Cassidy v Stephensons & Anor

Under section 10(7) of the Access to Justice Act 1999, the statutory charge extends to property recovered or preserved in proceedings, or in a compromise or settlement of the dispute in connection with which the funded services were provided. The provision did not extend the charge to damages recovered in a separate professional-negligence claim arising from the failure of the funded clinical-negligence claim. The wording and legislative history preserved the previous scope of the charge. A failed claim did not create a valuable chose in action merely because a judgment later crystallised the loss. The constructive-trust reasoning in Cavaliere v Legal Services Commission therefore did not apply.

The claimant, administratrix of the estate of Paul Nevitt, had pursued a clinical-negligence claim with public funding. Proceedings were issued but the claim failed when an extension of time for serving the claim form was set aside. The claimant later recovered £30,000 from the first defendant’s insurer in a professional-negligence claim concerning that failure.

The Legal Services Commission had paid costs incurred under the funding certificate and asserted that its statutory charge attached to the settlement. The claimant sought declarations concerning that charge. The preliminary issue was whether section 10(7) of the Access to Justice Act 1999 applied to the later professional-negligence settlement.

1. Declaration. The sums paid by the Legal Services Commission for costs incurred by Stephensons and Lloyd Jones Associates were not charged against the sums paid to the claimant under the 2007 compromise. The claimant was entitled to the declaration sought.
2. Section 10(7) requires a connection between the funded services and the proceedings, compromise or settlement in which the property was recovered or preserved. The funded services were provided for the clinical-negligence claim. The £30,000 settlement was recovered in a separate professional-negligence claim, for which no services had been provided under the certificate.
3. Although the wording of section 10(7) differed from section 16(6) and (7) of the Legal Aid Act 1988, clearer words would have been required to alter the established scope of the statutory charge. The approach under the earlier legislation, including the distinction between property formally in issue and property substituted for it, supported that construction.
4. If the statutory language were ambiguous, the parliamentary statement relied on under Pepper v Hart confirmed that the new charge was intended to have the same scope as the existing legal-aid charge and that the amendments made no substantive change.
5. The constructive-trust argument based on Cavaliere v Legal Services Commission failed. In that case, payment by an insurer reduced a judgment debt obtained in the legally aided proceedings. Here, the order setting aside service did not create a valuable right or judgment debt. The cause of action against Stephensons accrued when the period for serving the claim form expired, as explained in Khan v RM Falvey and Hatton v Chafes; the later judgment merely crystallised the loss.
6. Permission to appeal was granted to the Court of Appeal. The claimant was invited to lodge an agreed form of order. The judge’s provisional view was that the Second Defendant should pay the costs of the claimant and the First Defendant.

The claim was issued in the Warrington County Court. On 4 February 2009, Deputy District Judge Dawson directed that the statutory-charge issue be tried as a preliminary issue and transferred the claim to the High Court in Manchester. The High Court determined the preliminary issue and granted permission to appeal to the Court of Appeal.