Civil Legal Aid (Hansard, 25 January 1994)

§ Mr. Michael Stern (Bristol, North-West)

Earlier this year, there was considerable discussion on the extent to which legal aid should be available in civil cases. My hon. Friend the Minister will recollect that I was not backward in supporting the policy of the Government—that civil legal aid should remain generally available, with some readjustment of income scales. As my hon. Friend will be aware from our subsequent correspondence, information coming to hand over the past few months has given me cause substantially to revise that opinion and I must admit that I am now very doubtful about the utility of legal aid in civil cases and about whether it fits at all into an equal opportunity society.

My hon. Friend will be aware that my doubts arise from two cases, both of them in my constituency and both involving a legal action between one party fully supported by the legal aid system and one party who has not only had to find all the legal costs of the action but cannot hope to recover any costs if successful in the action. The case of Rolfe v. Harries is the sort of boundary dispute that occurs too often in a suburban area where lawyers have been less than 100 per cent. accurate in drawing up the title deeds. It was the sort of dispute that would normally have to be settled by some means short of legal action, simply because neither side could possibly afford the potential cost.

Unfortunately, in that case, one side, namely Mr. Rolfe, could afford the potential cost, as he was entirely supported by legal aid, despite the fact that, at every stage, it was clear to all the lawyers concerned except the Legal Aid Board that his case had not one whit of merit. Although, on two separate occasions, the court has come to the identical conclusion about the merits of his case, the fact remains that Mr. Rolfe was able to pursue it in the knowledge that the costs to him would be insignificant, whereas, having won their case, Mr. and Mrs. Harries were faced with costs which to most people would be ruinous and which would certainly have had a significant effect on their standard of living in retirement.

The case of Jones v. Sinton, a dispute over a claim by Mr. Jones for a share in the successful business started by Mr. and Mrs. Sinton, is again one which would normally have been settled by agreement if Mr. Jones had not been able to obtain the full support of the Legal Aid Board for a claim to take over the business or a substantial part of it from the people who set it up. Again, Mr. and Mrs. Sinton face at least substantial financial hardship even if they win the case, as they are advised is highly likely, because they have been forced to enter into a legal action against a litigant with the full resources of the state behind him. That is clearly a classic no-win situation.

In correspondence in those two cases, my hon. Friend the Minister has stated that the percentage of legally aided cases where judgment was against the legally aided client has fallen constantly over the past decade and currently stands at less than 10 per cent. I find that statement very worrying. What was the percentage a decade ago? We must remember that the percentage represents cases where injustice has been created by the intervention of the state. Clearly, 10 per cent. of cases in which the Legal Aid Board 263 was wrong is much too high, because of the consequences of the board's getting it wrong, but at no stage has either of my constituents received so much as an apology from the board for getting it wrong. After all, my constituents cannot sue the Legal Aid Board for negligence in deciding whether there was a reasonable case for action, as clearly it was negligent in the case of Rolfe v. Harries and might prove to have been negligent in the case of Jones v. Sinton.

In addition, although my hon. Friend the Minister has suggested in the case of Jones v. Sinton—no one has made a similar suggestion in the case of Rolfe v. Harries—that my constituents could apply to the Legal Aid Board for certification to be withdrawn in respect of Mr. Jones, they are advised by their own lawyers that they, the lawyers, do not know of any case in which such an application has been successful. It would be interesting if my hon. Friend would confirm that the percentage of such successful applications—that is, for the Legal Aid Board to reconsider a patently wrong decision—is considerably less than the 10 per cent. of cases in which the Legal Aid Board gets it wholly wrong.

I have already pointed out that, win or lose, the unaided litigant cannot recover his costs except in the case in which the unaided litigant suffers severe financial hardship. A non-lawyer such as myself might have assumed that the potential loss to the owners of a successful small business, in which all the proprietor's funds are committed to the business, or the substantial reduction of funds set aside over a working lifetime would amount to severe financial hardship, but clearly it does not. I should be interested to know how much room there is between the definition of severe financial hardship used by the Legal Aid Board and entitlement to legal aid. I suspect that there is not much.

The worries I have which are aroused by those two cases are, however, much wider. It is clear that the Legal Aid Board can be fooled by someone claiming financial hardship. Common sense says that an organisation that has fewer resources than the Inland Revenue and the fraud squad will be fooled some of the time, but the consequence of its being fooled falls entirely on a random victim. It is clear that there needs to be some system whereby the Legal Aid Board can be called to account for, and to pay compensation for, its own mistakes.

