Jarrett, R (On the Application Of) v The Secretary of State for Trade And Industry [2001] EWHC 389 (Admin)

EWHC-Admin
Jarrett, R (On the Application Of) v The Secretary of State for Trade And Industry
[2001] EWHC 389 (Admin) · 2001-05-22
[1]MR JUSTICE BURTON: The application before me today is by the claimant, a Mrs Jarrett, who was director (on the face of it the sole director) of a company called Cintel Limited, which was incorporated and started to trade in April 1998, and from whose bank account more than £170,000 was withdrawn in cash during its short existence, in circumstances which have yet to be explained (she being the person apparently who was to deal with the bank). After only six months of trading in November 1998 it went into creditor's voluntary winding up.[2]The conclusion of the Secretary of State was that Mr Gumus was a shadow director. Disqualification proceedings have been brought against Mr Gumus which resulted in a no contest by that gentleman and a disqualification order made against him for 11 years on 21st August last year. Those disqualification proceedings were also brought against the claimant, the sole de jure director, as I have indicated. Those disqualification proceedings have been adjourned while this application has been adjudicated.[3]The claimant is by origin and nationality Turkish. Her case is that she does not have a particularly good grasp of English, and that her conduct of the company's affairs should not be criticised, at least to the extent of forming the subject of disqualification proceedings, she being overridden by Mr Gumus and others. Notwithstanding her previous experience in Turkey as an economist, she is said to have difficulty both with English and with commercial affairs. She sought the benefit of what I shall loosely call legal aid for the purpose of defending those disqualification proceedings in June of last year.[4]Legal aid, as is well known, has been considerably cut back as a result of legislation in the course of this government and, in particular, by virtue of the Access to Justice Act 1999. The government, and therefore in due course Parliament, took the view that there was an impossibly large amount of money being expended on civil legal aid and that that sum had to be reduced. They sought to establish new priorities, which were not limited to restrictions upon the means of applicants and the merits of their case.[5]The Access to Justice Act ("the Act") provided, by section 6, that the Legal Services Commission, which as I understand it in general terms replaced the Legal Aid Board, should set priorities in its funding of services as part of the Community Legal Service. By section 6(1)(a) of the Act the priorities should be set in accordance with any directions given by the Lord Chancellor. By section 6(6) the Commission may not fund as part of the Community Legal Service any of the services specified in Schedule 2. Schedule 2, which is headed up "Community Legal Service : Excluded Services" and reads in material part as follows:
"The services which may not be funded as part of the Community Legal Service are as follows. 1. Services consisting of the provision of help (beyond the provision of general information about the law and the legal system and the availability of legal services) in relation to- (g) matters of company or partnership law, or (h) other matters arising out of the carrying on of a business."
[6]By section 6(8) of the Act:
"The Lord Chancellor- (a) may by direction require the Commission to fund the provision of any of the services specified in Schedule 2 in circumstances specified in the direction, and (b) may authorise the Commission to fund the provision of any of those services in specified circumstances or, if the Commission request him to do so, in an individual case."
[7]So far as this case is concerned, the relevant subsection for consideration is section 6(8)(b) because the Lord Chancellor has not sought to require the Commission to do anything in this case. That, as is clear from the subsection itself, which I have read, relates to circumstances in which notwithstanding that on the face of it the claim made or defence sought to be pursued by an applicant for legal aid falls within Schedule 2, nevertheless the Commission may be authorised, or, upon request, may be permitted to, fund that particular claim or defence.[8]In this case, the applicant originally made a claim for legal aid to the local body which simply formed the view that the defence to the disqualification proceedings fell within the exceptions (g) and/or (h). I need to reach no conclusion as to whether it falls within one or other, or both. On the face of it it does appear that the defence of disqualification proceedings relating to whether or not a director has run a business in such a way as to merit criticism and penalty, is a matter which would appear to fall within both of those subsections, but it certainly falls within one of them.[9]The claimant sought in due course appeal and/or review at two further levels, at which stage consideration was given by the Legal Services Commission to the question of whether to make a request to the Lord Chancellor for provision of legal aid in relation to this individual case. The submissions which were made by the claimant are contained in a number of documents. There is an original claim form and there is a further application for review.[10]The relevant applications culminated in two letters, both in October 2000. There were in fact two applications and I shall summarise them very briefly. The first was simply to seek legal aid for the defence of the disqualification proceedings themselves. The second was to seek legal aid so that there could be the hearing of a preliminary issue within the disqualification proceedings themselves as to whether the defendant could have a fair hearing of those proceedings without legal aid and/or as to whether legal aid should be granted for the purpose of such preliminary issue. Both of those applications were, upon review and appeal, refused.[11]The relevant Directions to which I have made reference, which were specifically referred to in subsections 6(1) and (8) of the Act, were at that stage those issued by the Lord Chancellor in April 2000, headed up:
"Lord Chancellor's Directions and Guidance Community Legal Service Fund Funding Priorities"
. There is subsequent Guidance issued in April 2001 with which I do not need in the circumstances to concern myself.[12]The Lord Chancellor specifically addressed himself to what are called Exceptions to the Exclusions. The Exclusions were in particular (g) and (h), to which I have referred (although, of course, there are others, such as defamation or malicious falsehood.) The Exceptions were those which he was creating, as he was permitted to do, by reference to subsection 6(8) of the Act. The first paragraph relating to Exceptions and Exclusions reads as follows:
"This is a direction by the Lord Chancellor under section 6(8) of the Access to Justice Act 1999 ("the Act"). It authorises the Legal Services Commission ("the Commission") to fund in specified circumstances services generally excluded from the scope of the Community Legal Service Fund by Schedule 2 to the Act."
