Parkes v Legal Aid Board
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE BUTLER-SLOSS,LORD JUSTICE WAITE |
| Judgment Date | 16 February 1996 |
| Judgment citation (vLex) | [1996] EWCA Civ J0216-1 |
| Docket Number | FAFMF 95/1238/F |
| Court | Court of Appeal (Civil Division) |
| Date | 16 February 1996 |
[1996] EWCA Civ J0216-1
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
FAMILY DIVISION
(Mr. Justice Thorpe)
Before: Lord Justice Butler-Sloss Lord Justice Waite
FAFMF 95/1238/F
MR. JOHN ROBSON (Instructed by Messrs Churchers, Lee-on-the-Solent, Hampshire, PO13 9DD) appeared on behalf of the Appellant
MR. CHARLES UTLEY (Instructed by Colin Stutt, Legal Aid Board, Head Office, 85 Gray's Inn Road, London, WC1N 8AA) appeared on behalf of the Respondent
I will ask Waite LJ to give the first judgment.
The appellant is the co-owner, jointly with the man who was formerly her partner in an unmarried relationship, of a property which was transferred into their joint names and in which they lived together until he left the house when their relationship ended shortly after the birth of their child. After his departure he sought a sale of the former joint home with vacant possession, but she objected and wished to remain in occupation. When he brought proceedings against her for an order for sale of the property and distribution of the net proceeds she obtained legal aid to defend them. The proceedings were compromised at the door of the court, on terms that upon her undertaking full responsibility for the mortgage payments she would be allowed to remain in occupation with the child until the child's 17th birthday, or her own death or that of the child, or her marriage or cohabitation with another partner, whichever of those events should first happen. Upon the occurrence of the relevant event, the house would be sold and the net proceeds would be divided equally between the co-owners. The consent order embodying those terms stated that there should be no order as to costs.
Following the conclusion of that litigation, the Legal Aid Board claimed a charge on the appellant's beneficial interest in the property to secure repayment to the Board of the costs that had been incurred on her behalf. In this current action she claims a declaration against the Board that the charge did not apply. That declaration was refused by Thorpe J. on 13 May 1994. There had been two issues before him. The first was whether (as the Legal Aid Board contended) the beneficial interests had been in contest in the original proceedings or (as the appellant contended) were undisputed; the second was whether the right she had obtained under the compromise to force a postponement of sale and to remain in occupation was sufficient (as the Board contended) or insufficient (as she contended) to bring the property within the definition in the relevant provisions of the Legal Aid Act of property recovered or preserved in the proceedings. The judge held, in the appellant's favour on the first question, that there had been no contest between the co-owners as to the extent of their beneficial interests; but on the second question he held, favourably to the Board, that the rights of exclusive possession she had acquired or retained under the compromise brought the property within the charge. In this court she now appeals against the latter holding, and the Board (by Respondent's notice) cross-appeals against the former.
The Law
Section 16 of the Legal Aid Act 1988 provides, so far as relevant, that:
"(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….."
In Hanlon v Law Society [1981] AC 124 the House of Lords was concerned with a case where the legal title to a matrimonial home was vested in the husband alone. The wife asserted, and the husband disputed, that she had a beneficial interest in the property. Without prejudice to that issue, each side claimed a transfer of property order in respect of the other's interest under the Matrimonial Causes Act 1973. The upshot of the proceedings was an order (on appeal) that the husband should transfer the property to the wife. An issue later arose under the equivalent of Section 16 when the legal aid authorities claimed a charge on the property for the wife's costs. That claim was upheld in the House of Lords on the ground that the charge attaches to any property that has been in issue between the parties; that the whole beneficial interest had been in contest —either as a matter of established right on ordinary equitable principles or as the subject matter of a property transfer claim —and that accordingly the true view of the case was that the house became property recovered by the wife to the extent of any interest in it of the husband and property preserved to the extent of any interest of her own. That reasoning was expressed thus by Lord Simon of Glaisdale at page 180:
"… property has been recovered or preserved if it has been in issue in the proceedings —recovered by the claimant if it has been the subject of a successful claim, preserved to the respondent if the claim fails. In either case it is a question of fact, not of theoretical "risk." In property adjustment proceedings, in my view, it is only property the ownership or transfer of which has been in issue which has been "recovered or preserved" so as to be the subject of a legal aid charge. What has been in issue is to be collected as a matter of fact from pleadings, evidence, judgment and/or order. I can see no reason for extending the words to items of property the ownership or possession of which has never been questioned.
I think this interpretation also accords with the structure of the legal aid scheme. Items of property the ownership of which is not questioned and which are not the subject of dispute fall (subject to disregards) to be taken into account for the initial contribution from the legally-aided litigant. It would seem to be contrary to the general scheme to take them into account again for the purpose of the legal aid charge.
Although no doubt the subject matter in part determined the change of wording of regulation 18(10)(c) in 1976, that change also marginally supports the construction which I venture to favour. The 1971 regulation referred to "any property affected by an order." These are the very words used by counsel for the respondent as one of the tests for "property recovered or preserved." But in the 1976 amendment these words disappear.
If therefore it had been conceded that the appellant had a beneficial half-share of the house, I would presume to agree with Sir John Arnold P. that it was only the husband's beneficial half-share which was "recovered"; and I would hold consonantly that only if it was disputed that the appellant had or should retain a beneficial half-share in the house would she have "preserved" her beneficial half-share.
But though I therefore respectfully agree with Sir John Arnold P.'s general approach, I venture to differ on its application to the facts of the instant case. What is crucial, to my mind, is that at the very outset, in the original pleadings, each spouse was claiming the transfer of the other's interest in the house. I cannot find that the husband's claim was ever withdrawn. On scrutiny of the evidence it is apparent that there never was any real agreement that the appellant had a beneficial half—or any share in the house: it was at most a hypothesis on which various contingent financial causes could be canvassed. This conclusion involves that the house was property which was recovered by the appellant (the husband's interest) or preserved to her (her own interest)."
The Section was considered, again in the context of a matrimonial home, by this court in Curling v The Law Society [1985] 1 WLR 470. In that case the house was in the joint names of husband and wife. The husband wanted to remain in occupation and resist a sale, and also to exclude the wife from the house. The wife wanted the house sold, so that she could buy a new home out of the proceeds. The proceedings were settled by a consent order by which the husband bought out the wife's interest in the matrimonial home for £15,000 —representing the approximate value of her (admitted) half share in the beneficial interest. In subsequent proceedings the wife challenged a claim by the legal aid authorities to a charge on her £15,000 payment on the ground that since it represented no more than payment for her admitted half interest it constituted property neither recovered nor preserved but only the price of an asset whose ownership had never been in dispute. It was held that even though the beneficial title to the property had not been in issue, the wife had "recovered" property within the terms of the Section because she achieved an immediate or accelerated right to her share of the proceeds of sale under the trust for sale to which the house was subject. Neill J, who was a member of the court, said at page 477:
"What then was in issue in the divorce proceedings apart from the question of the custody of the children? It was submitted on behalf of the Law Society that the husband...
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