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England and Wales High Court (Administrative Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Fuseon Ltd v Senior Courts Costs Office  EWHC 126 (Admin) (28 January 2020)
Cite as:  EWHC 126 (Admin)
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QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| Fuseon Limited
- and –
|Senior Courts Costs Office
|The Lord Chancellor
Mr Riccardo Calzavara (instructed by Government Legal Department) for the First Defendant
Mr Richard Boyle (instructed by Government Legal Department) for the Second Defendant
Hearing date: 18 December 2019
Crown Copyright ©
Mr Justice Lane:
"Counsel for the taxing master conceded that such a jurisdiction existed but submitted that it should be restricted to cases where there had been a real injustice.
I agree with both that concession and, in general terms, with the limitation on it. In his refusal to certify, the taxing master was exercising a "strong" discretion entrusted under the statutory scheme to him. The cases where the supervisory court could reverse a failure to certify would, in the circumstances, be very rare indeed …"
B. THE LEGISLATIVE FRAMEWORK
"(6) A defendant's costs order shall, subject to the following provisions of this section, be for the payment out of central funds, to the person in whose favour the order is made, of such amount as the court considers reasonably sufficient to compensate him for any expenses properly incurred by him in the proceedings.
(6A) Where the court considers that there are circumstances that make it inappropriate for the accused to recover the full amount mentioned in subsection (6), a defendant's costs order must be for the payment out of central funds of such lesser amount as the court considers just and reasonable."
Section 17 deals with prosecution costs:-
"17. Prosecution costs.
(1) Subject to [subsections (2) and (2A)] below, the court may -
(a) in any proceedings in respect of an indictable offence; and
(b) in any proceedings before a Divisional Court of the Queen's Bench Division or the [Supreme Court] in respect of a summary offence;
order the payment out of central funds of such amount as the court considers reasonably sufficient to compensate the prosecutor for any expenses properly incurred by him in the proceedings.
(2) No order under this section may be made in favour of -
(a) a public authority; or
(b) a person acting -
(i) on behalf of a public authority; or
(ii) in his capacity as an official appointed by such an authority.
(2A) Where the court considers that there are circumstances that make it inappropriate for the prosecution to recover the full amount mentioned in subsection (1), an order under this section must be for the payment out of central funds of such lesser amount as the court considers just and reasonable.
(2B) When making an order under this section, the court must fix the amount to be paid out of central funds in the order if it considers it appropriate to do so and -
(a) the prosecutor agrees the amount, or
(b) subsection (2A) applies.
(2C) Where the court does not fix the amount to be paid out of central funds in the order -
(a) it must describe in the order any reduction required under subsection (2A), and
(b) the amount must be fixed by means of a determination made by or on behalf of the court in accordance with procedures specified in regulations made by the Lord Chancellor.
"7.- (1) The appropriate authority shall consider the claim, any further particulars, information or documents submitted by the applicant under regulation 6(5), and shall allow such costs in respect of—
(a) such work as appears to it to have been actually and reasonably done; and
(b) such disbursements as appear to it to have been actually and reasonably incurred.
(2) In calculating costs under paragraph (1) the appropriate authority shall take into account all the relevant circumstances of the case including the nature, importance, complexity or difficulty of the work and the time involved.
(3) Any doubts which the appropriate authority may have as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved against the applicant.
(4) The costs awarded shall not exceed the costs actually incurred.
"12. The Costs Judge shall have the same powers as the appropriate authority under these Regulations and, in the exercise of such powers, may alter the redetermination of the appropriate authority in respect of any sum allowed, whether by increase or decrease, as he thinks fit."
(1) An applicant who is dissatisfied with the decision of a costs judge on an appeal under regulation 10 may apply to a costs judge to certify a point of principle of general importance.
(3) Where a Costs Judge certifies a point of principle of general importance, the applicant may appeal to the High Court against the decision of a Costs judge on an appeal under regulation 10, and the Lord Chancellor shall be a respondent to the appeal.
(7) An appeal under paragraphs (3) … shall be brought to the Queen's Bench Division, follow the procedure set out in Part 52 of the Civil Procedure Rules 1998 and shall be heard and determined by a single judge whose decision shall be final.
(1) The importance of private prosecutions
"26. The value to our modern society of the right to bring a private prosecution is the subject of lively debate.
27. The Gouriet case  AC 435 concerned the ability of a private citizen to secure an injunction restraining a threatened refusal by post office workers to handle mail to South Africa in breach of the criminal law. Members of the appellate committee of the House of Lords considered, in passing, his right to bring a private prosecution in the hypothetical event that the workers had proceeded to commit such an offence. Lord Wilberforce said, at p 477:
"This historical right which goes right back to the earliest days of our legal system, though rarely exercised in relation to indictable offences, and though ultimately liable to be controlled by the Attorney General (by taking over the prosecution and, if he thinks fit, entering a nolle prosequi) remains a valuable constitutional safeguard against inertia or partiality on the part of authority."
