Legal Services Commission v Rasool

On 2nd March 1993 the respondent, Mohammed Rasool, was granted a legal aid certificate to be represented as plaintiff in an action for negligence and/or breach of contract. The proceedings were commenced and were defended. On 12th May 1999 the Legal Aid Board decided that he had failed to provide information or documents when requested to do so by the Board and his certificate was revoked under regulation 79 of the Civil Legal Aid (General) Regulations 1989, as amended (“the Regulations”). The requisite notices were served on him and on the solicitors representing him. On 30th June 1999 his appeal against revocation was dismissed. On 19th December 2001 the court taxed the costs incurred under his certificate in the sum of £17,333.70. On 21st January 2002 the solicitors who had represented him claimed payment of those taxed costs and they were duly paid by the Legal Aid Board on 26th April 2002. On the same day the Board sent a letter of demand to the respondent to recover those costs. It was, however, not until 14th March 2006 that the appellant, the successor to the Legal Aid Board, issued its claim for the “monies owed in respect of a legal aid certificate”.

Was the appellant’s claim statute-barred under section 9 of the Limitation Act 1980? That depends upon whether time began to run from the date of revocation by the Legal Aid Certificate on 12 May 1999 in which event the claim is barred or from the date of the assessment of the costs on 19 December 2001 in which event time will not have expired. On 21st December 2006 Deputy Circuit Judge Taylor sitting in the Halifax County Court held that the claim was statute-barred. He dismissed the claim but gave leave to appeal because the issue could be a matter of significance to more than the present parties – indeed we were told, I confess to my surprise, that large amounts of money have not been collected in many cases where certificates have been revoked.

The time limit for actions for sums recoverable by statute is prescribed by section 9 of the Limitation Act 1980 as follows:

“(1)

An action to recover any sum recoverable by virtue of any enactment shall not be brought after the expiration of six years from the date on which the case of action accrued.”

It is common ground that this is an action to recover a sum recoverable by virtue of an enactment, namely the Legal Aid Act 1988 and the Regulations made pursuant to it.

The Legal Aid Act 1988 (“the Act”) is a successor to the Legal Aid Act 1948. Its purpose is neatly expressed in section 1 and, as one would expect from one of the pinnacles of the social welfare reforms enacted at the end of that decade, this was an Act:

“to establish a framework for the provision … of advice, assistance 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.”

It is, therefore, a system of Government funding for those who cannot afford to pay for that legal advice, assistance and representation.

The Legal Aid Board was established to secure that those services are available in accordance with the Act. The Board was required by section 6 of the Act to establish and maintain a separate Legal Aid Fund, out of which fund there was to be paid, pursuant to section 6(1)(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 or representation.”

This demonstrated the Board’s responsibility for paying the solicitor’s proper bills. The other fundamental rule is expressed in section 15:

“(6)

Except in so far as he is required under section 16 to make a contribution, a legally assisted person shall not be required to make any payment in respect of representation under this Part and it shall be for the Board to pay his legal representative.

(7)

The Board’s obligation is under subsection (6) above is –

(a)

in the case of representation provided in pursuance of a contract between the Board and the legally assisted person’s legal representative to make such payments as are due under the contract; and

(b)

in the case of representation provided otherwise than in pursuance of such a contract to make such payments as are authorised by regulations.”

The regulations with which we are concerned are the Civil Legal Aid (General) Regulations 1989 Statutory Instrument 1989 No. 339. These were amended from time to time, and as the events with which we are concerned are spread over a considerable period of time, it is necessary to establish precisely which regulations apply. Changes were introduced in 1994 by the Civil Legal Aid (General Amendment) Regulations 1994, Statutory Instrument 1994 No. 229 (the “1994 Regulations”). Regulation 1 of that amendment provides:

“(1)

These Regulations … shall come into force on 25th February 1994.

(2)

Subject to paragraph (3) below these Regulations apply to proceedings in respect of which a legal aid certificate is granted on or after 25th February 1994.

(3)

[This does not apply here.]

