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Selected Cases and Summaries of Completed Investigations - October 2000 to March 2001
Volume 4 - 2nd REPORT - SESSION 2001-2002
Chapter 1
LEGAL SERVICES COMMISSION
8. Case No. C.1446/00
Failure to act upon representations concerning a person’s financial eligibility for legal aid
Summary
Mr and Mrs V complained that the Legal Aid Board (LAB) had failed to act effectively upon their representations that their opponent in proceedings was not financially eligible for legal aid. The Ombudsman found that in November 1997 LAB had failed to review the opponent’s eligibility upon receipt of information from Mr V about the opponent’s income from business; that when Mr V had renewed his representations in March 1998 LAB’s handling of them had been characterised by error and delay, and had again failed to tackle the key issue effectively; and that the Board had also mishandled a report by the opponent of a change in his circumstances and representations by Mr V regarding the merits of the opponent’s case. The Ombudsman criticised that very poor performance, the effect of which had been to postpone from November 1997 to November 1998 the withdrawal of the opponent’s legal aid, thereby prolonging the case and increasing the costs for which Mr V became liable. The Chief Executive of LAB agreed to offer Mr V an ex gratia payment representing 50 per cent of the costs for which he was liable as from December 1997 to November 1998.
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Full text
8.1 Mr and Mrs V complained that the Legal Aid Board (LAB) had failed to act effectively upon their representations that their opponent in proceedings was not financially eligible to receive legal aid, and that as a result they had incurred substantial financial loss.
8.2 My investigation began in December 1999 once the Ombudsman had obtained the comments of the Chief Executive of LAB following referral of the complaint by the Member. Since then, LAB have been replaced by the Legal Services Commission; for convenience, I refer to “LAB” throughout this report. The following paragraphs describe the relevant aspects of the legal aid scheme as it existed at the time of the events leading to Mr and Mrs V’s complaint.
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Background
8.3 In order to obtain legal aid an applicant had to satisfy LAB that there was an issue of fact or law which should be submitted to a court for a decision and that he or she had reasonable grounds for taking or defending a court action. LAB had also to be of the view that it was reasonable in the particular circumstances of the case that legal aid should be granted. In deciding that point LAB applied the principle that legal aid would normally be granted only in circumstances where, having regard to the likely costs and benefits of the action, a privately paying client of moderate means would be advised to litigate. The applicant had also to be financially eligible to receive legal aid. Until 1997 the Benefits Agency’s Legal Aid Assessment Office (the assessment office) were responsible for assessing, under the Civil Legal Aid (Assessment of Resources) Regulations 1989, whether an applicant was financially eligible. During 1997 LAB’s area offices assumed responsibility for financial assessment.
8.4 The Civil Legal Aid (General) Regulations 1989 required an applicant or an assisted person to give such information and to provide such additional material as was required by LAB or the assessment office. LAB might discharge or revoke a legal aid certificate if the assisted person was found to be no longer eligible for legal aid, or had knowingly made an untrue statement or failed to disclose a material fact in connection with the application, or had failed to provide information when required. If the assisted person was assessed as being no longer financially eligible for legal aid, LAB were required to discharge the certificate from such date as they considered appropriate. If a certificate was discharged the assisted person remained legally aided until the date of discharge. If a certificate was revoked the assisted person was regarded as never having been legally aided. In certain circumstances LAB might not discharge or revoke a certificate until the assisted person had been given the opportunity to show cause why that should not be done. If LAB then decided to discharge or revoke the certificate the assisted person could appeal to an area committee. (That procedure did not apply when a certificate was discharged on grounds of financial ineligibility.)
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8.5 Section 38 of the Legal Aid Act 1988 restricts the disclosure of information which has been provided to LAB or the assessment office in connection with an applicant’s or an assisted person’s case. Those rules of confidentiality have not inhibited my investigation as the Ombudsman has had access to the relevant papers pursuant to section 8 of the Parliamentary Commissioner Act 1967. The Ombudsman may disclose information obtained in the course of an investigation but only in the circumstances specified in the 1967 Act. I have therefore not included as much detail in this report as is usual in order to avoid disclosing details of the affairs of Mr V’s opponent.
