R (Argyn Khassenov) v Kulich and Kulich
| Jurisdiction | England & Wales |
| Judge | Jennifer James |
| Judgment Date | 09 November 2022 |
| Neutral Citation | [2022] EWHC 2845 (SCCO) |
| Docket Number | Case No: T20167850 |
| Court | Senior Courts |
In the Matter of an Appeal from Redetermination Pursuant to Regulation 10 of the Costs in Criminal Cases (General) Regulations 1986:
[2022] EWHC 2845 (SCCO)
COSTS JUDGE James
Case No: T20167850
SCCO Reference: SC-2020-CRI-000188 (170/17)
IN THE HIGH COURT OF JUSTICE
SENIOR COURTS COSTS OFFICE
(from the Crown Court at Birmingham)
Thomas More Building
Royal Courts of Justice
London, WC2A 2LL
Mr Strickland and Mr Morris (instructed by Thomas Legal Costs Limited) for the Appellant
Mr Rimer (instructed by The Legal Aid Agency) for the Respondent
Hearing dates: 1 and 7 April 2021
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
REASONS FOR DECISION
The Written Reasons in this matter were dated as long ago as 9 November 2018 and the date of the Notice of Appeal was 29 November 2018. In fact, I handed down a written Judgment in this matter in July of 2019 but sometime thereafter certain consequential issues arose. I heard those matters (remotely, via BT MeetMe) as long ago as 1 and 7 April 2021 and sincerely apologise to the parties for the subsequent lengthy delay in producing this decision, which was partly to do with the pandemic; the parties clearly deserved the certainty of a ruling before this.
I heard from Mr Tom Morris (Counsel for the Appellant; his input on the first hearing was limited as there was insufficient time to address the matter upon which he had been briefed) and Mr Edward Strickland (Costs Lawyer for the Appellant, who made submissions before me at the first hearing). The Legal Aid Agency (‘LAA’) was represented throughout by Mr Michael Rimer, who was at the relevant time an employed Barrister with the LAA. References below are to the page numbers in the hearing bundle lodged for this matter.
This is an appeal by Mr Khassenov, a Private Prosecutor in relation to the assessment of his costs under a prosecution costs order, made on 30 May 2019 under s.17 of the Prosecution of Offences Act 1985. On 25 April 2019, £209,197.51 was claimed in relation to confiscation proceedings under the Proceeds of Crime Act 2002. In total, the Determining Officer assessed the claim at £122,896.261 (excluding VAT). In her written reasons dated 24 April 2020, the Determining Officer gave an explanation as to why areas of the claim had been reduced on assessment (although, as will be seen below, I agree with the Appellant that the Determining Officer gave insufficient detail in her written reasons).
There is no need to recite in detail the background to this case (brief information appears below); in 2019 I dealt with an appeal against the assessment of costs in the underlying proceedings and the full background facts are at paras 5–11 of Khassenov v. Kulich (SCCO ref 170/17 31 July 2019).
First Hearing 1 April 2021 – Mr Strickland on Disclosure Platform issues
On 1 April 2021 Mr Strickland referred me to a Bundle on CE-file which was the same bundle as had been uploaded for the main hearing in this matter, back in 2019. Although I handed Judgment down after that hearing, the parties were unable to agree all of the ramifications of that Judgment and hence the need for a further, short hearing to take place.
Mr Rimer and Mr Strickland attended in person on the Appeal hearing in 2019 along with representatives of the firm of Edwards Marshall McMahon, Solicitors for the Appellant. The Appellant had brought a successful private prosecution after being the victim of a complex multinational fraud in respect of which the Police/CPS refused to prosecute.
Dealing with the outstanding issues, Mr Strickland addressed the question of costs regarding the disclosure platform. He stated that, whilst I had allowed the Appellant's Costs; there were other points, of which the Appellant won some and lost others. The original Appeal hearing had addressed what the disclosure platform was for and my 2019 Judgment dealt with that issue; the Appellant had appealed the disallowance of some of the time spent, as well as the costs of setting up the disclosure platform.
Per Mr Strickland, the upshot was that the Appellant succeeded on the disclosure platform aspect but that when he sought payment, the payment received did not accord with what was due following that win. The LAA paid an increase in hourly rates as awarded by this Court, but despite the fact that the Appellant won on the disclosure platform issue, the LAA paid the relevant disbursement but not the time spent/work done.
