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You are here: BAILII >> Databases >> England and Wales High Court (Senior Courts Costs Office) Decisions >> Allseas Group SA, R (On the Application Of) v Sultana [2023] EWHC 2731 (SCCO) (31 October 2023) URL: https://www.bailii.org/ew/cases/EWHC/Costs/2023/2731.html Cite as: [2023] EWHC 2731 (SCCO) |
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SCCO Reference: SC-2022-CRI-000070 |
SENIOR COURTS COSTS OFFICE
Royal Courts of Justice London, WC2A 2LL |
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B e f o r e :
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R (ALLSEAS GROUP SA) |
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- v - |
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PAUL SULTANA |
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Judgment on Appeal under Regulation 10 of the Costs in Criminal Cases (General) Regulations 1986 |
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Appellant: Allseas Group SA |
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Crown Copyright ©
Primary Legislation and Policy
"17.— Prosecution costs.
(1) Subject to subsections (2) and (2A) below, the court may… in any proceedings in respect of an indictable 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…
(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."
"…The s 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 s 16(6)… 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…
… The obligation is to provide a sum of money which is reasonably sufficient to compensate the successful defendant. The word "sufficient" pre-supposes that there is some measure to determine whether the amount paid satisfies that criterion of sufficiency or not. It must be sufficient by reference to some particular criterion or criteria. In this case the relevant measure is the principle of compensation, albeit one which is constrained by considerations of what is reasonable and proper expenditure…"
"… 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.…"
"… the compensatory nature of section 17 needs to be recognised in the context of the importance afforded to private prosecutions. That importance explains why, despite the similarities between sections 16 and 17 of the 1985 Act, the Lord Chancellor was held in R (Law Society of England and Wales) to be entitled to decide not to cap private prosecutors' costs in the same way as defendants' costs. Paragraph 65 of Elias LJ's judgment, although describing private prosecutors (such as the RSPCA) who act in that capacity on a fairly regular basis, falls to be read as having a more general application; particularly where he highlighted the fact that, unless private prosecutors can "recover expenditure close to actual levels… they would be out of pocket, and that in turn would deter them from bringing such prosecutions…"
Secondary Legislation and Guidance
"(1) Costs shall be determined by the appropriate authority in accordance with these Regulations.
(2) Subject to paragraph (3), the appropriate authority shall be…an officer appointed by the Lord Chancellor in the case of proceedings in the Crown Court…
(3) The appropriate authority may appoint or authorise the appointment of determining officers to act on its behalf under these Regulations in accordance with directions given by it or on its behalf."
"(1) The appropriate authority shall consider the claim and any further particulars, information or documents submitted by the applicant… and shall allow 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 and 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.
(5) … the appropriate authority shall allow such legal costs as it considers reasonably sufficient to compensate the applicant for any expenses properly incurred by him in the proceedings…"
"On an assessment of the amount of costs, relevant factors include—
(a) the conduct of all the parties;
(b) the particular complexity of the matter or the difficulty or novelty of the questions raised;
(c) the skill, effort, specialised knowledge and responsibility involved;
(d) the time spent on the case;
(e) the place where and the circumstances in which work or any part of it was done; and
(f) any direction or observations by the court that made the costs order.…"
"(a) the importance of the case, including consequences to reputation and Livelihood
(b) the complexity of the matter
(c) the skill, labour, specialised knowledge and responsibility involved,
(d) the number of documents prepared or perused, with regard to difficulty
and length
(e) the time expended; and,
(f) all other relevant circumstances…
… (a) regional variations in the expense to solicitors of conducting litigation, and
(b) the assessment of the weight of the case by the Judge who tried it or those who participated in it."
"(1) An applicant who is dissatisfied with the costs determined under these Regulations by an appropriate authority in respect of proceedings other than proceedings before a magistrates' court may apply to the appropriate authority to redetermine them….
(5) The appropriate authority shall redetermine the costs, whether by way of increase, decrease or at the level previously determined, in the light of the objections made by the applicant or on his behalf and shall notify the applicant of its decision.
(6) The applicant may request the appropriate authority to give reasons in writing for its decision and, if so requested, the appropriate authority shall comply with the request."
(1) Where the appropriate authority has given its reasons for its decision on a redetermination under regulation 9, an applicant who is dissatisfied with that decision may appeal to a costs judge…
(11) The costs judge may consult the presiding judge, and the appropriate authority or the determining officer who redetermined the costs on its behalf as the case may be, and may require the appellant to provide any further information which he requires for the purpose of the appeal and, unless the costs judge otherwise directs, no further evidence shall be received on the hearing of the appeal and no ground of objection shall be valid which was not raised on the redetermination under regulation 9.