Investigation
8.6. 1997 On 23 January 1997 the opponent’s solicitors (solicitors A) sent LAB’s area office an application for legal aid to take proceedings for breach of contract against Mr V in the sum of £20,182. They explained that that derived from a bill for building work totalling £55,574 of which Mr V had paid £35,392. On 10 February, on the basis of the information provided in the application, the assessment office assessed the opponent as financially eligible for legal aid. The area office subsequently granted him a legal aid certificate.
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8.7 On 7 July solicitors A wrote to the area office informing them that the opponent had recently become a director and shareholder of a renovation company. They asked that the appropriate forms be sent to the opponent in respect of his financial eligibility for legal aid. On 28 July Mr V wrote to the area office making representations against the award of legal aid to the opponent. He said that between October 1996 and January 1997 he had paid the opponent £35,392 in respect of building work. The opponent was the director of a renovation company which was currently renovating two properties. While the opponent had been working for Mr V he had said that he was working on at least two other substantial building jobs and that he had exceeded the VAT threshold, suggesting income of more than £50,000. Mr V said that he did not know the opponent’s financial position but it seemed to him that there was a good possibility that he exceeded the thresholds for financial eligibility for legal aid. On 18 August the area office acknowledged Mr V’s representations and explained that they would be investigated by the assessment office, and that they would normally expect the investigation to be completed within about six weeks. That day they wrote to the assessment office asking them to investigate Mr V’s representations.
8.8 On 3 September the assessment office contacted Companies House regarding the opponent’s company directorship. On 18 September they noted that the opponent had been registered as director of the renovation company since 9 May 1997 and was also registered as the director of his own building company. On 23 September the assessment office wrote to the opponent. They asked him to comment on their understanding that he was a director of the renovation company and that his building company had recently undertaken work worth more than £85,000. They asked him to ask his accountant to confirm in writing how much net profit it was estimated his building company would make and when his first year’s trading accounts would be ready. They asked him to complete a further statement of his financial circumstances and to provide bank statements, with an explanation of all transactions over £100. They enclosed a form for completion by his accountants on which the accountants were asked to give information about his directorship of the renovation company. On 8 October the opponent replied confirming that he was managing director of the renovation company. He enclosed a completed statement of his financial circumstances and bank statements for personal and business accounts.
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8.9 On 16 October the assessment office wrote to the opponent. They pointed out that he had become director of the renovation company on 9 May 1997; they asked if that was in addition to his pre-existing self-employment as a builder. They repeated their request for completion by his accountants of the form about his directorship of the renovation company, and asked for completion of a further form giving information about his building company. On 31 October the opponent replied. He said that he had been self-employed as a builder until setting up the renovation company. The building company had been liquidated and no company records were available. He enclosed the form about his directorship of the renovation company, completed by his accountants, and a copy of the company’s management accounts for the period ending 31 July 1997.
8.10 On 17 November Mr V wrote to the area office. He said that he was concerned that little progress seemed to have been made regarding his representations of 28 July and that the opponent’s claim against him was only continuing due to his legally aided status. On 14 November a preliminary hearing had been held before a district judge who in dismissing both the opponent’s actions had been fairly scathing regarding the tactics the opponent had been employing. During the discovery process further information had come to light. The renovation company was paying the opponent £500 per week, as evidenced by his bank statements; while working for Mr V, from October 1996 to January 1997, the opponent had paid himself £726.62 for petrol, as evidenced by his ‘day book’; the opponent’s bank statements also showed that he had paid out other amounts totalling over £2,600; and the renovation company continued to refurbish a five-bedroom house. Mr V asked the area office to let him know whether their investigation had reached any conclusion.