Lord Diplock observed, at p 498, that the need for private prosecutions to be undertaken had largely disappeared but that the right to undertake them still existed and was "a useful constitutional safeguard against capricious, corrupt or biased failure or refusal of those authorities to prosecute offenders against the criminal law". Can one confidently say that the later advent of the CPS has banished all the concerns articulated in the Gouriet case, particularly in relation to "inertia", or (to adopt what may be the fairer word used by the witnesses to the Royal Commission: see para 19 above) "inaction", on the part of the public authority?
28. In Jones v Whalley  1 AC 63 the police administered a formal caution to the perpetrator of an assault and explained to him that, as a result, he would not be brought before a criminal court in respect of it. Thereupon his victim instituted a private prosecution against him in respect of it. The House of Lords held that the magistrates had been correct to stay the proceedings as an abuse of their process. General observations were made about the value of the right of private prosecution. Lord Bingham said, at para 9:
"There are ... respected commentators who are of opinion that with the establishment of an independent, professional prosecuting service, with consent required to prosecute in some more serious classes of case, with the prosecution of some cases reserved to the Director, and with power in the Director to take over and discontinue private prosecutions, the surviving right is one of little, or even no, value...
[Counsel for the victim] is entitled to insist that the right of private prosecution continues to exist in England and Wales, and may have a continuing role. But it is hard to regard it as an important constitutional safeguard when, as I understand, private prosecutions are all but unknown in Scotland."
Lord Bingham added, at para 16, that the surviving right of private prosecution was of questionable value and could be exercised in a way damaging to the public interest. By contrast, Lord Mance suggested, at para 39, that the rarity of a private prosecution in Scotland did not undermine the traditional English view that the right to institute it was an important safeguard; and, at para 43, that, as Lord Wilberforce and Lord Diplock had suggested in the Gouriet case, it was a safeguard against the wrongful refusal or failure by prosecuting authorities to institute proceedings.
29. With respect, I consider that there is much to be said in favour of the views thus expressed by Lord Mance. In any event, however, the fact is, that, by section 6 of the 1985 Act, Parliament chose, albeit in qualified terms, to reaffirm the right of private prosecution; and the conduct of the CPS must conform to its reaffirmation. …"
"48. In my judgment, they are not lawful. The section 20 power has to be exercised "to carry into effect" the principles enunciated in Part II of the Act, and that includes the principles set out in section 16(6). Mr Eadie does not suggest otherwise. He accepts that the regulations cannot undermine or subvert the principles of compensation set out in that subsection. That provision requires that the compensation must be "reasonably sufficient". It should be such amount as is reasonably incurred for work properly undertaken. In my view, one can only sensibly ask whether the cost has been reasonably incurred by having regard to the prevailing market. The individual defendant seeking legal representation is a consumer in that market. The amount he or she will have to pay to secure the services of a lawyer will be determined by that market."
"63. The third ground compares the position of defendants and prosecutors. The submission in essence is that since sections 16 and 17 of the 1985 Act provide for costs orders to be paid from central funds in similar terms, so Parliament must have intended that a similar approach would be adopted by the Lord Chancellor in setting any rates and scales. To alter the rules in a manner prejudicial to defendants but to leave private prosecutors unaffected is unjust and irrational.
64. Mr Eadie denies that there is any legislative intent that can be inferred from the 1985 Act which would require the two cases to be treated identically. For example, a very important difference is that the cost of private prosecutors cannot be recovered from central funds where summary cases are successfully prosecuted in the magistrates' court.
65. Furthermore, Parliament has not chosen to empower the Lord Chancellor simply to introduce one set of rates and scales to apply identically to both sets of costs orders. He also points out that Ms Albon in her witness statement has identified a number of reasons why the Secretary of State has chosen not to cap private prosecutors' costs in the same way as defendants' costs. The Lord Chancellor took the view that it might deter private prosecutions if the claimants were to be so limited and that would be against the public interest. Some private prosecutors conduct prosecutions on a fairly regular basis. This will include a number of charities, such as the RSPCA. They will need to recover expenditure close to actual levels, otherwise they would be out of pocket, and that in turn would deter them from bringing such prosecutions. By contrast, defendants are not typically involved in a range of cases in this way. A further distinction is that private prosecutors have no access to an alternative funding mechanism, such as insurance or legal aid.
66. Finally, there are pressures which will cause private prosecutors to keep costs down, specifically because they cannot recover the majority of their costs even if successful. It is the Lord Chancellor's opinion, which is challenged by the Law Society, that the pressure is not felt to the same extent on individual defendants since they are generally involved in a one off event.