[13]Paragraph 2 reads as follows:
"In this direction, 'excluded issues' generally means the issues listed in paragraph 1(a)-(g) of Schedule 2 to the Act" [I interpolate thus excluding paragraph (h)] "but in paragraphs 9 and 10 below means the issues listed in paragraph 1(a)-(h) of the Schedule." [So (h) is thereby included.] "
Matters arising out of the carrying on of a business are not brought within the scope of funding by this direction, other than in the circumstances described in paragraph 10."[14]I need not trouble with paragraph 10 because that relates to what have been called "mixed claims", where the otherwise excluded issue is a part of the subject matter of the claim, but regarded as a minor or incidental part.[15]Paragraph 4 of the relevant direction reads as follows:
"The Lord Chancellor authorises the Commission to fund Legal Representation or Support Funding ... in relation to excluded issues in: (a) cases that have a significant wider public interest; and (b) proceedings against public authorities (including judicial review proceedings) alleging serious wrong-doing, abuse of position or power, or significant breach of human rights."
[16]Wider Public Interest, which in the course of argument before me has been shortened, irreverently, to WPI, is defined in the separate directions which have been given by reference to the funding code (the funding code being the methodology by which the Legal Service Commission operate.) It has been defined as follows:
"...the potential of the proceedings to produce real benefits for individuals other than the client (other than benefits to the public at large which normally flow from proceedings of the type in question)."
[17]So far as the second part of section 6(8)(b) is concerned, relating to individual cases, the Lord Chancellor gives separate guidance, headed up "Individual Cases", and paragraph 1 reads as follows:
"Section 6(8)(b) of the Act empowers the Lord Chancellor to authorise funding in individual cases, following a request from the Commission. The Lord Chancellor has issued the following guidance to the Commission under section 23 of the Act, to indicate the types of case he is likely to consider favourably under this power."
[18]Paragraph 4 is the relevant paragraph with which we have been primarily concerned on this application:
"The other categories in paragraph 1 of Schedule 2 are excluded because they are of low priority."
[19]That is a reference to all the excluded categories apart from personal injury, which is separately dealt with by reference to the existence of conditional fee agreements and thus specifically included subparagraphs (g) and (h), with which we are concerned.

The Lord Chancellor continues:

"I have authorised the Commission to fund cases raising significant issues of wider public interest that would otherwise be excluded by paragraph 1. The only other reason that would justify funding a case in a low priority category would be if it was of overwhelming importance to the client, affecting the life, liberty or physical safety [of] the client or his or her immediate family or the roof over their heads. I find it very hard to see how this could apply to cases in the categories concerned, which relate to business and property issues or to reputation. But if such a case did arise, I should of course be prepared to consider the Commission's application."