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8.11 On an unspecified date the assessment office wrote to the area office. They said that the opponent had confirmed that he was the managing director of the renovation company and had supplied accounts for the year ending 31 July 1997. The assessment office said that those accounts showed that the opponent had made a loss, therefore although the information supplied by Mr V was correct it did not affect their assessment of the opponent’s financial eligibility for legal aid. On 24 November the area office wrote to Mr V. They said that the points which he had raised and any new information which he had provided had been carefully investigated by the assessment office; the area office had considered the results of the investigation and had concluded that that information did not materially affect the grant of legal aid to the opponent. On 1 December Mr V wrote to the area office asking if his letter of 17 November had been taken into consideration. On 8 December the area office replied that his letter of 17 November had been considered when investigating the opponent’s eligibility for legal aid but it had been concluded that the information provided in that letter did not materially affect the opponent’s eligibility.
8.12 1998 On 15 March 1998 Mr V wrote to the area office. He said that he had further information regarding the opponent’s financial status. He had been contacted by a person who, in October 1997, had instructed the opponent to renovate a property and since then had paid him £56,000. That person had been contacted by numerous sub-contractors and suppliers who had not been paid by the opponent. Mr V gave the person’s name and address and the address of the property involved. He asked if the area office would consider how the opponent could receive £56,000 in the space of five months, work on other jobs during that time and still qualify for legal aid. On 6 April the area office wrote to Mr V seeking his consent to disclose the information in his letter of 15 March to the opponent. On 7 April Mr V replied giving his consent. He added that he had since met with a former co-director of the renovation company who had told him that in the first six months of trading as the company the opponent had taken drawings of between £19,000 and £23,000; the opponent had paid personal expenses from company funds, such as £700 to a restaurant for his birthday party; while operating as the company the opponent had worked on two other properties in addition to the one mentioned in Mr V’s letter of 15 March, each for substantial payment; the company had ceased trading in January 1998 and was being put into liquidation; that was the third company which the opponent had put into liquidation; the opponent was now trading under another company name and was working on another property. Mr V said that the former co-director believed that the opponent had taken £40,000 out of the renovation company during its existence. Considerable sums were owed to sub-contractors and suppliers. Mr V gave an address to which he said the opponent had moved. He added that to try to settle the matter without further costs being incurred he had that day sent a ‘without prejudice save as to costs’ offer to solicitors A and the court; if that offer was not accepted he was prepared to go to trial. The next hearing was scheduled for 16 April. Mr V’s offer to the opponent, dated 6 April, said that in full settlement of the opponent’s claim and all costs in the matter he was prepared to pay £3,206.94 and waive his counterclaim totalling £4,696 and costs awarded in his favour.
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8.13 On 16 April the court ordered that Mr V had leave to serve a further statement of a lay witness (the former co-director of the renovation company), and that experts were to meet with a view to narrowing the issues and prepare a joint report stating what items remained in dispute and why. On 10 May the area office wrote to the opponent. They asked him by 25 May to provide the names of all the directors of the renovation company; to confirm if he had received £56,000 for a job which he had been instructed to do in October 1997, providing documentary evidence to support his answer; and to provide full details of all income received from 1 January 1997 to date. They sent that letter to the opponent’s previous address.
8.14 On 17 June Mr V wrote to the area office. He said that he was concerned about the delay in receiving a decision regarding the opponent’s eligibility for legal aid, particularly as solicitors A had since applied for a trial date to be set. He added that experts from both sides had met as requested by the court and agreed that at best the opponent’s claim was worth £9,147. He reminded the area office that he had made an offer of more than £8,000 to settle the matter. On 27 June the area office replied that the investigation into the opponent’s means was continuing and they hoped to complete it within the next four weeks. They would send a separate reply concerning the point Mr V had raised about the merits of the opponent’s case shortly. That day they wrote to the opponent at his previous address asking him to show cause why his legal aid should not be withdrawn for failure to co-operate with their investigation. They copied that letter to solicitors A.