(4)

Proceedings in respect of which a Legal Aid Certificate was issued before 25th February 1994 shall be treated as if these Regulations had not been made notwithstanding any amendment issued under Part VII on or after that date.”

It is, therefore, quite clear that we must concentrate on the Regulations as they were before 25th February 1994 and I quote them below as they were when this certificate was issued in March 1993. If and in so far as I may refer to the 1994 amendments, I do so because some arguments have been addressed to us about their effect but I incline to agree with Mr Robert Jay Q.C., who appears in this court for the appellant, that the amendments do not alter the position significantly, indeed I would say they do not affect this case at all.

Part 10 of the Regulations deals with “Revocation and Discharge of Certificates”. Regulation 74 allows an Area Director to terminate a certificate by revoking or discharging it. Whereas a person whose certificate is discharged ceases to be an assisted person from the date of the discharge, a person whose certificate is revoked is deemed never to have been an assisted person in relation to those proceedings. The distinction between these two classes of assisted persons runs through the Regulations. The 1994 Legal Aid Handbook explains the difference between revocation and discharge in this way:

“Solicitors and counsel will be paid out of the Legal Aid Fund in either event. The difference lies in the effect on the assisted person who, on revocation, will [except when considering the rights of unassisted parties to claim costs out of the Legal Aid Fund] be regarded as never having been legally aided. He or she will have a legal liability to reimburse the Legal Aid Fund for any costs paid out on his or her behalf. On discharge, the assisted person will stay legally aided to the date of discharge.”

Regulation 79 gives the Area Director power to revoke a certificate if he is satisfied that the assisted person has failed to provide information or documents when required to do so under the Regulations. This is what happened in this case. Regulation 81 gives an opportunity to show cause against revocation but the decision with regard to an appeal shall be final. Regulation 82 provides for notification of revocation as follows:

“ (1)  Where an Area Director revokes … an assisted person's certificate, he shall, unless the costs have already been determined, forthwith issue a notice of revocation … and shall send the notice (together with a copy) to his solicitor, …

(2)

A solicitor who receives a notice of revocation … shall either forthwith, or if an appeal has been brought under regulation 81(2) which has been dismissed, forthwith upon receipt by him of a notice of dismissal-

(a)

serve notice of such revocation … upon any other persons who are parties to the proceedings, and

(b)

inform any counsel, and if proceedings have been commenced, send a copy of the notice by post to the appropriate court office or registry.”

The effect of revocation or discharge is prescribed by regulation 83 to be that the retainer of solicitor and counsel is determined forthwith upon receipt of the notice of revocation or the notice of the dismissal of any appeal against such revocation or discharge: but if proceedings have commenced, the retainer of the solicitor shall not determine until he has sent to the appropriate court office or registry, and has served, any notice required by regulation 82.

Regulation 84 then provides as follows:

“Costs to be taxed or assessed on revocation or discharge
Upon the determination of a retainer under regulation 83-

(a)

the costs of the proceedings to which the certificate related, incurred by or on behalf of the person to whom it was issued, shall, as soon as is practicable after the determination of the retainer, be submitted for taxation or assessment; and

(b)

the fund shall remain liable for the payment of any costs so taxed or assessed.”

Regulation 86 is the important one for our purposes. It provides as follows:

“Right to recover costs and contribution

(1)

Where a certificate has been revoked-

(a)

the Board shall have the right to recover from the person to whom the certificate was issued the costs paid or payable under regulation 84(b) less any amount received from him by way of contribution; and

(b)

the solicitor who has acted under the certificate shall have the right to recover from that person the difference between the amount paid or payable out of the fund and the full amount of his solicitor and own client costs.

(2)

Where a certificate has been discharged, the person to whom the certificate was issued shall remain liable for the payment of his contribution (if any) as determined or redetermined, up to the amount paid or payable by the Board under regulation 84(b) …”

The appellant draws attention to further Regulations from Part XI dealing with “Property and Costs Recovered for Assisted Persons”. Regulation 92 (“Retention and payment out of moneys by the Board”) is one of those affected by the 1994 amendment. As unamended, and thus as the regulation applied on the facts of this case, it provides as follows:

“92.

