R v Dilenardo
| Jurisdiction | England & Wales |
| Judge | Leonard |
| Judgment Date | 13 June 2023 |
| Neutral Citation | [2023] EWHC 1693 (SCCO) |
| Court | Senior Courts |
| Docket Number | Case No: T20170362 |
[2023] EWHC 1693 (SCCO)
COSTS JUDGE Leonard
Case No: T20170362
SCCO Reference: SC-2022-CRI-000136
IN THE HIGH COURT OF JUSTICE
SENIOR COURTS COSTS OFFICE
Thomas More Building
Royal Courts of Justice
London, WC2A 2LL
Appellant: Cohen Cramer (Solicitors)
The appeal has been successful (in part) for the reasons set out below.
The appropriate additional payment, to which should be added the sum of £650 (exclusive of VAT) for costs and the £100 paid on appeal, should accordingly be made to the Applicant.
Judgment on Appeal under Regulation 29 of the Criminal Legal Aid (Remuneration) Regulations 2013
COSTS JUDGE Leonard
From 29 August 2019, the Appellant represented Peter Adrian Dilenardo (“the Defendant”) in confiscation proceedings under the Proceeds of Crime Act 2002. A settlement was agreed prior to the final hearing on 9 September 2022, when the court made an order recording a benefit figure of £1,197,552.23 and an available amount of £514,163.88, and providing for a default period of 5 years.
This appeal concerns payment for that work, which is governed by paragraphs 26 to 29 of Schedule 2 to the Criminal Legal Aid (Remuneration) Regulations 2013. Schedule 2 sets out the Graduated Fee scheme for payment of Litigators representing defendants who have the benefit of Legal Aid funding under a Representation Order. The relevant Representation Order was made on 26 November 2017, so the 2013 Regulations apply as in force on that date. These are the pertinent provisions.
Paragraph 26 of schedule 2 reads:
“26.—Fees for confiscation proceedings
(1) This paragraph applies to… proceedings under Part 2 of the Proceeds of Crime Act 2002…
(2) Where this paragraph applies, the appropriate officer may allow work done in the following classes by a litigator—
(a) preparation, including taking instructions, interviewing witnesses, ascertaining the prosecution case, preparing and perusing documents, dealing with letters and telephone calls, instructing an advocate and expert witnesses, conferences, consultations and work done in connection with advice on appeal;
(b) attending at court where an advocate is instructed, including conferences with the advocate at court;
(c) travelling and waiting; and
(d) writing routine letters and dealing with routine telephone calls.
(3) The appropriate officer must consider the claim, any further particulars, information or documents submitted by the litigator under regulation 5 and any other relevant information and must allow such work as appears to him to have been reasonably done in the proceedings…
(5) The appropriate officer must allow fees in accordance with paragraphs 27 to 29 as appropriate to such of the following grades of fee earner as the appropriate officer considers reasonable—
(a) senior solicitor;
(b) solicitor, legal executive or fee earner of equivalent experience; or
(c) trainee or fee earner of equivalent experience.”
Regulation 2 of the 2013 Regulations defines these grades (generally referred to as A, B and C) in more detail:
“… “senior solicitor” means a solicitor who, in the judgement of the appropriate officer, has the skill, knowledge and experience to deal with the most difficult and complex cases…
“solicitor, legal executive or fee earner of equivalent experience” means a solicitor, Fellow of the Institute of Legal Executives or equivalent senior fee earner who, in the judgement of the appropriate officer, has good knowledge and experience of the conduct of criminal cases;
“trainee solicitor or fee earner of equivalent experience” means a trainee solicitor or other fee earner who is not a Fellow of the Institute of Legal Executives, who, in the judgement of the appropriate officer, carries out the routine work on a case…”
The “appropriate officer”, for present purposes, is the Legal Aid Agency (“LAA”)'s Determining Officer, from whom, by reference to regulation 29 of the 2013 Regulations, appeal lies to a Costs Judge.