(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.
(13) The costs judge shall communicate his decision and the reasons for it in writing to the appellant, the Lord Chancellor, and the appropriate authority or the determining officer who redetermined the costs on its behalf as the case may be.
(14) Save where he confirms or decreases the sums redetermined under regulation 9, the costs judge may allow the appellant a sum in respect of part or all of any reasonable costs (including any fee payable in respect of an appeal) incurred by him in connection with the appeal."
The Guideline Hourly Rates
"… 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 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."
The History of this Case
"… The appeals are from the order of Morgan J dated 6 October 2017. He heard two actions which were tried together at a hearing lasting eight weeks. The citation for his meticulous judgment, which runs to 151 pages, is [2017] EWHC 2466 (Ch). The two actions are referred to in his order as the "Group Seven Proceedings" and the "ETS Proceedings" although in his judgment he referred to the latter as the "Larn" proceedings, Larn Ltd. being the former name of Equity Trading Systems Limited ("ETS")…
The backdrop for both sets of proceedings was a brazen fraud by which Allseas Group SA, a company registered in Switzerland, ("Allseas") was defrauded of €100 million. The fraud was followed by an attempt to launder the proceeds using the client account of a London firm of solicitors Notable Services LLP ("Notable"). Notable was a multi-disciplinary partnership, whose members included Mr Martin Landman, an accountant, and Mr Francesco Meduri and Ms Cristina Ciserani, both solicitors. The money laundering was partly successful but as a result of police intervention €88 million was returned to Allseas. The present proceedings concern attempts to recover the unreturned balance from Notable and others, including from a bank employee (Mr Othman Louanjli), who dishonestly provided information to Notable in support of one of the main fraudsters, and from the bank that employed him, LLB Verwaltung (Switzerland) AG, formerly known as Liechtensteinische Landesbank (Switzerland) Ltd ("LLB" or "the Bank")…
The complex events that led up to the transfer of the €100 million to Notable's client account and the circumstances surrounding the payments from that account are set out in full detail in Morgan J's judgment and it will be necessary to pick out some of his more important factual findings when considering the issues to which they relate…"
"The Court orders that a payment be made to the prosecution out of central funds in respect of prosecution costs, including the costs of investigation, and that the sum to be paid shall be determined."
Hourly Rates
Authorities Referred to by the Parties in Relation to Hourly Rates
"It appears to me that subs (6) and subs (7) presuppose that, in properly assessing the amount of costs which are to be allowed in respect of a defendant's cost order, the appropriate taxing authority will carry out a two-stage exercise, first of all, consider what amount will be reasonably sufficient to compensate the defendant for any expenses properly incurred by him in the proceedings. That is stage one. In order to fulfil the requirements of stage one he has to ask himself, first of all, whether the expenses are ones which are properly incurred by the defendant.
Looking at the situation in this case the cost of instruction leading counsel, in my view, could not be described as other than expenses properly incurred, subject to the amount of those costs being reasonable. Having regard to the nature of the case, which I have already described, it is quite impossible for it to be said that the defendants were acting improperly in instructing leading counsel.
Having come to the conclusion that the expenses are properly incurred the court's next task is to consider the amount which is reasonably sufficient to compensate the defendants for those costs. That is a question of quantum. If there are no untoward circumstances that is the end of the task of the taxing authority under the provisions of s 16. However, there can be a situation where subs (7) comes into play. That is a situation where the court is of the opinion that there are circumstances which make it inappropriate that the person, in whose favour the order is made, should recover the full amount mentioned in subs (6). Subsection (7) is dealing with a situation where there is something which causes the court to consider that what would normally be the result of taxation would not apply to this particular case."
"(1) The statutory test is one of compensation but subject to the amount being considered reasonably sufficient to cover expenses properly incurred…
(2) Compensation in an amount considered reasonably sufficient to cover expenses for work properly incurred must have regard to prevailing market rates and is not limited by the size of the public purse...