67. In my judgment, there is nothing which requires the Lord Chancellor to treat both situations the same, and these reasons provide a rational basis for drawing the distinction that he does. The assumption that must be made in assessing this ground as an independent basis for quashing the New Scheme is that the Lord Chancellor can fix such rates as he considers to be reasonable; and he has a wide area of discretion as to the factors that can weigh with him when making that assessment. He has chosen to discriminate here because he thinks it desirable to promote private prosecutions in the public interest. There is not the same public benefit to be derived from recompensing successful defendants in the same way.
68. In my view, this is capable of providing a justification for the difference in treatment. It is not for the court to determine how much weight should be given to these considerations. Had the scheme been otherwise lawful, I would not have struck it down on these grounds." (Elias LJ)
(2) The High Court's inherent jurisdiction: "real injustice"
"to the conclusion that this is one of those rare cases where it would be right to intervene. The solicitors acting for the Defendants have raised no objection to the Court intervening. Indeed, one of the solicitors has indicated that he would have been happier if the Master had proceeded to consider the merits … It seems to me that on the material before me there would be real injustice caused if the Plaintiffs were not entitled to put the evidence which they had before the Master …".
"19. In short, therefore, the jurisdiction is one to be exercised sparingly, only to be used to cure "a real injustice".
20. Mr Buley suggest that the approach of this court should replicate the jurisprudence in respect of second appeals under the Civil Procedure Rules … Whilst I acknowledge that there is some similarity between the present jurisdiction and that exercised in those circumstances, this jurisdiction has no statutory basis and I would prefer to place no gloss on the "real injustice" test and the "very rare indeed" limitation."
"It seems to me that once the Costs Judge had accepted that the claimant should receive some reimbursement in respect of the cost of engaging Ms Travis [the American attorney], it became necessary to carry out a detailed investigation so as to ascertain what she had done and whether particular aspects of her endeavours had been reasonably done in all the circumstances of the case. As I understand it, the Costs Judge was invited to review a large amount of documentation but declined to do so."
"25. I have come to the conclusion that, having admitted the claim in principle, the Costs Judge did not then carry out the task in the way that was required by the Act and the Regulations. To this extent, I consider that there is a "real injustice" in awarding a figure - described by the Costs Judge as "a small sum" - which is not based upon the task which ought to have been undertaken. I express no view whatsoever on what a proper reassessment may yield. …
26. The problem that has arisen in this case has arisen because the claims separately submitted by [the solicitors] and by the claimant himself were allowed to remain separate. This should not have happened. …
27. It follows from what I have said that, in my judgment, there was a "real injustice" in proceeding to assess the sum reflecting the input of Ms Travis without undertaking a detailed assessment of the work she had done."
"23. Most unfortunately, there had been a misunderstanding or error as to whether a further hearing should take place before Master Campbell made his decision. The date for such an oral hearing had been identified when directions were given on 8 December 2006, but that date came and went without any hearing having taken place. It appears that regrettably the date had not been confirmed to Mr Brewer or to his solicitors, with the result that they were waiting to hear from the court as to a new date, whilst Master Campbell proceeded in the belief that Mr Brewer and his advisers knew of the hearing date but did not wish to add oral submissions to their written submissions. This unhappy situation became apparent, of course, when Master Campbell's written decision was received by Mr Brewer and his solicitors.
29. On 30 October 2008 the SCCO acknowledged service of this claim and indicated that it would not be resisted. The SCCO accepts that because of the administrative error to which I have referred, Mr Brewer had suffered a breach of natural justice such as to justify the exercise by this court of its inherent jurisdiction.
40. In those circumstances I accept that this is a proper case to exercise the inherent jurisdiction of this court so as to quash the relevant parts of Master Campbell's decision and remit Mr Brewer's claim in relation to the fees and expenses paid to Ms Travis to be considered afresh by a different costs judge. …"
(3) The reasonableness of the claimant's actions
"was asking himself the wrong question. What he was asking himself was this: Could a junior counsel or a senior solicitor reasonably have conducted the case on behalf of the applicants? The answer he came to was that a senior solicitor or junior counsel could have properly conducted the matter on behalf of the applicants. However, Mr Inman submits that what he should have asked himself was whether the applicants acted reasonably in employing leading counsel, which is an entirely different question. The answer to that question would be very different on the facts of this case from the answer to the question which the clerk obviously asked himself. You can have many situations – and Mr Inman accepts that this is one such situation – where junior counsel or a senior solicitor could adequately deal with the case. But it was nonetheless reasonable for a defendant to employ leading counsel.
If it was reasonable for him to employ leading counsel, then in the language of s.16 the expenses were properly incurred. It seems to me the criticism which is made by Mr Inman of the justices' clerk is justified. If the justices' clerk had asked himself the right question he would undoubtedly have come to a different conclusion from that which he did. By asking himself the wrong [questions] he came to the wrong decision as to whether or not any fees were allowable for leading counsel.
