Legal Services Commission v Henthorn
| Jurisdiction | England & Wales |
| Judge | HIS HONOUR JUDGE ANTHONY THORNTON QC |
| Judgment Date | 04 February 2011 |
| Neutral Citation | [2011] EWHC 258 (QB) |
| Date | 04 February 2011 |
| Court | Queen's Bench Division |
| Docket Number | Case No: HG06X00333 |
[2011] EWHC 258 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Before : His Honour Judge Anthony Thornton Qc
Sitting As A High Court Judge
Case No: HG06X00333
Ms Nicola Rushton(instructed by CKFT, Solicitors) for the Claimant
Miss Geraldine Clark (instructed by The Bar Pro Bono Unit) for the Defendant
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
A. Introduction
In this action, the Legal Services Commission ("LSC") is claiming recovery from Mrs Aisha Henthorn ("AH"), a voluntarily disbarred barrister, of sums it contends that she was overpaid out of the legal aid fund ("the fund") when she was in practice. These overpayments occurred when the LSC made payments on account ("PoA") to AH towards her final entitlement to fees under the LSC PoA scheme. These apparent overpayments had come to light following the detailed assessment of her fees in the relevant cases which had shown that the overall fee that she was entitled to in each of those cases was less than the total of the PoAs that she had received in the same case. These LSC recovery claims, which are called recoupment claims in LSC terminology, are brought under Regulation 100(8) of the Civil Legal Aid (General) Regulations 1989 ("the Regulations") which were made under the Legal Aid Act 1988 ("the Act"). The Regulations require that AH must repay the fund on demand the total overpayment in any relevant case. These claims are also brought as restitutionary claims for the recovery of AH's unjust enrichment arising from the overpayment by the fund of sums that AH was not entitled to.
AH carried out the work in the fifteen cases giving rise to these claims between 1987 and 2000 and the total sum claimed is £109,064.68. The LSC considers that AH was also overpaid a total sum of £242,356.20 in further cases in the same period. These further claims have not been included in these proceedings because none of them has yet been the subject of a detailed assessment of costs by the court and the LSC considers that it has no entitlement to reclaim an overpayment until there has been such an assessment. However, the LSC has reserved its position in relation to these further claims and might pursue them in subsequent proceedings in the light of the judgment in this case.
AH's principal defence to these claims is that the claims under the Regulations are barred by limitation and the restitutionary claims by laches. AH also contends that the LSC has not proved that its entitlement to reclaim the sums in question ever arose. AH also contends the LSC has delayed so long and acted so unreasonably in bringing the claims that they should be stayed as an abuse of process.
B. Background
(1) The LSC
This case has involved a minute examination of the PoA scheme for making interim payments to legal representatives representing assisted persons under the civil legal aid scheme that was applicable in the 1990s under the earlier Legal Aid and Advice Act 1948. Section 1 of that Act stated that the overall purpose of the legal aid scheme was:
"… to establish a framework for the provision of … advice, assistance, mediation and representation which is publicly funded with a view to helping persons who might otherwise be unable to obtain advice, assistance or representation on account of their means."
The Act removed the management of the legal aid scheme from the Law Society and placed into the hands of the Legal Aid Board ("LAB") whose function was to fund legal aid services out of the legal aid fund also established by the Act. The previous system for determining who qualified for legal aid representation and the remuneration for solicitors and counsel undertaking that representation remained largely unchanged. However, the Regulations established for the first time a PoA scheme which allowed an assisted person's legal representatives to receive partial remuneration for their work prior to the conclusion of the case and the final determination of their entitlement to payment 1. This followed repeated complaints from both branches of the legal profession about the lengthy periods of delay in being paid that were invariably experienced because no payment entitlement arose until the conclusion of any particular case.