[21]This definition of Overwhelming Importance has been again shortened, in the course of this argument, to OI.[22]It is quite apparent to me from that guidance that the only bases upon which the Lord Chancellor has indicated that he will exercise his discretion to consider a request from the Commission on the face of the guidance are either WPI or OI. I do not see any meaning for the words in paragraph 4 "the only other reason that would justify funding a case" being OI, if it was intended to leave some residual third reason in play, notwithstanding the broader words of paragraph 1, which are plainly, in my judgment, clarified and limited by the words of paragraph 4.[23]That is plainly the basis, it seems to me, on which the Legal Services Commission considered the application by way of review and/or appeal for funding in this case, namely to see whether, notwithstanding that the application for funding of the defence in the disqualification proceedings fell within Exclusions either (g) or (h), it could be said, on the basis of what was put before them, that there was either WPI or OI.[24]The case that was put forward by the claimant was two-fold: first, that it was OI, i.e. there was overwhelming importance to the client; and secondly, and I quote from the application for review:
"We further submit that failure to grant public funding for legal representation in this matter would breach Article 6 of the European Convention of Human Rights."
[25]Included in the application there is cited as follows:
"The present appeal is brought by Mrs Jarrett. We submit that the following factors render it necessary for public funding to be granted in her case: (i) she is a Turkish national, whose command of the English is insufficient to allow her by herself to fully and effectively defend proceedings commenced under The Company Directors Disqualification Act 1986 ("
CDDA 1986"). (ii) the complexity of the law and procedure in proceedings brought under CDDA 1986 is such that public funding for legal representation is the only way that real and effective access to the Court can be provided in this matter."[26]The argument is by reference to Airey v Ireland (1979) 2 EHRR 305, and the question of civil legal aid. The argument includes the assertion that the proceedings would be classified by the European Commission and the European Court of Human Rights as criminal: alternatively, that they should be regarded as particularly serious because they are quasi-criminal.[27]It is not at all surprising in my judgment that that application was treated by the Legal Services Commission, simply upon and in accordance with the specific terms of the Lord Chancellor's Guidance. It was treated as being put forward on the basis either that the proceedings were criminal, or that they fell within OI (overwhelming importance) as per the Guidance of the Lord Chancellor. The application was rejected on that basis, and a challenge by way of judicial review was subsequently brought.[28]The challenge was said to be to the two decisions in October, although, as I have indicated, the challenge to the one which was simply relating to the ability to have the preliminary issue in the company's proceedings has not, as from the first day of this hearing, been pursued. No point has been taken by the Secretary of State that challenge to the earlier decisions was not specifically included in the application for review. An original case that was made alleging inadequate reasons has equally not been pursued by the claimant, on the basis that the totality of the reasoning put forward by the Legal Services Commission in all its decisions in June, July and August, through to October should be treated as a consolidated refusal.[29]The relief in terms that was sought in the application is:(1) a quashing order, to quash the said decisions of the Legal Services commission;(2) a declaration that the claimant's rights under Article 6.1 of the European Convention of Human Rights (the Convention) in the CDDA proceedings have been or would be violated by the refusal of public funding;(3) a declaration that Schedule 2 of the 1999 Act and/or the said Directions are unlawful in that they are incompatible with article 6 of the Convention;(4) further or other relief.[30]It was apparent from the very outset of this application that, quite apart from the non-pursuit of the inadequate reasons argument, to which I have referred, further matters were not pursued by the claimant, which had formed the basis of the very able and ample skeleton arguments filed by Mr Nicholas Blake QC with Mr Julian Knowles on the side of the claimant, and on the other side by Mr Jonathan Crow and Mr Mark Hoskins for the defendant, and also a considerable amount of evidence put forward both on the part of the Legal Services Commission and, because he was joined by reference to the Human Rights Act challenge to the Act, the Secretary of State for Trade and Industry instructing Mr Davis-White of counsel.[31]The matters that were not pursued were as follows. First of all, the case that the Act was itself incompatible with the Convention was not contended. Secondly, as I have indicated, no challenge was pursued to the refusal to fund the preliminary issue, on the understandable grounds, which were put forward very early on by the defendants, that there was no need for any such challenge because the Legal Services Commission had itself given legal aid for the purpose of funding this very judicial review application, which was a better and certainly equally convenient forum. Thirdly, there was not pursued the allegation that the CDDA proceedings were and are criminal proceedings, in the light of binding authority putting paid to that contention, both domestically and in the European Court of Human Rights. The case however was still pursued that such civil proceedings were to be regarded as quasi-criminal.