On that basis, therefore, in my view, the decision of the justices' clerk has to be quashed in this case. …"
"When giving judgment in Wraith v Sheffield Forgemasters Ltd  1 W.L.R. 617, 624-625 Potter J said:
"In relation to the first question 'Were the costs reasonably incurred?' it is in principle open to the paying party, on a taxation of costs on the standard basis, to contend that the successful party's costs have not been 'reasonably incurred' to the extent that they had been augmented by employment of a solicitor who, by reason of his calibre, normal area of practice, status or location, amounts to an unsuitable or 'luxury' choice, made on grounds other than grounds which would be taken into account by an ordinary reasonable litigant concerned to obtain skilful competent and efficient representation in the type of litigation concerned … However, in deciding whether such an objection is sustainable in practice, the focus is primarily upon the reasonable interests of the plaintiff in the litigation so that, in relation to broad categories of costs, such as those generated by the decision of a plaintiff to employ a particular status or type of solicitor or counsel, or one located in a particular area, one looks to see whether, having regard to the extent and importance of the litigation to a reasonably minded plaintiff, a reasonable choice or decision has been made. If satisfied that the choice or decision was reasonable, it is the second question 'what is a reasonable amount to be allowed?' which imports consideration of the appropriate rate or fee for a solicitor or counsel of the status and type retained. If not satisfied the choice or decision was reasonable, then the question of 'reasonable amount' will fall to be assessed on the notional basis of the costs reasonably to be allowed in respect of a solicitor or counsel of the status or type which should have been retained. In either case, solicitors' hourly rates will be assessed, not on the basis of the solicitor's actual charging rates, but (in a case where the decision to retain was reasonable) on the basis of the broad costs of litigation in the area of the solicitor retained or (in a case where the choice made was not reasonable) of the type or class of solicitor who ought to have been retained."
That in my judgement is right. I do however take issue with the way in which the principle was applied to the facts of the case. I accept that it was reasonable for Mr Wraith to consult his trade union, but the trade union knew or ought to have known what sort of legal fees it would have to expend to obtain competent services for Mr Wraith, who lived in Sheffield and had sustained a serious accident there. Once Mr Wraith consulted his union that knowledge must be imputed to him. As Potter J accepted, at p. 625, "no doubt there were firms of solicitors in Sheffield or Leeds well qualified to do the work" and in reality the only reason why the work went to London solicitors was that the union had adopted the practice of sending all their work to those solicitors. That connection seems to me to be of limited relevance on taxation in an individual case. It means of course that, like competent solicitors in Sheffield or Leeds, the solicitors actually instructed were well qualified to do the work, and that the union, as advisers to Mr Wraith, knew the solicitors to be competent and trusted them to exercise the necessary expertise, but that is all."
"If the judge had taken account of the matters which I have listed it seems to me to be obvious that he would have reached a different conclusion, namely that it was reasonable for Mr Truscott to instruct ATC. This is not a question of discretion, it is a question of the proper approach to be adopted to the matter under consideration."
"16. That case illustrates the sensitivity of the test to the facts of the case. In one of the two cases under appeal (Truscott v Truscott) it was held to have been reasonable for the claimant to have instructed London solicitors instead of local solicitors; while in the other (Wraith v Sheffield Forgemasters Ltd) it was held to have been unreasonable for the claimant to have instructed London solicitors rather than local solicitors. The way in which this test was applied in Truscott is particularly instructive. At first instance the judge had simply compared the charging rates of the London solicitors, ATC, with the charging rates of a local firm. This court held that was too narrow an approach. It examined the reasons (of which there were seven) why Mr Truscott had chosen the solicitors that he did. One of those reasons was entirely personal to him: namely his dissatisfaction with his previous (local) solicitors. Another, which has relevance to the issues in our cases, was the fact that he had taken advice about whom to consult, and had been recommended to consult ATC. Thus the court examined the litigant's particular reasons for making the choice that he did. Equally important, the court excluded from consideration any particular experience that ATC had in relation to professional negligence:
"… because that was not why Mr Truscott consulted them."
17. It is plain, in my judgment, that in examining whether costs were reasonably incurred the court is entitled to (and, in practical terms, will often have to) examine the reasons why the litigant incurred the costs that he did.
18. Potter J's statement of principle was again approved by this court in Solutia UK Ltd v Griffiths  EWCA Civ 736,  PIQR P16 in which, having referred to Wraith, Latham LJ said at :
"… whereas it is clear that the test must involve an objective element when determining the reasonableness or otherwise of instructing the particular legal advisers in question, nonetheless that must always be a question which is answered within the context of the particular circumstances of the particular litigants with whom the court is concerned."
19. That was another case in which the court took into account the particular reasons why the claimants had instructed London solicitors. As Latham LJ put it at :
"It seems to me that the costs judge was clearly wrong in failing to take account of those special features of the case which were material to the decision to instruct Leigh Day & Co…."
20. Thus the court took into account the factors that were material to the decision. The choice of "material" as the appropriate adjective also has a bearing on the issues we have to decide."