Above all, the two cases demonstrated to me—this is why I am drawing the matter to my hon. Friend the Minister's attention—that there is something desperately wrong with a legal system in which, by the offer of maintenance in a legal action, the Legal Aid Board can effectively pick, and indeed select, winners.

Without civil legal aid, many people have said that we have already reached a situation where civil justice through the courts is available only to the rich or to the insured. With civil legal aid, we have introduced the additional element of the state using taxpayers' funds like dice in a craps game, and that is clearly wrong. If the state is unable to withdraw from civil legal aid—I am sure that philosophically my hon. Friend would agree with me—that legal aid which consists of putting the resources of the state behind one individual and against another when they are both citizens must be intrinsically wrong. If civil legal aid cannot be withdrawn entirely, it should be severely cash-limited and available only in certain types of case, for 264 example matrimonial cases, as against the random scattershot approach of the dispensing of injustice which has been thrown up by the two cases.

The Parliamentary Secretary, Lord Chancellor's Department (Mr. John M. Taylor)

I congratulate my hon. Friend the Member for Bristol, North-West (Mr. Stern) on securing the debate, and thank him for the unfailing and characteristic courtesy with which he has dealt with the exchanges which preceded it.

My hon. Friend has referred to the support he gave last year to the eligibility changes for legal aid. I did not need reminding of that support, which was most appreciated. I am sorry that my hon. Friend has since become doubtful of the wider benefits of the legal aid scheme. I hope that tonight's debate will go some way towards removing some of those doubts.

My hon. Friend has written to me on a number of occasions about the case he has raised tonight, that of Mr. and Mrs. Harries, and once about the Sintons. As I think he appreciates, I cannot intervene in the way that the Legal Aid Board handles any particular case. Nor should my comments be taken to refer to the reasonableness of a grant of legal aid in the case in which the Harries were involved, or the ongoing litigation concerning the Sintons' business. However, there are two main points of wider concern to answer: the extent to which the legal aid scheme may permit hopeless litigation to be brought, and the financial consequences for a successful defendant facing a legally aided plaintiff. I will deal with each of those in turn.

Before the introduction of the legal aid scheme almost 50 years ago, it was possible for an individual of limited means to pursue a spurious claim through the courts by way of a speculative action, safe in the knowledge that, should he lose, his opponent would be unlikely to find it worth while trying to recover costs against him due to his impoverished circumstances. Over the years, the legal aid scheme has evolved into the system we know now and, while it may not be perfect, it is a great improvement on what occurred before.

A number of measures have been incorporated into the legal aid scheme to ensure that, as far as possible, privately paying clients are protected against having unjustifiable or even ludicrous cases brought against them by those who fall within the financial eligibility limits for legal aid. Indeed, today's legal system offers more benefits to its potential users than a system that does not include a legal aid scheme.

One of the measures adopted by the scheme which goes some way towards preventing spurious claims is the merits test. In addition to having to qualify financially for legal aid, an applicant must satisfy certain tests as to the merits of his case. An applicant must be able to show the Legal Aid Board—the granting authority for civil legal aid—that he has reasonable grounds for taking, defending or being a party to proceedings. He must also be able to show that his case has a reasonable prospect of success. The tests do not stop there. It must remain reasonable, as the case develops, for it to continue to receive public funding.

When the board makes its initial decision to grant a legal aid certificate, it has before it only one side of the argument and it must make its decision based on the facts before it. However, the opponent, or someone else entirely, may have information which puts the assisted person's 265 case in an altogether different light. The Legal Aid Act 1988 therefore gives an opponent or anyone else the opportunity to make representations to the Legal Aid Board against the grant of legal aid. That is not merely a theoretical right. It is one which is taken up in practice in a fair number of cases, although it must be said that something that strikes an opponent as conclusive evidence of a weak case will not necessarily strike the Legal Aid Board in the same way. Using further evidence provided in that way, the board may decide to discharge the legal aid certificate, should the circumstances warrant it.

My hon. Friend has asked in what proportion of cases where such representations are made the board removes legal aid. I am afraid that the board does not keep a record of that. However, all such representations are taken very seriously and, unless they give the board nothing at all to go on, are pursued with the other side, who are asked to show cause why legal aid should not be removed. This process, combined with the board's checks on the continued validity of a grant of legal aid, ensures that virtually all weak cases are weeded out before the case reaches court.

In contrast, in privately funded cases, it is often not until the case comes to court that it is scrutinised and its merits are assessed. By then a large amount of costs may already have been incurred. The opponent is then faced with a further battle to secure his costs, sometimes to no avail. It is still possible, therefore, for a privately funded client to bring a bogus claim.