(3) The test is an objective one, necessity plays no part and there is no indemnity for costs actually incurred…
(4) In determining compensation in an amount considered reasonably sufficient to cover expenses for work properly incurred, the taxing authority must have regard to all the relevant circumstances, including the nature, importance, complexity or difficulty of the work and time involved…
(5) In the special circumstances of a particular case it may be considered inappropriate for there to be recovery according to the above principles and the taxing authority can then fix a lesser amount considered just and reasonable…"
"…The market in legal services continues to undergo significant change, particularly as a result of the Legal Services Act 2007 which has affected the scope of regulation and the type of entity which can provide legal services.
…The type of fee agreement and the rates charged will be influenced by the particular market in which legal services are required; fees vary significantly as between different segments of the market. Competition is greater. For example, firms which specialise in private prosecutions of cases arising out of intellectual property infringements advertise their services and the fact that legal and investigative costs can be recovered from central government.
…It is now commonplace for commercial clients to seek quotations or tenders and to negotiate the basis on which fees are charged.
…Thus in relation to the test in Dudley Magistrates:
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 paras 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."
"However, the reasonableness of the costs incurred must be judged by reference (1) to the proceedings in question – that is to say the conduct of an appeal before the Criminal Division of the Court of Appeal, (2) the nature of the issues before the court – issues of law relating to confiscation proceedings and (3) comparable market rates charged for similar work.."
"… If, as Lane J. found, Mr Laycock could not find a firm more local than EMM, it must have been reasonable for him to instruct EMM. The issue then is whether the rates charged by EMM were reasonable for a central London firm…
The guideline hourly rates for central London (where EMM were then based) for 2010 were: A £317, B £242, C £196, D 126.
The use of the guideline rates in the determination of criminal costs appears to derive from guidance given by the Ministry of Justice to determining officers…
The guideline rates are of course just that. They are fairly blunt instruments designed to assist judges in the summary assessment of costs. The passage of time since 2010 means that they tend now to be used as a starting position rather than as carved in stone.
Part 45 of the Criminal Procedure Rules 2015 applies where the court makes an order for costs under Part II of the 1985 Act…
It seems to me that this was not a particularly complex case. It was however conducted by specialist solicitors and, for the reasons found by Lane J., the work was properly done in London. Given the amount of time spent by the solicitors, over 1,000 hours, I do not think that it can be said that the matter was handled with despatch.
The only factors which it seems to me elevate this matter above the guideline rates are the specialism of the solicitors instructed and the passage of time..."
The Jurisdiction of This Court
"It is for the court which has actually heard the case presented by the private prosecutor to determine how to exercise those statutory powers. A DO is well-qualified to assess the reasonably sufficient sum, and will no doubt be punctilious in doing so. But the DO will proceed on the basis of the antecedent decision by the court as to whether that sum is to be paid in full or subject to some limitation. As Ms Cumberland put it in her skeleton argument, the factors to be considered by a DO in accordance with the 1986 Regulations "do not align precisely" with those which a court may consider under s.17."
"What the determining officer did in Singh… was to reduce the overall time allowed for certain classes of work, so that a reasonable total was allowed for those particular tasks. The Singh principle cannot be used to reduce the reasonable hourly rate that has been allowed."
The Appellant's Submissions on Hourly Rates
The Lord Chancellor's Submissions on Hourly Rates
"The touchstone is not the amount of costs which it was in a party's best interests to incur but the lowest amount which it could reasonably have been expected to spend in order to have its case conducted and presented proficiently, having regard to all the relevant circumstances".
Conclusions: Whether the Appellant's Choice of Solicitor was Reasonable
Conclusions on the Appropriate Approach to Assessing Solicitors' Hourly Rates
"… there were two questions.
vi) Whether it was proper and reasonable to instruct the solicitors and/or advocates actually instructed. It did not matter whether the work could have been done adequately by someone less experienced, provided it was proper and reasonable to instruct those instructed.
vii) If it was proper and reasonable, then the costs were recoverable, provided the costs were reasonable."
Conclusions: Hourly Rates
Counsel's Fees: Principles
"One must envisage a hypothetical counsel capable of conducting the particular case effectively but unable or unwilling to insist on the particularly high fee sometimes demanded by counsel of pre-eminent reputation. Then one must estimate what fee this hypothetical character would be content to take on the brief… There is, in the nature of things, no precise standard of measurement. The taxing master, employing his knowledge and experience, determines what he considers the right figure."