"11. Provision is also made in respect of costs by the Practice Direction (Costs in Criminal Proceedings)  EWCA Crim 1632. Paragraph 2.6 makes specific provision in respect of private prosecutors' costs. Paragraph 2.6.1 provides as follows:
"An order should be made save where there is good reason for not doing so, for example, where proceedings have been instituted or continued without good cause."
12. The Ministry of Justice has issued the following Guidance in respect of determining costs:
"In determining … costs of a private prosecutor … National Taxing Team determining officers will be guided as to the reasonableness of hourly rates claimed, by the composite rates set out in the Senior Court Costs Office Guide to the Summary Assessment of Costs. These guidance rates can be found on the Senior Courts Office website.
These rates usually apply to the location of solicitors' office and not to where the matter is tried. However, where a solicitor not local to the court of trial has been instructed, the determining officer may apply a test of reasonableness as to which rate may be considered as relevant. Where the rate claimed is in excess of the guidance rate indicated in the Senior Court Costs Office guide, further explanation should be provided in the narrative of the claim."
i) In determining the first question, namely whether a person, whether it be a corporate body or private individual, has acted reasonably and properly in instructing the solicitors and advocates instructed, the court will consider what steps were taken to ensure that the terms on which the solicitors and advocates were engaged were reasonable. It was submitted on behalf of the Interveners that they do not pursue private prosecutions lightly, but only where state prosecuting authorities are unwilling to prosecute or where the nature of the case makes it inappropriate; as this is the position of highly responsible industry bodies, a court may also have regard to the steps taken to involve State prosecuting authorities.
ii) In any significant prosecution the private prosecutor would be expected properly and reasonably to examine the competition in the relevant market, test it and seek tenders or quotations before selecting the solicitor and advocate instructed.
iii) We must emphasise that it will rarely, if ever, be reasonable in any such case, given the changes in the legal market to which we have referred, to instruct the solicitors and advocates without taking such steps. Although for the reasons we give at paragraphs 23 and 24 below that issue does not arise in this matter, it will be highly material on all future applications.
iv) In determining whether the costs which are charged are proper and reasonable in a criminal case, the court will also have regard to the relevant market and the much greater flexibility in the way in which work is done.
v) The court will also have regard to the Guidance given by the Ministry of Justice".
(4) The "Singh" reduction
"Before moving to my specific reasons it may assist if I outline my approach to the assessment of the solicitors' claim in this case. The claim for preparation was percentaged in a total of 414 items, each one indicating the date, activity undertaken, grade of fee earner and time taken. Nearly all of these were supported by an attendance note, some attaching a copy of the document prepared at the attendance. This is, of course, the correct way to present the claim, and the bill and supporting papers were clearly prepared in a neat and orderly way. However, upon examination of the bill and papers, I formed the view that the time spent was excessive, a view which I based on my experience of assessment of other solicitors' claim in large cases as well as what appeared to be consistently high claims for most of the activities undertaken and given the work produced.
This said, for several categories of work, I did not feel able to point to any particular attendance as being rather unreasonable in length or unreasonably held, and I accepted that something was gained from nearly all the attendances. However, as well as examining each individual item, I felt it reasonable for me to step back and look at the totality of the time claimed in relation to each type of activity and consider if, taken as a whole, the time claimed for that activity was reasonable.
To assist my task I therefore classified the activities undertaken into a total of 15 categories as listed in annex 1 to these reasons. This lays out a category number, class of activity, the total claimed and the total allowed after redetermination. A note then indicates if my allowance for the activity based on a global figure of all the items classed in the relevant activity or whether I have made separate and specific allowances on the claim, my 'total allowed' figure on the chart being simply the allowance for each item totalled up."
"The second point taken is this: whether the determining officer and taxing master could take an overall view and reduce the hours for each individual class of work over the board in the way that they did. The task to be performed in this taxation is preserving the balance between reasonable remuneration of the legal profession for work done on legal aid and protecting the fund against making an open-ended commitment to pay for more hours work than the task reasonably required. The judge dealt with it in this way at page 16:
"… the notice of appeal … essentially challenged the Determining Officer's right to stand back from the individual items in the bill and determine that the aggregate produced from those individual items, although not capable of being impugned as separate items, nonetheless produced a result which established that the time claimed was unreasonable. It seems to me that that must be one of the necessary functions of the Determining Officer, once he has carried out what might be called the audit exercise in relation to the individual items on the bill. The Determining Officer in the first instance, and the Taxing Master on appeal, should exercise great care to ensure that the sum payable on a determination such as the one in question is kept within reasonable bounds, whilst accepting that particular clients may pose particular problems. It is perhaps well to remember the comment of Russell LJ in Re Eastwood (deceased)  3 All ER 603 at page 608 [Costs LR (Core Vol) 50 at 53] where he said that the field of taxation albeit in that case an inner partes taxation, was on where:
'Justice is any event rough justice, in the sense of being compounded of much sensible approximation.'
