Eric Evans and Others v The Serious Fraud Office

JurisdictionEngland & Wales
JudgeMr Justice Hickinbottom
Judgment Date12 February 2015
Neutral Citation[2015] EWHC 263 (QB)
Docket NumberCase Nos: T20137190 & T20141089
CourtQueen's Bench Division
Date12 February 2015
Between:
(1) Eric Evans
(2) David Alan Whiteley
(3) Frances Bodman
(4) Stephen Davies
(5) Richard Walters
(6) Leighton Humphreys
Applicants
and
The Serious Fraud Office
Respondent

[2015] EWHC 263 (QB)

Before:

Mr Justice Hickinbottom

Case Nos: T20137190 & T20141089

IN THE CROWN COURT IN CARDIFF

AND

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Cardiff Civil Justice Centre

2 Park Street

Cardiff

CF10 1ET

Patrick Harrington QC and Benjamin Douglas-Jones (instructed by Blackfords LLP) for Eric Evans

Philip Hackett QC and David Hassall (instructed by McSorely Lewis Law Ltd and Morgans Criminal Law) for David Alan Whiteley

Frances Bodman did not appear and was not represented

Michael J Beloff QC and Guy Ladenburg (instructed by Charles Russell Speechlys LLP) for Stephen Davies

Nicholas Purnell QC and Jonathan Barnard (instructed by Hugh James) for Richard Walters

John Charles Rees QC and Jonathan Elystan Rees (instructed by de Maids) for Leighton Humphreys

Michael Parroy QC and Allison Clare (instructed by the Serious Fraud Office) for the Respondent

Hearing dates: 14–16 January 2015

Mr Justice Hickinbottom

Introduction

1

Following a five-day hearing, on 18 February 2014 in the Crown Court at Cardiff, prior to arraignment, I dismissed the single charge of conspiracy to defraud on which the Serious Fraud Office ("the SFO") sought to try the six Applicants (now reported as R v Evans and Others [2014] EW Misc 5 (Crown C), [2014] 1 WLR 2817). I generally adjourned issues relating to costs. In this judgment, where I refer to "the Dismissal Application", "the Dismissal Hearing" and "the Dismissal Ruling", those are references to the Crown Court proceedings.

2

Following a seven-day hearing, on 14 November 2014 Fulford LJ sitting as a Judge of the Queen's Bench Division, refused the SFO's application for a voluntary bill of indictment containing two counts, one in identical terms to that which I dismissed and a second count, also of conspiracy to defraud, but with different particulars (now reported as Evans & Others v Serious Fraud Office [2014] EWHC 3803 (QB)). Fulford LJ remitted consequential matters, including costs, to me. In this judgment, where I refer to "the VB Application", "the VB Hearing" and "the VB Judgment", those are references to the High Court voluntary bill proceedings.

3

Each of the Applicants, except Ms Bodman, now applies for two costs orders against the SFO, namely:

i) in respect of the Dismissal Application, an order under section 19 of the Prosecution of Offences Act 1985 ("the 1985 Act"); and

ii) in respect of the VB Application, an order that the SFO pays his costs on the indemnity basis.

4

These applications give rise to two specific issues, namely:

i) whether the statutory precondition for the exercise of the court's jurisdiction under section 19 of the 1985 Act (i.e. that the SFO as prosecutor was responsible for an "unnecessary or improper act or omission" that caused the Applicant to incur costs) is satisfied; and

ii) whether the Applicant's costs of the VB application (which the SFO concedes it should pay) should be assessed on the standard or indemnity basis.

5

At the hearing on 14–16 January 2015, I heard submissions on those issues; and this is the reserved judgment from that hearing.

6

It was sensibly agreed by the parties that submissions on quantum should await this judgment, on the basis that the costs of the VB application should in any event be the subject of a detailed assessment and, if it were in due course necessary summarily to assess the costs of the Dismissal Application, that assessment could almost certainly be dealt with on written submissions alone.

7

However, to put the applications into context, the Applicants have submitted statements of the aggregate costs for both applications, in the following approximate sums: Mr Evans £1,200,000, Mr Whiteley £900,000, Mr Davies £890,000, Mr Walters £1,210,000, and Mr Humphreys £2,610,000. Those figures are, I stress, wholly untested – the SFO has strongly indicated that it does not accept that anything like those amounts would be reasonable and, if and when appropriate, it will contend that very much smaller sums should be awarded – but the total costs in issue are in the region of £7m. Nothing I say in this judgment should be taken as any indication, one way or other, as to the amounts that might be properly due if and when a costs order is made.

The Charge

8

It will be helpful to set out the charges at the outset. The proposed counts in the VB Application before Fulford LJ were as follows:

"Count 1

STATEMENT OF OFFENCE

CONSPIRACY TO DEFRAUD contrary to Common Law.