"In assessing a brief fee it is always relevant to take into account what that fee, together with the refreshers, has to cover. The brief fee covers all the work done by way of preparation for representation at the trial and attendance on the first day of the trial. But in heavy litigation, particularly where there is a team of barristers and experts, additional work is involved in ensuring that the client is properly represented and his case fully developed beyond simply appearing in court. In this litigation, counsel had to meet together to consider their strategy and tactics and prepare material. They also had to have meetings with their experts, including meetings with experts from abroad prior to their going into the witness box to give evidence. Some of these meetings were lengthy and took place at weekends. Then there was the work involved in the preparation of final submissions. …
… Having regard to… the general principle… that in allowing fees the taxing officer should have regard to any other fees and allowances payable to counsel in respect of other items in the same case where the work done in relation to those items has reduced the work which would have otherwise been necessary in relation to the item in question, I should as the first step identify what items of work are to be treated as covered by the brief fee and refreshers and to what extent fees already allowed overlap with the brief fee…
In assessing the brief fee one also has cards to take into account what will be earned by way of refreshers and what will be the totality of the work that will be required from counsel in the proper discharge of their obligations to protect the interests of their client and the extent to which that work will not be separately remunerated."
"It is plain from this decision that there is no basis for charging as separate items meetings with experts which are part of the preparation for trial after delivery of a brief. No matter what limited opportunity there has been beforehand to meet with experts and to understand the contents of their reports, this is preparation for the trial which should be included in the brief, which itself should be fixed at a sum which is sufficient to include all such matters. It is only in a very exceptional case that there would be scope to depart from this principle. If the whole shape of a case were to change by reason of an amendment to pleadings or a fresh expert report was adduced which fundamentally changed the nature of the dispute, then it may be possible to say that there is work which falls outside the ambit of the original brief… there is no basis for allowing fees for meetings with experts after delivery of the brief".
Counsel's Fees: Mr Jonathan Laidlaw KC
Counsel's Fees: Mr Ben Smitten
Whether the Choice of Mr Laidlaw Was a Reasonable One
"I consider that the Court of Appeal authorities of R (Law Society) and Zinga are incompatible with the designated officer's decision in the present case (upheld by the Master) to introduce the CPS as a comparator for the purposes of applying the Singh discount. In particular, the Lord Chief Justice's judgment in Zinga cannot in any sense be read as justifying use of the CPS in determining what is the relevant market for private prosecutions. On the contrary, as has been seen, the whole thrust of the judgment is to the opposite effect…
The point of Lord Thomas's observations was to highlight the fact that the then inability of the CPS to undertake prosecutions for particular kinds of fraud was unnecessarily costing the public purse, since it was having to compensate private prosecutors using private firms that were more expensive than the CPS would be, if it were to be in a position to do the work…
In both Zinga and the present case, there is no suggestion that the private prosecution was trivial. Although the designated officer and the Master were of the view that the mechanics of the prosecution of Mr Shinners were straightforward, it was, on any view, a serious matter. The trial lasted eleven days and Mr Shinners received an immediate sentence of three years' imprisonment. There was, in sort, a substantial public interest in seeing him brought to justice…
The fact that the designated officer employed Zinga to bring about some amelioration in the claimant's position is, accordingly, nothing to the point. On the facts of this case, the relevant market could not be said to involve any comparison with the CPS….
As I have already noted, the claimant rightly does not contend that the Singh reduction can play no part in the assessment of costs of private prosecutors. I also do not consider it can be said, as a matter of law, that it will always necessarily be wrong to look at CPS costs, when determining the amount of costs to be awarded to a private prosecutor. If an individual resolves to embark on a private prosecution with no regard to whether the state is willing and able to prosecute, a comparison with the CPS might be legitimate. That, however, was not the position in the present case."
Tendering and the Choice of Mr Laidlaw as Leading Counsel
Conclusions: Mr Laidlaw's Hourly Rates, Brief Fees and Refreshers
Conclusions: Mr Laidlaw's First Brief Fee
Conclusions: Mr Laidlaw's Retrial Brief Fee
Conclusions: Mr Laidlaw's Refresher Fees
Conclusions: Mr Laidlaw's Non-Sitting Days, Pre-Trial Hearings and Costs Hearings
Conclusions: Mr Smitten's Fees
Counsel's Fees: Ms Katherine Lloyd
Research
Noting Briefs
Mishcon's Internal Disbursements
Neutral Citation No.[2023] EWHC 2731 (SCCO)
Case No: T20157243
SCCO Reference: SC-2022-CRI-000070
IN THE HIGH COURT OF JUSTICE
SENIOR COURTS COSTS OFFICE
Thomas More Building
Royal Courts of Justice
London, WC2A 2LL
Date: 31 October 2023