Milton Keynes NHS Foundation Trust v Sally Anne Hyde (Respondent/Claimant)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Soole |
| Judgment Date | 20 January 2016 |
| Neutral Citation | [2016] EWHC 72 (QB) |
| Docket Number | Case No: QB/2015/0336 |
| Court | Queen's Bench Division |
| Date | 20 January 2016 |
[2016] EWHC 72 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Hon Mr Justice Soole
Case No: QB/2015/0336
Mr Vikram Sachdeva QC (instructed by Acumension Ltd) for the Appellant
Mr Roger Mallalieu (instructed by Ashton KCJ) for the Respondent
Hearing dates: 15 th and 16 th December 2015
This is an appeal by the Defendant ('the Trust') against the decision of the costs judge Master Rowley dated 1 July 2015 that the Claimant ('Mrs Hyde') was entitled to recover the costs of her clinical negligence action against the Trust via a Conditional Fee Agreement ('CFA') with her solicitors Ashton KCJ ('Ashton'). Master Rowley rejected the Trust's submission that the CFA was unenforceable in circumstances where a Community Legal Services ('CLS') funding certificate for the action had never been discharged by CLS.
The claim arose out of Mrs Hyde's emergency admission to the Trust's hospital in February 2008. A public funding certificate was first issued on 10 July 2008. Mrs Hyde thereafter changed solicitors twice and the certificate was transferred to Ashton in October 2009. The Trust admitted liability in July 2012. In August 2012 the Trust made a settlement offer of £150,000. This was considered inadequate and so it was necessary to prepare for trial on quantum. Judgment for damages to be assessed was entered on 11 September 2012. On 12 October 2012 the Court granted leave to rely on the evidence of 5 experts.
The certificate was in the usual way subject to costs limitations. For the purpose of its work on quantum Ashton sought an increase from the existing costs limitation of £25,000, pursuant to 'Stage 5 (Quantum Investigations)' of the clinical negligence funding check list. In early November 2012 the LSC increased the limitation by £18,000 to cover the cost of the 5 experts.
By letter of 8 November 2012 Ashton advised LSC that the increase was insufficient to bring the case to a conclusion. The LSC replied (20 November) that the figure was based on a 50% apportionment of the maximum (£36,000) which it would normally authorise under the 'Stage 5' checklist for 8–10 experts and there was no sufficient or compelling reason to show that this was inadequate. In reply (20 December) Ashton reiterated its view that previous solicitors had spent £14,000 to no effect; and said that there would be sufficient funds if that sum could be 'wiped or allowed for'. On 1 February 2013 the LSC replied that it could not do that nor were there any sufficient grounds to authorise a retrospective increase in cost limitation.
Ashton thereafter undertook a case review which concluded that the cost of the work which had been done by the three firms of solicitors was 'approaching' the £43,000 limit and that public funding was therefore insufficient to complete the case. Having undertaken a risk review they were willing to proceed on the basis of a CFA. On about 13 March 2013 they advised Mrs Hyde accordingly. On 25 March the CFA was entered, in terms expressed to include 'the work that has been done since our initial instructions of 20 th March 2013'. Ashton concluded a CFA with Counsel on 20 March, Counsel having signed on 15 March. By Notice of Funding (Form N251) dated 26 March Ashton advised the Trust of its CFA and the associated ATE policy. On 1 April the legislative changes in respect of recovery of CFA success fees and ATE premiums came into force. In November 2013 the claim was settled at the Trust's increased figure of £325,000 excluding CRU.
The issue arises from the fact that Ashton never applied for or obtained a discharge of the funding certificate. In consequence the Trust contends that in contravention of sections 10(1) and 22(2) of the Access to Justice Act 1999 ('the 1999 Act') the CFA was a private retainer running concurrently with public funding and entirely unenforceable. The Trust accepts that the position would have been saved by a provision (I am told, commonplace) in the CFA that 'no work is covered under this agreement until after discharge of the legal aid certificate'; but this CFA contained no such term.
