Handbooks Index

 

Part 4: Civil legal aid


Chapter 2

Financial assessment

2.1 Financial conditions
2.2 Application forms
2.3 Period of computation
2.4 Resources of partners
2.5 How we calculate income
2.6 Wage or salary from employment
2.7 Net profit from self-employment or business
2.8 State benefits
2.9 Other sources of income
2.10 Deductions from income
2.11 Capital
2.12 Contributions
2.13 Paying contributions in instalments
2.14 Estimating case costs and restricting the contribution
2.15 Special circumstances
2.16 Assessment of children
2.16A Capital held by Prisoners
2.17 Assessment of person applying in representative or fiduciary capacity
2.18 Deprivation of resources
2.19 Subject matter of the dispute
2.20 Financial provision on divorce
2.21 Matrimonial home
2.21A Fund held on joint deposit reciept
2.22 Payment of aliment
2.23 Payments connected to the subject matter of the dispute
2.24 Appellate proceedings – financial assessment
2.25 Adults With Incapacity (Scotland) Act 2000

 

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Unless otherwise stated, "the Act" or "the 1986 Act" means the Legal Aid (Scotland) Act 1986, and “the regulations” means the Civil Legal Aid (Scotland) Regulations 2002.

2.1 Financial conditions

To be eligible for legal aid, an applicant must satisfy the financial conditions on disposable income and disposable capital set out in section 15 of the Act. ”Disposable income” and “disposable income” are defined in section 42. The financial eligibility limits are revised periodically, usually at annual intervals. Schedules 2 and 3 to the regulations contain detailed rules for computing disposable income and disposable capital respectively. We assess an applicant’s disposable income and capital in deciding whether to grant legal aid.

Special rules (paragraph 15 of Schedule 3) apply to assessing the disposable capital of anyone of pensionable age.

Section 42 of the Act requires that when an applicant has a disposable income which exceeds the relevant upper limit set by the Scottish Parliament then the application for legal aid must be refused.  If, however, the applicant is found to have disposable capital in excess of that upper limit, consideration can be given, if the Board considers that the applicant cannot otherwise afford to proceed,   to granting legal aid. Further information about the factors which the Board will take into account when considering if an applicant whose capital exceeds the upper limit should be granted legal aid are given in paragraph 2.12 of this chapter.   The information given in that paragraph is illustrative and is  not determinative of any particular case nor exhaustive of the factors to which the Board might have regard. Each case will be considered on its own facts and circumstances.

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2.2 Application forms

You should ask the applicant to complete one of the applicant’s financial eligibility forms – either:

or

If the applicant is employed or a company director, they must also get their employer or company secretary to complete form CIV/FIN/3, Statement of earnings by your present employer, and return it to us with their financial eligibility form.

Some applicants may need help in completing these forms. Please encourage them to contact our Financial Assessment Unit if they would like to speak to someone about completing them. The applicant can return the forms to you, for submission with the solicitor’s application form, or directly to us.

Before asking the applicant to sign any forms, you must ensure that they have a copy of the leaflet Civil legal aid – information for applicants. You should also ensure that they understand the implications of receiving a grant of legal aid – see Part IV paragraph 1.8.

NOTE
Final two paragraphs amended August 2007. Reference to income-related employment and support allowance added October 2008

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2.3 Period of computation

We assess an applicant’s disposable income over 12 months immediately following the date they apply to us – this fixed period is known as the “period of computation” and is defined in regulation 2.

Under regulation 23, the applicant must tell us about any changes in circumstances, financial or otherwise, that may affect their ongoing eligibility for civil legal aid. If the proceedings for which legal aid is granted conclude before the end of the period of computation, this does not affect this obligation. We may still reassess the applicant’s means and seek payment of any contribution arising from that assessment.

No similar statutory provision exists for the period over which we assess the applicant’s capital and we therefore only reassess a person’s disposable capital while the proceedings for which legal aid has been made available are continuing.

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2.4 Resources of partners

Regulation 11 of the Civil Legal Aid (Scotland) Regulations 2002 says that, “For the purposes of section 42 of the Act, two persons living together as husband and wife or in a relationship which has the characteristics of the relationship between husband and wife except that the persons are of the same sex shall be treated as if they were spouses of each other”. The practical effect of this is that Regulation 11 covers spouses and civil partners and those living together in relationships with the characteristics of spouses or civil partners.