The Legal Aid Board struggled through the 1990s to administer a system which had become so large and unwieldy that legal aid expenditure had got out of control and, moreover, the management of the system was being strangled by its own
paperwork. These difficulties were referred to in the White Paper Striking the Balance – The future of legal aid in England and Wales (1996)2 which explained that they were caused, in part by a lack of appropriate mechanisms to control and minimise inefficient working practices of legal representatives and their excessive remuneration. Relevant to the PoA scheme were these comments:"The doubling in five years in the cost of legal aid, despite continuing efforts to contain it, demonstrates that the current controls are insufficient. … Controlling costs by limiting lawyers' fees has not proved particularly effective in the past. In fact, in some ways the current scheme gives the highest rewards to lawyers who do more work than is necessary. … It is therefore important not only that legal aid is paid for in a way that encourages efficiency, but also that robust mechanisms are applied to ensure that quality is maintained. … the current arrangements are [not] ideal for the providers of legal services themselves. They do not know how much legally-aided work they will get or, because most fees are decided and paid after the event, how much they will be paid or when." 3
The White Paper initially led to the introduction of more efficient computerised record-keeping systems. These did not achieve the efficiency savings that had been hoped for. As a result, in 2000, the independent LAB was replaced by the LSC which was established as an executive non-departmental public body. This change was coupled with a fundamental change in the legal aid system that involved the introduction of the Community Legal Service and a system whereby service providers contracted with the LSC for the entitlement to provide publicly funded legal services. Further changes occurred in the 2000s with the introduction of tendering and franchising and, for civil representation, a significant reduction in the areas of work eligible for legal representation. Notwithstanding these changes, legal aid expenditure continued to rise so that, by the year 2003 – 2004, the LSC spent £2.1 billion on all legal aid services. Although the LSC managed to maintain its expenditure on legal aid at this figure for the ensuing five years, in 2008 – 2009 its annual accounts were qualified. More recently, the Government has announced that the LSC is to be converted from a non-departmental public body of the Ministry of Justice into an executive agency within the Ministry and that there is to be a severe curtailing of the legal aid budget. These changes have converted the legal aid scheme from being a demand-led scheme to being a capped and confined provider of state-funded legal services for those with limited financial resources.
Thus, this case relates to a period in the history of legal aid and its administration that has now disappeared since the relevant events occurred between ten and twenty years ago and the relevant legal aid system has been replaced by new systems which are already in a state of rapid transformation. However, this case is not a single surviving relic of an historic legal aid system but is one of many surviving legacy claims from the system administered by the LAB in the 1990s. These aged claims for overpaid PoAs to solicitors and barristers, have slowly been dealt with over the last few years and are now the subject of two ad hoc Guidance Notes issued by,
respectively, the Law Society and the Bar Council 4. This case is regarded by the LSC as something of a test case in relation to whether these repayment claims may only be brought as statutory claims or may also be brought as restitutionary claims, what must be established to make good either type of claim, what available defences may be advanced by the legal practitioner involved and when, if at all, these repayment claims become statute-barred or barred by laches.(2) AH and her practice
AH is now aged seventy two and is a Singaporean of Malay descent by birth. She has lived in England for many years and joined the Middle Temple as a student member in 1978 when she was forty years old. She was called in July 1981, completed her chancery and tax pupillage in 1982 and then practised for eleven years in common law chambers in King's Bench Walk, Inner Temple, London. In the early years of her practice, she combined this with a law lectureship. In 1993, she was able to buy office premises in Watford and she set up her own chambers, Watford Chambers, in Mildred Avenue, Watford with the assistance of two clerks from her existing chambers. Within a short time, these two clerks had left and were replaced by senior clerk and a fees clerk, neither of whom had any previous experience of working in chambers or had received or obtained any training in any aspect of chambers administration or fees collection. AH remained Head of Chambers until she retired from practice and took voluntary disbarment in 2002 although, for at least four years prior to her retirement and disbarment this role was a purely non-active titular one.
AH's practice is best described as having been an unusual amalgam of a niche practice...
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