I can see nothing to recommend an approach to taxation in this field which merely requires some justification of each item of the claim, followed by an aggregation, without a sensible assessment of the consequence of aggregation in the light of the overall complexities of the case, and above all the experience of the Determining Officer and Taxing Master."
I agree with that passage entirely. How else can the unreasonable claim be controlled? That is, the judge found, a point of principle but it is not a point of principle as to which there is any dispute."
"In the public interest that the CPS is properly resourced to conduct such difficult and complex proceedings" and that the consequence of it not being so resourced "is detrimental to the public purse. The costs of a private prosecution, whether successful or unsuccessful, are recoverable from the taxpayer; the use of private prosecutors will almost inevitably cost the State much more than the use of a State prosecutor such as the CPS" (paragraph 43)."
"We accept that in a private prosecution it is not a necessary requirement that for costs to be recovered they must correspond precisely with what may be claimed and allowed in the case of a public prosecution. But at the same time it is wrong to allow a very significant disparity between the two. That, in truth, is a reflection of considerations of proportionality. … Overall we do not consider – quite apart from the objections raised as to various individual items – that the claimed sum of £415,115 can be a just and reasonable sum to award. In truth, it would be wholly disproportionate and oppressive, given not only the various defendants' means but also having regard (to the extent that they are not legally aided) to their ability to defend themselves hereafter. Those factors of themselves require a very considerable reduction.
Viewing the position overall, and having regard to considerations of proportionality, this court considers that the just and reasonable sum to be paid is £110,000 (net of VAT). The exercise of its powers under s.18(2A), and all other enabling under the Rules, so to order accordingly."
D. THE DECISION OF THE DESIGNATED OFFICER
"I fully accept that Laycock considered this an especially important case. All litigants tend to believe that their own case is special. However, having dealt with Crown Court costs for some thirty-two years, including multi-million pound complex frauds in cases which took many months to try, my view is that the instant case in terms of complexity of the fraud, the amount at issue, and the length of trial, was in fact a fairly ordinary Crown Court case and not a particularly complex or sophisticated fraud. The nature of the case is for example not dissimilar to frauds perpetrated by supermarket till operatives and supervisors, and I have known cases of that kind where twice to three times the amount of money contended by solicitors in this case, was in issue".
"I do not accept the contention that because such expertise in private prosecution was only available in London, the Applicant had no choice but to instruct a central London firm. I have no doubt that there are firms based in Merseyside, Manchester or other Lancastrian towns which could reasonably have dealt with the private prosecution of this ordinary case".
"In my view the major metropolitan centres of Manchester and Liverpool (not considering the other major urban centres of the north-west) are capable of providing a pool of large and experienced firms which would negate any problems relating to [the stated condition] many significant regional firms of solicitors now offer a private prosecution service [examples given]".
"… It was an ordinary Crown Court case. I have determined a number of substantial private prosecution cases over the past few years. Some of those were complex intellectual property cases relating to musical copyrights or broadcasting rights. Virtually all of those were dealt with, and more than adequately, by firms, both in London or substantial regional centres, which did not claim an exclusive speciality in private prosecutions."
"I made a rough assessment as to what it would have cost the CPS to prosecute this case (i.e. not including the police costs of investigation). Assuming say £75 hours prep and 11 days of trial before counsel (75 x £80 plus 11 x 310) and say 750 hours by a legal operative (say staff costs of £45/hour) and £30,000 for expert fees. That is approximately £75,000, adding a VAT element for comparison, the total is approximately £90,000.
From this point of view, I consider the amount allowed after the audit phase, £207,000 still disproportionate to the nature of the case, and I there made a "Singh" adjustment allowing £100,000 plus £50,000 for the investigative work. This produced a total of £150,000 plus VAT which I considered to be reasonable. The determined figure including that would therefore be reduced from £282,381.95 to £180,000.
My view is that it is a legitimate exercise to make a basic comparison with a level of costs that would be incurred by the Public Prosecutor. I accept that it is not a simple comparison, and that there are particularities to be considered in the private prosecutions (see para 61 of solicitors' comments as to the judge's comments in the Zinga case). However, my view is that there should not be a gross disproportion between the level of costs incurred by a private prosecutor and the state prosecutor. Although the police apparently declined to act, the private prosecutor is not obliged to pursue the case, is at costs recovery risk in so doing, and (as is conceded) there is a private interest involved.
In considering whether or not this claim for costs is reasonable, I must consider whether or not the application firm would risk £¼ million of its money to pursue a prosecution the outcome of which on the one hand would see the conviction and likely imprisonment of the defendant, but on the other would not result in the restitution of any of the monies which the defendant had misappropriated. …
It seems unlikely to me that the Applicant would reasonable lay down £¼ million of its own money to this end …
In the recent case of D Limited v A & Others the judgement of Davis LJ included the following passages at paragraphs 16 and 18:-
"We accept that in a private prosecution it is not a necessary requirement that for costs to be recovered they must correspond precisely with what may be claimed and allowed in the case of a public prosecution. But at the same time it is wrong to allow a very significant disparity between the two. That, in truth, is a reflection of considerations of proportionality.
