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BLOG: Private Prosecution Costs: Refresher

10/05/2021

Sebastian Winnett provides a short refresher on the law and considerations surrounding recovery of prosecution costs from central funds in privately brought prosecutions


Increased Scrutiny

In recent years there has been a significant increase in the number of private prosecutions brought within England & Wales, as the funding available to state entities has been curtailed, and demand has outreached supply. Unsurprisingly the effect has been even more significant in relation to fraud and financial crime, as victims/entities with access to funds have sought alternatives to underfunded and ill-equipped public services.

2020 saw increased scrutiny of private prosecutions. The Commons Justice Select Committee Report into the state of private prosecutions in England & Wales was followed by a further Report published in March of this year concerning the effectiveness (or lack thereof) of regulatory safeguards. The decision in Hamilton & Others v Post Office Limited may well be a herald for change in the near future. The response to the safeguarding reports suggests that the government will consider: 

  • Creating a register of private prosecutors;
  • Reconsideration of the status of atypical private prosecutors which exist as de facto prosecuting authorities (such as the Post Office and RSPCA);
  • Improving compliance with disclosure obligations; and (significantly)
  • Addressing “inequitable” costs recovery by capping private costs at legal aid rates. (After all, in the experience of the Court of Appeal in Zinga there is “no difference in quality” between the two).

Rules and Procedure

In the meantime, recovery of costs incurred by private prosecutors from central funds is permitted under section 17 of the Prosecution of Offences Act 1985 for proceedings in respect of indictable offences (and summary offences in the Divisional and Supreme Court) for any period when the case was not prosecuted by the CPS. 

Section 17 should be read in conjunction with Part 45 of the Criminal Procedure Rules 2020 and the relevant Practice Direction. In summary:

  • There is no power to order payment of costs from central funds towards a prosecution brought by a public authority;
  • Where the court considers it inappropriate to order the full payment sought, a lesser just and reasonable amount must be substituted;
  • The general rule is that the Court must make an order;
  • The Court may decline to make an order where there is a good reason (the example given within the direction is in the case of a prosecution brought or continued without good cause);
  • If there has been misconduct a private prosecutor should not be awarded costs out of central funds.

Private prosecutors are not expected to swallow the costs of bringing a prosecution as occupational hazards (contrary to the considered view of the justices as reported in R v Esher and Walton Justices ex p Victor Value & Co (1967) Crim L. R. 475) and the default position is that recovery from central funds for reasonably incurred costs in respect of an indictable offence (or certain committed or summary matters) will be permitted.

Given that the motivation for bringing a private prosecution might well be connected to a desire to recover or prevent losses, private prosecutors should be prepared to demonstrate the appropriateness of eschewing public law enforcement, rather than the self-interested justification for commencing proceedings… or foot the bill.   

Costs incurred prior to the commencement of proceedings

Private prosecutors may face a significant outlay of funds prior to commencing proceedings. The preparation of witness statements and exhibits within a process consistent with disclosure and other obligations often results in considerable expense, particularly in cases relating to financial wrongdoing.

Last month the decision in Football Association Premier League and another v Lord Chancellor [2021] EWHC 755 (QB) provided some welcome news to private prosecutors in relation to some of the typical costs incurred pre-commencement.

In that case the Appellant, who had successfully prosecuted a number of individuals sought to recover costs from central funds under section 17.  An assessment of the costs sought was made and determined that no costs should be recovered in relation work undertaken prior to the commencement of proceedings. This decision was appealed to a costs judge who upheld the decision but certified a point of law for consideration. The issue being what approach a Court should take when asked to permit the recovery of pre-commencement expenses. The case was ultimately considered by the Divisional Court which held in summary:

  • Costs incurred by private prosecutors incurred prior to commencement of proceedings were recoverable out of central funds under section 17;
  • The words “incurred in proceedings” do not create a cut-off date prior to the commencement of proceedings;
  • In practice prosecutors are able to recover some pre-commencement costs and the statutory provisions did not draw a distinction in this regard;
  • Following Mirchandani (see below) policy considerations should lead to a more generous approach towards prosecution costs;
  • Only just and reasonable costs can be recovered.

