England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		17/06/2010

The Hon. Mr Justice Owen :

1. This is a renewed application for permission to apply for judicial review of decisions by the Legal Services Commission (LSC) dated 25 November and 23 December 2009. At the beginning of the hearing the claimant produced a skeleton argument running to 36 pages together with a number of other documents that she had not hitherto put before the court. Having heard argument I took the unusual course of reserving my judgment in order to enable me to give full consideration to the contents of the skeleton argument and to the response to it from Ms Barbara Hewson, who appeared for the defendant, and who had not received the skeleton in advance of the hearing.
2. On 24 May, three days before the hearing, the claimant sought an adjournment on the basis that she wished to "add the latest request for Audit to these proceedings", but did not identify the audit to which she was referring. The LSC opposed the request for an adjournment, and I refused it.
3. The claimant is a solicitor practising in the field of Community Care and reliant upon funding from the Community Legal Service to run her cases. She holds a unified contract with the LSC in the categories of Community Care and Public Law entered into for a term of three years from 1 April 2007 to 31 March 2010, but extended to October 2010. The contract is in the LSC's standard terms; and contracts entered into on such terms are the means by which the LSC discharges its statutory obligation to establish, to maintain and develop the Community Legal Service.
4. A number of the terms of the contract are of direct relevance to the claimant's application. Clause 8.1 requires a contractor to demonstrate to the LSC's reasonable satisfaction that the contractor is complying, and has at all times complied with its provisions. Clause 9.1 requires a contractor to provide the LSC with such information and documents as it may reasonably require, within such period as it may reasonably specify. Clause 10.7 provides that a contractor agrees to the standard of her Contract Work being assessed by the Independent Peer Review Process and "promptly to provide such information, matter files and case files as may be required for that purpose." Clause 30 deals with termination. Clause 30.9(b) provides that the LSC may serve a notice to terminate if the contractor has "… failed to provide documents or access to premises in accordance with clauses 8 and 9 and have not remedied such breach within 7 days of a notice from us referring to this clause and requiring you to do so." Clause 30.10-12 are in the following terms:

"10. If you have breached this contract, we may serve you with a notice specifying the breach. If we consider that the breach is capable of remedy, the notice will require you to remedy it within a specified period, which will not be shorter than 28 days. Otherwise, the notice will require you not to repeat the breach.

11. If a notice requires you to remedy a breach within a specified period and you fail to do so to our reasonable satisfaction, we may serve a notice on you terminating this contract on the date specified in the notice.

12. If a notice requires you not to repeat the breach then, if you do so, or we serve you with two further notices specifying any breaches, we may serve a notice on you terminating this contract on a specified date."

5. Clause 32 provides that a contractor who is aggrieved by a decision or action by the LSC has the right to request a formal review, and Clause 33.9 provides that all formal disputes between a contractor and the LSC which fall outside the review procedure or where all alternative methods of dispute resolution have been exhausted, shall be referred to arbitration.
6. On 30 June 2009 the LSC wrote to the claimant making an Independent Peer Review File Request. It enclosed a list of 20 files, in each case indicating inter alia the date upon which the file had been closed, the dates falling between 1 June 2008 and 31 May 2009. The claimant replied on 3 July asserting that "save for one of the files, all the matters selected relate to a country-wide multi-party action, which will be issued in the next few weeks." She went on to assert that the request would have the effect of her sending 1500 client's files for peer review, and asked for confirmation that the peer review would be stayed. The LSC replied on 10 July asking that she identify on the list provided the live files belonging to the multi-party actions. Mr Wilson, the peer review team civil supervisor, asked for a response by 24 July. Another member of the peer review team, Ms Kappas, wrote to the claimant on 28 July 2009 explaining inter alia that the peer review process specifies that a random sample of 20 files closed within the last 12 months could be selected for peer review. There was a follow up letter, undated but stamped as having been received by the claimant on 4 November 2009, saying:

"I am aware that from our previous community care peer review file request 19 of the 20 files had linked files that were still on going as part of a multi-party action.

In our previous file request we required your assistance in identifying any open files on the list of reported work. I understand that this was a time consuming process for you, so to overcome this problem please can you provide us with a list of those parties involved in the multi-party action. This must consist of the client names and their UFN numbers.

Once we receive this information from you we can then eliminate these files when generating a new file list. "

The author requested a response by 16 November.

7. It appears that the claimant responded by e-mail on 16 November; but it is not to be found in the papers before me. But in response, on 25 November, the LSC wrote the first of the letters, the subject of the claimant's challenge. It explained that the peer review process was independent of any other audits undertaken on her firm by the LSC and stated that:

"It is your responsibility to ensure all files requested reach us by 16 December 2009. Any delay in submitting the files may result in a Contract Rectification Notice.

