Cassidy v Stephensons & Legal Services Commission
| Jurisdiction | England & Wales |
| Judge | His Honour Judge Holman |
| Judgment Date | 23 June 2009 |
| Neutral Citation | [2009] EWHC 1562 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: 8WA01622 |
| Date | 23 June 2009 |
[2009] EWHC 1562 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MANCHESTER DISTRICT REGISTRY
Manchester Civil Justice Centre
1 Bridge Street West
Manchester
His Honour Judge Holman
Sitting as a Judge of the High Court
Case No: 8WA01622
David Knifton (instructed by Jones Robertson) for the Claimant
Jamie Carpenter (instructed by Barlow Lyde & Gilbert) for the First Defendant
Mukhtiar S Otwal instructed by and for the Second Defendant
Hearing dates: 10 June 2009
His Honour Judge Holman :
The Claimant is the sister of the late Paul Nevitt. He suffered from severe learning difficulties, but managed to lead a reasonably independent life with some support from her. She became his legal guardian in 1995. By that time he had been diagnosed as suffering from diabetes mellitus. This condition necessitates regular eye examination since it can lead, without treatment, to diabetic retinopathy and blindness. Sadly, that is what happened, and in the summer of 1998 the Claimant consulted Lloyd Jones Associates, a firm of solicitors, regarding a claim for clinical negligence in relation to his treatment over the period 1994 to 1998.
In September 1998 a Legal Aid Certificate was issued to pursue the claim. Paul Nevitt died in December 2000 (from unrelated causes) and the Certificate was discharged in consequence. By this time a new regime had come into being for public funding, and a Certificate could only be granted to a firm, which held the requisite franchise. It was thus that the Claimant came to consult the First Defendant to whom a Community Legal Service (CLS) Funding Certificate was issued in July 2003. The scope of the Certificate was “As claimant to be represented in an action for clinical negligence”. The Certificate was, very much in accordance with standard practice, limited, but the scope and financial limit were extended from time to time. Following a favourable advice from counsel, who put the prospects of success at between 60% and 80%, the institution of proceedings was authorised.
The claim form against five Defendants was issued in the Leigh County Court on 18 December 2003, just under two weeks before the primary limitation period expired. However, it had not been possible to draft the Particulars of Claim as further medical evidence was awaited. Disastrously, the First Defendant decided, for this reason, to delay serving the claim form. In April 2004, just before the four month period for service expired, it obtained a without notice extension for service of the claim form until 16 August 2004. This triggered applications by the defendants to set that order aside. Those applications were granted in October 2004. His Honour Judge Stewart QC dismissed an appeal on behalf of the Claimant in February 2005. Accordingly the clinical negligence claim foundered. The Claimant was advised to obtain independent advice, and did so.
Horton v Sadler [2006] UKHL 27 had not been heard by the House of Lords at that time, so as the law stood that was the end of the claim. After the judgment in Horton the Claimant's present legal advisers asked the First Defendant if it wished the Claimant (with an indemnity as to costs) to issue a fresh claim and seek the exercise of discretion to proceed out of time under section 33 Limitation Act 1980. The First Defendant did not require her to do so.
At some point (I do not know when) the First Defendant lodged a claim with the Second Defendant for costs and disbursements incurred under the Certificate. The Second Defendant paid out £22150.65 including substantial disbursements and counsel's fees. I am given to understand that there are procedures available to the Second Defendant which can lead to disallowance of the claim, but the Second Defendant chose not to invoke these procedures. In passing, I express some surprise at that decision. Had the Claimant been a fee-paying client, I cannot conceive that the First Defendant would have dared to render a bill to her. However, the fact that the Second Defendant chose to make the payment is not relevant to the issue before me.
The Claimant obtained public funding for a professional negligence claim against the First Defendant. Its insurer conceded liability, and negotiations took place about the amount of compensation. That, of course, involved not only consideration of the likely award, which the clinical negligence claim might have achieved, but also the assessment of the extent of the loss of the chance to obtain that award. Agreement was eventually reached as evidenced by correspondence which took place in 2007. The insurer agreed to pay the Claimant £ 30000, to indemnify her in respect of costs (and any interest), which she had been ordered to pay to one of the defendants in the claim, and to pay her costs of pursuing the professional negligence claim. £ 30000 represented somewhere between 70% (Claimant's valuation) and 80% (insurer's valuation) of the clinical negligence claim.
