LEGAL AID—ADVICE AND ASSISTANCE—DISPOSABLE INCOME

Queen’ Bench Division (Administrative Court)
Collins J
20 July 2007

The words “or such part of it as is reasonable in the circumstances” in reg 24(3) of the Community Legal Service (Financial) Regulations 2000, SI 2000/516 (CLS 2000), do not enable the Legal Services Commission (LSC) to take only rent paid into account when calculating disposable income. It is what is payable and not what has been paid that has to be taken into account.

Robert Latham (instructed by Southwark Law Centre) for the claimant in the first case.
Peggy Etiebet (instructed by Traymans) for the claimant in the second case.
Barbara Hewson (instructed by the Legal Services Commission) for the Legal Services Commission.

Two claims concerned the true construction of CLS 2000, reg 24. In both cases, the occupants had failed to pay rent due under the tenancies and were facing eviction. Each sought legal representation to try to avoid eviction. The solicitors or legal representatives granted legal representation under their devolved powers having taken full instructions and applied their understanding of the manner in which means should be assessed.

When they sought the necessary funding from the LSC however, funding was denied because the defendant took the view that the clients’ disposable income exceeded the level which entitled them to public funding. According to the defendant, in assessing the amount to be deducted from gross income in respect of the cost of accommodation, it was appropriate under CLS 2000 to take into account the amount  paid in respect of rent or charges for such accommodation, rather than the amount payable. In the case of one tenant, nothing had been paid and so the defendant made no deduction. In the other’s case, account was taken of a payment of £500, which had been paid by way of arrears. Since nothing had been paid for six months, the defendant divided it by six to reach a notional monthly payment of £83.66. Judicial review was sought of the defendant’s decisions not to grant public funding.

MR JUSTICE COLLINS:

CLS 2000, reg 24 provided: “(3) In calculating the disposable income of the person concerned, the net rent payable by him in respect of his main or only dwelling, or such part of it as is reasonable in the circumstances, shall be deducted; and the assessing authority shall decide which is the main dwelling where the person concerned resides in more than one dwelling.”
The defendant submitted that the words “or such part of it as is reasonable in the circumstances” gave it a discretion which enabled it to allow against gross income only such part (if any) of the rent as had been paid during the relevant month or other period adopted by it. That was said to be in accordance with the funding code which the defendant was required to prepare to set out the funding criteria (Access to Justice Act 1999, s 8).

The draftsman of the regulations was obviously alive to the difference between payable and paid. He had deliberately used the word payable in reg 24(3). That was not surprising since it would only be when arrears had been accumulated and payments due to avoid eviction had not been made that eviction would be sought. If only what had been paid during the relevant period could be deducted from gross income, many would be unable to qualify although it was clear that they could not fund any legal representation.

His lordship did not accept that the words “or such part of it as is reasonable in the circumstances” enabled the defendant to take only what was paid into account. That would be tantamount to rewriting the regulation so that it applied not to rent payable but only to rent paid. Unless there had been some deliberate action caught by reg 12, what was payable and not what had been paid had to be taken into account. It followed that the defendant has misconstrued the regulation and the decision was accordingly flawed.

It was clear that what a person had to pay in order to be able to live in premises should prima facie be taken into account in deciding on his disposable income. Charges such as those which used to be within reg 24(4)(c) could not now not be taken into account. But sums equivalent to rent and arrears should be. Non-payment could result in a possession order in the same way as non-payment of rent.

It was not necessary to reach a final conclusion whether sums payable by a tolerated trespasser or by, for example, a licensee fell within reg 24(3). His lordship was inclined to the view that they did not. But in that case reg 24(6) would apply.

The applications would be allowed.