Richards v The Legal Services Commission

As long ago as 15^th June 1993, Margaret Alison Pryce Richards (“Mrs Richards”) resolved the financial consequences of her divorce in terms that included periodical payments for her four children “until they shall respectively attain the age of 17 or cease full-time education whichever is the later or further order”. It still remains in force in relation to two children, that is to say Daniel (who was born on 23^rd July 1982 and remains at Glasgow University studying chemistry) and Simon (who was born on 12^th June 1984 and who has completed a law degree at Glasgow University but is still in Glasgow studying for a legal professional qualification from which it appears likely that he will remain in Scotland). The payment is presently £600 per month for each son but there are continuing proceedings to determine whether they should remain. For these proceedings, Mrs Richards has applied for public funding.

When she applied, given that she had the benefit of legal aid to pursue an action against her former solicitors, she cannot have anticipated any difficulty. That certificate had been granted on the basis that £400 of the £1,200 received by way of maintenance for her sons should be apportioned as part of her gross income; on that basis, her disposable income was below the threshold limit. When the exercise was repeated for this application, however, the full £1,200 was included; this resulted in her being over the threshold income eligibility limit (nothing turning on her capital position) and she was determined not to be entitled to public funding. Not only was the application that she was then making refused but, in addition, her certificate in relation to the action against her former solicitors was cancelled.

Mrs Richards then conducted a lengthy correspondence with the Legal Services Commission (“the LSC”) relating to her eligibility for legal aid, pointing to the fact that both in December 2003 and in April 2005 assessments had been made by different people, both of whom had only apportioned the maintenance she had received and so had declared her within the income threshold and thus eligible for legal aid. The LSC has insisted that the Regulations contain no discretion: the full sum of £1,200 is properly counted as gross income (which is above the threshold).

With the leave of the single judge, Mrs Richards now seeks to challenge that decision by way of judicial review. No reason for the earlier decisions has been advanced, but it is not suggested that any form of estoppel or legitimate expectation is created. Rather, she argues that her sons are not members of her household, so that the Regulations give the LSC discretion to deduct a reasonable amount of the maintenance payment before calculating eligibility for legal aid. In assessing that deduction for children, it is submitted that the proper approach is to apply a ‘relative benefit’ test and so deduct any expenditure that benefits the children. The LSC, on the other hand, maintain that the children are members of her household and that, even if they were not, the appropriate test to apply is that of ‘receipt and control’ so that only money that is received and controlled by the children can be deducted.

My task, therefore, is to determine the matter by reference to the facts and a proper construction of the governing legislation, that is to say the Access to Justice Act 1999 (“the Act”), the Community Legal Service (Financial) Regulations 2000 as amended (“the Regulations”) and, if appropriate, the relevant regulations and the guidance contained in the LSC Manual (“the Code”).

The starting point is the Act which provides:

“7

(1) The [LSC] may only fund services for an individual … if his financial resources are such that, under regulations, he is an individual for whom they may be so funded

….

8

(1) The [LSC] shall prepare a code setting out the criteria according to which it is to decide whether to fund (or continue to fund) services …

….

(5)

The code shall also specify procedures for the making of decisions about the funding of services by the [LSC] … including … (b) provision imposing conditions which must be satisfied by an individual applying for funding …”

Turning to the Regulations, there are definitions of gross income (“total income from all sources, before any deductions are made”: Reg. 5A), and income from any source (“the income which that person may reasonably expect to receive (in cash or kind) during the period of calculation”: Reg. 16). It is not challenged that the maintenance payments that Mrs Richards receives fall within these definitions. There are then provisions in relation to dependant children or relatives who are part of the applicant’s household (Reg. 20) and those who are not part of the applicant’s household (Reg 21). Although the LSC contend that the boys are members of Mrs Richard’s household, I do not need to address this provision, because it is common ground that if that is so, the relevant deductions are not sufficient to take her below the income threshold and so render her eligible for legal aid.

That brings me to Regulation 21, which deals with the situation where dependant children are not members of the applicant’s household. It provides:

“Where the person concerned is making and, throughout such period as the assessing authority considers adequate, has regularly made payments for the maintenance of:

(a)

a former partner;

(b)

a child; or

(c)

a relative

who is not a member of his household, a reasonable amount shall be deducted in respect of such payments.”