Whilst listing the types of costs that a private prosecutor may be entitled to recover, the Court declined to make any reference to costs associated with the “investigation” of crime. Later within the judgment, however,  the Court made reference to the judgment in R (TM Eye Ltd) v Pama and Co Ltd 26th February 2021 SCCO 239/19 and 240/19, appearing to endorse the approach of Master Whalan, which in respect of the relevant authorities and statutory provisions followed the same reasoning as the Divisional Court. In Pama, Master Whalan determined that costs incurred at the investigative stage were covered by section 17 and were recoverable.

The extent to which the Divisional Court agreed with that aspect of the reasoning in Pama is not entirely clear, but given the softening position of the courts in respect of costs generally it is not unreasonable to assume that reasonably incurred investigative costs could be recovered pursuant to section 17.

Costs incurred post-conviction

An additional concern in private fraud cases is funding for enforcement proceedings post-conviction. The Court in Mirchandani v Lord Chancellor [2021] 1 Cr App R 7 clarified the correct approach to be taken when a Court, having already made an order under section 17, is asked to permit the recovery of the costs of dealing with variations of and/or enforcement a court order.

Mr Mirchandani brought unsuccessful proceedings in the High Court seeking to enforce a confiscation order against the defendant’s ex-partner. He was ordered to pay the ex-partner’s costs in those proceedings. The court at first instance refused his application to recover both his own costs, and the costs he had been ordered to pay the ex-wife, pursuant to section 17 POA. The Court holding that a private prosecutor could seek the appointment of a receiver in respect of a convicted defendant’s assets, but that recovery from central funds was unavailable on the basis that enforcement proceedings were civil, rather than criminal, and therefore fell outside the remit of section 17.

That decision was overturned, with the Court of Appeal confirming that confiscation proceedings are part of the sentencing process, in line with the previous decisions in Rezvi and Zinga, and that costs were recoverable for enforcement proceedings. 

The Court’s determination was that whilst enforcement proceedings under the 1988 Act are civil proceedings, they were “in respect of” an indictable offence, and that prohibiting recovery of prosecution costs in respect of enforcement proceedings was restrictive, and a strained interpretation of the law.  Davis LJ concluded that:

The trial proceedings unquestionably were “in respect of” an indictable offence. The ensuing confiscation proceedings, part of the overall sentencing process which culminated in the confiscation order, were themselves likewise unquestionably “in respect of” an indictable offence. It seems to me to be very odd and strained then to say that, nevertheless, enforcement proceedings which are designed to give effect to the confiscation order are somehow not “in respect of” an indictable offence. It is too restricted an approach, in my opinion, to say that such proceedings are, and only are, in respect of the confiscation proceedings. As the judge had herself put it in her first judgment, the enforcement proceedings do not exist in a bubble or have some life of their own…

There can, as I see it, be no rhyme or reason in permitting a private prosecutor’s costs of confiscation proceedings to be paid out of central funds but then prohibiting such an outcome for enforcement proceedings with regard to the confiscation order so obtained. Indeed, it can also be said that such an outcome would be contrary to the perceived public interest.

The ruling is unambiguous and puts to rest any lingering questions about the applicability of section 17 to enforcement proceedings brought under the 1988 Act or POCA 2002. 

Conclusion

At least for the moment, private prosecutors are offered real protection against enforcing orders against impecunious parties and, subject to the qualifications in section 17, are entitled to recover their costs in full (see also Fuseon Limited v Senior Courts Costs Office, The Lord Chancellor [2019] EWHC 126 (Admin)) in respect of costs incurred pre-commencement, trial, confiscation and enforcement.


Sebastian Winnett is regularly instructed as led junior and junior alone in relation to a variety of serious and complex criminal matters, and has a developing practice in regulation and professional discipline.

10/05/2021

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