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8.15 On 14 July solicitors A wrote to the area office. They said that the opponent had changed address and supplied his new address (which was similar but not identical to that provided by Mr V on 7 April). That day the area office learned by telephone of a change in the opponent’s circumstances that had taken place in December 1997. On 18 July the area office wrote to the opponent thanking him for confirmation of his new address and repeating the questions put to him in their letter of 10 May. They asked for a reply by 3 August. They sent that letter to the opponent’s previous address. On 21 July Mr V wrote to the area office seeking an explanation for the delay in deciding the opponent’s eligibility for legal aid. On 31 July the area office wrote to the opponent at his new address repeating the questions asked in their letter of 10 May; they also asked him to complete a financial assessment form regarding the change in his circumstances reported on 14 July. They asked for a reply by 6 August. On 3 August Mr V wrote to the area office requesting a reply to his letter of 21 July. On 9 August the area office replied that the investigation had not yet been completed.
8.16 On an unspecified date the opponent responded to the area office’s requests of 10 May. In response to their request that he provide the names of the directors of the renovation company, he enclosed some letter-headed paper; he suggested that if that was not sufficient the area office should contact Companies House. Regarding the area office’s request for clarification of £56,000 that they understood he had received for a job, he enclosed an estimate for that job and an invoice for monies received by the renovation company. Regarding the area office’s request for details of all income received from 1 January 1997 to date, he enclosed the renovation company’s bank statements, on which he said that he had highlighted all the monies paid to himself. On 15 August LAB wrote to the opponent asking if either while trading as the renovation company or as a sole trader he had carried out work at the address supplied by Mr V on 15 March (because the address on the invoice supplied by the opponent was different). They asked that he provide details of the work and the payment received. They asked for a reply within 14 days. They sent that letter to the opponent’s previous address.
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8.17 On 9 October Mr V telephoned the area office. They noted that he had told them that the trial had been set for 11 November and he was very anxious about their delay in coming to a decision about his representations. The area office noted that no action had been taken since August. On 11 October the area office wrote to Mr V apologising that he had not been updated recently with regard to their investigation. They said that the investigation was still open and would be expedited as much as possible. That day they wrote to the opponent at his previous address asking him to show cause why his legal aid should not be withdrawn for failure to co-operate with their investigation. They copied that letter to solicitors A. On 15 October solicitors A replied that the opponent had provided all the information asked of him; they asked the area office to check their file. On 16 October the area office wrote to the opponent at the correct address. They enclosed a copy of their letter of 15 August and apologised for having sent it to the wrong address. They asked him to reply within seven days. On 19 October Mr V wrote to the area office. He said that the case was to go to trial on 11 November and consequently an early decision would be appreciated. On the same day Mr V wrote to solicitors A offering £4,000 in settlement of the opponent’s claim, which he said had been paid into court that day, plus waiver of his counterclaim and of costs awarded in his favour.
8.18 On 20 October the opponent replied to the area office’s letter of 16 October. He confirmed that the work in question had been carried out on the property at the address given on the invoice he had supplied; details of the payments received would be on the bank statements which the area office held. On 24 October the area office wrote to the opponent. They said that they could not locate those transactions on the statements. They asked that he advise them what his full bill had been and when he had received payment. They asked for a reply by 9 November. On the same day the area office wrote to Mr V. They assured him that their investigation was being progressed as quickly as possible. On 27 October solicitors representing Mr V (solicitors B) wrote to the area office expressing surprise that the investigation of Mr V’s representations had yet to be concluded in view of the time that had elapsed since those representations had been made. They added that a substantial amount of costs was going to be incurred in a short space of time as the action was listed for a three-day trial beginning on 11 November.