The Code identified by section 8 of the Act is contained in the LSC Manual and clearly governs the operation by the LSC of its discretion. Its scope is described as “procedures for making decisions about the funding of services by the [LSC]” (see Part 2, Part A, paragraph 1.1 of A1) and it is clear that the LSC shall be “responsible for decisions under the Code, including exercising any judgment or discretion under the Criteria or Procedures” (ibid, paragraph 8.1 of A8).

Part D deals with Financial Eligibility. What is caught by the word “income” is made clear at paragraph 4.1 in these terms (in each case the emphasis being mine):

“ ‘Income’ means the total income from all sources which a person has received or may reasonable [sic] expect to receive in respect of the calendar month […] In determining gross income there are no deductions or disregards and all income must be included whether from employment, state benefits or elsewhere, e.g. assistance from friends and relatives. The only exceptions to this are certain state benefits as specified within the regulations, none of which should be regarded as income for the purposes of determining gross income. Cross reference: see para. 4.6.”

(3)

Only the main types of income are discussed in this guidance. The list is not exhaustive and income from any source including a source not specifically discussed in this guidance (e.g. income from a private pension) should be taken into account.”

Thus, all and any sources of income must be considered although (at paragraph 4.9) maintenance is the subject of specific analysis and potential exception under the heading “Income from court order or voluntary maintenance” in these terms:

“1.

Included as income is the amount declared by the client as maintenance received for themselves and/or their dependant children. This will be maintenance paid by a … former spouse…

3.

Included as the client’s income will be any maintenance payments received for the client’s children whether or not the order specifies that the payments are made to or for the children. However, in such circumstances where it is clear that the child receives and controls the money this will not be included as the client’s income but the dependant’s allowance [i.e. a discount allowed from income when calculating eligibility] will be reduced by the amount of the maintenance. ”

Based on the assumption that Daniel and Simon were not members of Mrs Richards household, although both sides proceeded on the basis that Regulation 21 bit upon the payments made by her to or for their benefit I must first sound a note of caution. The sums in respect of which she seeks a reasonable allowance do not take the form of regular payments but, rather, comprise a proportion of the cost of the general upkeep and maintenance of the family home where each of the boys have a bedroom (although, as I shall later elaborate, for most of the year they both live in Glasgow) together with incidental sums that she provides when she can including for dental and optical treatment.

My concern is that it is, at least, arguable that although by satisfying the order of the court, Mr Richards “has regularly made payments for the maintenance” of his sons, Mrs Richards is not regularly making payments for their maintenance at all: she is providing them with incidental occasional financial assistance while maintaining a home to which they can return when they wish. The language of the regulation at the very least implies something rather more formal than the situation in this case.

Neither is such an interpretation inconsistent with the purpose of the legislation. If a child is a member of the parent’s household, maintenance can be used directly to benefit that child (eg after school activities or lessons) or for expenses of the family (food, heat etc); the maintenance is thus additional income and is included as such in the financial assessment of eligibility for legal assistance, subject to a discount for a dependant’s allowance. If the child is not a member of the parent’s household, he has his own household and the only appropriate reduction in the calculation of the parent’s income is any maintenance, that is to say financial payment, that is being received that is passed directly to the child for that child to control. This approach would also apply in the case of a devoted adult son, contributing to the upkeep of an elderly parent living elsewhere: albeit not by order of the court, Regulation 21 allows the deduction of that money from the income used to calculate eligibility.

In one sense, this argument was not advanced, in these terms, by the LSC although the reliance placed on ‘receipt and control’ as the test to determine the extent of any allowance which itself requires a consideration of actual payment, rather than the provision of a benefit such as a home. I will thus return to it later. For present purposes, however, I proceed on the premise that Regulation 21 applies and that Mrs Richards has “regularly made payments” for their maintenance.