I must dispute my hon. Friend's comment that the board gets it wholly wrong if a legally aided plaintiff loses. Last year, more than 92 per cent. of legally aided parties won their cases. This is not to say that those cases which were lost should never have received legal aid. It is rather a reflection of the generally successful way in which the board applies the merits test. In answer to my hon. Friend's question, the figure for 10 years ago—the year 1982–83—was 86 per cent. success. So there has been a significant improvement in the past 10 years.

I think that the current proportion is about right, because the Legal Aid Board's job is not to fund only sure-fire winners but to sift applications to ensure that only reasonable cases receive funding. There should, therefore, always be a proportion of legally aided cases which are lost. Otherwise the board would be replacing the "reasonableness" test with a test of complete certainty, and many perfectly respectable cases which stood a fair chance of success would not be given that chance.

Therefore, there are occasions on which the legally aided plaintiff will lose his case against an unassisted defendant. As I have said, I do not think that that is in itself wrong. I am, of course, concerned about the position of the privately-paying defendant, who may be by no means wealthy. Therefore, in the event of this happening, and provided that it is just and equitable for the defendant to receive costs from public funds, an order can be made for the costs to be paid by the Legal Aid Board. Before this can be done, however, at the first instance only, the defendant must be able to satisfy the court that he will suffer severe financial hardship if the order is not made. That final safeguard acts as a protection for those who would be most likely to suffer, despite successfully defending a claim.

I am concerned that my hon. Friend's constituents have been experiencing the problems that gave rise to this debate. However, I am grateful for this opportunity to explain to the House an aspect of the legal aid scheme that 266 is not always easy to understand. It may be helpful if I set out the reasons for the scheme's operating as it does in this respect.

The need for the defendant to prove that he will suffer severe financial hardship—which my hon. Friend may find it consoling to know is a matter for the courts, and not for the board—has been called into question as being unfair. I am bound to say that if the provision could be considered in isolation from anything else, I might agree. But this cannot be considered simply on its own merits.

As my hon. Friend will know, there are many calls on public funds, both to widen the proportion of people or types of case eligible for legal aid and, more widely, in many other aspects of our lives. These cannot all be met from the public purse. What this provision therefore seeks to do is to protect those who would suffer most. This is not a perfect solution. It is perhaps inevitable that there will be cases in which the decision seems harsh. But, in view of financial realities, I consider that the balance represented by the provision is about right.

Legal aid expenditure has risen by 130 per cent. over the past four years. The public purse is not a bottomless pit, and there are many competing claims on it. This measure was debated fully by Parliament when the Bill was passing through it, and Parliament has determined that it is right for the defendant's means to be considered.

Whilst again I cannot comment on the board's handling of a particular case, it may be helpful if I set out my understanding of what happened on this aspect of the Harries case. I understand that two orders for costs were made in this matter—by the county court and the Court of Appeal respectively—and it is the first that has caused difficulty. It appears that the problem has arisen because there is some concern on the part of the board that the original order made in this matter is defective as no inquiry was made into the defendants' means before the order was made. The board has attempted to sort out the problem informally with my hon. Friend's constituents' solicitors in order to avoid the cost of any further court proceedings. Unfortunately, it has not been possible to do this, and the board now intends to apply to have the order rectified.

The board is quite happy to satisfy the further order made in this matter, by the Court of Appeal, once the inquiry into the plaintiffs' means has been concluded. The purpose of that inquiry is to assess the amount payable by the plaintiffs, with the balance of the appeal costs being paid by the Legal Aid Board. I believe that this inquiry stands adjourned at present.

Although my hon. Friend has not explicitly said so, I sense from his remarks a wider concern about the costs of civil litigation for those without the benefit of legal aid. As he will know, since the publication of the civil justice review in 1988 we have been taking steps aimed at reducing cost, delay and complexity in civil litigation, and this programme is continuing.

Finally, I must also address the underlying concerns that my hon. Friend has expressed about the whole nature of the current legal aid scheme and the use of the courts for resolving apparently minor disputes. As my hon. Friend may know, the Lord Chancellor is currently conducting a fundamental review of expenditure on courts and legal services, including legal aid. This will be looking at whether the present system offers the best forums for resolving disputes and at factors influencing cost in a number of areas of civil litigation, with a view to achieving changes that will reduce the cost of such litigation for all 267 those concerned in the system, including individual litigants and the taxpayer. If my hon. Friend, whose views 268 I greatly value, wishes to write to me with any suggestions he may have about this, they will certainly be taken into account.