Claimant challenging defendant secretary of state's decision to ban referral fees – secretary of state contending no process of consultation adopted
R (on the application of Association of Personal Injury Lawyers) v Secretary of State for Justice: Queen's Bench Division, Administrative Court (London): 1 March 2013
Under the provisions of sections 56-60 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO), the payment and receipt of referral fees in personal injury cases would be banned from April 2013 as part of the government's reform on 'no-win no-fee' conditional fee agreements. One of the effects of the provisions of LASPO was to reduce the fixed costs for small-value personal injuries claims. The reforms had been made clear in advance to relevant groups, however there had still been some discussions concerning the amount of the reduction to fixed costs.
In February 2012, the prime minister met with representatives from the insurance industry, following which, communications were sent between the government and the insurance industry. Subsequently, the provisions and effects of LASPO were made public. The claimant challenged, by way of judicial review, the secretary of state's decision to implement the reforms. The claimant submitted that the secretary of state had, by engaging in meetings and communications with members of the insurance industry, undertaken a process of consultation, and that that consultation exercise had been flawed by, inter alia, the non-inclusion of other relevant stakeholders including the claimant and the interested parties. The claim would be dismissed.
On a proper analysis of the events, including the relevant meetings and communications, it had been clear that the process adopted had not been one of consultation. The discussions carried out by the government and other parties, in particular the members of the insurance industry, had been no more than negotiating what the reduction in fixed costs would be. The government had already made its decision that there would be a ban on referral fees and there had been no doubt about its position in that regard.
Had the government entered into a formal consultation policy, then it would have been obliged to ensure a proper consultation exercise had been carried out. However, it could not be inferred that a consultation exercise had been carried out merely from the fact that the government had had discussions with an interested party. The lack of a consultation exercise had meant that the government had been able to talk to an interested party free from having to enter discussions simultaneously with other stakeholders. Accordingly, as there had been no consultation process, the claim that the secretary of state had failed to properly consult would be dismissed.
Paul Nicholls QC (instructed by Kingsley Napley LLP) for the claimant; James Eadie QC and Martin Chamberlain (instructed by the Treasury Solicitor) for the secretary of state; Charles Bear QC and James McClelland (instructed by DAC Beachcroft) for the first interested party (Association of British Insurers); Colin Wynter QC for the second interested party (Unite); Ben Hooper (instructed by the Law Society) for the third interested party (Law Society).