Paragraph 29 of Schedule 2 reads:
29.—Allowing fees at more than the prescribed rates
(1) Upon a determination the appropriate officer may, subject to the provisions of this paragraph, allow fees at more than the relevant prescribed rate specified in paragraph 27 for preparation, attendance at court where more than one representative is instructed, routine letters written and routine telephone calls…
(2) The appropriate officer may allow fees at more than the prescribed rate where it appears to the appropriate officer, taking into account all the relevant circumstances of the case, that—
(a) the work was done with exceptional competence, skill or expertise;
(b) the work was done with exceptional despatch; or
(c) the case involved exceptional complexity or other exceptional circumstances…
(4) Where the appropriate officer considers that any item or class of work should be allowed at more than the prescribed rate, the appropriate officer must apply to that item or class of work a percentage enhancement in accordance with the following provisions of this paragraph.
(5) In determining the percentage by which fees should be enhanced above the prescribed rate the appropriate officer must have regard to—
(a) the degree of responsibility accepted by the fee earner;
(b) the care, speed and economy with which the case was prepared; and
(c) the novelty, weight and complexity of the case.
(6) The percentage above the relevant prescribed rate by which fees for work may be enhanced must not exceed 100%.
(7) The appropriate officer may have regard to the generality of proceedings to which these Regulations apply in determining what is exceptional within the meaning of this paragraph.”
The Background
I will set out below the decisions of the Determining Officer which are taken to appeal, and my conclusions on each of them. Before I do so I should refer to the background to the case, which I take from the Determining Officer's written reasons for the decisions under appeal, provided in accordance with regulation 28(8) of the 2013 Regulations.
The Defendant was employed as an Independent Financial Advisor (“IFA”), authorised by the Sesame Bank Hall Group (“Sesame”). Sesame is a regulated financial network authorised by the Financial Conduct Authority. Harvest Associated Limited (“Harvest”), a firm under which the Defendant had been self-employed as a financial advisor since he joined on 12 March 2012, was also regulated by Sesame.
In about July 2013 Sesame became aware that the Defendant appeared to be charging his clients excessively for advice. There was also concern that he was “churning” his clients, a term which describes IFAs, in breach of industry rules, regularly “turning over” their existing book of business in order to generate commission for themselves and without benefit to their clients. Sesame decided to review the Defendant's business and investments on a full file basis from August 2013.
Inspection revealed irregular switches and repeated transfers of client investments, some without their knowledge. Sesame's investigators concluded that the Defendant's activity appeared to be aimed entirely at generating elevated commission payments for himself and that the charges made by the Defendant were far in excess of both general industry guidance and Sesame's own guidance.
As a result of those investigations, on 17 February 2014 the Defendant was suspended by Harvest and his IFA authority removed. He was invited to attend a meeting with the investigation team at Sesame to discuss the allegations of fraud and forgery, but he refused to attend. The Defendant resigned in March 2014 and continued to refuse requests to attend Sesame's offices.
Following the Defendant's suspension and resignation it was established by Sesame that a number of signatures on client authorisation documents had been forged. A total of 22 clients were initially identified as possible victims, of whom a number subsequently confirmed that signatures on documents relating to their investments, purporting to be theirs, were not genuine. As the investigation progressed the number of potential victims increased.
Ultimately the Defendant faced an indictment identifying these areas of offending.
Switching and or movement of client funds (overcharging): Counts 1 & 2
This involved the repeated movement of clients' investment funds in order to generate greater commissions. These movements took place between January 2010 and February 2014.
In numerous cases the Defendant's clients were moved from one provider to another, sometimes repeatedly, and within a relatively short period of time, with no clear incentive or gain for the clients. Some client portfolios had been repeatedly and unnecessarily restructured by the Defendant without their knowledge and agreement, in particular with a provider called “Skandia”. Skandia's online system meant the Defendant could claim “switching fees” of up to 3% of the fund values without the knowledge of the relevant client. The Defendant moved funds into Skandia purely for the purpose of switching. A number of documents (Service and Payment agreements) supposedly signed by clients were analysed and found to have been doctored or to contain forged signatures.
Orion: Count 4
Between January 2014 and May 2015, when the Defendant was no longer authorised to give regulated financial advice, the Defendant encouraged clients to withdraw their funds from legitimate investment plans and to “reinvest” them in a new product over a five year period. This was not a genuine investment but an unsecured loan to the Defendant. The Defendant had informed his clients that his “investment product” would offer a 5% interest return over a fixed five-year term with underlying the funds returned in their entirety on expiry. Following a search of the Defendant's home on 7 August 2015, exhibit CHM1/070815 was...
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