Regarding the time sought, Mr Strickland asserted that the Appellant was not asking for all of it; for example, the Appellant knew he would not recover training on the disclosure platform, but he believed that he was entitled to (and had only sought) time working on the disclosure platform once it was up and running. In Mr Strickland's submission, if one follows the Application, the Appeal and the Submissions, under ‘time spent’ it is clear (following my original Judgment) that the Appellant succeeded on that issue. My original Judgment does not say that the Appellant won the disbursement but not the time spent/work done on this platform.
Per Mr Rimer, my decision was in favour on the overhead cost of the disclosure platform, but not the time spent uploading the data. The Appellant claimed 3,249 hours uploading and scanning; 2,800-odd hours were allowed, but it was not (per the LAA) correct to state that the remaining 393.2 hours must be included. Instead, the 2,800-odd hours allowed already, were enough and there was no need to add in another 393.2 hours. This had been discussed via email between the parties; Mr Rimer directed my attention to the Bundle accordingly and I have read it.
Mr Strickland asked whether Mr Rimer could point to a decision of the Determining Officer which allows 2,800 hours as ‘enough’, which is not something Mr Strickland or his clients had seen, and nor was this (2,800 hours is ‘enough’) what the LAA had said on Appeal. This was a very large private prosecution, and if the LAA now referred to the 2,800 hours as ‘enough’, if that was not an argument made on Appeal, then it was not reasonable to raise it now. He reiterated that the Appeal was not based on 100% of all the work on disclosure; the LAA had treated the issue as being that work done on the disclosure platform was irrecoverable and ‘as night follows day’ if it was not allowed as a disbursement, the time would go as well. That being the case, should not the reverse (if it WAS allowed as a disbursement) be true too?
Mr Strickland added that his clients were not simply scanning documents into the platform. A Judgment has already been given on this matter, and it contained two pages on the Application for redetermination, and 1 paragraph on the disbursement. The Appellant did NOT appeal all reductions, just those predicated on a misunderstanding, which is why the parties went to such lengths to discuss it in email correspondence. Per the Appellant, in those circumstances it is not right now to say that the Determining Officer thought ‘enough’ had already been allowed; that was not said at the material time, and as such it was not what the redetermination addressed.
In the original Judgment in this matter, from July 2019, the following points were noted:
Decision on Disclosure Platform
88. It appears that, in referring to the disclosure platform enabling the Solicitors to do their job, the Respondent has conflated the definition of an overhead and the definition of a disbursement. Whether or not VAT is chargeable upon disbursements depends upon whether the goods or services in question were supplied to the Solicitor to enable him to render his service to the client (HM Revenue and Customs Notice 700). Travelling and hotel expenses are not classed as disbursements, and VAT is therefore chargeable upon them. Court fees and oath fees are payments relating to goods or services supplied to the client and hence are disbursements and do not attract VAT. However, both would generally be chargeable to the client and not classed as overheads so that enabling the Solicitors to do their job, is not determinative.
89. The hourly rate charged by Solicitors is designed to cover their costs, office overheads and a profit element. Where an item is included within office overheads it should not be charged separately to a client on top of the hourly rate; this includes administration costs, telephone calls and faxes (as to the actual fee charged by the line provider rather than the unit charge for the time spent on the call or fax in question). Postage and couriers are overheads as is copying unless it is unusually heavy for the kind of case in question. Travelling expenses to a local Court (less than 10 miles away) are likewise treated as overheads. However, where the expenses are unusually heavy, and not deemed to be part of the firm's expected overheads when calculating their hourly rates, they are usually recoverable as an extra expense.
90. So, the question (of whether this is an overhead) is not whether this enabled the Solicitors to do their job, but whether it was an unusually heavy expense. That is secondary to the main question, in this Appeal, of whether it was reasonable to purchase (or lease) the software for this case. I note that Ms Gammon asserts it was the first time she had ever used the software, but I also note that Mr Strickland asserted that disclosure platforms are now deployed in almost every prosecution of this nature (including by the SFO). Be that as it may, at the time it was used for this case it was clearly unusual and, in my view, reasonable. Given the scope of the fraud as to its value and its worldwide nature, using...
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