Legal Services Commission v Loomba

A statutory body may use a wide incidental power to prevent recipients of payments on account retaining money to which they are not entitled. Under the Legal Aid Act 1988, the Commission could therefore make a nil assessment and recoup payments where the solicitor had expressly or by conduct abandoned any intention to submit final costs for assessment.

Regulation 105 of the Civil Legal Aid (General) Regulations 1989 did not itself confer a power to nil assess in the absence of an application for assessment. Later regulations could not alter the meaning of the enabling Act, although a later recovery provision was not objectionably retrospective. A restitutionary claim was not impliedly excluded by the statutory scheme.

Three test claims by the Legal Services Commission concerned payments on account made to solicitors under legal aid certificates issued pursuant to the Legal Aid Act 1988 and the Civil Legal Aid (General) Regulations 1989. The solicitors had generally failed to submit final bills, and the Commission had made nil assessments and recouped the payments through their supplier accounts.

The claims raised questions of statutory authority, restitution, contractual compromise, public law fairness, limitation and human rights. The central statutory issue was whether the Commission could nil assess and recoup payments under section 4(1)(b) of the 1988 Act, regulation 105 or regulation 102B(2) of the 1989 Regulations.

1. Statutory power. The Commission’s incidental power under section 4(1)(b) of the Legal Aid Act 1988 was sufficiently wide to permit a nil assessment and recoupment where a solicitor had expressly, or by conduct, indicated that no final claim for costs would be submitted. That power was necessary to prevent solicitors retaining payments on account despite the absence of an established final entitlement.
2. Construction of the regulations. Contemporaneous regulations may assist in construing an enabling Act, following Hanlon v The Law Society [1981] AC 124. Later regulations cannot alter the intention of the Act. The original 1989 Regulations did not displace section 4(1)(b), because they lacked the necessary provisions for nil assessment and recoupment. Regulation 105 itself did not confer that power: it assumed that the solicitor had taken the initiative by applying for assessment.
3. Regulation 102B(2). Although regulation 102B(2) was introduced in 2002, its application to earlier payments on account was not objectionably retrospective. A payment on account was subject to the eventual determination of liability, and any obligation to repay an excess was inchoate until that determination.
4. Restitution. A restitutionary claim was not excluded by the statutory scheme. Unlike the scheme considered in R (Child Poverty Action Group) v Secretary of State for Work and Pensions [2010] UKSC 54, the statutory arrangements were not exhaustive and contained lacunae through which solicitors could obtain an undeserved windfall.
5. Defences and procedure. The deed of settlement did not bar the claims because BACS statements generated before 1 April 2008 constituted debit notes for the purposes of clause 8.1. The Commission had not unlawfully fettered its discretion. Its policy allowed extensions, consideration of alternative evidence and review of nil assessments. The procedures followed were fair and did not breach natural justice or Convention rights. Payments on account were not the solicitors’ unqualified property for the purposes of Article 1 of the First Protocol.
6. Disposition. Subject to limitation points arising from Legal Services Commission v Henthorn [2011] EWCA Civ 1415, the Commission was entitled to recoup the payments on account under section 4(1)(b) of the 1988 Act.

The Ulasi and Simon Carter claims originated in the County Court and were transferred to the High Court as test cases. The Loomba claim was already pending in the High Court. The three claims were ordered to be heard together. The judgment also considered the implications of the Court of Appeal’s decision in Legal Services Commission v Henthorn [2011] EWCA Civ 1415.