Legal aid

Legal aid

Legal Aid Board's charge - settlement of proceedings - board only entitled to charge over property in issue or substitutionsMorgan v Legal Aid Board: ChD (Neuberger J): 12 April 2000

In October 1989 the claimants charged two pieces of land to a bank as security for the repayment of money owed.Subsequently, both the bank and the claimants commenced separate actions against each other.

By consent orders agreed in August 1993, the actions were settled; the bank accepted a payment in full and final settlement and agreed to discharge the mortgages on the land.

The Legal Aid Board, which had funded the claimants in both actions, contended that, since the land had been subject to mortgages in the bank's favour until the settlement agreement, they were entitled to a charge over the land pursuant to s.16(7) of the Legal Aid Act 1988.The claimants submitted that since the land had not been in issue the board did not have a charge over it and sought a declaration to that effect.Jane Collier (instructed by Tom Browne) for the Legal Aid Board.

Stephen Jourdan (instructed by Burges Salmon, Bristol) for the claimants.Held, granting the claimants' application, that, like s.16(6), s.16(7) gave the board a charge over assets which had been in issue in the proceedings; that s.16(7) also applied to substitutions, namely to property which was included in the terms of a settlement and which, while not in issue itself, in some way represented or replaced property or rights in issue; that the charge did not extend to assets which, although referred to in the settlement, were extraneous to the proceedings; that the release of the land from the mortgages was neither in issue nor in substitution for any rights or property in issue; and that, accordingly, it did not fall within the board's charge under s.16(7).