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8.19 On 5 November the opponent accepted Mr V’s offer of 19 October. On 12 November the area office replied to solicitors B. They said that they had commenced an investigation into Mr X’s representations on 3 April and it was taking longer than they had originally anticipated. Some delay had been caused by the opponent’s failure to notify them of his new address so that various items of correspondence had had to be reissued. The investigation had then raised other areas of concern on which they had been seeking comments and documentary evidence. On 19 November solicitors A informed the area office of the opponent’s acceptance of Mr V’s offer. On 20 November the area office revoked the opponent’s legal aid certificate on the grounds that he had failed to provide information requested of him. On 24 November the area office wrote to solicitors B. They said that they had considered all the information available and had concluded that the opponent did not qualify for legal aid; his certificate had been revoked. On 1 December the opponent appealed against the revocation on the grounds that he had responded to all the area office’s requests for information.
8.20 On 13 December Mr V wrote to the area office. He related the history of his representations regarding the opponent’s eligibility for legal aid. He said that because the opponent’s legal aid certificate had remained in place he had been advised by counsel to make an offer and payment into court to protect him against the costs of trial. Having accepted the offer of £4,000, the opponent had claimed £33,000 costs from him. Mr V believed that the opponent’s claim would not have progressed past the early stages if the opponent had not been legally aided. He contended that legal aid would never have been granted had a proper investigation been carried out. Apart from that, he had supplied the area office with specific information which they could easily have verified. Despite his notifying them of the opponent’s change of address and them having solicitors A’s details they had still claimed that they had been unable to contact the opponent for a lengthy period. He understood that the area office were required to set time limits for a response from an applicant but they did not appear to have done that for the opponent. Mr V listed a number of questions about the area office’s handling of the case on which he requested specific responses, including why they had waited until after the trial date to revoke the opponent’s certificate and whether they had funded a claim for £21,000 to the extent of £33,000.
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8.21 On 18 December the area office replied. They said that Mr V’s representations in July 1997 had been dealt with by the assessment office, who had decided that the representations did not affect the opponent’s eligibility for legal aid. In October 1997 the area office had taken over from the assessment office responsibility for the assessment of financial eligibility for legal aid. The area office’s view had been that Mr V’s representations of November 1997 did not materially change the decision of the assessment office. When Mr V had written again in March 1998 the area office’s investigation had “started in earnest”. The area office acknowledged that they had not concluded their investigation as quickly as they should have done. Inefficiencies on their part had caused the process of requesting information from the opponent to be longer than necessary. Deadlines had been set on a number of occasions but they had failed on more than one occasion to review the case and take the next action speedily. The address Mr V had given them for the opponent had proved to be wrong and that had not become apparent until after solicitors A’s intervention; even after that they had continued to write to the opponent at the wrong address. In answer to Mr V’s question as to why they had waited until after the trial date to revoke the opponent’s certificate, they said that their own errors had caused some delay but it had been only after the necessary exchange of correspondence that they had been in a position to act. Regarding the costs of the case, they said that legal aid certificates specified the level of costs allowed on the basis of what the area office considered reasonable; however, the costs of cases were ultimately decided by taxation officers of the courts. They were unable to disclose to Mr V the costs condition they had placed on the opponent’s certificate. In conclusion the area office said that they had made administrative errors which had caused delays. They apologised for any inconvenience caused. However, they said that from the information available they could not say if there would have been a different or an earlier decision had some of those errors not occurred.
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8.22 On 29 December the area office wrote to the opponent. They said that they were reviewing the revocation of his legal aid certificate further to his notice of appeal. They asked for clarification of information contained in the accounts of the renovation company that he had sent the assessment office on 31 October 1997. (LAB have since confirmed that the opponent did not reply to that letter and his certificate remained revoked.)
