Friday, 16 April 2010

Cork Materials from Professor Muir Hunter QC’s Collection

It is interesting that Professor Hunter had strongly advocated against the withdrawal of public funding from business cases (in what he called “rescue cases”) due to the costs and fees involved in the insolvency procedures. The withdrawal is in line with Schedule 2 of the Access to Justice Act 1999. This is to the effect that matters arising out of the carrying on of a business and matters of company or partnership law may not be funded as part of the Community Legal Service. Professor Hunter was particularly concerned with a number of things:
- the disregard of the constitutional right of general access to courts
- the impact of the fees charged under the Insolvency Fees Order 1994 (see Insolvency Proceedings (Fees) Order 2004)
- the remuneration and fees of the liquidator
- the cost of access to the insolvency courts including the deposit payable on the debtor’s petition and the costs of preparing and presenting the petition
- the failure to consider the cause of insolvency such as bad debts, implying that the small company may simply have no funds despite the managers' best efforts


In a written message addressed to Professor Hunter, Sean Langley of the Legal Aid Division noted that business cases are excluded because of the limited resources of the Community Legal Service and the decision of the Government to focus on “high priority areas” such as social welfare, public interest cases and those involving the welfare of children. He also argued that there are alternatives to public funding that entrepreneurs may exploit such as conditional fees agreements and legal expenses insurance. Thus, a small business may enter into a conditional fee agreement (see section 2 of the Access to Justice Act) with a solicitor allowing for the latter’s fee to be paid only if the case is won; and the solicitor may obtain an insurance policy to cover the costs of losing. He further maintained that the solicitor could pay the insurance where the client does not have sufficient funds and insisted on the possibility of recovering insurance premium from the losing party under the Act. Mr Langley was however close to acknowledging the difficulty of using these alternatives when he noted that business cases are not completely excluded as sole traders may still get funding where their cases are about personal insolvency. Mr Langley’s arguments were certainly not forcefully persuasive. The idea that funding should not be granted where an alternative exists is commendable, however, where such an alternative is not comparable to public funding, Professor Hunter’s hard-headed appraisal deserved a better consideration.

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