Upon receipt of monies paid for it under this Part of these Regulations, the Board shall retain –

(a)

subject to regulation 103, any sum paid under an order or agreement for costs made in the assisted person’s favour in respect of the period covered by his certificate;

(b)

a sum equal to the amount (if any) by which any property recovered or preserved is charged for the benefit of the Board by virtue of section 16(6) of the Act; and

(c)

any costs of proceedings taken by the Board under regulation 91(1);

and shall pay the balance to the assisted person.”

In its amended form, regulation 92, provides, so far as material:

“(1)

… The costs payable by the Board in respect of any work done under a certificate, after deduction of any sums paid under regulations 100 or 101 (payments on account), shall be-

(a)

the legal aid only costs;

(b)

any other costs determined under regulation 107A(2) …

(2)

[This retains section 92 as it was at the time of the 1994 amendment].”

“Legal Aid only costs” was a new concept introduced by the 1994 Regulations and defined in regulation 3 to mean:

“those costs which would not be allowed as inter partes costs, but which are payable from the fund subject to determination under Regulation 107A(2).”

Regulation 107A, also introduced in 1994, provides for the basis of taxation as follows:

“(1)

This regulation applies on any assessment, review or taxation of the costs of an assisted person in proceedings where the costs are, or may be, paid out of the fund.

(2)

Costs to which this regulation applies shall be determined on the standard basis subject to—

(a)

the Legal Aid in Civil Proceedings (Remuneration) Regulations 1994 in proceedings to which those Regulations apply …

(3)

Any assessment, review or taxation under this Regulation shall—

(a)

subject to the provisions of sub-paragraphs (a) and (b) of paragraph (2), be in accordance with Part XII of these Regulations;

(b)

be conducted together with any determination of the costs of the proceedings required in accordance with any direction or order given or made in the proceedings.”

Part XII deals with “Costs of Assisted Persons”. In summary, it provides that monies are paid out of the Fund for the costs of the solicitor, counsel’s fees and disbursements only on the basis of certification proved either by taxation by the court or by assessment by the area officer: see regulations 100-122. There are provisions for payments on account but otherwise payment will only be made at the end of the case, or on termination of the solicitor’s retainer, e.g. following revocation of the certificate, when any adjustment relating to payments on account will be made. The regulations set out the detailed procedures for taxation and the series of appeals which is available if costs are reduced. The regulations also set out the detailed procedures for assessment by the area office and appeals from its decisions. Costs must be assessed, rather than taxed, in the case of

Mr Jay draws attention to regulation 100(8), in the regulation dealing with payments on account:

“Where, after taxation or assessment, payments made under this regulation are found to exceed the final costs of the case, the solicitor or counsel (if any) shall, on demand, repay the balance due to the fund and, where the total costs exceed any payments made under this regulation, the balance shall be paid from the fund.”

Deputy Judge Taylor concluded:

“16.

… my decision is that the cause of action in this case accrued when the defendant’s legal aid certificate was revoked. I say this in the light of the authorities to which I have been referred and upon what I regard as the clear and unambiguous meaning of the regulations, in particular regulation 86(1) namely the right to recover arose when the certificate was revoked. This is because it seems to me by linking the right to recover with the revocation the regulation makes it clear that that [i.e. revocation] is when the cause of action begins. In my view, the use of the word “payable” in that regulation reinforces that construction. I think that the requirement for a taxation or assessment certificate is a procedural requirement and no more.”

As has been seen, time begins to run from the date on which the cause of action accrued. The question is, when did this cause of action accrue? In Coburnv Colledge [1897] 1 QB 702 a solicitor commenced an action on June 12th, 1896 for his fees for work which had been completed on May 30th 1889. It was held that the statute of limitations began to run from the time the work was completed, not from the expiration of a month from the delivery of the bill of costs. The court accepted this definition of “cause of action”:

“Every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the court.”

