Ben Hoare Bell Solicitors & Ors, R (On the Application Of) v The Lord Chancellor

Regulations made under Legal Aid, Sentencing and Punishment of Offenders Act 2012 may regulate when remuneration is paid and may withhold payment for defined aspects of otherwise eligible services. The statutory power does not generally authorise making remuneration contingent on success. A remuneration scheme intended to incentivise rigorous merits assessment is unlawful where it places providers at risk because of events occurring after issue which are outside their control and unrelated to the merits assessment. The relevant question is whether the regulation is rationally connected to its stated statutory purpose. A challenge based on a prospective chilling effect requires evidence meeting a high threshold.

Five providers of legally aided public-law services challenged regulation 5A of the Civil Legal Aid (Remuneration) Regulations 2013, inserted by the Civil Legal Aid (Remuneration) (Amendment) (No 3) Regulations 2014. The regulation generally denied remuneration for preparing an application for judicial review unless permission was granted, subject to a discretionary payment where permission was neither granted nor refused.

The claimants argued that the regulation was ultra vires, inconsistent with the statutory purpose of the legal-aid scheme, and likely to deter providers from taking meritorious cases. The central issue was whether transferring the financial risk of the permission stage to providers was authorised by Legal Aid, Sentencing and Punishment of Offenders Act 2012 and rationally connected to the stated purpose of improving merits assessment.

1. Strict vires. The claim on the basis that regulation 5A was wholly beyond the statutory power failed. Section 2(3) of Legal Aid, Sentencing and Punishment of Offenders Act 2012 authorised regulations about payment of remuneration, including provision for circumstances in which payment would not be made. The word “about” was wider than a power merely to prescribe payment. Regulation 5A did not itself remove judicial-review work from legal aid; that consequence would arise only if providers withdrew or applied a stricter merits test.
2. Statutory purpose. The stated purpose was to incentivise providers to apply the merits test more rigorously before issuing proceedings. In the standard case, transferring the limited and reasonably predictable cost of a paper permission application, and possibly a renewal, could be rationally connected to that purpose.
3. That connection failed in three situations: where the defendant withdrew the impugned decision; where the court ordered an oral permission hearing; and where the court ordered a rolled-up hearing. In those situations the outcome, cost exposure or both could be materially affected by the court, the defendant or a third party after issue. The provider could not rationally have been incentivised at the outset by a risk created in that way. The amount at risk could also become unpredictable and disproportionate. The discretion to pay where permission was neither granted nor refused did not cure the defect, particularly because no equivalent discretion existed after permission was refused.
4. The regulation was therefore inconsistent with the statutory purpose of the scheme to that extent. The challenge on the Padfield ground succeeded.
5. The chilling-effect ground was not necessary to determine. The court nevertheless indicated that the authorities imposed a high evidential threshold, which was not met on the evidence then available. The claim succeeded on ground 2; relief was to be addressed separately.