You must ensure that a minimum of 17 files, along with any linked files are submitted (please refer to the Frequently Asked Questions document enclosed for more detailed information)."

8. It appears that the claimant responded by letter dated 7 December 2009, but again it has not been produced. But it is clear from the reply from the LSC on 14 December that the claimant had raised a number of concerns about providing the files that had been requested for peer review on the 25^th November. The letter then continued:

"You mention that we have requested all of your sheltered housing cases. You are concerned about sending these files to the Commission, as these Legal Help files are needed at your office until Private Law Litigation is under way by the end of the year.

This problem occurred in relation to the first file list that we issued on 30 June 2009 and, as a result, you were unable to submit those files for peer review. To overcome this problem, we liaised with you to identify the files that were ongoing as part of this multi-party action. In an e-mail on 16 November 2009, you provided lists of the sheltered housing files that were affected by this action. We excluded all the files mentioned in your e-mail from being selected in your file list in order to ensure that the peer review could go ahead.

As we have taken steps to resolve this problem, I am confused as to why this issue has arisen again in the new file list issued on 25 November 2009. Could you please explain why these files were not flagged up in your e-mail of 16 November 2009? Could you also confirm how many files on this file list are part of the ongoing Private Law Claim?

I should also clarify that we are not requesting all of your sheltered housing cases as stated in your letter. We are requesting that you provide the 20 files listed in the file list along with any closed linked files. For the purposes of peer review, linked files are files linked to the clients mentioned in the file list, rather than the case. You would therefore not be required to provide all the files relating to the multi-party action."

9. On 15 December the claimant sent a further e-mail to the LSC. It contained the statement that she wanted the LSC "… to back off from the intense and unhealthy pressure re audits and investigations whilst I am trying to do the work."
10. There were then further e-mail exchanges in the latter part of December. On 18 December the claimant sent an e-mail asking for confirmation that she understood the position correctly, namely that the LSC required the 20 files, and also required the generic files in each case "even though these are massive containing as they do all the evidence for each case as well as the generic correspondence."
11. On 22 December the claimant sent an e-mail headed "Letter Before Claim". Its opening paragraph was in the following terms:

"In view of the timescale that you have set I give you until close of business on 6 January 2009 to reconsider. In my view the LSC's decision to demand files by the 8 January 2009 which are needed for litigation for seriously at risk clients is Wednesbury unreasonable, unlawful and irrational for the following reasons. "

The e-mail went on to assert that the LSC was acting male fides.

12. The LSC responded by letter of 23 December. It was from the Head of Dispute Resolution, Legal Governance Team. It is the second letter the subject of the application. The second and third paragraphs were in the following terms:

"As you know my client is committed to avoiding litigation if possible. What I propose is that the stipulated date (being 08 January 2010) for supply of the 20 closed control work files (plus any linked files) is maintained. If you do not comply with this then in all likelihood a rectification notice will be issued requiring compliance by the end of February 2010. As this is the date you say you can spare the files then litigation should not be necessary. Of course any allegation of bad faith is not admitted. If you do not agree then any court proceedings should be served on the Legal Director at the address quoting the reference above, although again I would remind you of the need to comply with the contractual dispute resolution mechanisms first.

I do consider one needs to get a sense of perspective. My client has simply requested 20 closed files. If you wish to do publicly funded work then you have to take the benefit with the burden. I say burden but a request for 20 closed files is hardly a burden. It is what you agreed when you signed the contract. It is not for my client to design bespoke systems around your practice as you suggest. It is for you to comply with the contract and it is down to you to ensure that you do comply. You would not treat your clients in this way and the contract does not permit you to treat the LSC like this. You are not the only supplier my client has to manage although your reaction to simple requests demands a disproportionate amount of resource for my client, and it tantamount to a refusal to comply. This is simply not acceptable."

13. The claimant replied by e-mail on 4 January 2010. The essence of the e-mail is contained in the first paragraph in which she asked whether the LSC would "… simply extend my time for supplying the files until the end of February 2010", and adding "if not then is there any detriment to me in being served with a rectification notice?". The LSC replied by e-mail on 5 January saying "my instructions are that my client is unwilling to extend the deadline for provision of the files, which remains at 8 January 2010, extended since July last year. In the event that you do not comply with the request for files then my client may decide to issue a rectification notice or take other action in accordance with the contract you agreed too. If a rectification notice is issued it will comply with the contract and you should seek your own independent legal advice if needed about its legal impact."
14. The claimant's application for judicial review was issued on 7 January 2010. In addition to the challenge to the decisions contained in the letters of 25 November and 23 December 2009, she sought an order preventing the LSC from issuing a Rectification Notice. That application was dealt with on the papers by HHJ Mackie QC, sitting as a Judge of the Administrative Court on 7 January when he ordered that the LSC should not serve such a notice on the claimant for 28 days.
15. Following filing of the Acknowledgement of Service by the LSC, the permission application was put before Kenneth Parker J on 2 February 2010. He refused permission and categorised the application as being totally without merit. His observations were in the following terms:

"1. This is a contractual dispute, not amenable to judicial review.