In Central Electricity Board v Halifax Corporation [1963] A.C. 785, the Electricity Act 1947 transferred the assets of electricity undertakings to electricity boards and provided that the property held by local authorities in their capacity as authorised undertakers should, on vesting day, vest in the relevant board. An issue arose as to whether certain monies had been held by the local authority and the question was referred to the minister, who decided that they had and so the appellant sought to recover the money. The House of Lords held that the cause of action accrued at the vesting date, more than six years before the action commenced, even though the appellants could not have proved the monies were held by the respondents as authorised undertakers until the minister had so decided. Lord Reid said at p. 801:

“No new right or liability came into existence at [the date of the minister’s decision]. It is quite clear, and it is now admitted by the appellants, that the effect of the minister’s decision was merely to prove that this sum had belonged to the appellants ever since the vesting date. It created no new right of property or chose in action: it merely enabled a pre-existing right to be enforced.

A number of cases were cited in argument. None was directly in point and I have found nothing in any of these cases which conflicts with the view that a cause of action can exist although one of the facts essential to the cause of action can only be proved otherwise than by evidence led in court and has not yet been proved when action is brought. If the appellants had begun an action within six years of the vesting date, and had applied to the minister for his decision when the respondents traversed their allegation that the sum sued for had been held or used by the respondents in their capacity of electricity undertakers, proceedings in the action could, if necessary, have been stayed to await the minister’s decision. But they did not do that and, in my judgment, this action is barred by section 2(1)(d) of the Limitation Act.”

Sevcon Ltd v Lucas CAV Ltd [1986] 1 W.L.R. 462 was an action for infringement of a patent. It was brought after the specification had been published but before the patent had been sealed. Section 13(4) of the Patents Act 1949 provided:

“After the date of the publication of a complete specification and until the sealing of a patent in respect thereof, the applicant shall have the like privileges and rights as if a patent for the invention had been sealed on the date of the publication of the complete specification: provided that an applicant shall not be entitled to institute any proceedings for infringement until the patent had been sealed.”

It was held that the cause of action for infringement accrued at the date of the infringement even if that was before the date of sealing but the claim could not be enforced until the procedural requirement of sealing was met. Lord McKay of Clashfern said at p. 467:

“If he were to institute proceedings for infringement before the patent for the invention was sealed, the procedural requirements of the proviso would not be satisfied but a statement of claim could not be struck out as disclosing no cause of action although it might be liable to be struck out as an abuse of the process of the court.”

In Swansea City Council v Glass [1992] 1 Q.B. 844 the local authority required the defendant to carry out certain essential repairs to his property and on his failure to do so the local authority itself carried out the work and in due time served written demands under the Housing Act 1957 to recover the costs incurred. The claim was issued more than six years after completion of the works but less than six years from the service of the demand. It was held that the cause of action arose on completion of the works. Taylor L.J., having referred to the above cases, held at p. 852:

“Although not on all fours with the present case, these decisions show that a cause of action may well accrue before, for procedural reasons, the plaintiff can bring proceedings. Where a cause of action arises from statute, the question as to what is merely procedural and what is an inherent element of the cause of action is one of construction.”

Hillingdon London Borough Council v A.R.C. Ltd [1999] Ch. 139 was a case where the council entered upon and took possession of land belonging to the company in accordance with the compulsory purchase procedures. This happened in 1982 and the company did not bring its claim for compensation under section 11 of the Compulsory Purchase Act 1965 until 1992. The question was whether the cause of action arose on entry to the land or upon the determination of the amount of compensation that was to be payable as a result of that entry. Potter L.J. accepted the correctness of the submission that the answer to the question “When does a cause of action to recover a sum recoverable by virtue of any enactment accrue?” is to be found in the proper construction of the statute giving the right to recover. Nourse L.J. succinctly summarised the position at p. 157:

“… it is established by authority that a cause of action for a sum recoverable by virtue of an enactment "accrues" notwithstanding that it remains to be quantified and, further, that the quantification may have to be made by a tribunal other than a court of law.”

