COSTS

Legal advice and funding - legal profession - conditional fee agreements - legal aid - insurance premiums - solicitors' powers and duties - success fees - incorrect legal advice - enforceability of conditional fee agreements - breach of client care code - recoverability of costs

Traci Hughes v Newham London Borough Council: Caroline Opoku-Donker v Newham London Borough Council: Valerie Thornton v Newham London Borough Council: SCCO (Master O'Hare) 28 July 2005



Conditional fee agreements (CFAs) were unenforceable where the claimants' solicitors had failed to properly advise them as to the availability of, and their entitlement to, legal aid. The actual availability of legal aid had rendered irrecoverable the success fees and premiums for after-the-event insurance claimed in the cases.


The claimants (H) in joined proceedings sought determination of two preliminary issues following housing disrepair claims brought against the defendant local authority landlord. H were secure tenants of the local authority and were represented by the same firm of solicitors (S). S advised H that legal aid was not available to them because they would be unlikely to meet the cost/benefit test, and that the Legal Services Commission's requirement for them to give notice to the local authority could cause further delay and jeopardise their claim. As a result, H entered into CFAs that necessitated them each taking out a loan. However, a loan had not been needed. If H had applied for legal aid, they would have satisfied the means criteria entitling them to legal aid without contribution. Following a consent order in each case, H were awarded their costs. Each bill of costs claimed for base profit costs, a 5% success fee, after-the-event insurance, survey report, court fees and the costs of investigatory work conducted by a firm to establish the merits of pursuing the claim. H provided written statements explaining their reasons for entering into the CFAs with S. The two issues to be determined were whether the CFAs were unenforceable because of a failure by S or their agents to properly inform H as to the availability of legal aid; and whether the availability of legal aid in the cases had rendered irrecoverable the success fees and the premiums for after-the-event insurance claimed.



Roger Mallallieu (instructed by Sehgal & Co, Birmingham) for the claimants; Simon Butler (instructed by the local authority solicitor) for the defendant.


Held, by failing to properly inform H of the availability of legal aid, S had departed from what was required of them under regulation 4(2)(d) of the Conditional Fee Agreements Regulations 2000, and that departure had had a materially adverse effect upon the protections afforded to them. The regulations had been intended to duplicate the client care code, Hollins v Russell (2003) EWCA Civ 718, (2003) 1 WLR 2487 applied. Therefore, for a CFA to be valid, a solicitor had to ensure as far as possible that the clients understood what they were entering into and were able to make an informed choice of the funding options available. Compliance was not achieved merely by mentioning that legal aid was possible to someone likely to qualify for it, if there were accompanying words that sought to discourage the client from pursuing it. The burden was on S to put H's best interests first. S's departure from the regulations had resulted in the adoption of a funding system under which H had incurred substantial irrecoverable costs, namely, the insurance, interest on the loan taken out and, but for the regulations, the contractual obligation to pay success fees as well as base fees. S had failed to properly discharge their duties under paragraph 4 (j) of the Solicitors Costs Information and Client Care Code. The repeated advice that legal aid was not available, or was unlikely to be available to H, was bad advice. At the time the cases were taken on, H's prospects of success did not appear unclear, borderline or poor. In valuing the likely benefits of the proceedings, it was right to take into account the cost of the repair as well as the damages claimed. In all the cases, the repair costs claimed and the damages claimed substantially exceeded H's likely costs at legal aid rates. Even if, to obtain legal aid, H had had to give notice again to the local authority, it was not right for S to anticipate that this would be a cause of any substantial delay in the proceedings. S had failed to give H proper advice as to the availability of legal aid. Accordingly, it was unreasonable for H to seek to recover from the local authority the additional liabilities in the form of the success fee and insurance premium that had resulted from their chosen method of funding. Furthermore, none of the individual reasons given by H showed that it was reasonable for them to instruct a solicitor on CFA terms with insurance even if they had received better advice on legal aid. As the CFAs were unenforceable, the local authority's maximum liability for costs was in respect of paid disbursements and any costs of assessment allowed. Preliminary issues determined in favour of the defendant.