In this guidance we will use the term “partner” to mean an applicant’s husband or wife, civil partner, or any person that the applicant is living with in a relationship which has the characteristics of the relationship between husband and wife or spouses or civil partners. Regulation 11 of the Civil Legal Aid (Scotland) Regulations 2002 requires that when assessing an applicant’s financial eligibility and the amount of any contribution that the applicant can be asked to pay towards the cost of the case, if the applicant is married or living with a partner as if married, even if the person they are living with is of the same sex, the resources of the couple must be aggregated unless:

In order for the resources of a partner to be disregarded on the grounds that the partner holds a contrary interest in the case it must be shown that the partner is seeking a different outcome from the applicant. This is not the same as where a partner may have a different interest in the proceedings, for example, where the partner may be called upon to give evidence which is detrimental to themselves or to the applicant’s case but nonetheless he/she seeks the same outcome as the applicant.

The regulation also allows that where the applicant and partner are no longer living together and have separated then aggregation need not apply. In considering if aggregation should not apply for this reason it must be shown that not only is there a physical separation but also that the relationship is at an end.

Some periods of physical separation take place without ending a relationship. For example:

In each of these examples, which do no constitute an exhaustive list, couples may consider their relationship to be on-going despite their physical separation.

In deciding if aggregation of resources should take place, particularly where the couple have not entered into a form of marriage or civil partnership, there are several factors which will be used to determine if the applicant is in a relationship which warrants aggregation. Essentially what is to be established falls under two broad headings: do the parties live together; and if so, do they do so in the manner of spouses or civil partners. As noted above it is not always the case that the parties live together permanently.

The principal factors which we will take into account in deciding if the parties live together and do so as if spouses or civil partners are:

This list is by no means exhaustive and it is not necessary for all of these factors to be present before a decision will be arrived at that aggregation is appropriate. Each case will be considered in accordance with its own facts.

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2.5 How we calculate income

Paragraph 1 of schedule 2 to the regulations states that the applicant’s income is taken to be the income they may reasonably expect to receive (in cash or in kind) during the period of computation. The following notes give examples of the most common types of income and how we treat them.

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2.6 Wage or salary from employment

The applicant should supply

We will look at what they have earned since the start of the current tax year and use this information to calculate an average that we assume they will earn for the whole of the coming year. While we can get some insight into earning capacity from someone’s P60 (issued annually by employers, usually in April or May, to show the employee’s earnings during the preceding fiscal year) we prefer the more up-to-date information contained in the pay slips or statement.

We can also take account of, for example, seasonal fluctuations, or periods when the applicant is not paid, such as school holidays.

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2.7 Net profit from self-employment or business

We take into account information contained in the latest set of accounts about the net profit your client has earned. We make certain adjustments to the net profit as follows:

If your client is newly self-employed and does not have a full year record, we can accept the figure the applicant says they draw each week or month from the business. We will ask for bank statements, to help determine these figures in the absence of accounts.
If your client does not have to have accounts made up, we will accept a copy of the information made available to HM Revenue & Customs and the tax assessment based on it.

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2.8 State benefits

Paragraph 5 of schedule 2 authorises us to disregard payments of income support, income-related employment and support allowance, income-based jobseeker’s allowance and Universal Credit and paragraph 7 allows us to disregard payments of disability living allowance, attendance allowance or Personal Independence Payment , and these will be left out of account. All other state benefits will be converted to an annual figure and included. Pension credits are also not taken into account.

NOTE
The reference to pension credits was added to this section, and deleted from section 2.9, in April 2008 Reference to income-related employment and support allowance added October 2008

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2.9 Other sources of income

Otherwise we will aggregate the partner’s resources with the applicant’s and ignore the sums they exchange as housekeeping payments.

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2.10 Deductions from income

This is not a definitive list of all deductions, but illustrative only.

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2.11 Capital

All capital resources must be taken into account, excluding the following:-

In considering if an asset can be disregarded because it is subject matter of the dispute it must be shown that, at the date of application,  the asset is the subject of some form of request to the court for an order ( for example a specific crave or conclusion, or the prayer in a Petition). Further guidance on this issue is given in paragraphs 2.19, 2.20 and 2.21 of this chapter.

Examples of capital include:

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2.12 Contributions

If an applicant is granted legal aid, they will come into one of three categories:

 In considering if legal aid should be made available in the last of these three situations regard will be had to the following factors:-

This list is illustrative and the criteria listed above are not determinative of any particular case nor exhaustive of the factors to which the Board might have regard. Each case will be considered on it’s own facts and circumstances.

