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Recovery of Costs and Damages and Hardship
Introduction
This part of Circular sets out the position in relation to the recovery by the Board of it costs and of statutory obligations on solicitors to ensure that the Board recovers its costs.
The relevant sections are 33 and 34 of the Civil Legal Aid Act 1995 (“the Act”) and, in particular, Section 33 (7) and (8).
There are two aspects to the recovery of costs, namely:-
> from the other party to dispute; and
> from a legally aided person.
The term “legally aided person” means a person provided with legal advice, legal aid or
both. The term “money” includes damages in accordance with Section 33(7).
Recovery of Costs from Other Party
In seeking to recover costs, the Board may recover costs from the other party to a dispute,
either as a result of a court order for costs, or an agreement with the other party as part of
a settlement of a dispute. When an order for costs is made or a settlement is reached, the solicitor should inform the Private Practitioner Centre in writing.
The costs to be recovered from the other party may be agreed between the parties or, in default of agreement, may be determined by, for example, the County Registrar. Where the costs are to be agreed, the Private Practitioner Centre will determine the amount. In default of agreement, the matter will be referred, where necessary, to cost drawers for the purpose of preparing a bill of costs.
In determining whether to proceed with the recovery of some or all of the costs from the
other party, the Private Practitioner Centre will have regard to, inter alia, the:-
> resources of the other party, including the likelihood of the recovery of costs; and
> actual cost incurred.
Recovery of Costs from Legally Aided Persons
The Board is authorised by Section 33 of the Act to recover its costs from monies or property obtained by the legally aided person as a result of the provision of legal
advice/aid. The circumstances in which costs will be recovered must have regard to:-
(a) the interpretation to be placed on Section 33 (7) and (8);
(b) the impact of the concept of hardship in Section 33 (8); and
(c) the procedure to be followed in seeking to recover costs having regard to the
differences in treatment of monies and property, as set out in the Act.
Each of these matters is dealt with below.
(a) Interpretation
The various aspects of section 33 (7) have been considered and the following approach
adopted to the interpretation of the section.
> “Recovered by or preserved for” refers to monies or property: -
> which was at risk of being awarded to the opposing party to the dispute;
> in which a legally aided person secures an interest; and
> which, though not expressly at issue in the dispute, was recovered or preserved for a legally aided person.
In each case it is a question of fact, and is determined by looking to matters such as the pleadings, the evidence and settlement negotiations.
Given that the Act envisages, monies or property being recovered or preserved “on behalf of” the recipient of legal aid/advice, the following approach must be adopted so as to protect the Board’s entitlement to costs:-
> Where the applicant proposes to seek certain relief which is not directly for his/her benefit (e.g. the creation of a trust in favour of minor children), the solicitor must first obtain approval from the Private Practitioner Centre.
> Where a court, of its own motion, makes an order conferring a benefit on a third party, the Board may look behind the order and examine the circumstances and the context in which the order was made.
> The reality, as opposed to the form, of a settlement must be examined. If a person does not receive monies or property directly but is in effective control of the distribution of such monies, the Board will seek to recover its costs from such monies or property.
> The term “any proceedings” encompasses the proceedings authorised by a particular legal aid certificate, including any advice in relation to the particular matter.
> The term “appropriate charge” relates to the amount of the Board’s costs as determined in accordance with Section 34 and/or Section 33 (6) of the Act, which is to be secured on the property.
> Section 33 (8) (a) (1) provides that the Board shall waive its right to any property consisting of a “house or portion thereof… being the normal place of residence” of the legally aided person. “The normal place of residence” is considered to mean the applicant’s normal place of residence prior to the matters giving rise to the issues in the proceedings or dispute. A person may at any one time have more than one normal place of residence and, for the purpose of the Act, such a place of residence may or may not be a family home. This is a question of fact to be determined by the Board in each individual case.
(b) Hardship
This is dealt with as a separate topic later in this part of the Circular.
(c) Procedure for Recovery of Costs
General
Section 33 (6) of the Act provides that the amount of costs recoverable by the Board shall either be agreed between the parties (in accordance with Section 34) or measured by the court or determined by the Taxing Master (County Registrar) having regard to the rules of the relevant court. The costs incurred by the Board are the total cost of the legal services provided in relation to a particular matter.
Money
Any payment or interim payments of money must be deposited into the legal aid fund and retained there (in whole or in part) until the Board:-
> determines the amount of the costs to be recovered, if any; and
> recovers any such costs.
The legally aided person will be provided with details of the costs incurred and of the amount, if any, retained by the Board in respect of costs.