FAMILY


Breach of injunctions - committal for contempt - non-molestation orders - sentence length - harassment - domestic violence

Carabott v Huxley: CA (Civ Div) (Lords Justice Wall, Lloyd) 19 August 2005


A sentence of 18 months' imprisonment imposed under the Family Law Act 1996 was not manifestly excessive in respect of persistent and serious breaches of a non-molestation order.


For cases warranting the top of the range of sentences, the appropriate course was to bring the proceedings under the Protection from Harassment Act 1997 instead of the Family Law Act 1996.


The appellant (H) appealed against the sentence of 18 months' imprisonment imposed for breach of a non-molestation injunction made in favour of H's former partner (C).


Following several incidents of serious violence perpetrated by H, his two-year relationship with C came to an end. H was unable to accept that the relationship had ended, and started to harass, intimidate and pester C to such a degree that injunctive proceedings were brought by C against H. Under the resulting order, H was forbidden from going within 100 meters of C's property and from intimidating or using violence against C. H repeatedly and persistently breached the terms of the order, and C made an application under the Family Law Act 1996 for his committal to prison for contempt of court.


After the hearing, the recorder gave a brief judgment advising H to accept that the relationship was over and sentenced him to 18 months' imprisonment, during which time the recorder suggested that H get help for an admitted drug problem. H submitted that the sentence was manifestly excessive and a sentence of 12 months ought to be substituted.


He submitted that the recorder had not mentioned or given him credit for the fact that he had admitted his guilt early, shown remorse and had problems with depression and substance abuse. A sentence of two years' imprisonment was reserved for the worst cases of contempt, and given the mitigating factors it could not be said that the instant case was among the worst type requiring a sentence near the maximum.


H also submitted that he had subsequently been diagnosed with schizophrenia and was on medication that was successfully controlling his condition.


Rebekah Wilson (instructed by Kennard Wells, London) for the appellant; Rachel Wingert (instructed by Julia Cooper, London) for the respondent.


Held, the principles relevant to the instant case were contained in Robinson v Murray (2005) EWCA Civ 935, The Times, August 19, 2005, Lomas v Parle (2003) EWCA Civ 1804, (2004) 1 WLR 1642 and Hale v Tanner (2000) 1 WLR 2377; Robinson and Lomas considered and Hale applied. On the facts before the recorder, it could not be said that the sentence imposed was manifestly excessive. Although the recorder ought to have mentioned facts such as H's admission of guilt and his apology, it could not be said that had he done so he would have been required to impose a lesser sentence. Although a different recorder might have imposed a different sentence, it could not be said that 18 months was outside the range of reasonable sentences for such serious and persistent contempt of court. H's recent diagnosis of schizophrenia was not relevant as it had not been before the recorder when he was making his decision.


For cases warranting the top of the range of sentences, the appropriate course was to bring the proceedings under the Protection from Harassment Act 1997 instead of the Family Law Act 1996. Drug rehabilitation considerations should not be a factor influencing sentence length. However, during a justified sentence, every effort should be made to get offenders the appropriate help. Appeal dismissed.




Civil procedure - capacity - declaratory orders - injunctions - learning disabilities - adult lacking capacity to marry - court's jurisdiction to restrain parents - human rights

M v (1) B (2) A (3) S (by her litigation friend the Official Solicitor): Fam Div (Mr Justice Sumner) 28 July 2005


The court had jurisdiction to make an order to restrain those responsible for an adult lacking capacity from entering into a contract of marriage if it was required to protect that adult's best interests. Part 8 of the Civil Procedure Rules (CPR) 1998 was the correct means by which to commence such proceedings, even if a substantial dispute of fact existed.


The claimant local authority applied under part 8 for declarations that the third defendant (S) lacked capacity to marry, and also for the continuation of existing injunctions forbidding S's mother (M) and father (F) from taking any steps in respect of any marriage to S or removing her from the jurisdiction. S was 23 years old, and suffered from severe learning disabilities. The local authority had been involved with S's family for a number of years and was concerned, because of things said by M and F in unguarded moments, that they wished to take S to Pakistan for an arranged marriage.



