Hanlon v The Law Society

CourtHouse of Lords
JudgeLord Edmund-Davies, Lord Simon of Glaisdale, Lord Fraser of Tullybelton, Lord Scarman, Lord Lowry
Judgment Date01 May 1980
JurisdictionEngland & Wales

[1980] UKHL J0501-2

House of Lords

Lord Edmund-Davies

Lord Simon of Glaisdale

Lord Fraser of Tullybelton

Lord Scarman

Lord Lowry

Hanlon
(Appellant)
and
The Law Society
(Respondents)
Lord Edmund-Davies

My Lords,

1

This appeal raises issues of considerable public importance, and your Lordships' House has fortunately had the counsel of my noble and learned friend, Lord Simon of Glaisdale, in considering them. In the light of his great experience of the type of topics involved, he has prepared a speech to which I desire to add nothing, and this particularly as it has been complemented by the speeches of my noble and learned friends, Lord Scarman and Lord Lowry. Not only do all these command my respectful concurrence, but they are in strict accordance with the conclusions arrived at by Reeve J. at first instance in a judgment which was in my respectful opinion as right as it was clear.

2

Reeve J. had not, however, been asked to decide whether the respondents to this appeal have any discretion in the manner of enforcing their charge under section 9(6) of the Legal Aid Act 1974, nor, indeed, was the point specifically raised in Mrs. Hanlon's notice of appeal to the Court of Appeal. But it was there dealt with by all three members, and, in common with my noble and learned friends, I would respectfully dispose of it in the same liberal manner as that favoured by Lord Denning, Master of the Rolls.

3

But, my Lords, in thus concurring in the dismissal of the appeal, I urge as strongly as I can that early attention be directed to the concluding observations of my noble and learned friend, Lord Lowry, in relation to the difficult problem thrown up by this appeal. We live in a busy world and the demands made upon the legislature are endless, but the present unsatisfactory state of affairs could, if permitted to continue indefinitely, substantially erode our present pride in the legal aid system of this country.

Lord Simon of Glaisdale

My Lords,

4

By an order of the Court of Appeal of the 17th October 1977 the appellant's former husband after a divorce between them was ordered under section 24(1) ( a) of the Matrimonial Causes Act 1973 to transfer to the appellant their former matrimonial home, 106 Trinity Lane, Waltham Cross, the legal title to which had theretofore vested in him and in which (the Court of Appeal assumed) both parties had some unquantified beneficial interest. Both parties were in receipt of legal aid. The main questions in this appeal are, first, whether (and if so to what extent) the Law Society (the respondent in this appeal) has a legal charge on the property by virtue of section 9(6) of the Legal Aid Act 1974 and the regulations made thereunder in respect of costs incurred on the appellant's behalf in the proceedings in which she was legally aided; and, secondly, if the respondent has such a charge, whether the charge can be transferred to a replacement home.

5

The opening words of section 24 of the Matrimonial Causes Act 1973 (a consolidation Act) read:

"24.—(1) On granting a decree of divorce … or at any time thereafter … , the court may make any one or more of the following orders, that is to say—

( a) an order that a party to the marriage shall transfer to the other party … such property as may be so specified, being property to which the firstmentioned party is entitled, either in possession or reversion;

…."

6

Section 9(6) of the Legal Aid Act 1974 (also a consolidation Act) reads:

"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."

7

Regulation 18 of the Legal Aid (General) Regulations 1971 ( S.I. 1971/62 (L.1)), made under an Act consolidated in the 1974 Act, provides machinery whereby the charge imposed by section 9(6) of the Legal Aid Act 1974 and its predecessor might attach and be enforced. Paragraph (10) of Regulation 18 stated:

"The provisions of this Regulation shall not apply to—

….

( c) any property affected by an order … made under sections 4( a) . . of the Matrimonial Proceedings and Property Act 1970;

….".

8

Section 4( a) of the Matrimonial Proceedings and Property Act 1970 is now section 24(1)( a) of the Matrimonial proceedings Act 1973. Such exemption of the property in question from the charge could be made by virtue of the opening words of what is now section 9(6) of the Legal Aid Act 1974 ("Except so far as regulations otherwise provide").