It is of course accepted that the applicant will have viewed this appeal with immense seriousness … but it does not follow at all that what might be reasonable, in terms of time spent and personnel engaged, as between solicitor and own client thereby becomes reasonable as to payment with regard to the opposing (paying) parties."
I did consider that there did remain such a very significant discrepancy and on redetermination I did apply a Singh reduction although in consideration of Zinga, a lesser reduction than on the original determination such that an increase of £50,000 plus VAT was allowed."
E. THE DECISION OF THE COSTS JUDGE (MASTER ROWLEY) OF 30 APRIL 2019
"11. I began to read online about the possibility of bringing a private prosecution against Mr Shinners for his fraud.
12. I spoke to my solicitors who are quite a large company. They had acted for me in various matters, however they were not able to assist and could not recommend anyone in the area that might be able to assist me.
13. I did some further research and came across the law firm, Edmonds Marshall McMahon who specialised in bringing private prosecutions. I do not recall seeing on Google any other firms that advertised themselves as providing private prosecution services for frauds, although I looked numerous times and therefore was not able to contact other firms that were more local than Edmonds Marshall McMahon."
"11. There is therefore a difference between the sum claimed and the sum allowed of £187,909.66. This appeal concerns the imposition of a Singh discount; certain brief fees; and numerous aspects of the solicitors' charges. In particular the use of London solicitors and the consequent effect of London rates being charged and travelling between London and Preston, including accommodation, being required. It is this last aspect which is the most significant in terms of the reduction made by the determining officer and consequently it is the place where I shall start this decision".
"14. The ultimate intention of those regulations is to compensate the prosecutor for fees and expenses properly incurred by him in the proceedings as is required by s17 of the 1985 Act. The nub of this issue is that the determining officer considers that the company should be compensated on the basis that it instructed local solicitors to act on its behalf. The company contends that its choice of London solicitors i.e. EMM was a reasonable one and as such the compensation should be based on London rates.
15. … As a result, the decision I need to make is simply whether or not the determining officer was correct to consider that the use of central London solicitors was not justified."
"30. The solicitors have gone to the trouble of producing a witness statement from Mr Laycock about the initial instruction of EMM and I have used the contents of that statement to produce paragraphs 3 to 5 above. Additionally, the solicitors have made enquiries of the availability and experience of the firms referred to by the determining officer to carry out a private prosecution. That evidence is distilled in a witness statement of Ashley Fairbrother, a solicitor at EMM, together with an exhibit relating to searches carried out by Mr Fairbrother.
31. EMM seek permission to rely upon Mr Fairbrother's evidence albeit that it was not provided to the determining officer. Since the determining officer did not mention the particular firms which formed the basis of Mr Fairbrother's witness statement until producing his written reasons, it is inevitable that solicitors were unable to provide information previously and I have no hesitation in allowing the witness statement to be considered.
32. As I understand it, the searches involved rely on a sole-called "Wayback machine" which seeks to provide website information at particular points in time. There appeared to be some limitations on the information produced by such searches but I suspect that Mr Fairbrother's evidence is at least generally correct in terms of the availability of private prosecution departments at the firms mentioned by the determining officer. The core of Mr Fairbrother's evidence is set out in a table to paragraph 25 of his witness statement. It concludes that of the seven firms named by the determining officer, only two had advertised their ability to carry out private prosecutions …"
"33. Based upon his search of the websites, Mr Fairbrother concludes:-
"The analysis above suggests that there was not a "pool of large and experienced firms" that could have been instructed in this matter. Arguably, none of the firms relied upon by the determining officer could have been instructed in this matter, and at the very best, only one or two could have been. These firms are neither local, nor do they constitute a sufficiently large pool of experienced firms that the appellant could have chosen from to instruct."
34. Mr Fairbrother states that the market in private prosecution services is so small that it does not feature in the legal directories and that another costs judge has remarked that there are only a small number of firms going who are comparable to EMM. He also says there were no Google search results within the first ten pages upon searching private prosecution in January 2016 and finally makes the point that, although the determining officer may have knowledge of the market of private prosecutions, even the firms he had been able to locate were not reasonable to instruct. Mr Laycock, as an average consumer of such services, would not have known even of those firms.
35. Mr Strickland suggested that there was little between the tests put forward by the various cases. I agree with that comment, but I do not agree with Mr Strickland that the choice made by Mr Laycock was reasonable whichever test is applied.