8.23 1999 On 1 January 1999 Mr V wrote to the Customer Service Unit at LAB headquarters. He said that he was not satisfied with the response he had received from the area office. He said that the area office had admitted in their letter of 18 December that they had made administrative errors which had caused delays. It was those delays which had led him to make an offer to the opponent prior to the trial, thereby causing a loss to him of £33,000 plus £4,000. He held LAB responsible for that loss and wished to claim compensation. His barrister would state that the advice she had given him to make the opponent an offer two weeks before the trial had been solely related to LAB allowing the opponent’s legal aid certificate to continue through the trial. He added that a leaflet published by LAB said that they would normally expect an outcome within about 14 weeks following an investigation; it had taken the area office 36 weeks to revoke the opponent’s certificate following the further information Mr V had supplied. He found it hard to understand why the area office had allowed delays to occur as he had sent five reminders to them and made two or three telephone calls to staff in the period leading up to two weeks before the trial. He suggested that the information he had supplied prior to his letter of 15 March 1998 would have been sufficient basis on which to conduct an “earnest” investigation. He asked if a proper investigation had been carried out in November 1997.
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8.24 On 26 January the Customer Service Unit replied to Mr V. They summarised the history of the case as they saw it. They acknowledged that there had been error and delay by the area office in their investigation of Mr V’s representations, despite his having chased them for progress. They attributed delays in pursuing correspondence with the opponent to backlogs of work in the area office. They said that during the delay all relevant information had been considered and it had not indicated that the opponent’s legal aid should be withdrawn. They concluded that LAB tried to meet their published targets for investigating representations and they accepted that the service Mr V had received from the area office had fallen below the standard he should reasonably expect. They apologised for that and said that they had brought the matter to the attention of the area manager. The area office now investigated the majority of new representations within five working days; the backlog had been cleared and they would shortly be taking action to ensure that all “diary dates” were up to date. Regarding Mr V’s claim for compensation, they invited him to write to them giving details and evidence of his alleged financial loss, for consideration by LAB’s Costs Appeals Committee.
8.25 On 31 January Mr V sent the Customer Service Unit the bill of costs submitted by the opponent, totalling some £33,000. In addition he claimed £4,000 which had been paid into court to settle the case. He reserved the right to include in the claim his own legal costs. He said that LAB’s failure to deal properly with his representations had enabled the opponent to pursue, with little regard to costs, a matter which he would not have pursued if he had not been legally aided, putting Mr V at a severe disadvantage and causing him to offer five days before the trial to settle the case as his barrister had advised that even if he had won he would have had to pay all his costs, or if a small award had been made against him he might have had to pay the opponent’s costs as well. On the same day Mr V asked the Member to refer his complaint to the Ombudsman.
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8.26 On 27 July, following settlement of the opponent’s claim for costs, Mr V quantified his claim for compensation as £4,000 in respect of the original settlement, £21,000 in respect of the opponent’s costs, and £4,586 in respect of his own costs and fees – a total of £29,586. On 24 August LAB wrote to Mr V informing him that the Costs Appeals Committee had considered his claim and decided that a payment was not justified. The Committee accepted that there had been minor maladministration by LAB in the form of delay in dealing with Mr V’s representations and the sending of correspondence to the opponent at an incorrect address, but found no direct causal link between that maladministration and the costs claimed by Mr V. They considered that LAB had investigated the information provided by Mr V as to the opponent’s financial eligibility for legal aid and the merits of his case, and had concluded that his legal aid should continue. Mr V’s legal advisers would have been aware of the consequences of settling the case and the decision to do so would not have been made purely on the basis that the opponent was legally aided; if that had been so, Mr V could have settled at a much earlier stage without incurring costs.
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Findings
8.27 I find no administrative fault with the grant of legal aid to the opponent in February 1997 (paragraph 8.6), which was consistent with the circumstances as presented to the area office and the assessment office in the application. There is no indication that the area office took any action on solicitors A’s report of 7 July of a change in the opponent’s financial circumstances (paragraph 8.7). Mr V’s representations on the point later that month ensured that an investigation began, but the assessment office did not write to the opponent until 23 September (paragraph 8.8). That action could have been taken some two months earlier if the area office had responded to solicitors A’s report.
