Southwark Law Centre, R (on the application of) v Legal Services Commission

When assessing disposable income for public funding, accommodation costs under regulation 24(3) of the Community Legal Service (Financial) Regulations 2000 are ordinarily assessed by reference to rent payable, rather than rent actually paid. The discretion concerning what part of the rent is reasonable does not permit the Commission to rewrite the provision by allowing only payments made during the assessment period. The Funding Code and administrative guidance must conform to the Regulations. Deliberate reduction of disposable income remains subject to regulation 12. Where an occupier is no longer a tenant, regulation 24(3) may not apply, but regulation 24(6) requires a reasonable accommodation allowance to be assessed consistently with the approach in regulation 24(3) to (5).

Two claims were heard together. In each, legal representatives had granted emergency public funding to tenants facing possession proceedings, but the Legal Services Commission later refused reimbursement because it calculated disposable income by allowing only accommodation payments actually made during the relevant period.

In one case the claimant remained an assured tenant. In the other, the possession order had terminated the tenancy and the occupier was a tolerated trespasser. The central issue was whether regulation 24 of the Community Legal Service (Financial) Regulations 2000 required deduction of rent payable, or permitted deduction only of rent actually paid.

1. The claims succeeded. The Commission’s decisions were unlawful, were quashed, and had to be reconsidered in accordance with the judgment. On the judge’s view, reconsideration could only result in the claims succeeding.
2. Regulation 7 establishes a monthly assessment period, subject to an equivalent period where appropriate. Regulation 16 permits averaging income where a monthly figure is unrepresentative. That flexibility does not allow inconsistent criteria for accommodation costs in cases assessed under devolved powers.
3. Regulation 24(3) requires deduction of the net rent payable in respect of the main dwelling, or such part as is reasonable in the circumstances. The deliberate distinction in the Regulations between amounts paid and amounts payable shows that liability, rather than actual payment, is ordinarily the relevant measure. The phrase concerning what is reasonable does not authorise deduction only of amounts paid.
4. The Funding Code made under section 8 of the Access to Justice Act 1999, and the Commission’s guidance manual, could not produce a result inconsistent with regulation 24. Guidance referring to what the client actually pays could be construed consistently only as referring to what the client has to pay.
5. Regulation 12 continues to require deliberate reduction of disposable income to be disregarded. The Commission may investigate whether arrears payments or other conduct were deliberately arranged to secure eligibility, and suppliers must remain alert to that issue.
6. The judge expressed doubt whether a tolerated trespasser falls within regulation 24(3), since rent ordinarily presupposes a tenancy or grant. A person’s accommodation costs should nevertheless prima facie be considered. If regulation 24(3) does not apply, regulation 24(6) applies, and the reasonable amount must be assessed mutatis mutandis by the approach in regulations 24(3) to (5). Amounts equivalent to rent and arrears may be relevant, whereas charges formerly covered by regulation 24(4)(c) are not.

Not stated in the judgment.