9

Regulation 18(10) ( c) of 1971 was amended by the Legal Aid (General) (Amendment No. 2) Regulations 1976 ( S.I. 1976/628) to read as follows:

"( c) the first £2,500 of any money, or the value of any property, recovered or preserved by virtue of an order made … under the provisions of—

(i) section … 24 … of the Matrimonial Causes Act 1973

….".

10

(This provision was re-enacted in the Legal Aid (General) (Amendment) Regulations 1977 ( S.I. 1977/1293), the now current provision.) The effect of this amendment is that now, if section 9(6) of the Legal Aid Act 1974 applies to a property ordered to be transferred under section 24(1) ( a) of the Matrimonial Causes Act 1973, the first £2,500, of the value of any property recovered or preserved is exempt from the charge, but no longer the whole of the property.

11

The Facts

12

The domestic, proprietary and financial background which led to the Court of Appeal's order of the 17th October 1977 is stated in the judgment of Ormrod L.J. reported at [1978] 1 W.L.R. 592. The matter is brought up to date by the judgments of Reeve J. and of the members of the Court of Appeal in the instant proceedings. For the purposes of my submissions to your Lordships it is sufficient to summarise as follows.

13

The house has throughout been assumed to be worth about £14,000 subject to a mortgage of nearly £4,000. (It may well be worth more now, but presumably the cost of any suitable replacement home would have increased proportionately.)

14

On the 26th July 1971 the appellant was granted an emergency legal aid certificate "To prosecute a suit for divorce and to apply for an injunction restraining the husband of the assisted person from entering the matrimonial home or otherwise molesting her." On the 19th January 1972 a full certificate was granted to her "To prosecute a suit for divorce and to continue proceedings under the Married Women's Property Act 1882 section 17 and to apply for an injunction." In 1974 that certificate was enlarged to enable her to defend a petition for divorce filed by her husband. As a condition of the certificate of the 19th January 1972 (see section 9 of the 1974 Act) the appellant made a contribution of £115 to the legal aid fund. No other relevant certificate was granted to her, nor has any other contribution been paid by her.

15

The appellant's original Petition for divorce included a prayer "That the court may order the transfer of the property known as and situate at 106, Trinity Lane, Waltham Cross in the County of Hertford at present owned by the respondent to the petitioner …". Her husband's Answer to that Petition included a prayer "that the court may order the transfer to the respondent of any interest which the petitioner may be held to own in … 106, Trinity Lane …".

16

The marriage was ultimately dissolved on the 15th May 1974 on a Supplemental Petition filed by the husband based on two years' separation. In addition to the divorce proceedings proper and those for an injunction, there were interlocutory proceedings relating to access and child maintenance: in all of these the appellant was legally aided by virtue of the full certificate granted to her, as interpreted by the Law Society.

17

On the 6th February 1976 the appellant, still held to be legally aided by virtue of the same certificate as so interpreted, made application under sections 23 and 24 of the Matrimonial Causes Act 1973 for periodical payments, a lump sum and transfer to herself of the matrimonial home. Mr. Registrar Kenworthy ordered the husband to transfer the house to the appellant subject to the existing mortgage, and to make periodical payments of £3 per week in respect of each of the two youngest of the four children of the marriage; the appellant to pay to the husband a lump sum of £5,000 (in effect buying out what was assumed to be his beneficial interest in the house). It was apparently assumed generally that the appellant could raise the necessary sum; but it was overlooked that she would also have to discharge the existing mortgage and obtain a new mortgage, which would be on more onerous terms. In the upshot the appellant was unable to raise the necessary money; moreover, the house was in need of repair, which was beyond the appellant's financial resources. If the appellant had been able to secure the house in February 1976 the respondent would have had no charge upon it for any legal costs incurred on her behalf, the relevant Regulation at that time being that of 1971.

18

Since the appellant was unable to raise the £5,000 which was the quid pro quo for the transfer of the house, she appealed successfully against the order of Mr. Registrar Kenworthy to Rees J., who ( inter alia) increased the periodical payments to £7 for each of the two youngest children; and again successfully to the Court of Appeal against the Order of Rees J.; resulting in the Court of Appeal's Order of the 17th October 1977, whereby the house was to be transferred to the appellant without her paying anything in return, though the periodical payments for the children were reduced to a nominal sum. By this date, however, the 1971 Regulation had...

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