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07 March 2014

Court Rules Legal Aid Policy Unlawful

Thursday 27 February 2014

 

COURT RULES LEGAL AID POLICY UNLAWFUL

Summary of Judgment

Mr Justice Treacy, sitting today in the High Court in Belfast, ruled that the Northern Ireland Legal Services Commission’s policy on the late submission of legal aid claims was unlawful.

John Fahy & Co Solicitors (“the applicant”) operate a substantial criminal practice in which much of the work is legally aided.  The firm’s administrative system is to keep a criminal file as a “work in progress” until all stages of the litigation have been completed and the bill for legal aid is not submitted until all the work to which the legal aid certificate relates has been completed.  This would have meant that the firm submitted its legal aid claims outside the statutory three month period prescribed by the legal aid rules however in all cases the bills were routinely accepted, and if good reasons were shown for the delay the payment would be made in full.

In June 2011, the Northern Ireland Audit Office published a report entitled “Managing Legal Aid”.  The report commented on “late” submission of legal aid bills saying that the imposition of penalties for cases submitted late is one area where the Northern Ireland Legal Services Commission (“NILSC”) could potentially reduce its costs, but that the Commission’s information in this area was incomplete.  The report noted that the NILSC should:

  • Review the current late submission policy;
  • Record centrally all instances of late claims and provide clear explanations for the action taken, particularly when deductions have not been made; and
  • Investigate ways to access data on concluded cases in order to produce performance information on the level of penalties imposed, both overall and on a case by case basis.

On 17 January 2012 the NILSC published a new policy by way of Circular 04/12 (“the Circular”).  This made substantial changes to how late claims would be treated.  The key changes included removing the provision for consideration of a “good reason” for late submission; only permitting extension of time on the grounds of “exceptional circumstances” where there is a prior, pre-expiration application to extend time; applying a tariff of financial penalties unless there are “compelling reasons to vary the tariff”; and not assessing the claim if it is submitted 15 months after the conclusion of the proceedings.  This new method of administering “late” claims was intended to operate from 7 February 2012.  The period between 17 January and 7 February 2012 was designated as a “first amnesty” and all claims were to be paid in full irrespective of their age without penalties being incurred.  A second amnesty period was operated between 7 February and 16 March 2012.  In this period, NILSC decided that claims would not be refused on the basis of no prior request for extension having been made, however the sliding scale of deductions would be applied.  After the expiry of this second unpublished amnesty, the new policy was to be applied in full.

The applicant submitted that the firm’s first knowledge of the new policy was on 18 May 2012 was it was informed about the NILSC’s decision in respect of its claim for costs in a case.    The firm sought a declaration that the Circular was unlawful, unreasonable and incompatible with the NILSC’s obligations under the legal aid rules.  It also challenged the NILSC’s decision in respect of 10 individual cases.

The relevant provisions of the various Legal Aid Rules provide for claims to be submitted within three months of the conclusion of the proceedings to which the legal aid certificate relates.  This time limit may be extended “for good reason” and “in exceptional circumstances” there is discretion to consider whether it is reasonable to reduce the costs.   Mr Justice Treacy said that the extension provisions are one part of the rules which govern the administration by the NILSC of the criminal legal aid schemes.  He noted that the NILSC is to operate within these rules and while it has authority to use the discretion set out in the rules, it should not use its discretion to undermine the objectives of the scheme or stray outside the bounds of the powers vested in it. 

The judge referred to two cases in which the extension provisions of the NI rules and the virtually identical legal aid rules in England and Wales.  These set out the manner in which the extension provisions out to be applied and the circumstances to which the time to submit costs could be extended.  He said the NILSC policy and circular was intended as a guide as to the manner in which the NILSC would exercise the discretion granted to it in the rules but commented:

“In writing this impugned policy, the NILSC has strayed beyond creating a guide as to how they will use their statutorily granted discretion, and have instead fundamentally changed the nature and extent of the discretion they will apply to cost claims submitted late”.

Mr Justice Treacy said that NILSC had done so by:

  • Entirely jettisoning their discretion to decide whether there are “good reasons” for the late submission of a costs claim.  He said that making a decision on this issue is essential in order for the NILSC to meet the statutory requirement to make full payment on cost claims submitted late for good reason:  “The NILSC in this policy has divested itself of the ability to perform this part of its functions and in this regard the policy is unlawful”;
  • Jettisoning their discretion to decide whether there are “exceptional circumstances” which justify the payment of cost claims submitted late where representations in relation to those circumstances are made after the expiry of the statutory time limit.  The judge said that the NILSC, in place of this statutory discretion, had substituted a narrower test whereby they can make such payment if there are “wholly exceptional circumstances”:  “The NILSC in this policy have significantly departed from the statutory scheme and unlawfully fettered their discretion and in this regard the policy is unlawful”;
  • Jettisoning their discretion to decide whether, in the event of a costs claim submitted after the statutory time limit for exceptional circumstances, it is reasonable in the circumstances to reduce the costs.  Mr Justice Treacy said that NILSC had substituted a narrower test whereby pre-set penalties would apply unless there are “compelling reasons” to vary the tariff.  He added that in this regard the policy was unlawful;
  • Jettisoning their discretion to decide if a sanction is proportionate by substituting the narrower test in relation to the financial penalties and imposing the pre-set scale of penalties.  The judge said that in so doing, the NILSC had divested themselves of their ability to perform their statutory duty to allow a reasonable amount in respect of all work reasonably undertaken and properly done: “In this regard the policy is unlawful”;
  • Asserting a power they do not have by adopting a sliding scale of financial penalties in the event of “exceptional circumstances” for late submission of costs and which mandates that no payment at all will be made for claims submitted 15 months late.

Mr Justice Treacy concluded that he could find no reading of the policy which would be consistent with the legal aid rules and said that for this reason the individual decisions under the policy could not stand.

NOTES TO EDITORS

1.        This summary should be read together with the judgment and should not be read in isolation.  Nothing said in this summary adds to or amends the judgment. The full judgment will be available on the Court Service website (www.courtsni.gov.uk).

 

 

ENDS

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Lord Chief Justice’s Office

Royal Courts of Justice

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