In support of his submission that the cause of action has not crystallised until the costs have been assessed or taxed, Mr Jay draws attention to the fact that regulation 86 is introduced by the words “where a certificate has been revoked” in (1) and “where a certificate has been discharged” in (2) and he submits that the use of the word “where” indicates that the draughtsman intended only to identify two contrasting contexts in question, revocation and discharge, rather than (in either case) to pinpoint a particular time, whether the time of revocation or the time of discharge. This lack of a temporal connotation defeats the argument that the cause of action arises at the moment of revocation or discharge. The right conferred by regulation 86 is “to recover” costs which the Board had paid or would become liable to pay pursuant to the certificate notwithstanding that it has been revoked. Recovery, he submits, implies obtaining sums owed by way of costs to the assisted person’s solicitor and the Board cannot claim from the assisted person until it has at least become liable to pay his solicitor, if not actually paid him. Assessment or taxation is therefore a vital element or precondition for liability.

Mr Stuart Brown Q.C. was retained by the respondent to present his case in this Court. His submission is that, since regulation 86 allows the recovery of costs paid or payable, then, if monies had already been paid by way, for example, of interim payments, the fund was immediately liable for that ascertained amount but if the costs remained to be taxed or assessed, the fund was still liable but liable to pay such amount was found to be due on assessment or taxation. Taxation or assessment is but a procedural step, not an ingredient of the cause of action. Even if the costs had not been assessed or taxed at the date the proceedings commenced, judgment could be entered for such sum as may be so assessed or taxed: at least there could be a declaration that such sum shall be payable. The policy of the Limitation Act is to discourage stale claims. The appellant’s construction would defeat that policy where there are delays in assessment or taxation.

The purpose of the Act is to enable those who cannot afford to pay for advice, assistance or representation on account of a lack of means nonetheless to enjoy the services of solicitor and counsel without cost to themselves on the basis that the Board, now the Legal Services Commission, will pay the solicitor’s costs and disbursements once duly assessed or taxed. If, however, the Legal Aid Certificate is revoked then, per regulation 74(2), the assisted person is deemed never to have been an assisted person in relation to those proceedings. Nonetheless the Board is not released from its duty to indemnify his solicitor in respect of the solicitor’s costs. The solicitor’s retainer is determined (regulation 83) and upon determination of the retainer, regulation 84 requires that the costs of the proceedings “shall” be submitted for taxation or assessment and, per regulation 84(b), “the fund shall remain liable for the payment of any costs so taxed or assessed”. Construing the scheme as a whole, this means that the fund remains liable notwithstanding the revocation and notwithstanding the fact that, as a result, the assisted party is deemed never to have had that assistance. Use of the word “remains” confirms that whilst the certificate was operative the fund was liable in the usual way and that once the certificate was revoked the fund continues to be liable to pay the solicitor. It seems to me to follow as part of a coherent scheme that the fund is liable to the solicitor for any costs that are payable (regulation 84(b)) and since it remains liable to pay the solicitor, it also has the right to recover from the person on whose behalf it has assumed liability by way, as it were, of indemnity. That right to recover is what is conferred by regulation 86.

Regulation 86(1) is, of course, crucial. This is the regulation which needs to be construed. Is the need to ascertain the precise sum which is payable a condition precedent to recovery, or is it merely a procedural step as opposed to an inherent element of the cause of action? To remind myself, regulation 86(1) provides that “the Board shall have the right to recover” from the formerly assisted person “the costs paid or payable under regulation 84(b)” less the amount of any contribution already made.

The right of recovery is given both in respect of costs paid and costs payable under regulation 84(b). The costs paid must refer to costs which were paid by virtue of other regulations than 84(b) because 84(b) quite clearly refers to costs which still have to be taxed or assessed. Final payment is only made once the process of taxation or assessment has been completed.