Property
Where property is recovered or preserved, a bill of costs will be submitted to the legally aided person giving a specific time period within which the person may discharge the costs owing to the Board. If the person declines to pay the amount owing, the Board will seek their agreement to a charge over the property and, in default of which, the Board will seek to charge the relevant property.
Sale of family home/proceeds are divided
Where the family home is sold, section 33 (7) provides that the Board shall recover its costs from the proceeds of sale.
The Board may waive its costs, in whole or in part, if it considers that not to do so would be likely to create hardship for the legally aided person.
Advice to Client Regarding Costs and Damages
Where there is a possibility of a client recovering monies or property, a solicitor must advise a client of the extent of the costs that may be deducted from monies or property recovered by or preserved for the client. The client will have been furnished with a Section 68 letter with the legal aid certificate granted to him / her.
Solicitors should advise clients of the cost of the proceedings from time to time, particularly in the case of additional expenses being incurred such as expert witnesses.
It is responsibility of the solicitor handling a case to ensure that persons are aware of their
potential liability for costs.
Cost of Providing Legal Services – Hourly Rate
The Board, from time to time revises the hourly rate used for the purpose of assessing the cost of providing legal services in individual cases. The current hourly rate is €150. This is the figure to be used for the purpose of determining costs to be recovered from an individual and also for determining the actual contribution to be paid, where the client has formally applied for legal aid on or after 1st April, 2006. The rate of €110 still applies to cases where the client formally applied prior to the 1st April, 2006.
Guidelines on the Interpretation of Financial Hardship
Introduction
The Board has considered the meaning of “hardship” in the Act in relation to the recovery of costs with a view to ensuring consistency in decision making and the equal treatment of all legally aided persons where the issue of hardship arises.
Section 33(8) of the Act provides as follows:-
“The Board may, in whole or in part, waive any right to any money or other property to which it is entitled under this section if, in the opinion of the Board, not to do so would be likely to create hardship for the recipient of legal aid or advice concerned.”
Section 33(8) accordingly gives the Board a discretion to waive its right to recover its costs where it is of the opinion that not to do so would “create hardship” for the person.
While hardship will inevitably depend upon the circumstances of a particular case, the Board considers that it is necessary to set down principles, criteria and guidelines to assist in determining whether or not hardship might ensue for a particular person as a consequence of the Board seeking to recover its costs.
Principles to be Applied to the Application of Section 33(8)
The following principles have been agreed by the Board namely:-
> hardship is to be considered by reference to the position of the legally-aided person at the end of the provision of legal services; and
> the financial circumstances of the legally-aided person must be examined at the date of the decision on the issue of hardship; and
> the establishment of criteria to be taken into account and the preparation of guidelines so as the achieve a consistency in the treatment of all persons in relation to the retention by the Board of the costs of providing legal services are essential; and
> while guidelines are essential so as to provide a uniform and standard set of criteria to be taken into account in reaching a decision, the Board must exercise its discretion in each and every case by reference to the particular facts of the case.
Criteria to be Taken into Account
The following criteria are to be taken into account when considering if hardship is created
in any individual case:-
> the current financial circumstances of the person, including any assets/liabilities,
through the completion of a new means test;
> the amount of money/property recovered/preserved;
> the purpose for which the money/property is to be used;
> the extent to which the person can raise other monies on, for example, a mortgage;
> the amount of the costs;
In more specific terms, regard should be had to:-
> whether the person has suffered a financial loss and the monies recovered are to remedy that loss;
> whether the value of the monies recovered is so low that enforcement would substantially diminish or wholly extinguish the benefit to the client; and
> the individual personal circumstances of the person.
General Guidelines
As the Act contains no guidelines on the approach to be adopted to the phrase “create
hardship”, the Board has approved the following general guidelines, subject to the
principles and criteria set out above:-
> it is considered generally reasonable to exclude the first €4,000 of any monies
received by a legally-aided person, when determining if hardship is created by the
retention of costs;
> when a person receives monies arising out of, for example, a property adjustment order in relation to the family home in matrimonial proceedings, it is considered
reasonable to exclude the first €57,000 of such monies for the purpose of the retention of costs and that a sliding scale be used for cost recovery, with full recovery at €76,000; and
> where the monies recovered are between €4,000 and €18,000, a sliding scale should be used for the recovery of costs with full recovery at €18,000.
In each of the above examples, the person must still be eligible for legal services on financial grounds. If a person is not eligible, the guidelines are not considered to have the same impact, but would be a factor to be taken into account in arriving at a decision.
These guidelines do not restrict the discretion to waive, or not to waive, some or all of the
costs below or above those limits by decision makers.
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