8.28 On 31 October the opponent provided the assessment office with a statement from his accountants and business accounts (paragraph 8.9). For the reasons given in paragraph 8.5 I do not consider it appropriate to give details of that information here. However, I can say that it should have led the assessment office to review the opponent’s financial eligibility for legal aid. The points made by Mr V in his letter to the area office of 17 November (paragraph 8.10) amplified the need for such a review, but the area office simply decided that Mr V’s letter did not make any difference to the assessment office’s decision that the opponent remained financially eligible for legal aid. In view of the fact that the area office had by then assumed responsibility for the assessment of financial eligibility for legal aid, and had not seen the information upon which the assessment office had based their decision, I regard that as an inadequate response.
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8.29 Mr V renewed his representations in March 1998 (paragraph 8.12). There was a delay of several weeks before the area office sought his consent to disclose those representations to the opponent. Another month elapsed before the area office wrote to the opponent (paragraph 8.13), and they did so using an address which Mr V had told them was no longer current. To make matters worse, although they asked the opponent to reply by 25 May, they did not follow up the matter until 27 June, after prompting by Mr V. Even after they had been given the opponent’s new address on 14 July, the area office sent two letters to the old address (paragraphs 8.15 and 8.16); those errors were likewise rectified only as a result of Mr V’s intervention. There was a delay of two months in following up the second of those letters, with the result that it was not until 16 October – after a third misdirected letter – that the area office’s enquiries were back on track (paragraph 8.17). Moreover, those enquiries had since 15 August focused too narrowly on the question of a particular payment received by the opponent, whereas the correct course would have been to seek up to date information from the opponent’s accountants regarding his income from business so as to enable a review of his income to be made. I criticise the area office for their persistently ineffectual handling of Mr V’s representations of March 1998. If they had dealt with the matter properly, they would in April 1998 have written to the opponent care of solicitors A requiring verification from his accountants of his income from business. That would have given ample time to resolve the point before the date set for the trial (11 November).
8.30 Quite apart from the question of the opponent’s income from business, the area office learned on 14 July 1998 of a significant change in the opponent’s circumstances that had taken place some seven months previously (paragraph 8.15). They correctly asked him to complete a form giving details of the change to enable them to assess its impact upon his financial eligibility for legal aid. However, the area office’s papers indicate that that request was subsequently dropped, apparently as a result of a telephone discussion with the opponent. That was a serious error; pursuit of the point might well have given the area office grounds on which to revoke the opponent’s certificate for failure to report material information timeously.
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8.31 There is also the question as to whether the opponent’s pursuit of his claim against Mr V continued to satisfy the test of reasonableness by comparison with what would be expected of a privately paying client (paragraph 8.3). The area office had applied a costs condition to the opponent’s legal aid certificate; that condition reflected an estimate of the costs which was significantly less than the £20,182 originally claimed by the opponent against Mr V. However, on 17 June 1998 Mr V sent the area office information which suggested a reduction of that claim by more than half (paragraph 8.14). The area office have in internal memoranda subsequently asserted that they considered that information, but there is no contemporary evidence to that effect; if they did, they failed to notify Mr V of the outcome, as they had promised they would. In any event, I cannot see how the area office could at that stage sensibly have come to a decision regarding the likely costs and benefits to the opponent of the action, without seeking from solicitors A up to date information as to the costs and an up to date opinion as to the prospects of success should the matter go to trial. That was especially so in view of the offer of settlement of which Mr V had informed the area office. I conclude that the area office failed to deal in any significant way with Mr V’s representations of 17 June 1998 regarding the continuing merits of the opponent’s case.
8.32 In sum, there was persistent maladministration by the assessment office and LAB in their handling of Mr V’s representations. The assessment office should have reviewed the opponent’s financial eligibility for legal aid in November 1997 but failed to do so; LAB neglected to rectify that omission despite being pressed by Mr V on the matter; and LAB’s response to Mr V’s renewed representations in 1998 was characterised by error and delay, and again failed to tackle the key issue effectively. That adds up to a very poor performance indeed. LAB’s Customer Service Unit subsequently apologised to Mr V for the fact that he had not received the standard of service he was entitled to expect, and assured him that the area office’s performance had since improved (paragraph 8.24).