One specific matter was excluded from the agreement. The Claimant asked for an indemnity in respect of any costs which the Legal Aid Board and/or the Second Defendant had paid to either Lloyd Jones Associates or the First Defendant, in the event that the Second Defendant was entitled to exercise its statutory charge over the settlement money in respect of those costs. The First Defendant declined to give such an indemnity, and suggested that the statutory charge did not bite in that respect. On being approached by the Claimant, the Second Defendant took the contrary view. The Claimant was stuck in the middle, and she therefore issued the present claim in the Warrington County Court seeking a declaration from the First Defendant that it indemnify her in respect of any liability she might have to the Second Defendant for the costs incurred by Lloyd Jones Associates and/or the First Defendant, and, in the alternative, a declaration against the Second Defendant that the statutory charge did not bite. By order dated 4 February 2009 Deputy District Judge Dawson directed that the issue of whether the statutory charge attached be tried as a preliminary issue. He also directed that the claim be transferred to the High Court in Manchester. I apprehend that he did so on the basis that an issue of principle arose on which there was no direct authority. It was thus that I came to hear the preliminary issue.
In the event that I were to rule that the statutory charge did bite, there would be a further issue to be resolved at a later date between the Claimant and the First Defendant, namely whether the Claimant was entitled to a full or only a partial indemnity.
The issue involves interpretation of section 10(7) Access to Justice Act 1999 (the 1999 Act), which provides:
Except so far as regulations otherwise provide, where services have been funded by the Commission for an individual as part of the Community Legal Service—
(a) sums expended by the Commission in funding the services (except to the extent that they are recovered under section 11), and
(b) other sums payable by the individual by virtue of regulations under this section,
shall constitute a first charge on any property recovered or preserved by him (whether for himself or any other person) in any proceedings or in any compromise or settlement of any dispute in connection with which the services were provided.
It was the 1999 Act which introduced a new regime of public funding. The Second Defendant replaced the Legal Aid Board. The Criminal Defence Service was established. The Community Legal Service was available for certain civil work. Budgets were not open-ended but fixed.
It is relevant to look at the previous history of the statutory charge under what is still often described as “legal aid”. It begins with the Legal Aid and Advice Act 1949. Section 3(4) and (5) provided:
(4) Except so far as regulations otherwise provide, any sums remaining unpaid on account of a person's contribution to the legal aid fund in respect of any proceedings, and, if the total contribution is less than the net liability of that fund on his account, a sum equal to the deficiency shall be a first charge for the benefit of the legal aid fund on any property (wherever situated) which is recovered or preserved for him in the proceedings.
(5) The reference in subsection (4) above to property recovered or preserved for any person shall include his rights under any compromise arrived at to avoid or bring to an end proceedings and any sums recovered by virtue of an order for costs made in his favour in the proceedings.
These provisions were replicated in section 9 of the Legal Aid Act 1974 (The 1974 Act). That Act was in turn replaced by the Legal Aid Act 1988 (The 1988 Act). The wording is very similar but not exactly the same. Section 16(6) and (7) read:
(6) Except so far as regulations otherwise provide–
(a) any sums remaining unpaid on account of a person's contribution in respect of the sums payable by the Board in respect of any proceedings, and
(b) a sum equal to any deficiency by reason of his total contribution being less than the net liability of the Board on his account,
shall be a first charge for the benefit of the Board on any property which is recovered or preserved for him in the proceedings.
(7) For the purposes of subsection (6) above it is immaterial what the nature of the property is and where it is situated and the property within the charge includes the rights of a person under any compromise or settlement arrived at to avoid the proceedings or bring them to an end and any sums recovered by virtue of an order for costs made in his favour in the proceedings (not being sums payable to the Board under...
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P v Local Authority
...were provided”. The languageof “in connection with” is obviously very wide. I was referred to the case of Cassidy v Stephenson[2009] EWHC 1562 (QB) where Holman J held that money recovered from the selement ofprofessional negligence proceedings brought as a result of a failed clinical negl......