Defined in the Oxford English Dictionary as “the inmates of a house collectively; an organized family including servants or attendants, dwelling in a house; a domestic establishment”, the word ‘household’ has also been considered judicially. In London Borough of Hackney v. Ezedinma [1981] 3 All ER 439, May J cited Lord Hailsham’s speech in Simmons v. Pizzey [1979] AC 37 (at page 59G) that “household and membership of it is a question of fact and degree, there being no certain indicia of presence or absence of any of which is by itself conclusive.” This approach was followed in England v. Secretary of State for Social Services [1982] 3 FLR 222 in which Woolf J (as then he was) concluded, at page 227, that “children can remain members of the household even though temporarily absent as long as ties with the parents and home are sufficiently closely maintained.” In that case, although the children spent weekdays in voluntary care because the parents were at work, their bedrooms were maintained, they saw their parents on the weekend, and the arrangement was not intended as permanent: they remained members of the household. This approach was also followed in Regina v. Birmingham Juvenile Court Ex Parte S. [1984] 11 Fam. 93, where Sir John Arnold P. also cited Simmons and went on to note (at page 98G) that “at the heart of the concept it is the persons who comprise the household…and not the place where the household is located as a matter of residence.”

Thus, whether a child remains a member of a household is just as much a function of attitude (and, perhaps, emotion) as an application of a simple test of hours spent in the home. A student taking a gap year prior to university may not set foot in his or her parents’ home for an entire year, but could still remain a member of the household. In each case, the question is one of fact having regard to all the circumstances of residence, relationship and ties.

What is the situation here? Mrs Richards argues that because the boys are Scots, pay rent throughout the year in Glasgow where they are on the electoral roll, are registered with doctors and spend the majority of their time there, they are no longer members of her household. On the other hand, she had referred to her house as the family home and a home for herself and her sons; she described it as the boys’ “permanent home when not at university … a home base”. In relation to Daniel, still pursuing his undergraduate studies, that seems to be an entirely apposite description. How accurate it might be for Simon, the younger son who is studying for a diploma in Scottish law (thus undergoing professional training which is almost inevitably likely to lead to a professional life in Scotland rather than in England), may be another matter but as Mrs Richards herself notes, he is still being educated and remains as close to and linked with his mother in Lincolnshire as he was while still at University.

Based on the closeness of the relationship, I am not prepared to conclude that the LSC were not entitled to reach the conclusion that the boys remained members of their mother’s household. Indeed, although I appreciate that the test and the arguments might be different, such a conclusion is entirely consistent with Mrs Richards’ claim to increased maintenance (which is the action for which funding was sought and that generated this dispute in the first place). I am certainly not willing to decide that the boys were not members of their mother’s household.

Although that is sufficient to determine the matter (for Mr Clemens conceded that unless he could establish that the boys should not be treated as members of Mrs Richards’ household, that was the end of his challenge to this decision), I consider this further argument shortly. On the basis that the boys were not members of the household, he submitted that a “reasonable amount” in Regulation 21 included all payments applied “for the benefit” of the child, including the cost of maintaining available accommodation albeit (by definition) at premises at which he was not a member of the household. The Guidance, however, provides no support for his interpretation but rather requires both “receipt” and “control”. This has the effect not only of limiting the difficulties of assessment but, more significantly in my judgment, making it clear that any money that may benefit the applicant as well as the child should not be excluded. This is entirely consistent with the determination to bring all income from whatever source into the calculation so to ensure that devices cannot be used to avoid the strict application of the means test on eligibility for legal assistance. Neither am I surprised by this result: were it otherwise, it could well mean that a child who was not a member of the household could generate a larger deduction from income for eligibility purposes than a child who was a member of the household.

Mrs Richards may well have arguments that the maintenance that she has been receiving to assist her sons should continue to provide them with a family home with her for as long as they remain students and are not independent of her thereby ensuring that they have the very best start in life. For the reasons that I have given, however, in the circumstances of this case, I do not consider that the legislation and regulations that govern financial eligibility for legal assistance permit the extent of the reduction from maintenance payments that she receives as would bring her within the financial eligibility criteria for legal assistance. When granting permission, the single Judge warned her that her argument may not prevail and I am afraid that I do not consider that it does. This claim for judicial review of the decision of the LSC is dismissed.

I have agreed to hand down this Judgment in the absence of the Parties and their representatives. Any consequential application must be made and served both on the Court and the other side within fourteen days with fourteen days to respond and seven days thereafter to reply.