Expert evidence suggested that S did not understand what was involved in marriage and that it would be something she would not be able to cope with. M and F resented the local authority's interference and protested that they wanted to take S to Pakistan solely so that she could meet her extended family. The local authority argued that (1) S lacked the capacity to make a decision about whether or not she should marry; and (2) there should be a continuation of the existing injunctions forbidding M or F from taking any steps in respect of any marriage of S or removing S from the jurisdiction.


Joseph O'Brien for the local authority; Ged Ford for the parents; Alison Ball QC for the Official Solicitor.


Held, all the evidence suggested that S did not understand the nature of the marriage contract or the duties and responsibilities that are normally attached to marriage, Sheffield City Council v E (2004) EWHC 2808 (Fam), (2005) Fam 326 considered. S therefore did not have the capacity to give a valid consent to marriage. In appropriate circumstances, there was jurisdiction to make an order to restrain those responsible for an adult lacking capacity from entering into a contract of marriage, whether formal or informal, if it was required to protect that adult's best interests. Were S to get married, evidence suggested that she would suffer serious emotional and psychological harm. F was clearly the dominant person within the household and S was highly impressionable. It was also clear that F did not understand the local authority's legitimate causes for concern and was motivated to arrange a marriage for S owing to the strong cultural and religious influences on him as revealed by him and M in unguarded moments. Accordingly there was a strong case for injunctive relief on the basis that there was a substantial risk that if S was taken to Pakistan for a holiday, she would agree to enter into a marriage arranged by her parents.


The principle of the court not to risk the incurring of damage to children which it could not repair, but rather to prevent the damage being done, applied equally to S, Wellesley v Duke of Beaufort (1827) 2 Russ 1 applied.


Furthermore, an injunction was justified under article 8 of the European Convention on Human Rights to protect S's private life from being jeopardised by her parent's actions in seeking to arrange a marriage for her. Where declaratory relief was sought in relation to an adult who lacked capacity under the court's inherent jurisdiction, the proceedings should commence under part 8. In such cases, a substantial dispute of fact was not a bar to such procedure. Interlocutory and final hearings would normally be heard in the Family Division. Applications granted.






JUDICIAL REVIEW


Administrative law - highways - local government congestion charges - legitimate expectation - penalties - seizure of car for non-payment of penalties - statutory procedure - discretion to deal with unusual case - penalty charge notices - exemptions

R (on the application of Dolatabadi) v Transport for London: QBD (Admin) (Mr Justice Collins) 28 August 2005


Despite failing to follow the statutory procedure for disputing congestion charge penalties, the claimant car driver was permitted the remedy of judicial review in order to challenge the seizure of his car for non-payment of the penalties. There had been a failure on the part of Transport for London to address the claimant's initial legitimate concerns.


The claimant (D) applied for judicial review of the actions of the defendant (T) in seeking to enforce outstanding penalty charge notices, issued for failure to pay the congestion charge, by seizure of D's car.


D used his car for the transportation of an elderly disabled person (M) in and around Greater London. As a disabled person, M qualified for a full exemption from payment of the daily congestion charge and could specify two cars to be exempt. D's car was therefore fully exempt from payment of the daily congestion charge. When the time came for M to renew his exemption, he mistakenly ticked the wrong box on the registration form. The result of M's mistake was that D's car was no longer registered as being exempt. D, being unaware of the mistake, continued to drive his car in and around the congestion charge area without payment of the congestion charge and consequently received penalty charge notices. When D refused to pay the penalties, T sought the assistance of a bailiff to recover the debt.


D submitted that he was a person of good standing, that T had not given adequate consideration to his initial representations regarding the situation and that, in any event, T had misled D on the telephone into thinking that the situation had been resolved.


T submitted that the congestion charge scheme was administered according to a statutory procedure that included an appeal process, and that D had not followed that procedure in relation to individual penalty charge notices and should not be allowed to engage the remedy of judicial review, which was a remedy of last resort.


The claimant in person; Galina Ward (instructed by the solicitor, Transport for London), for TFL.