[32]Two further submissions which were made by the claimant were also not pursued. Fourthly, that the CDDA proceedings fell outside the Exclusions, because the Exclusions in the Schedule were themselves to be construed purposively, or on a limited basis, in order to render them compatible with the Human Rights Act, so that there should be a restricted interpretation of the references to 'carrying on of a business' or 'company law'. Finally and fifthly, there was not pursued a submission that the application in question fell within the terms of the present Guidance, by reference to the specified Exceptions, either of WPI or OI, as defined.[33]The application was thus limited in the end, although there was a good deal of submission, and a good deal of education had to be given to me by reference to the authorities along the way, to the simple issue as to whether the refusal of the legal aid in this case offended against Article 6, such that the Directions, but not the Act itself, were inadequate so as to comply with the Human Rights Act and/or the Convention.[34]When Mr Crow began his submissions, or during the course of them, one matter became very clear and that is that he was submitting, indeed asserting, that the Lord Chancellor had a wider discretion than one limited to WPI and OI. He also justified the limitations contained in the Act on a number of bases and pointed out the clear authorities from the European Court of Human Rights and the Commission (as it then was) including Airey itself, which made it plain that there was no obligation on a country, particularly one such as the United Kingdom which has run a luxury system of legal aid compared with almost every other jurisdiction for many years, to grant legal aid for all civil claims; and that there was freedom of choice for a subscribing country to the Convention as to how it enabled or ensured access to the courts in relation to civil claims and defences, which enabled restrictions to be placed not only by reference to merits and means, but also by reference to the scope of the claims in question.[35]It became speedily apparent that the most central dictum was in what was in fact a Commission case called X v United Kingdom [1984] 6 EHRR 136. The relevant dictum which was set out there, by cross-reference to Airey , was as follows: "Only in exceptional circumstances, namely where the withholding of legal aid would make the assertion of a civil claim practically impossible, or where it would lead to an obvious unfairness of the proceedings, can such a right be invoked by virtue of Article 6(1) of the Convention," that is a right to free legal aid in civil cases.[36]Mr Crow submitted, first, that such is the case under the Act and by virtue of the Directions, namely that in such an event legal aid will or may be available: secondly, that the limitation of the scope of legal aid by the 1999 Act is acceptable of itself, because it is not based upon arbitrary or (as I prefer) irrational grounds - a number of limitations have been rationally placed by Parliament on the extent of legal aid, including traditional areas such as defamation, which have always been so excluded: thirdly, in any event, the existence of such limitations can be justified by reference to the Lord Chancellor's residual discretion both in specified circumstances and in relation to individual cases.[37]Once that became clear it seemed to me that the answer is simply that the Guidance does not in those circumstances accurately set out the reality, such as to mislead or fail to inform those who apply for legal aid and the Legal Services Commission itself, who would be in a position to apply for request funding. It is quite clear to me that both in this case and in any other case, on the face of the Guidance, the ordinary person both applying and operating the Guidance would be led to believe that the only basis upon which the Lord Chancellor would be likely to look favourably upon an application in an individual case would be where there is either WPI or OI, neither of which applied in this case. No attempt would be made, and certainly no attempt was made in this case, to ask or answer the question as to whether on the facts relating to this claimant the withholding of legal aid 'would make the prosecution of her defence practically impossible' or 'would lead to an obvious unfairness of the proceedings,' as it is now conceded should be done.[38]Mr Crow made a very powerful point that in order to show that a person is the victim of a human rights breach a claimant, such as the claimant in this case, would need to satisfy a court that she has in fact been denied justice, and that I could not on the evidence before me decide, on the basis of disputed evidence about her linguistic and business ability, that she would not be able to cope with the nature of CDDA proceedings, particularly where the State would have to set out its case in advance and, indeed, has done, and would have to give assistance, as indeed would the court, to an unrepresented litigant. The possibility was therefore before the court that in an application such as this, in order to establish a human rights breach, a claimant would have to produce evidence of her inability or her unfamiliarity with language and, if necessary, be cross-examined in open court.[39]That possibility would be an inevitability if it was necessary for this court to decide whether an applicant in question is in fact unable to cope. But once Mr Crow submits and accepts that that decision can and should be made by the funding body and/or by the Lord Chancellor, in response to a request from the funding body, such that the court's role would only then be a reviewing role in relation to Wednesbury unreasonableness, the argument falls into place and the decision seems to me to be correct and inevitable, namely that there must be, and it ought to be expressly set out, within the Guidance consideration of what I would call the X v United Kingdom question that I have set out; and that provided Wednesbury reasonable consideration is given of that question there is no call for the court to make its own decision.