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8.33 There remains the question of financial redress for Mr V. The approach that the Ombudsman considers correct is that a person who has suffered injustice as a result of maladministration should as far as possible be put back in the position in which he would have been had the maladministration not occurred. I have therefore considered what, on the balance of probabilities, would have happened if the assessment office had reviewed the opponent’s financial eligibility for legal aid as they should have done in November 1997. I consider that the most likely outcome would have been that the assessment office would have found the opponent no longer financially eligible for legal aid, and the area office would have discharged his certificate accordingly.
8.34 The probable effect of withdrawal of the opponent’s legal aid in November 1997 upon the subsequent course of his action against Mr V is more difficult to determine. Mr V has argued that the opponent would have dropped the case immediately, and has produced a letter from a former business associate of the opponent supporting that view. However, that letter is dated 19 March 2000; it does not provide an objective, contemporary indication of the opponent’s thinking on the subject. I consider it more likely that, rather than dropping the case entirely, the opponent would have tried to settle out of court. I regard a settlement in November 1997 as the most probable outcome of withdrawal of the opponent’s legal aid at that stage. I see insufficient grounds on which to say that a settlement in November 1997 would have been on terms significantly more or less favourable to Mr V than the position eventually reached a year later. For that reason I have no grounds on which to recommend that LAB should reimburse Mr V the £4,000 that he paid into court. However, if the case had settled in November 1997, the costs incurred by the opponent and by Mr V after that date, for which Mr V became liable, would have been avoided. I therefore asked the Chief Executive of LAB if they would make Mr V an ex gratia payment equivalent to those additional costs.
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8.35 In reply, the Chief Executive said that he accepted that LAB should have acted differently. However, in the circumstances he believed that Mr V too might reasonably have been expected to act differently in dealing with proceedings against him in which liability had not been an issue. The Chief Executive said that he would have expected Mr V’s legal advisers to make sure that he was aware that he should mitigate his losses in terms of costs by making a realistic payment into court at an early stage. The fact that LAB had failed to discharge the opponent’s certificate when they should have done did not relieve Mr V of all responsibility for taking reasonable steps to limit costs. The Chief Executive proposed to reflect what he saw as a shared responsibility for the additional costs by offering Mr V a payment representing 50 per cent of the costs for which he was liable as from December 1997 to 5 November 1998 (when the opponent had accepted the payment into court). That payment would be subject to the production of documentary evidence and a breakdown of profit costs, disbursements and counsel’s fees during the relevant period. The Chief Executive emphasised that he was making that offer in the unique circumstances of Mr V’s case and in reliance upon my judgment as to the balance of probabilities.
8.36 I have considered the Chief Executive’s argument in the light of the facts of the case and of explanations that Mr V has given me regarding the way in which he handled the proceedings. I sympathise with Mr V’s view that, from his perspective at the outset of the action, a vigorous defence of what he regarded as a wholly spurious claim was the proper course to adopt; moreover, he was eventually vindicated in his belief that strenuous representations against the opponent’s financial eligibility for legal aid would prove justified. Nevertheless, Mr V has admitted, with commendable even-handedness, that with hindsight he might have been better to have settled at an earlier date; he had not appreciated the extent of the advantage conferred on a plaintiff by legally aided status. On balance I have concluded that the Chief Executive’s offer represents a reasonable measure of redress, having regard to the extent to which the assessment office’s and LAB’s maladministration contributed to an injustice to Mr and Mrs V.
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Conclusion
8.37 Mr and Mrs V were poorly served by LAB in the matter of their representations against their opponent’s financial eligibility for legal aid. LAB have apologised for that and agreed to share the additional costs that ensued. I regard that as a satisfactory outcome to a justified complaint.
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