Begg v HM Treasury
| Jurisdiction | England & Wales |
| Judge | Master of the Rolls,Lord Justice Longmore,Lord Justice Lloyd Jones |
| Judgment Date | 23 June 2016 |
| Neutral Citation | [2016] EWCA Civ 568 |
| Docket Number | Case No: C1/2015/2776 |
| Court | Court of Appeal (Civil Division) |
| Date | 23 June 2016 |
[2016] EWCA Civ 568
The Master of the Rolls
Lord Justice Longmore
and
Lord Justice Lloyd Jones
Case No: C1/2015/2776
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
MR JUSTICE CRANSTON
PTA/7/2014
Royal Courts of Justice
Strand, London, WC2A 2LL
Daniel Squires QC (instructed by Birnberg Peirce & Partners) for the Appellant
Tim Eicke QC and Richard O'Brien (instructed by Government Legal Department) for the Respondent
Hearing dates: 15/06/2016
Approved Judgment
On 25 February 2014, the appellant was arrested by West Midlands Counter Terrorism Command and charged with seven offences under the Terrorism Acts, including offences under section 8(1) of the Terrorism Act 2006 and sections 17 and 57(1) of the Terrorism Act 2000. On 14 March 2014, he was designated by HM Treasury under section 2 of the Terrorism Asset-Freezing etc Act 2010 ("TAFA") which provides:
"(1) The Treasury may make a final designation order of a person for the purposes of this Part if—
(a) they reasonably believe –
(i) that the person is or has been involved in terrorist activity….and
(b) they consider that it is necessary for purposes connected with protecting members of the public from terrorism that financial restrictions should be applied in relation to the person."
He therefore became subject to an asset-freezing regime whose drastic consequences were described in Ahmed v HM Treasury [2010] 2 AC 534. The allegations that formed the basis of the designation included that the appellant had attended a terrorist training camp in Syria and that in July 2013 he had arranged for a generator to be sent to Syria.
The appellant was remanded in custody following his arrest. He remained in custody for seven months. The letter dated 14 March 2014 notified the appellant that he had been designated on the basis that:
"A Treasury Minister has considered your case and believes that you are a person who has been involved in terrorist activity and that it is necessary for purposes connected with protecting members of the public from terrorism that financial restrictions should be applied in relation to you."
In preparation for the criminal trial listed to start on 6 October 2014, the CPS disclosed to the appellant the "open" material on which the case against him was based and all relevant unused material. This amounted to some thousands of pages of documents.
In written submissions in support of an unsuccessful bail application, the appellant admitted that he had been in Syria between November 2012 and April 2013 and to having provided basic fitness training to "some of those individuals who might later become involved in resistance to an overwhelming military onslaught". The submissions also stated:
"While some of the underlying facts the prosecution is seeking to establish are not in dispute, namely his having been in Syria, having had contact with named individuals and having endeavoured to provide a specific item to assist one of those individuals, this challenging case will require detailed exploration of the legal and factual circumstances on which the prosecution seeks to base its case…"
Nevertheless, on 1 October 2014, the CPS announced that it would no longer proceed with the prosecution against the appellant and that it was offering no evidence against him. An Assistant Chief Constable of the West Midlands Police told the press on the steps of the Central Criminal Court that the appellant was "innocent". He was formally acquitted and released from custody. In a statement also made on that day, the CPS stated that at the time the charges were authorised there was sufficient evidence available to provide a realistic prospect of a conviction and that it was in the public interest to prosecute; but that in the light of further material which had become available there was no longer a realistic prospect of conviction. The statement continued: "If we had been made aware of all of this information at the time of charging, we would not have charged". The further material relied on by the CPS has never been disclosed to the appellant.
On 2 October 2014, the appellant's solicitors invited the Treasury to quash the designation ab initio on the footing that he had never met the criteria for designation because he had never been involved in terrorism and his designation had never been necessary. In its reply dated 14 October 2014, the Treasury said that a decision had been taken to "revoke" the designation. It gave no reasons for its refusal to quash it.