As for costs paid, costs may have been paid by way of an interim payment on account and regulation 100(8) sets out the mechanism for the solicitor or counsel to repay any excess of the interim payment over the final costs as assessed or taxed or for the solicitor to be paid the balance due if the interim payment is less than the final figure. I can see no reason why an action would not immediately lie against the formerly assisted person to recover such an interim payment, though in practice the Board would probably wait until assessment or taxation to establish the final costs of the case up to revocation. Another case where costs may have been paid is envisaged by regulation 82 which applies only where costs have not already been determined. The scheme is that notice of revocation must be sent to the solicitor (regulation 82) set out at [8] above, the solicitor’s retainer is then determined (regulation 83) and the solicitor is then required to have his costs assessed or taxed (regulation 84(1)) set out at [10] above). This procedure is not necessary where the costs have already been determined where, for example, the case has been concluded. If information comes to the knowledge of the Board that the certificate should never have been granted in the first place, nothing prevents the Board revoking the certificate in order to claim back the monies they have had to pay out in connection with the litigation. If the costs have been determined, they would invariably have been paid by the fund to the solicitors. At any rate, if the costs have been determined there is nothing more for the solicitor to do except to ask to be paid his costs as taxed.

If the costs have been determined and if the costs have been paid, then in my judgment - and I do not understand Mr Jay to dissent - the cause of action is complete because the right of recovery has been conferred by regulation 86 and all necessary facts and all constituent elements will have been ascertained. Nothing more needs to be done. Time will start to run from the date of revocation of the certificate.

If that is the rule for costs paid, then one asks why the rule should be any different if the costs are payable. Is there any justification for time running differently? I can see none at all. Take a hypothetical case where an interim payment had been made on 1st February 2000 but the interim payment is less than the final cost which had only been determined on a taxation on 1st June 2001. Assume revocation on 15th February 2000 and a claim brought on 1st March 2007. Does it mean that recovery of the interim payment is statute-barred though the balance may still be recoverable? Does it mean that two claims have is issued, one before 15th February 2006 to recover the interim payment and the other before 1st June 2007 to recover the excess? It would, in my judgment, be absurd to answer those questions in the affirmative. Assume again that a claim is made on 31st January 2006 within the limitation period for recovery of the interim payment and the claim is coupled with a declaration that the defendant is liable to pay such further sum as may be found to be due and payable on taxation. Will the court give summary judgment in respect of the interim payment but strike out the claim for a declaration on the ground that it discloses no cause of action? The answer must be a firm “No”. All the ingredients required by regulation 86 are present in the claim for a declaration: the certificate has been revoked, and there is a right in the terms of regulation 86 to recover costs payable under regulation 84(b). It is absurd to suggest that a declaration would be denied. Compare Sevcon Ltd v Lucas CAV Ltd set out at [18] above.

In my judgment the fact that declaratory relief is available demonstrates to me that the process of ascertainment of the amount of costs is a mere procedural requirement, not an inherent element of the cause of action itself. Compare Swansea City Council v Glass set out in [19] above.

Since it is now well established that a cause of action for a sum recoverable by virtue of an enactment accrues notwithstanding that it remains to be quantified – see Hillingdon London Borough Council v A.R.C. Ltd set out at [20] above – I can see no good reason for construing regulation 86(1) in such a way as to make quantification a condition precedent to recovery in this case. The language does not compel that construction. The Legal Aid Act ought, in my judgment, to be construed in a manner which is compatible with private practice as far as that is possible. As Coburn v Colledge at [16] above has made clear, time runs from the date of the completion of work not from the date of taxation. I can see no reason why a similar rule should not apply by way of analogy so that the only facts to be proved to establish cause of action under regulation 86(1) are that work had been done under a certificate but that the certificate had been revoked. Taxation should not be the crystallising event in either case.

The purpose of the Limitation Act is to prevent delay. That would be utterly frustrated if Mr Jay’s submission is correct. On his working of the scheme, actual taxation or assessment could take place long after revocation. The assisted person would have no control over that taxation and tardy solicitors could delay indefinitely. The delay that has occurred in this case and in others dependent on the outcome of this appeal reveal how endemic delays of one sort or another may be. There would be no certainty for the assisted party as to when he might be called upon to pay the Board. The claim may have become very stale indeed. I prefer a construction of regulation 86(1) which leaves everybody knowing exactly where they stand so that the period of limitation can be ascertained with certainty.

In my judgment the judge reached the right conclusion and I would dismiss this appeal.

I agree.

I also agree.