Held, T had failed to deal with the matters raised initially by D in his explanation as to why he believed he was still operating under the exemption. Although there was a statutory scheme in place, T had discretion to be able to deal with difficult cases and ought to have done so in the instant case. D had made it clear in his correspondence with T that his argument regarding one penalty charge notice held good for all the penalty charge notices sent to him. T should have accepted D's explanation and cancelled the penalty charge notices. The way in which T dealt with D created a legitimate expectation that the matter had been cleared up and that D would not be further charged. T then acted to his detriment. The only solution remaining was to order the release of D's car forthwith and the repayment to him of any monies taken by T in payment of the penalty notices. Application granted.






PROPERTY


Administration of justice - grant - leases - local authorities - powers of disposition - statutory interpretation - magistrates' courts - Lord Chancellor's power to create leases under property transfer scheme - transfer of part of building

R (on the application of the Lord Chancellor) (claimant) v (1) Chief Land Registrar (defendant) (2) Barking & Dagenham London Borough Council (first interested party): QBD (Admin) (Mr Justice Stanley Burnton) 15 July 2005


The Lord Chancellor had no power under schedule 2 of the the Courts Act 2003 to effect a grant by a local authority of a lease of that part of a building that comprised a magistrates' court in circumstances where the magistrates' court was only part of that building. The Lord Chancellor could not compel a local authority to transfer the entirety of its freehold or leasehold interest in a building, part of which was a magistrates' court.


The claimant Lord Chancellor sought declarations as to his power to create leases by a property transfer scheme relating to magistrates' courts under the Courts Act 2003. Under the 2003 Act, the general intention of the government was that magistrates' courts should be owned and administered by central government or its agencies. In the purported exercise of his powers under the Act, the Lord Chancellor made the Transfer of Property (Abolition of Magistrates' Courts Committees) Scheme 2005 for the transfer of property rights and liabilities of the magistrates' court estate. In relation to the first interested party, a local authority, the Lord Chancellor had purported to create a 999-year lease of the ground floor of the building which was used as a magistrates' court; the rest of the building was let to residential tenants. The Lord Chancellor was of the position that the lease was intended to convey a virtual freehold and that any terms restricting his ownership or control of the property were inappropriate. The defendant Chief Land Registrar expressed doubt as to whether the Act conferred power to create new leases of magistrates' courts, and declined to register leases created under the 2003 Act. The issues were whether the Lord Chancellor had power under schedule 2 of the Act to effect a grant by a local authority of a lease of that part of a building which comprised a magistrates' court in circumstances where the magistrates' court was only part of that building; and whether the Lord Chancellor could compel a local authority to transfer the entirety of its freehold or leasehold interest in a building, part of which was a magistrates' court, and whether such a transfer was within schedule 2, paragraph 1(1)(b).


Philip Jones (instructed by the Treasury Solicitor) for the claimant; Tim Mould (instructed by the Treasury Solicitor) for the defendant; Leigh-Ann Mulcahy, Nicole Sandells (instructed by the local authority solicitor) for the first interested party.


Held, Parliament had conferred on the Lord Chancellor a power to transfer property. However, that power was not a power to create leases or to grant them. There was an obvious difference between the transfer of property and the creation or grant of a new property interest. If Parliament had intended that there was to be a power to grant leases, different words would have been required and would have been used. The transfer of property involved the transfer of a bundle of rights and obligations relating to a building. The creation of a lease did not transfer any rights or obligations. It subjected the lessor's rights to those of the lessee.


Additionally, the Act did not make any provision for the determination of the provisions of a new lease. If Parliament had intended the Lord Chancellor to be able to determine the terms of any lease unilaterally, then it would have done so in express terms. Furthermore, if it had done so, it would have considered whether provision was required to limit that power or for independent determination of any dispute as to the terms of any lease. Accordingly, the Lord Chancellor had no power under schedule to effect the grant of new leases of magistrates' courts by responsible authorities. The obvious intention of the words 'in connection with or otherwise attributable to a magistrates' court' in schedule 2, paragraph 1(1)(b) was to include premises such as the offices used in connection with the magistrates' court itself and other rights that were ancillary to the magistrates' court accommodation.