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2.13 Paying contributions in instalments

NOTE
Amended April 2007

We will usually allow a contribution derived from income to be paid by instalments. Normally, we will allow contributions of –

If your client finds these instalment levels unaffordable, we may, depending on the individual circumstances, be prepared to review them and to allow them to pay the contribution over a longer period.

If the contribution is derived from disposable capital, it will normally have to be paid in a lump sum when legal aid starts.

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2.14 Estimating case costs and restricting the contribution

When we grant legal aid subject to a contribution –

We will carry out the means assessment in the same way. We should still be told of any changes in your client’s financial circumstances and we will adjust contributions in the light of any such changes.

Contributions reduced in this way will still be payable in instalments, usually over 20 months.

If we agree to reduce the assessed contribution and later, for example, when you make a stage report, we consider your estimate was too low, we will ask your client to pay the higher contribution, or a revised estimate, whichever is less. You should ensure that your client is aware that further requests for payment could arise.

With contributions generated from income, if your estimate is exceeded we will expect the applicant to revert to the instalment rate originally offered until either all your account has been met or the original contribution has been paid, whichever is lower.

Contributions generated from the applicant’s capital are always payable in one lump sum, but we can reduce any capital contribution to a lower estimate. Your client must be prepared to set aside enough capital to pay the whole contribution assessed or all your account, whichever is the lower, if this proves necessary because your estimate is exceeded. Our regulations do not make provision for us to reduce a person’s assessed contribution from capital unless there are exceptional circumstances.

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2.15 Special circumstances

2.16 Assessment of children

The Civil Legal Aid (Scotland) Amendment Regulations 2010 introduced changes to the assessment of an applicant’s financial eligibility for civil legal aid if they fall within the definition of a child. The financial resources of any person who owes an obligation of aliment (POA) to a child applicant are to be treated as part of the child’s own resources unless it would be unjust or inequitable to do so.

The regulation applies to applications made by solicitors appointed by the court to act in a representative capacity for a child in addition to those made by solicitors instructed directly by a child.

Definition of a child

In Regulation 11A of the Civil Legal Aid (Scotland) Regulations 2002, “child” now has the meaning given in section 1 (5) of the Family Law (Scotland) Act 1985, which states:

child” means a person –

(a) under the age of 18 years; or

(b) over that age and under the age of 25 years who is reasonably and appropriately undergoing instruction at an educational establishment, or training for employment or for a trade, profession or vocation.

Obligation of aliment

For this provision the obligation of aliment applies to those parties defined in section 1 (1) (c) or (d) of the Family Law (Scotland) Act 1985, which are:

(c) a father or mother to his or her child;

(d) a person to a child (other than a child who has been boarded out with him by a local or other public authority or a voluntary organisation) who has been accepted by him as a child of his family.

We will consider each case on its own merits but there are no instances where we can automatically accept that the resources of a POA should not be aggregated. If a solicitor is of the view that it would be unjust or inequitable for aggregation of resources to take place a detailed explanation must be given by the solicitor as to why it is considered this is the case.

It is not sufficient to simply state that in the circumstances of a particular case it would be unjust and inequitable to aggregate the POA’s resources without explaining what the  circumstances are  that led to that conclusion. 

 We have set out below some general principles and guidelines to assist solicitors in establishing in what circumstances it could be considered that aggregation of the POA’s resources would be unjust and inequitable.  This guidance is illustrative only and is not an exhaustive list of scenarios that may arise.

When the Board is assessing a child applicant’s financial eligibility for civil legal aid we have to obtain information about the resources of POA’s and the information supplied forms part of the application. This leads to two consequences:-

It has been put to us that in some instances the parents owing an obligation of aliment to the child applicant may be involved in litigation themselves concerning matters such as residence or contact which would make the parent with care very reluctant to contact the other POA for financial  information. This, in itself, is not generally regarded as showing that it would be unjust or inequitable to aggregate the POA’s resources but in this situation the Board can conduct the correspondence needed with the POA to obtain the information.

Bank accounts held by parents for other children

Accounts may be opened in the name of the guardian for the child’s benefit, or if opened in the name of the child (typically from the time they reach the age of 7) the guardian may be authorised to operate the account on behalf of the account holder child. In these circumstances, the guardian holds the monies in the account on trust for the child, as the beneficial owner of the capital. In the terms and conditions we have reviewed this is expressly stated therein. Accordingly, whilst the guardian may be the legal owner of an account for the purposes of administering it on behalf of someone who has not yet reached capacity, any capital in the account does not belong to them and is the capital of the child. Therefore, when the money is held for a child other than that for whom the current application for legal assistance is being made it should general be disregarded from any assessment for legal assistance purposed.