2. In any event, no good reason is given why the procedures established by the contract do not constitute an appropriate remedy.

3. Having considered the grounds of defence and the documents exhibited thereto, I can only conclude that this claim is wholly without merit and represents prevarication on the part of the claimant to avoid fulfilling her contractual obligations.

4. In my view, the claim is totally without merit, and the restraining order imposed by paragraph 3 of the order of Judge Mackie on 7 January 2010 is discharged.

5. I am minded to award the defendant its costs of filing the Acknowledgement of Service, summarily assessed at £5,442.50p. If the claimant wishes to resist that order she should, within 14 days of service of the order, file with the court and serve written representations; and the defendant has 14 days from any such service to file and serve a written reply."

16. In the course of the hearing I was informed that following the discharge of the order made by HHJ Mackie, a rectification notice was served on the claimant requiring her to comply with her contractual obligations, and that she produced the files required for peer review within the time allowed in the notice.
17. In my judgment the application must be refused. I arrive at that conclusion for a number of reasons. First by her skeleton argument the claimant contends that the decisions in question are amenable to judicial review notwithstanding that they arose in the context of her contractual relationship with the LSC. I recognise that the source of the LSC's power to enter into contracts with solicitors for the supply of legal services is statutory; but that is not of itself sufficient to make a dispute about the contract amenable to judicial review. The question is whether it is arguable that the action taken by the LSC in writing the letters, the subject of challenge, had a sufficient public element to make it susceptible to judicial review. I do not consider that the function being discharged by the LSC in attempting to bring about compliance by the claimant with her contractual obligations had any public law dimension.
18. But if I am wrong as to that, then in any event there was machinery under the terms of the contract for the resolution of any disputes, initially by seeking a review, and if that was not successful by resort to arbitration. As Kenneth Parker J observed in refusing permission there was no good reason why the procedures established by the contract did not constitute an appropriate alternative remedy.
19. Thirdly, and if I am wrong both as to the amenability of the decisions contained in the letters in question to judicial review, and as to the availability of an appropriate alternative remedy, I do not consider that there is any realistic prospect of the claimant establishing that the LSC acted unlawfully in writing them. The LSC was simply exercising its powers under the contract, and bearing in mind the history of the matter, the decision to write such letters cannot be said to be Wednesbury unreasonable as the claimant contends.
20. Fourthly there would no longer appear to be any live issue between the parties such as to warrant permission to apply for judicial review. Following the lifting of the injunction, the LSC served a rectification notice on the claimant; and she complied by delivering up the required files. She argues that the fact that such a notice was served might count against her in the future if she seeks a further contract. But that is entirely speculative.
21. It follows that this application is dismissed. Furthermore I consider that it is totally without merit. That gives rise to the question of whether I should make a civil restraint order. In that regard I bear in mind the observations made by Collins J on 22 June 2006 in relation to an earlier application for judicial review against the LSC:

"1. Miss Hossack, essentially for the reasons that have been explained to you in the course of this afternoon's hearing, it seems to me it is not in your interests in the end, and certainly there is no arguable case, that the Legal Services Commission has behaved in a way that is contrary to law. What they did was to carry out an audit and disallowed certain matters …

2. You have asserted that they have acted unreasonably in a number of respects …

3. But what does not help is to plunge into litigation and judicial review whenever you feel something has not gone they way you would want it to go, and it is even less satisfactory to indulge in allegations of bad faith and malice when there are no proper grounds for so doing. Furthermore it is almost impossible to establish from the material which you have put in what precisely are the matters upon which you rely. …

4. Certainly the second judicial review was quite unnecessary and was, it is alleged, an abuse of process or close to an abuse of process, and it is, because you already had in being judicial review which effectively covered the issues. All that you wanted to try to do was to stop them going ahead with an audit, and you had no proper basis for so doing.

13. … What I will make clear to you Miss Hossack is that the second judicial review claim … was in my view totally without merit. It is necessary that be recorded. I am not going to make any order against you at this stage. I will tell you that if you do take – and I simply hope that you are not foolish enough to do so – any action against the Legal Services Commission which is regarded by the court as action which has no reasonable chance of success you will find yourself the subject of a civil constraint order."

22. I will hear further submissions from the parties as to whether I should make a civil restraint order.