Legal Services Commission v Sham Loomba
| Jurisdiction | England & Wales |
| Judge | Mr Justice Cranston |
| Judgment Date | 17 January 2012 |
| Neutral Citation | [2012] EWHC 29 (QB) |
| Docket Number | Case No: TLQ/10/0017 |
| Court | Queen's Bench Division |
| Date | 17 January 2012 |
[2012] EWHC 29 (QB)
Mr Justice Cranston
Case No: TLQ/10/0017
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Jeremy Morgan QC and Rachel Sleeman (instructed by CKFT Solicitors) for the Claimant
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
INTRODUCTION
This case involves three claims listed together as test cases. All three claims concern moneys which the Legal Services Commission ("the Commission") asserts are owing to it by solicitors as a result of legal aid payments to them on account of work being undertaken for clients in civil cases. The Commission contends that the claims are authorised by law. Since it concedes that there is no express legislative power to make the claims, its argument raises some difficult issues of statutory interpretation. If the claims cannot be legislatively justified the Commissions advances other legal bases for them, including restitution. The defendants contend that there is no legislative authorisation for the Commission's actions, and in any event the claims are defeated by various defences. They also submit that the Commission's claims fail for public law reasons including the unfairness with which they have been pursued.
There is no need to traverse the full procedural history of these claims. It is sufficient to explain that the Ulasi and Simon Carter claims began in the County Court. The Ulasi trial had begun in the Central London County Court in September 2010 before HH Judge Paul Collins CBE, but shortly after it had commenced, an adjournment was sought. In granting an adjournment Judge Collins sensibly ordered that because of its character as a test case, it should be transferred to be heard in the High Court along with the Simon Carter claim (which was also pending in the Central London County Court). The Loomba claim was already pending in the High Court. Following transfer of the two county court claims to this court, Wyn Williams J ordered that all three claims be heard together. A number of other claims raising the same issues have been stayed by order or by agreement pending this judgment.
The hearing began on 21 November 2011. For the defendants Mr Susman QC indicated that he did not wish to cross-examine any of the Commission's witnesses. Accordingly I made an order under CPR 32.5(1) dispensing with the requirement of oral evidence. The hearing thus began on the basis of unchallenged evidence and submissions. On the third day of the hearing it was discovered that the Court of Appeal was shortly to give judgment in a test case, addressing the limitation period relevant to this type of claim. Consequently this hearing was adjourned. The Court of Appeal handed down judgment in Legal Services Commission v Henthorn [2011] EWCA Civ 1415 on 30 November 2011. The current hearing was resumed and completed on 7 December 2011.
BACKGROUND
Civil legal aid: an overview
Although now replaced by the Access to Justice Act 1999 ("the 1999 Act") the relevant statute in this case is the Legal Aid Act 1988 ("the 1988 Act"). All the certificates in this case were issued under that Act. The 1988 Act replaced earlier consolidating legislation, the Legal Aid Act 1974. Part II of the 1988 Act established the Legal Aid Board to administer the scheme. Like the earlier legislation the 1988 Act was essentially an enabling Act and much of the substantive legislation was contained in regulations. Relevant in that regard were the Civil Legal Aid (General) Regulations 1989 SI 1989 No 339, as amended ("the 1989 Regulations"). The relevant parts of the 1988 Act and the 1989 Regulations continue to apply in respect of legal aid certificates issued before the coming into force of the 1999 Act. By reason of paragraph 2(1) of schedule 14 to 1999 Act, all rights and property of the Legal Aid Board were transferred to the Legal Services Commission on 1 April 2000. For convenience the term "Commission" is often used in this judgment to cover both the Board and Commission.
Section 4 of the 1988 Act conferred wide powers on the Board, including a wide incidental power in sub-section (1)(b) to do anything:
"(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).
The operation of the legal aid scheme at the relevant time as regards individual clients and practitioners is succinctly summarised by Lord Neuberger MR in his judgment for the Court of Appeal in the Henthorn case [2011] EWCA Civ 1415. Relevant in our case is the position with solicitors.
"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."
The early part of the 1989 Regulations fleshed out the details of the system of legal aid certificates. Revocation and discharge of certificates was dealt with by regulations 74–86. Part IX was entitled "conduct of proceedings". Under regulation 70(1) solicitors were required to give the Commission such information regarding the progress and disposal of proceedings to which a certificate related as may be required. Solicitors had the obligation to report completion of the case under regulation 72.
Part XII of the 1989 Regulations covered costs. It is necessary to return to some aspects below. At this point it is pertinent to note that both the Commission and the court could assess costs. Regulation 105 dealt with the former. In the latest version of regulations 105(2), 105(2A) and 105(3), costs were assessed by the Commission where the solicitor's or counsel's retainer had been determined before proceedings had begun and there had been no subsequent change of representation under the certificate; where proceedings had begun and the total claim for costs did not exceed £2,500; and where proceedings had begun and the total claim for costs exceeded £2,500 and there were special circumstances where a detailed assessment would be against the interest of the client or would increase the amount payable from the fund. Regulation 105(3A) set a time limit for a solicitor to apply for assessment, namely three months from the termination of the retainer (where there had been no proceedings) or from the event giving rise to the duty to carry out an assessment. Regulation 105(10) laid down a sanction where a solicitor failed to comply with the time limits.
"(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."
Assessment of costs by the court was necessary where there had been a judgment; the acceptance of a payment in; or termination of...
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