That is not to say the Board would have no interest in the existence of such accounts. There may be a risk of capital being transferred from an account or investment of an applicant into an account of their child, purely for financial assessment purposes. Therefore Regulation 12 of the 2002 Regulations which deals with deprivation of resources by someone in order to make themselves financially eligible may be engaged. Our view is that it would be unreasonable for the Board to deem that any and all monies transferred to a child’s account amounts to deprivation, and each case would have to be looked at on its own set of facts.  Where large tranches of money are moved into the child’s account just prior to an application for legal aid, then this would be more likely to constitute deprivation of resources. Alternatively, had a parent set up a standing order for a regular payment of money to their child over a number of years then this would be unlikely to constitute deprivation of resources, although it would be open to the Board to consider any continuation of such payment from the time of submitting an application to be deprivation.

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2.16A Capital held by prisoners

In assessing financial eligibility in cases where the applicant is in prison the resources of the applicant’s spouse or partner have to be taken into account when assessing financial eligibility in accordance with Regulation 11.

Regulation 11 allows that there are two circumstances where aggregation need not apply, namely:-


or

    Where the parties are living separate and apart

In considering the second bullet point we do not consider that a geographical separation is sufficient reason to leave the spouse or partner’s resources out of account, and would only do so if the applicant considers that the  marriage or relationship must be at an end.

In addition we will take into account every resource of a capital nature owned by an applicant who is in prison.

This includes any property in which the applicant has a financial interest, even if that  property was the applicant’s main or only residence before his/her imprisonment, provided  we are  satisfied that the applicant will not reside in the property in question for at least the likely lifetime of the case

Consideration can be given to disregarding the value of the applicant’s share of the equity in such a property if the criteria usually applied to the disregard of capital assets is appropriate, for example, if the property is occupied by the applicant’s spouse or partner or the applicant’s share of any equity is at issue in the proceedings for which legal aid is sought.

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2.17 Assessment of person applying in representative or fiduciary capacity

Where a person is applying in a representative, fiduciary or official capacity, or is a named person by virtue of any of sections 250 to 254 and 257 of the Mental Health (Care and Treatment) (Scotland) Act 2003, we disregard the applicant’s personal resources, but take into account:

For example, if someone applies in the capacity of an executor, we have to consider not only the value of the estate, but also the resources of any beneficiaries of the estate (which might include the applicant).

Where the applicant is concerned in certain proceedings (defined in regulation 14(4)) relating to an incapable adult, we disregard the applicant’s personal resources, but have regard to the personal resources of the incapable adult.

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2.18 Deprivation of resources

Under regulation 12, we must consider capital disposed of before an application was made. We have to decide if

If we consider an applicant has disposed of funds in this way, regulation 12 allows us to assess their means as if they had not disposed of or converted the resources.

When considering these issues, we take into account the whether it was necessary to spend the funds in question and the timing of the disposal in relation to the knowledge that litigation was likely.

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2.19 Subject matter of the dispute

The definition of disposable capital in section 42 of the Act excludes the value of any capital which is the subject matter of the dispute. In practical terms, this generally means that some form of order, (for example, a crave or conclusion or prayer in a petition) is directed to that property or asset.

If the dispute concerns the ownership of a resource that will be determined in the proceedings for which legal aid is sought, that resource is likely to be the subject matter of the dispute. In the application, you should draw our attention to any resource which you regard as forming part of the dispute between the parties. However, your client should be advised that because an asset is disregarded on this basis does not mean that the value of the asset may not be considered to be available to cover the cost of legal services. Consideration will be given at the conclusion of the case to whether ownership  of the asset has been recovered or preserved by the applicant at the conclusion of the case. This is usually referred to as “clawback”. Further information on clawback is given in  Part VII chapter 2 of  this Handbook.

In deciding whether it is appropriate to exclude such resources from the financial assessment, we will consider whether the dispute concerns claims or counter-claims for  transfer of money or property. It is not enough to show that a global crave for payment of a sum of money is being made, rather ownership of the property or asset must be at issue in the proceedings. Simply because an asset which could be used to satisfy the opponents claim exists, does not necessarily mean that an asset is in dispute. We will consider whether the opponent is disputing ownership of the assets, or that ownership will only be resolved by the court action.

Property can become the subject matter of the dispute at a later stage of the action if, for example,  the opponent introduces a new claim specifically directed at the asset.  If so, the applicant’s capital will need to be reassessed either by way of a redetermination of the contribution if legal aid has been made available or in the context of a fresh application if legal aid was previously refused on the basis that his/her capital exceeded the upper limit and that we considered he/she could therefore proceed without legal aid.

