Earlier this year the High Court held that the Legal Services
Commission (LSC) was barred from recovering payments on account if
proceedings for recovery are not commenced within six years of the
conclusion of the case. The LSC appealed to the Court of Appeal on
the grounds that the limitation period does not commence until the
LSC make a demand for payment. The Law Society and the Bar Council
obtained permission to intervene in the appeal in support of the
High Court judgment as the appeal was an important test case on the
limitation issue.
The Court of Appeal held that the limitation period runs from
the date of the final costs assessment. The Law Society is
disappointed with this ruling which is essentially in favour of the
LSC as it enables claims to be brought many years after a case has
ended when it is claimed an assessment has not taken place. The Law
Society remains concerned about the uncertainty this creates when
time starts to run and leads to potential unfairness where firms
have followed the proper procedure but with the passing of time no
longer retain the records to respond to enquiries about a case
perhaps ten or 15 years after the date the case concluded. We hope
Ms Henthorn appeals and if she does we will seek to intervene
again.
The main issues arising from the judgment are:
- The Court of Appeal clarified that in relation to a claim by
the LSC for an alleged overpayment, time starts to run under the
Limitation Act 1980 from the date of final assessment of costs
under regulation 100(8) of the Civil Legal Aid (General)
Regulations 1989.
- The Court rejected the LSC's principle argument that time
starts to run from when it makes a demand for payment.
- The Court also rejected Ms Henthorn's argument, supported by
the Society and the Bar Council, that the limitation period begins
at the end of a case.
- It is important that practitioners insist upon a final
assessment inclusive of counsel's fees (as they should) at the
conclusion of a case under a legal aid certificate.
- We recommend that practitioners who are the subject of
recoupment by the LSC for old cases for which they hold no or
little record need to refer to the LSC's guidance in Focus 34 and Focus 41 which says solicitors can submit other
evidence to back up their claims.
- Where there are grounds firms should also appeal against the
LSC's assessment using the LSC's own internal appeals
mechanism.
- Generally practitioners should review their file retention
policies for legal aid cases to ensure that evidence of final
assessments is retained for six years after assessment (even if
this will result in files being retained for more than six years
from the conclusion of a case). We will be issuing guidance on this
shortly.
- The Society remains of the view that the real issue about the
LSC's actions remains outstanding. The real and serious concern is
the LSC's delay by years and in some cases decades in bringing
claims of alleged over payment amounts to serious
maladministration. Despite certificates being discharged for many
years, in some for over ten years, no information has been sent to
firms. While this was not the focus of the appeal, a decision
upholding the High Court judgment would have brought these ancient
claims to an end and certainty to all concerned.
- Given the concerns about maladministration the Society has made
a formal complaint to the Parliamentary Ombudsman and her findings
are expected in the new year.
Read the Court of Appeal judgment delivered by the Master of the
Rolls Lord Neuberger:
Legal Services Commission v Henthorn [2011] EWCA Civ 1415 (30
November 2011)