A legal aid firm has been ordered to repay nearly £800,000 received on account plus interest following a High Court ruling. 

East London firm Charles Ete and Co had contracts with the former Legal Services Commission (LSC) to carry out civil and criminal legal aid work. The lord chancellor’s claim to recoup payments on account (POA) relates to work carried out under a civil contract in relation to family proceedings.

The judgment, The Lord Chancellor v Charles Ete and Co and Charles Ete and Ratookumar Manorbhai Patel, states that from 2009, the LSC became ‘increasingly concerned’ by the large number of certificated civil cases in which the firm had not submitted final bills so that a reconciliation could be carried out between the POAs and a final assessment.   

Bills for a ‘substantial’ number of cases had been promised by the firm ‘on a number of occasions and still not produced’.

The LSC was also concerned ‘about the large amount of POAs compared to the firm’s work in progress as well as its accounting procedures’.

The firm’s contract for family work was terminated in January 2012. Its crime contract was terminated in July 2012.

Issuing a claim in the High Court in July 2013, the lord chancellor sought to recover £795,183.69 plus interest down to the date of the judgment at the rate of 4% a year. The firm’s response stated that it carried out work exceeding the value of the POAs and that it was owed £455,480.30 plus interest.

In a counterclaim, the firm alleged that the civil contract had been wrongfully terminated ‘because of the inadequate length of the notice period given, and a breach of natural justice involved in the composition of the [Contract Review Body]’.

In relation to the termination of the crime contract, the firm alleged there had been a breach of natural justice through the inappropriate composition of the CRB and a failure on the part of the LSC to consider taking corrective action instead of terminating the crime contract.

Ruling in favour of the lord chancellor and dismissing the defendants’ counterclaims, Mr Justice Holgate said the firm ‘repeatedly failed to have final bills prepared for nearly all of the cases in which it had said that bills would be submitted during the 2009-2012 period'.

Billing delays in the present case ‘were very substantial indeed’, Holgate said.

Holgate said firm partner Charles Ete’s explanations for the billing delays, whether in correspondence or in evidence, ‘lack any credibility’.

‘He sought to lay the blame for billing at the door of other parties, whether the LSC, or costs draftsmen, or lawyers who had removed files, so as to claim that the firm had not been unwilling to submit final bills on concluded cases’.

Holgate rejected Ete’s ‘repeated’ claims that the firm had been unable, rather than unwilling, to have final bills prepared because of financial constraints.

On the claim that the civil contract had been wrongfully terminated, Holgate said the breaches of the contractual terms had been ‘both flagrant and persistent and fully justified’ the contract’s termination.

On the claim that the crime contract was wrongfully terminated, he rejected Ete’s assertion ‘that the LSC had been obliged to require corrective actions to be taken rather than terminate the contract’.

He also rejected the claim that there had been a breach of natural justice.

Holgate refused Ete’s application for permission to appeal ‘the whole judgment costs and interest’ on the basis ‘that it does not have any real prospect of success and there is no other compelling reason why an appeal should be heard’.

However, Ete told the Gazette that he will lodge an application at the Court of Appeal.