Having reviewed the statutory material and authorities Master Rowley rejected the Trust's arguments on this essential basis :
' In my judgment, where a party has exhausted the costs that can be claimed under a certificate so that it is 'spent', they can in principle establish a discharge by conduct in the same manner as certificates in which all of the work up to a limitation of scope has been carried out. The effect of that discharge is to end the services funded by the LSC and enable a private retainer to fund the remainder of the proceedings': para.30.
He also rejected the Trust's further argument that, in any event, it was not reasonable for Mrs Hyde to change from public funding to a CFA: paras. 41–45. There is no appeal from that decision.
The starting point must be the provisions of ss.10(1) and 22(2) of the 1999 Act. Section 10(1) provides that: 'An individual for whom services are funded by the Commission as part of the Community Legal Service shall not be required to make any payment in respect of the services except where regulations provide.' Section 22(2) provides that 'A person who provides services funded by the Commission as part of the Community Legal Service or Criminal Defence Service shall not take any payment in respect of the services apart from —
(a) that made by way of that funding, and
(b) any authorised by the Commission to be taken.'
The mischief to which these provisions are directed can be drawn from Merrick v. Law Society [2007] EWHC 2997 (Admin) which was based on similar provision in ss. 15(6) and 31(3) of the predecessor Legal Aid Act 1988. Mr Merrick was subject to disciplinary proceedings for transferring £10,000 from client to office account at a time when the client enjoyed legal aid. The essence of the charge was that he was guilty of 'topping up' his remuneration from public funds: per Gross J at para. 3. In upholding the finding of breach and the sanctions the Court observed that the Act '…provides for the remuneration of solicitors to be dealt with through or via the LSC. There is no question of any payment arrangements being entered into directly between the client and the solicitor' (para.33); that it was a 'fundamental rule…that solicitors, acting for legally aided clients, are not entitled to look to that client for payment.' (para.54); and that the client's consent was irrelevant (para.48). The Court also noted the statement in the Legal Aid Handbook 1998/99 which, having dealt with topping-up added 'Solicitors and counsel may, of course, charge privately for work carried out before the issue and/or after the discharge of a legal aid certificate.' The Trust points to the significance of the certificate.
The Court in Merrick also referred to the decision in Littaur v. Steggles Palmer [1986] 1 WLR 287 where the Court of Appeal noted the potential forms of abuse of legal aid which such provisions were designed to prevent. These include the case where 'The hypothetical solicitor might seek to be paid more by some device than he will receive, or has received, from the legal aid fund for the work which he did under the certificate.' (per Ackner LJ at p.293F-G).
On this basis the Trust contends for a general principle that any private retainer entered into at a time when the public funding certificate has not been discharged by the LSC is unenforceable; and hence cannot rise to a liability for costs on the paying party. The Trust acknowledges two exceptions to such a principle but submits that the categories of exception are closed.
The first is where the scope of the work authorised by the certificate has been completed. In that case the certificate is treated as 'spent' without the need for a formal discharge of the certificate. Thus in Turner v. Plasplugs Ltd [1996] 2 All ER 939 the certificate did not extend to the issue of proceedings but such further work was carried out for the client on a private basis. The other side prepared and served a defence and when the action was discontinued sought their costs thereof. Mr Turner failed in his attempt to rely upon the undischarged certificate in order to obtain costs protection under s.17 of the Legal Aid Act 1988. Sir Thomas Bingham MR stated: 'There was strictly no need to discharge the certificate. It was spent. Everything it authorised had been done.' (p.943c; see also p.945h). In other words Mr Turner ceased to be an 'assisted' person from the date when the work authorised by the certificate had been completed.
I observe that in such a case there was no question of the solicitor being guilty of abuse of the legal aid system. He had completed his work under the certificate. On the contrary it was the client who was seeking to take advantage of the absence of formal discharge in order to obtain costs protection.
Likewise in Littaur the solicitors had completed the work which was authorised under the certificate. There was again no formal discharge of the certificate. The solicitor carried out further work on a private basis. The client unsuccessfully sought to take advantage of the undischarged certificate in order to defeat his solicitor's claim for fees. Ackner LJ stated that this argument '…suggests the fallacious proposition that someone cannot be pronounced dead until it is established that he or she has been buried.' (p.292H).
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