If Parliament had intended to confer on the Lord Chancellor power to compel the transfer of ownership of premises that were not in any meaningful sense 'used as or in connection with the magistrates' court', it would have used clear words. Parliament would not have intended to confer such a far-reaching and less-than-obvious power when the wording of the Act did not make that clear. Additionally, there was an absence of any provision for the payment of compensation to a transferor whose interests would have been compulsorily taken away by the scheme. It was not understandable that Parliament would create a power to deprive local authorities of entire buildings where only part was occupied by the magistrates' court without provision for compensation.


In the absence of clear words, the Act should not be interpreted to that effect. The Act did not provide for the Lord Chancellor to grant a lease back of the part of the building not occupied by the magistrates' courts. However, the Lord Chancellor did have power under schedule 2, paragraph 3(2) to apportion or to divide any property rights or liabilities. Accordingly, schedule 2 did not confer on the Lord Chancellor power to effect a transfer by a responsible authority, or a local authority, of an entire building where part only was occupied as a magistrates' court. The enabling provisions of a statute for schemes such as that involved in the instant case had to be as carefully considered as the provisions of the scheme itself to ensure that the necessary powers and obligations were clearly conferred and imposed on the executive arm of the government. That did not happen in relation to schedule of the Act. Declaration granted in favour of defendant.






TAX


VAT - charity fund raising - publications - supplies - recoverability of input tax - distribution and production costs - general overheads - committed donors

Church of England Children's Society v Revenue & Customs commissioners: ChD (Mr Justice Blackburne) 29 July 2005


Input tax on the supply to a charitable society of the goods and services used exclusively in the production and distribution of its newsletter was recoverable because the distribution to committed donors was the disposal of goods forming part of the assets under schedule 4 and paragraph 5(1) of the Value Added Tax Act 1994.


The appellant charitable society appealed against a decision that it could not recover input tax on the supply of fundraising services in connection with its newsletter. The respondent commissioners cross-appealed a decision that the newsletter was a deemed supply under schedule 4 paragraph 5(1) of the Value Added Tax Act 1994, so that the society could recover all input tax on the supply to it of goods and services used exclusively in the production and distribution of the newsletter. The newsletter was provided by the society to its committed donors, which were found by means of fundraising activities. The commissioners had disallowed input tax because they were of the view that the provision of the newsletter to the committed donors was not a supply because it was not made for consideration. On appeal, the tribunal concluded that the supply of the newspaper was not for consideration and so was not a supply within section 5(2)(a) of the 1994 Act but was a deemed supply under schedule 4, paragraph 5(1) of the 1994 Act, so that the society could recover all the tax on the supply to it of the goods and services used exclusively in the production and distribution of the newsletter but could not recover the tax on the supply of the fundraising activities. The society accepted the tribunal's findings but contended that the fundraising related to the raising of money for the general purposes of the society and that therefore input tax fell to be dealt with in the same way as input tax on supplies to the society of its overheads in general, namely as residual input tax. The commissioners contended that the society was only entitled to credit on such supplies as residual input tax, meaning that there should be an apportionment of the supplies to taxable uses so as to give rise to a partial right to deduct the input tax in question.


David Milne QC (instructed by Nabarro Nathanson, London) for the appellant; Kenneth Parker QC, Paul Harris Solicitors (instructed by the Revenue & Customs Solicitor) for the respondent.


Held, the tribunal had failed to determine, because it had not been asked to do so, whether the donations received through the activities of the fundraising services were unrestricted and could be used for any purpose of the society, and assuming that they were, the extent to which the monies so raised were in fact used, by funding the society's general overheads, towards the society's taxable supplies. Accordingly, the matter was remitted to the tribunal, Kretztechnik AG v Finanzamt Linz, Case C-465/03 (The Times, June 21 2005) considered. (2) The tribunal had correctly decided that the society could recover all of the input tax on the supplies to it of goods and services used exclusively in the production and distribution of the newsletter (Customs & Excise Commissioners v West Herts College (2001) STC 1245 followed). There was nothing odd in treating as a supply, to its fullest extent, a disposal of goods, made otherwise than for consideration, even where the original input tax had been restricted. Appeal allowed, cross-appeal dismissed.