Patel v Legal Services Commission
| Jurisdiction | England & Wales |
| Judgment Date | 02 April 2004 |
| Neutral Citation | [2004] EWHC 743 (Ch) |
| Docket Number | Case No:HC03C02152 |
| Court | Chancery Division |
| Date | 02 April 2004 |
[2004] EWHC 743 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London WC2A 2LL
Mr R Sheldon Qc Sitting as a Deputy Judge of the High Court
Case No:HC03C02152
Simon Williams (instructed by William Sturges) for the claimant
Katharine Scott (instructed by the Legal Services Commission) for the defendant
Hearing date: 24 March 2004
I direct 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.
Richard Sheldon QC
Mr Richard Sheldon QC (sitting as a Deputy Judge of the High Court):
In this CPR Part 8 claim, the claimant ("Mr Patel") seeks a declaration that the defendant, the Legal Services Commission (formerly the Legal Aid Board) ("the LSC"), is not entitled to a statutory charge pursuant to section 16(6) of the Legal Services Act 1988 on the property at 51 Garrick Road, Greenford, Middlesex UB6 9HU ("the property") in relation to assistance provided on behalf of Mr Patel under Legal Aid Certificate Number 01019109298 ("the certificate").
The facts
Mr Patel, who owns the property, was granted legal aid to pursue proceedings against his neighbours, Mr and Mrs Mandalia ("the Mandalias"), in connection with a boundary dispute. The dispute concerned a sliver of land, at its widest no more than seven inches wide and tapering to nothing, which formed a very small part of the rear garden of the property. The Mandalias had built an extension which had encroached into part of this strip of land. There was also a dispute in connection with an even smaller strip in the front garden which at its widest was 1 1/2 inches wide.
With the benefit of legal aid, Mr Patel commenced proceedings on 22 August 1996 in the Brentford County Court seeking declarations as to the boundary between the two properties and damages for trespass and assault ("the proceedings"). By the time of the trial, which commenced on 31 August 1999, the Mandalias had conceded that Mr Patel was correct in relation to the strip in the front garden. I say no more about this strip which was minimal and there is no suggestion that it had any value or that its recovery enhanced the value of the property.
On the second day of the trial (1 September 1999), the Mandalias conceded that the boundary line in the back garden should be as claimed by Mr Patel. However, HH Judge Green QC declined to order the removal of the encroaching extension. Instead he awarded Mr Patel a nominal £10 for the loss of the few inches of land on which it stood (Mr Patel's expert having advised that it had no value). As regards the other damages claims, HH Judge Green QC awarded Mr Patel £140 special damages, £850 for the assault and £2,000 for distress and inconvenience, a total of £3,000. Costs were awarded to Mr Patel but, since the Mandalias were also legally aided, he made the order subject to an assessment of how much it was reasonable for them to pay pursuant to section 17 of the Legal Aid Act 1988. He then went on to conduct that assessment himself. The Mandalias appealed that part of the order which related to the assessment. The appeal (at which Mr Patel, with the benefit of legal aid, was represented) was heard by the Court of Appeal on 20 June 2000 and was successful. The assessment was remitted back to the Brentford County Court for a rehearing. For reasons which I need not go into, that rehearing never took place.
The certificate, as amended from time to time, permitted costs to be incurred on behalf of Mr Patel up to a maximum in total of £38,500 excluding VAT. The total including VAT is £45,237.
The issues
Section 16(6) of the Legal Aid Act 1988 provides:
"Except so far as regulations provide
(a) any sums remaining unpaid on account of a person's contribution in respect of 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 …"
It is common ground that the introductory words to section 16(6) ("Except so far as regulations provide") have no application in this case.
Ms Scott, who appeared for the LSC, contends that the statutory charge conferred by section 16(6) attaches to the property for the amount of £45,237. The phrase "any property which is recovered or preserved for [the assisted person] in the proceedings" is said by the LSC to equate to the value to the assisted person of having taken the proceedings. The LSC also contends that in any event Mr Patel is estopped, by reason of certain representations said to have been made on his behalf, from asserting that the value of the land that he recovered or preserved in the proceedings has a nominal value.
The scope of the statutory charge
The case of Mr Patel, who was represented by Mr Williams, was that the statutory charge conferred by section 16(6) only attaches to property which has been recovered or preserved if it has been in issue in the proceedings. He accepts that the statutory charge bites on the damages awarded to Mr Patel by HH Judge Green QC. But as regards the property, he says that only the sliver of land was in issue in the proceedings. Whilst the statutory charge theoretically bites on this strip, the evidence of his expert was that its value was nil and, according to the same expert, its retention has not added any value to the property.
Mr Williams relied on the speech of Lord Simon in Hanlon v The Law Society [1981] AC 124 where he stated at p 180G —181B:
" …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 construction 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."
To similar effect, Lord Scarman said (at p 187G): "A person recovers or preserves in legal proceedings only what is in issue between the parties: and one discovers what is in issue by looking to the pleadings and the evidence,"
Applying these passages, it is said on behalf of Mr Patel that the property (other than the sliver of land) was never in issue and that this is apparent from looking at the pleadings, the judgment and order in the proceedings.
In the face of these contentions, Ms Scott submitted on behalf of the LSC that:
(a) The term "recovered" in section 16(6) of the LAA can apply to property, whose beneficial title was not in issue in the proceedings; Curling v Law Society [1985] 1 WLR 470; Parkes v Legal Aid Board [1997] 1 WLR 1547.
(b) Where the effect of a dispute is to lock a party's interest in the land away from him, and this interest is unlocked as a result of the proceedings, the statutory charge attaches to the whole of the land; see Curling.
(c) The purpose of the statutory charge is to give the defendant a security if the funded party has gained from the proceedings; see Lord Lowry's speech in Hanlon at page 809 and Davies v Eli Lilly [1987] 1 WLR 1136 at page 1140. "The statutory charge is not limited to property recovered by the assisted person, but extends to property recovered for his benefit" (per Ormrod LJ in Manley v The Law Society [1981] 1 WLR 335 at p 351).
The LSC point to letters written by Mr Patel's solicitors to the LSC to justify the continuation of legal aid (which I consider in more detail in the next section of this judgment) to the effect that the existence of the dispute effectively prevented Mr Patel from selling his property. The LSC contend that the effect of the proceedings (ie the resolution of the boundary dispute) for Mr Patel was to unlock his interest in the property. It is contended that, following Curling, the whole of the property became property that has been recovered for Mr Patel in the proceedings.
The short answer to these contentions by the LSC, is that, in the cases relied upon, the issues the proceedings in question clearly related to the property over which the statutory charge was said to attach. Thus, in Curling, there was no dispute about the wife's interest in the matrimonial home, but the proceedings were necessary in order to "unlock" that interest by a sale. The proceedings were in fact compromised by a consent order under which the husband agreed to purchase her interest. The Court of Appeal held that the statutory charge attached to the proceeds of sale of the wife's interest. Oliver LJ, having referred to the passage of Lord Simon in Hanlon cited above, stated at page 483:
"Where, even though the title to property may not be in issue, the proceedings are necessary in order to reduce...
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