. Later regulations made under the Act will be formulated by the executive. If Parliament has a role in relation to them it will be to approve or reject them as a whole. By exercising the power delegated by Parliament to make such regulations, the executive can in no way alter the intention behind the enabling Act. Those regulations made by the executive can have no bearing on what an Act means.
"Its position is analogous to, though not identical with, that of a statutory instrument which may be prayed in aid to construe main legislation, where it is clear that the two are intended to form an overall code:" 486B.
No challenge was mounted to that view, the only submission being that the Immigration Rules should not be taken into account during the period within which they might yet be disapproved by either House of Parliament. Laws J rejected that submission. In my respectful view, Laws J's approach is correct in recognising that the Act and the regulations must be part of the same legislative cloth.
Regulation 105
Regulation 102 B(2)
COMMISSION'S PRIVATE LAW CLAIMS
"[13] … when section 71 was enacted, there was a division of functions between the adjudication of awards and their payment. Since the Secretary of State paid the benefit awarded pursuant to a statutory duty, there could be no question of his having made a mistake of fact or law in making the payment. Thus … section 71 and its predecessor sections created a power of recovery when otherwise there would have been none. This explains too why section 71 contains no express exclusion of any common law right of recovery: there simply was none and it is hardly surprising that no such exclusion was inserted in 1998 when the adjudicatory and payment functions merged."
"[34] … The question is whether, looked at as a whole, a common law remedy would be incompatible with the statutory scheme and therefore could not have been intended to coexist with it."
A powerful reason for supposing that Parliament intended the statutory code to be exclusive was the chaos which would result with two overlapping schemes for recovery: [35].
DEFENCES
Deed of settlement
"8.1 LSC and [the Ministry of Justice] agree that from the date of this Deed in respect of any case in relation to which:
8.1.1 no payment has been made by LSC to the legal aid provider or former legal aid provider since 31 March 2002; and
8.1.2 there has been no activity on the legal aid certificate since 31 March 2002; and
8.1.3 the total payments on account do not exceed £20,000 net of VAT; and
8.1.4 no agreement has been made by the legal aid provider or former legal aid provider to repay to or to allow LSC to recoup payments on account made prior to 31 March 2002 or no debit note or debit to a BACs statement has been sent by LSC before 1 April 2008 in the absence of agreement
(each 'an historic case'), LSC will not act to recover any payments on account made by LSC in that case."
Public law defence: fettering discretion
Public law defence: procedural flaws etc.
Human rights
CONCLUSION