The appellant appealed against the refusal to quash the designation pursuant to section 26 of TAFA. His grounds of appeal were that (i) he had never been involved in terrorist related activity; and/or (ii) the designation was not necessary; and (iii) the designation was contrary to his rights under articles 6, 8 and A1P1 of the European Convention on Human Rights ("the Convention"); and (iv) the designation should therefore have been quashed ab initio.
On 23 March 2015, the Treasury wrote to the appellant's solicitors stating that it intended to oppose the appeal and that it would be relying on "closed" material. It provided no disclosure and did not explain the factual or legal basis on which it was resisting the appeal.
The appellant is not entitled to legal aid. He is being represented on a conditional fee agreement. He says that he could not afford to risk pursuing his appeal if he were potentially to become liable for the Treasury's costs if he lost. The Treasury has refused to make an estimate of its likely costs of the appeal or of conducting the disclosure exercise. The appellant's solicitor has attempted to estimate the Treasury's costs. His estimate for the entire appeal is a figure in excess of £200,000. This was accepted by the judge. The solicitor has advised the appellant that the Treasury's costs of the disclosure process could be in excess of £100,000.
The appellant sought an undertaking from the Treasury that it would not seek a costs order against him "should he lose at first instance". The Treasury refused to give such an undertaking "at this point in time". He therefore wrote to the Court and asked for the appeal to be listed for directions. A directions hearing took place on 19 May 2015 before Cranston J at which the appellant sought a protective costs order ("PCO") i.e. an order that he should not be liable for the Treasury's costs if he lost the appeal. In a careful judgment, Cranston J decided that a PCO might be appropriate, but that it was premature to make the order at this time. I need to set out some of the detail of his judgment.
Decision of Cranston J
The appellant argued before the judge that the court should recognise a new category of costs protection that would apply in cases in which, from the open material, it would appear that an individual had reasonable prospects of succeeding in an appeal, but that because closed evidence was being relied on against him he could not properly assess his prospects of success.
The Treasury argued that the judge should not take the "very bold step" of establishing such a "novel category of costs protection" and that costs protection should only be accorded in cases of "public interest" litigation pursuant to the principles established in R (Corner House Research) v Secretary of State for Trade and Industry [2005] 1 WLR 2600. The Treasury also argued that costs in cases involving closed evidence, as in any other, should be determined at the end of the proceedings, at which point the appellant would be liable to pay all of the Treasury's costs if he lost even if he was never able to be advised on his prospects of success.
The judge rejected the Treasury argument that costs protection should be limited to public interest litigation. He said:
"24. In my judgment, given the power of the court to make an order furthering the Overriding Objective of dealing with cases justly and fairly, and the orders made in comparable cases like CF v. Secretary of State for the Home Department and MF v. HM Treasury, it is time to recognise that a protective costs order may, in principle, be appropriate in this type of case where individuals have been accused of terrorism and reliance is placed upon closed evidence rendering it impossible to determine the merits of any challenge. For understandable reasons in this type of case the state is able to withhold its case from those individuals. The other side of the coin, however, is that if these individuals wish to vindicate important rights, such as reputation, they may be at risk of paying substantial costs since they cannot assess the strength of the case against them, with the result that they may be dissuaded from pursuing the matter.
25. As Mr Squires submitted, these are not ordinary cases in which the CPR rules mandate that the parties disclose all their case to the other side. Full disclosure is a requirement which is linked to the decision on costs, since in determining any costs application the court is required to consider the extent to which the parties followed the Practice Direction on pre-action conduct (CPR r. 44.1(4)(a) and 5(a)). This is not the case with closed-material procedures. These are recognised in our law for good reason but the plain fact is that they are not consistent with the ordinary principles of procedural fairness, in particular the rules of disclosure: see Al-Rawi v. Security Services [2011] UKSC 34, [2012] 1 AC 531, (CA) [30], [71], (SC), [10], [41], [72], [83], [95], [168]. See also Bank Mellat v. HM Treasury [2014] AC 700 [51]. In these circumstances, the orientation of the costs rules changes, and consistently with the Overriding Objection a protective costs order may be...
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