Understanding recovery and preservation: Hanlon v Law Society

We recommend that you familiarise yourself with the decision of the House of Lords in Hanlon -v- The Law Society [1981] AC 124, which has guided the UK legal aid authorities in their approach to clawback.

Hanlon was a judgement of the House of Lords relating to an English assisted person who was subject to clawback under the Legal Aid Act 1974.  Mrs Hanlon had pursued a divorce action in which she sought transfer to her of the matrimonial home, the title to which was held by her husband.  He sought an order for transfer of any interest which she might have in the house.

Ultimately, Mr Hanlon was ordered to transfer the house to Mrs Hanlon.  The court held that she recovered the husband’s interests in the house, and preserved her own interest.  The court analysed the meaning of recovery and preservation of property, and dealt with several other issues covered in this section.

In particular, regard should be had to the speech by Lord Simon of Glaisdale at page 180, who explained that

“…Property has been recovered or preserved if it has been at issue in the proceedings – recovered by the claimant if it has been the subject of a successful claim, preserved to the respondent if the claim fails.  In either case it is a question of fact, not of theoretical “risk”.  In property adjustment proceedings, in my view, it is only property, the ownership or transfer of which has been in issue which has been “recovered or preserved” so as to be the subject of a legal aid charge.  What has been in issue is to be collected as a matter of fact from pleadings, evidence, judgement and/or order.  I can see no reason for extending the words to items of property, the ownership or possession of which has never been questioned”.

In other words, recovering property means someone has gained property as a result of the action.  Preservation means that someone has kept property which has been put at issue because of a claim by the opponent.

We therefore have to look objectively at what the assisted person got or kept in the proceedings, or under a settlement either to avoid proceedings, or to bring them to an end.

Examples of property recovered or preserved

Examples of cases where property is likely to be recovered are:

  • getting a sum of money under a decree for payment,
  • getting an award of damages in an action of reparation for personal injuries,
  • getting property under a decree for delivery,
  • getting a decree for reduction in respect of heritable property,
  • getting a capital sum on divorce, and
  • receiving the opponent’s share of heritable property under an order for transfer of property on divorce.

Situations in which property may be preserved include:

  • successfully opposing an order for transfer of property on divorce,
  • successfully resisting an action for reduction of a disposition, and
  • successfully resisting a claim for a pension-sharing order on divorce.

The decision in Hanlon remains the leading UK authority on the recovery or preservation of property in relation to legal aid.  The Hanlon case was referred to with approval by Lord McCluskey in Cunniff -v- Cunniff 1999 SLT 992.  His Lordship observed at page 998 that “there was ample material before the court to warrant the conclusion that, if the house had to be sold, the Scottish Legal Aid Board would be entitled to make a claim against the proceeds of the sale in respect of the net liability of the Fund on the account of either legally aided party…  It appears to me to follow from Hanlon -v- The Law Society that the Legal Aid Board would be entitled to exercise this right.”

Definition of ‘property’ for the purposes of recovery or preservation

The 1986 Act does not give a specific definition of property.  The Compact Oxford English Dictionary definition is “the right to the possession, use, or disposal of something, ownership”.  It therefore covers property of any type, whether heritable or moveable, corporeal or incorporeal.  It extends to anything which can be owned and has material value.

What is meant by ‘the proceedings’ for the purposes of recovery or preservation?

For section 17(2B), recovery or preservation takes place in the proceedings for which civil legal aid has been granted.  In Hanlon -v- The Law Society, the court considered the proceedings were the totality of the proceedings in which the applicant had been involved.  The proceedings would therefore cover any appeal, and any step taken under the grant of civil legal aid to physically secure the property (for example, a step in diligence).

Even if the property is physically secured through some means other than directly through the proceedings for which legal aid was granted (for example, a claim in a sequestration, or decree in an action of furthcoming), this will still count as property recovered or preserved.

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