Eric Evans and Others v The Serious Fraud Office
| Jurisdiction | England & Wales |
| Judge | Mr Justice Hickinbottom |
| Judgment Date | 03 June 2015 |
| Neutral Citation | [2015] EWHC 1525 (QB) |
| Docket Number | Case Nos: T20137190 & T20141089 |
| Court | Queen's Bench Division |
| Date | 03 June 2015 |
[2015] EWHC 1525 (QB)
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 Declan McSorley & Jon Lewis Solicitors) for David Alan Whiteley
Frances Bodman did not appear and was not represented
Michael J Beloff QC, Guy Ladenburg and James Potts (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
Richard Christie QC and Lisa Arbon-Donovan instructed by the Serious Fraud Office) for the Respondent
Written submissions: 27 February to 3 June 2015
Approved Judgment
Introduction
The background to the costs applications now before me is set out in my judgment dated 12 February 2015, and I need not repeat it at length here.
However, briefly, 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) ("the Dismissal Application"). I adjourned issues of costs generally. 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); [2015] Lloyd's Rep FC 59) ("the VB Application"). Fulford LJ remitted consequential matters, including costs, to me.
The Applicants each applied for one or more of the following costs orders against the SFO, namely:
i) in respect of the Dismissal Application, an order under section 16 of the Prosecution of Offences Act 1985 ("the 1985 Act");
ii) also in respect of the Dismissal Application, an order under section 19 of the 1985 Act; and
iii) in respect of the VB Application, an order that the SFO pays his costs on the indemnity basis.
Unless otherwise indicated, in this judgment "section 16" and "section 19" are references to section 16 and section 19 of the 1985 Act respectively.
The costs claimed under (i) are small and largely uncontroversial. In relation to (ii) and (iii), on 12 February 2015, following a three-day hearing, I handed down judgment on two preliminary issues (now reported as [2015] EWHC 263 (QB)) ("the Costs Preliminary Issues Ruling"), finding as follows:
i) 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) was satisfied, and the costs so caused were the relevant Applicant's costs of the criminal proceedings from 23 September 2013; and
ii) the Applicant's costs of the VB Application should be assessed on an indemnity basis.
It had been agreed that submissions on quantum should await the judgment on the preliminary issues, as it was expected that I could deal with any further issues (notably the assessment of any costs found to be due, and any interim payments to be made in respect of the costs of the VB Application) on the basis of written submissions only.
Thus, since handing down that judgment, I have received written submissions on the three matters that remain to be dealt with by me, namely:
i) the assessment of the costs to be paid under section 19 of the 1985 Act;
ii) the assessment of the costs of the costs hearing; and
iii) the amount of any interim payment on account of the costs of the VB Application.
Very weighty submissions have been lodged, which set out the respective parties' positions more than clearly. I am quite satisfied that, with one exception, following determination of the preliminary issues, as expected I can deal with the issues between the parties and make the required determinations properly and justly on the basis of the oral and written submissions to date, without a further hearing; and that, given the historic levels of costs at every stage of this case to date, a further hearing would be disproportionate and is unnecessary. The one exception is the section 19 claim made on behalf of Mr Whiteley. For the reasons I briefly set out below (paragraphs 53–58), that claim gives rise to a point of law which has been the subject of very recent further submissions – including submissions made today – and, in my view, it requires further consideration. I have therefore adjourned that issue to be considered at an oral hearing.
Assessment of the Section 19 Costs: Relevant Provisions
As I explained in the Costs Preliminary Issues Ruling (at [85]–[87]), section 16 provides that, where a defendant is charged and he successfully defends that charge, he is generally entitled to his defence costs from central funds. However, in respect of criminal proceedings commenced between 1 October 2012 and 27 January 2014 – including, as is common ground, these proceedings – paragraph 2(2) of Schedule 10 to the Legal Aid, Sentencing and Punishment of Offenders Act 2012 inserted a section 16A(1) into the 1985 Act, which provides that, subject to exceptions not presently relevant:
"A defendant's costs order may not require the payment out of central funds of an amount that includes an amount in respect of the accused's legal costs…".
Therefore, in respect of criminal proceedings commenced in that period, under section 16, a successful defendant was able to recover only out-of-pocket expenses, such as fares to court. Section 16 costs are thus limited in these proceedings. (For completeness, I should say that the Costs in Criminal Cases (Legal Costs) (Exceptions) Regulations inserted a new section 16A(5A) into the 1985 Act under which, for proceedings commenced after 27 January 2014, legal costs are again recoverable but effectively only at legal aid rates.)
However, the 1985 Act provides for a number of special costs orders. Section 19 – the relevant statutory provision in this case – provides for costs orders against a party where costs have been incurred as a result of unnecessary acts or omissions on his part, in the following terms:
"The Lord Chancellor may by regulations make provision empowering magistrates' courts, the Crown Court and the Court of Appeal, in any case where the court is satisfied that one party to criminal proceedings has incurred costs as a result of an unnecessary or improper act or omission by, or on behalf of, another party to the proceedings, to make an order as to the payment of those costs."
The relevant regulations are the Costs in Criminal Cases (General) Regulations 1986 ( SI 1996 No 1335) ("the 1986 Regulations"). Regulation 3 provides (so far as relevant):
"(1) … [W]here at any time during criminal proceedings [the court] is satisfied that costs have been incurred in respect of the proceedings by one of the parties as a result of an unnecessary or improper act or omission by, or on behalf of, another party to the proceedings, the court may, after hearing the parties, order that all or part of the costs so incurred by that party shall be paid to him by the other party.
(2) Before making an order under paragraph (1), the court shall take into account any other order as to costs (including a legal aid order) which has been made in respect of the proceedings.
(3) An order made under paragraph (1) shall specify the amount of costs to be paid in pursuance of the order…"
That regulation is complemented by CrimPR rule 76, which sets out the relevant procedure (see CrimPR rule 76.1(1)(a)). Rule 76.8 concerns the procedure in respect of "Costs resulting from unnecessary or improper act etc", i.e. an order under section 19. Rule 76.8(7), reflecting regulation 3(3) of the 1986 Regulations, specifies that "if the court makes an order, it must assess the amount itself…". Rule 76.8(5) provides:
"Where the court considers making an order on its own initiative, it must—
(a) identify the party against whom it proposes making that order; and
(b) specify –
(i) the relevant act or omission,
(ii) the reasons why that act or omission meets the criteria for making an order, and
(iii) with the assistance of the party who incurred the costs, the amount involved."
However, particularly relevant to the matters before me is CrimPR rule 76.2, "Costs orders: general rules", which applies to all costs orders including those made under section 19. That rule provides, so far as relevant to these applications:
"(3) In deciding what order, if any, to make about costs, the court must have regard to all the circumstances, including –
(a) the conduct of all the parties; and
(b) any costs order already made.
(4) If the court makes an order about costs, it must –
(a) specify who must, or must not, pay what, to whom; and
(b) identify the legislation under which the order is made, where there is a choice of powers.
(5) The court must give reasons if it –
(a) refuses an application for a costs order; or
(b) rejects representations opposing a costs order.
(6) If the court makes an order for the payment of costs –
(a) the general rule is that it must be for an amount that is...
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