[40]Mr Crow emphasised that each case under the Human Rights Act must be considered on its facts, and that that is the basis upon which the European Court of Human Rights has always exercised its own judgment. In those circumstances, it was clear to me that this particular case can and should be decided on the basis that her application on the X basis has not yet been considered by the Legal Services Commission, and should now be so considered.[41]In those circumstances, the arguments very quickly cut themselves short. Mr Crow no longer needed to make submissions about the appropriateness of restrictions to legal aid, once it became clear that he accepted, and indeed asserted, that one of the bases upon which those restrictions could be justified was the availability of an X consideration by the Legal Services Commission and the Lord Chancellor. On the facts of this case that has not yet occurred and it should do.[42]In those circumstances the issues wholly narrowed and Mr Blake, while reserving his position on Mr Crow's justifications of the Act, limited the relief that he sought to the opportunity for a consideration in relation to the claimant of the X question; for which purpose the evidence, which has been put before me, will no doubt now be collated in order to be put before the Legal Services Commission so as to seek to persuade them that for her defence to the CDDA proceedings the claimant needs legal aid, or otherwise her defence will be rendered practically impossible, or there would be an obvious unfairness in the proceedings. There is, therefore, no need for me to reach any conclusions further on this application than that that should now be done.[43]It is clear to me that the Secretary of State's defence of the 1999 Act is founded upon submissions that there is rationality to its limitation of the scope of legal aid. Very careful argument has been put before me to justify such limitation, but I do not need to reach a decision on that aspect. Suffice it to say that, whether or not there would be justification for the limitations per se, taking the Act together with the Guidance, as now explained, I am satisfied that this claimant's human rights are not breached, provided that there is an acceptance of a fresh application from her on the X basis. That is all that I am required to consider in this case.[44]I do, however, urge upon the Lord Chancellor and those advising him that, given that it is openly accepted that the X formula is indeed for the Lord Chancellor's discretion, the Guidance should be speedily amended, so that there can be fully set out in the Guidance what in fact is asserted always to have been the case, hidden behind language which did not make that clear, and which on the face of it limited the discretion to questions of WPI and OI as defined. Certainly, although I leave open the question to another court if it arose, my judgment would be that if the Guidance now made it clear that there is the fall-back of the X formula, then that would protect a claimant from any infringement of his or her human rights in another case.[45]I have already indicated that the proper order as far as costs are concerned is that the claimant should have half her costs on the basis that she has in substance succeeded, save in respect of the five or six arguments which were not pursued and which, in my view, should be reflected by that reduction. MR BLAKE: My Lord, might I have full assessment of my community legal service costs? MR JUSTICE BURTON: Yes. Now, what are you going to do about an order? MR BLAKE: My Lord, the judgment, with respect, is exemplarily clear. I do not think there is really a need for any other relief but I will check. MR JUSTICE BURTON: Given that it is the Legal Service Commission itself by counsel which has said it will reconsider it. MR BLAKE: Seeing that it was voluntarily set aside, it does not need to be quashed and obviously a matter of MR JUSTICE BURTON: There ought to be some provision in relation to the – I suppose there does not need to be provision in relation to the existing order because they have said they will reconsider and you are not out of time to do so. So there really needs to be no order on the proceedings and you know that the Legal Services Commission will reconsider the position on a further submission to them, whether we call it a fresh application or not, being made. MR BLAKE: Yes, I cannot imagine any other difficulties. The only question, out of prudence, would be liberty to apply if any problem arose as to the interpretation of the order and then we would not have to start all over again? MR JUSTICE BURTON: Yes, thank you. Mr Crow is that all right? MR CROW: My Lord, I cannot see any problem there. MR DAVIES-WHITE: My Lord, so far as the disqualification proceedings, those are not concerned before you, but I just flag that up, if they can be held in abeyance? MR JUSTICE BURTON: Yes, we cannot let them hang around for too long but plainly they ought to continue to be adjourned until the outcome of this fresh application to Secretary of State, and it is to be hoped there will not need to be any further judicial review proceedings arising out of that. But if there were then that would no doubt MR DAVIES-WHITE: But, my Lord, the only observation I was going to make was that obviously it would be helpful if the claimant in these proceedings keep the Secretary of State informed and make any application speedily. MR JUSTICE BURTON: Yes. Is that all right, Mr Blake, you will make your fresh application with all expedition and attach to it such further information as you want, but I cannot believe it will take you very long to do that. MR BLAKE: Yes, my Lord.

Cited in 2 later judgments