PARTICULARS OF OFFENCE

ERIC EVANS, DAVID ALAN WHITELEY, FRANCES BODMAN, STEPHEN DAVIES, RICHARD WALTERS, LEIGHTON HUMPHREYS, between the 1st of January 2010 and the 31st of December 2010, conspired together to defraud Neath Port Talbot County Borough Council, Bridgend County Borough Council and Powys County Council ('the Mineral Planning Authorities') and the Coal Authority by deliberately and dishonestly prejudicing their ability effectively to enforce restoration obligations relating to open cast coal mining at sites known as East Pit, Nant Helen (Nant Gyrlais), Selar and Margam (Park Slip West and Kenfig) situated in South Wales by:

i) establishing companies registered in the British Virgin Islands, in the ultimate beneficial ownership of Eric Evans and David Alan Whiteley; and

ii) transferring the freehold title in the land containing and surrounding the opencast coal mining sites known as East Pit, Nant Helen (Nant Gyrlais), Selar and Margam (Park Slip West and Kenfig) situated in South Wales from Celtic Energy Ltd to those companies registered in the British Virgin Islands;

thereby intending that the financial liability to restore those open cast coal mining sites to open countryside and/or agricultural use would pass from Celtic Energy Ltd to those companies in the British Virgin Islands, thereby releasing some of the money set aside in Celtic Energy Ltd's annual accounts to restore those open cast coal mining sites, and allowing some of that money to benefit the Defendants personally.

Count 2

STATEMENT OF OFFENCE

CONSPIRACY TO DEFRAUD contrary to Common Law.

PARTICULARS OF OFFENCE

ERIC EVANS, DAVID ALAN WHITELEY, FRANCES BODMAN, STEPHEN DAVIES, RICHARD WALTERS, LEIGHTON HUMPHREYS, between the 1st of January 2010 and the 31st December 2010, conspired together to defraud Neath Port Talbot County Borough Council, Bridgend County Borough Council and Powys County Council ('the MPAs') and the Coal Authority by deliberately and dishonestly prejudicing their ability effectively to enforce restoration obligations relating to open cast mining at sites known as East Pit, Nant Helen (Nant Gyrlais), Selar and Margam (Park Slip West and Kenfig) situated in South Wales ('the sites') by dishonestly agreeing:

i) to establish and control shell companies registered in the British Virgin Islands ('the BVI companies'), and

ii) to cause one or more than one of the BVI companies to act against its/their financial interests by entering into a transaction at an undervalue, by which it/they acquired the freehold title of the sites from Celtic Energy Ltd ('Celtic'), and assumed liability to undertake substantial restoration works in respect of the sites and/or to indemnify Celtic in respect of any liabilities it might have in respect of the sites, without receiving adequate consideration in return and in the knowledge that Oak would be unable to meet those legal obligations, and

iii) to conceal from, and/or misrepresent to, the MPAs and other relevant parties the true nature of the transaction as set out at 1 and 2 intending thereby that:

(a) the MPAs and/or Coal Authority and other relevant parties would accept that substantially all of the financial liabilities to restore the sites to open countryside and/or agricultural use had passed from Celtic to the BVI companies;

(b) the BVI companies would be unable to, and would not, meet any such liability;

(c) the MPAs and/or the Coal Authority would be unable, during any investigation they conducted, to discover the true nature of the transactions as set out at 1 and 2 above and the MPAs would thereby be inhibited or deflected from carrying out their duty to consider how best to secure compliance with the relevant planning conditions;

(d) the MPAs would be deterred from exercising their planning enforcement rights (including pursuant [sic] section 178 Town & Country Planning Act 1990) against the BVI companies;

(e) provisions in Celtic's accounts in respect of the liability to restore the sites would be significantly reduced;

(f) Celtic monies would be paid to the benefit of some or all of the conspirators personally."

As I have explained, Count 1 was in the same terms as the charge in the proposed indictment in the Dismissal Application before me; Count 2 was new.

9

In respect of Count 1, it is noteworthy that the charge was based upon the following three premises:

i) the victims of the fraud were the three Mineral Planning Authorities ("MPAs") and/or the Coal Authority – and only those public authorities;

ii) the conduct relied upon as the means to effect the fraud was (a) the establishment of the British Virgin Islands ("BVI") company to which the freeholds of the sites was to be transferred, and (b) the transfer of the sites to that company – and only that conduct; and

iii) the conspirators intended the transfer of the freeholds to effect a transfer of the obligations to restore the sites to the BVI company.

Factual Background

10

The factual background to this matter is set out in the Dismissal Ruling (at [5]–[27]) and in the VB Judgment (at [4]–[23]). I can deal with it relatively briefly here, relying heavily upon Fulford LJ's succinct and helpful summary.

11

Richard Walters is the...

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