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2.20 Financial provision on divorce

An applicant may seek legal aid for divorce including orders for financial provision under sections 8 and 14 of the Family Law (Scotland) Act 1985.

We do not accept that, because of the court’s power to order fair sharing of matrimonial property, all an applicant’s assets must be disregarded as the subject matter of the dispute. We will take into account all the applicant’s capital assets and one half of those owned jointly with any other party, including the opponent.

If the opponent seeks transfer of property from the applicant, we will treat the applicant’s assets as the subject matter of the dispute to the extent of that claim. You should ensure that you include this in the information you send to us, either in the initial writ, statements and/or  a schedule of the matrimonial assets. Often, where the assets are less than the upper capital limit, we will not need to consider this information any further.

You must tell us about the applicant’s capital at the time they applied, as some time may have passed since the parties separated – for example, the applicant may have opened a new savings account or bought shares following separation.

Property can become the subject matter of the dispute at a later stage of the action if, for example, the opponent introduces a new claim specifically directed at the asset.  If so, the applicant’s capital will need to be reassessed either by way of a redetermination of the contribution if legal aid has been made available or in the context of a fresh application if legal aid was previously refused on the basis that his/her capital exceeded the upper limit and we therefore considered he/she could afford to  proceed without legal aid.

Property excluded as the subject matter of the dispute may amount to property recovered or preserved at the end of the case, and the applicant may have to pay us some or all of the costs of the case (For more information about this, please see Part VII Chapter 2).

If it becomes apparent, at any stage in the proceedings, that property was never actually at issue, and therefore not the subject matter of dispute, you must tell us so that we can reassess the applicant’s capital.

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2.21 Matrimonial home

If the applicant continues to live in the matrimonial home, its value should be disregarded under rule 10(1) of schedule 3 of the regulations. If the opponent lives there, we have the discretion, under rule 17, to disregard the value of the property.

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2.21A Funds held on joint deposit reciept

It is often the case, particularly in family cases, that jointly owned funds are held on joint deposit receipt pending the resolution of some ongoing or outstanding issue. The applicant’s share of any such funds are considered to be disposable capital and will be taken into account unless,  of course, the opponent is making a direct claim for transfer of the applicant’s share in whole or in part.

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2.22 Payment of aliment

Where legal aid is sought for divorce, and an estranged partner is already paying aliment to the applicant voluntarily, we take this sum into account in assessing financial eligibility, since it does not depend on the result of the proceedings. We do not accept the view that in this situation the aliment paid forms part of the subject matter of dispute.

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2.23 Payments connected to the subject matter of the dispute

Under rule 16, we must disregard any payments made either before or after the application for legal aid to the applicant in connection with the subject matter of dispute. A common example would be an interim payment in a personal injuries action before resolution of the whole case, although it is not limited to personal injuries cases. However, if the assisted person has, or gets, capital that is not disputed between the parties in the proceedings, we must include it in the assessment.

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2.24 Appellate proceedings – financial assessment

Someone applying for legal aid in connection with appellate proceedings may previously have been receiving legal aid for the proceedings in the court below. In these circumstances, the maximum contribution already paid for the proceedings in the lower court is all we will expect the applicant to pay. We will not ask for a fresh contribution in the appellate proceedings.

We may, however, reassess disposable income and disposable capital if there has been a change in circumstances that would normally result in a reassessment.

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2.25 Adults With Incapacity (Scotland) Act 2000

NOTE
Paragraph 2.25 added November 2007

The Civil Legal Aid (Scotland) Regulations 2002 were amended, as at 1 August 2006, to provide that civil legal aid should be available to a person concerned as claiming or having an interest in the property, financial affairs or personal welfare of an adult under the 2000 Act, other than the adult to whom the application relates, for:

(a) an intervention order under section 53(1); or

(b) a guardianship order under section 57(1)

relating to the personal welfare of an adult or to the property, financial affairs and personal welfare of an adult.

These regulations amended sections 15 and 17 of the Act and also regulation 5 of the principal civil regulations to provide that a person making such an application:

The Civil Legal Aid (Scotland) Amendment (No.2) Regulations 2007 came into force on 5 October 2007 and

(i) further amended the civil regulations to provide for other guardianship order applications made under the 2000 Act:

(ii) importantly, extended the modified means test, in connection with all such orders, to the incapable adult.

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