38. The difficulty I have with the appellant's submissions in this case is that the phrase "Sufficiently experienced" used in the TONG guidance is interpreted by them to mean that the other solicitors must have carried out private prosecutions before. I have no doubt that, in some cases, that would be a necessary pre-condition. …
39. But in this case, there is no great complication, notwithstanding the description of it as being a "sophisticated and heinous" crime. The fraud perpetrated by Mr Shinners was not skilful and there does not appear to have been any lack of evidence to convict him on the great majority of accounts. Whilst Mr Laycock has clearly taken his case to be of great moment such that he had spent a considerable amount of money in pursuing Mr Shinners, whilst knowing that there was little prospect of getting anything back, that does not make it sufficiently complicated for experienced private prosecutors to be required.
40. In my judgement, an experienced criminal practitioner would be quite capable of carrying out this private prosecution on behalf of the company. There are, in fact, numerous former public prosecutors who became partners or employees of defendant practices who would have no difficulty in bringing this prosecution. But even those without prosecution experience would, in my view, be quite capable of bringing this particular prosecution, if necessary with the benefit of experienced counsel.
41. This conclusion means that the evidence provided by Mr Fairbrother does not really assist. Some of the firms referred to by the determining officer have well-known criminal defence departments and that was the case well before these proceedings began. The fact that they may, or may not, have had a formal private prosecution department set out on their website does not alter that fact. There are also many other firms which contain suitably experienced criminal practitioners.
42. For these reasons it seems to me that the determining officer was quite correct to base his assessment on the hourly rates allowed for a firm local to Preston. He is allowed national band one rates which would encompass the large metropolitan centres."
"62. … the big difference in the sum allowed on determination actually relates to the hourly rate allowed by the determining officer of £45 per hour for staff costs rather than the hourly rates allowed by the Guideline Hourly Rates to be allowed. I understand that the determining officer is intending to calculate the figure based upon an internal allowance by the CPS but I cannot see how a private prosecutor is ever going to be able to compare their costs to that sort of hourly rate where it is accepted that guideline rates are the starting point for a private prosecutor to claim.
63. The effect of using that hourly rate is inevitably to depress the figure that would seem to be reasonable. The same point can be made in relation to counsel where a daily rate of £310 per hour is unlikely to be achieved by anybody other than the CPS.
64. It seems to me that the determining officer recognised that deficiency in his original determination and sought to correct it in the redetermination when increasing the sum allowed by £50,000 plus VAT … He specifically refers to the reason for increasing the sum allowed as being a consideration of the appellant's arguments arising from the case of R (Virgin Media) v Zinga … as to the rates available to private prosecutors. In view of this revision, it seems to me that a good deal of the force is taken out of the appellant's argument regarding the hourly rate used.
65. The appellant has described the determining officer's calculations as being "arbitrary". But it seems to me that this is in fact a very difficult exercise and the criticism of the determining officer is meant to calculate a reduced figure if he or she considers that a Singh reduction should apply to an aggregate figure that is too high, other than to consider "all the circumstances".
66. In the civil sphere, Lord Justice Jackson's review of civil costs extolled the virtue of stepping back in the manner set out in Singh in order to consider whether costs allowed as reasonable in the aggregate were also proportionate. … Nevertheless, the reported cases, which have been relatively few, demonstrate that courts have not always found this task to be an easy one. Most of the factors are not ones which involve figures and so it is a question of weighing the factors and coming to a sum based upon a consideration of those factors. A party dissatisfied with such a calculation may always challenge it as being arbitrary in the absence of any mathematical formulation.
67. In these circumstances, it seems to me that the determining officer's approach cannot be impugned. As I have already set out, he considered the nature of the case before looking at the costs that he allowed on a line by line audit and then considered whether it amounted to a sum that was reasonably sufficient to compensate the prosecutor as required by section 17 of the Prosecution of Offences Act 1985.
68. Each case is obviously factually different and if the determining officer had simply indicated that in his experience the costs were too high, and on that basis, allowed a different sum as being reasonable compensation, the appellant would undoubtedly be able to criticise it as being arbitrary. The determining officer has therefore sought a comparator in respect of the individual facts of this case and that seems to me to be a perfectly proper approach to take. As I have set out, he has in fact allowed almost all of the hours actually claimed by the appellant. He has then allowed an hourly rate which may well be perfectly appropriate for administrative costs within the CPS. It is certainly a figure that does not look entirely out of place with other legally aided rates such as those allowed in respect of confiscation proceedings. However, having accepted that such rates produced too large a gap between the comparative sums, the determining officer has revised his figures by an appreciable margin.
69. I take the same view as the determining officer that the aggregate sum of reasonable costs does not produce a figure which seems to be reasonable overall when compared with the nature of the case. Therefore, a Singh discount should apply and I consider that the determining officer's approach cannot be faulted. The figure that he has come out with through the redetermination process is well within the range of sums he might have allowed in order to comply with the requirements of s17."
F. MR LACOCK'S WITNESS STATEMENT OF 6 AUGUST 2019
(a) The court's inherent jurisdiction: "real injustice"
(b) The Master's decision on London/regional rates
(c) The Singh discount