Edmonds Marshall McMahon secure landmark decision from the High Court to provide guidance on the recoverability of private prosecutors’ costs

By Ashley Fairbrother

On 28 January 2020, in Fuseon Limited v Senior Courts Costs Office [2019] EWHC 126 (Admin), the High Court granted Fuseon’s appeal against a Costs Master’s decision (i) to assess Fuseon’s legal costs based on the hourly rates of a firm local to Bolton, where Fuseon was based, rather than London, where its  solicitors were based, and (ii) to apply hindsight when assessing such costs. Mr Justice Lane reaffirmed the constitutional importance of private prosecutions and the ruling provides guidance on the extent of recoverable costs incurred by a private prosecutor.

Key Points

  • The relevant question when determining the level of recoverable costs incurred by a private prosecutor is “Did the Applicant act reasonably and properly in instructing the solicitors so instructed?” and not “Could the Applicant have obtained cheaper representation in its locality?”
  • When assessing the reasonableness of the private prosecutor’s costs, the application of hindsight is not permitted.

Background

The Ruling arises from a successful private prosecution of a Timothy Shinners. Mr Shinners fraudulently abused his position as a director of Fuseon, causing losses to the company to the value of approximately £100,000, contrary to s.4 of the Fraud Act 2006. On 9 June 2017, the jury returned guilty verdicts in 4 of 5 counts of fraud and theft.

Fuseon was a small lettings agency in Bolton. A director, Mr Laycock, discovered the fraud by his co-director, who had, among other things, consistently failed to register tenancy deposits under the statutory scheme. Having discovered the fraud, Mr Laycock reported the same to Greater Manchester Police (“GMP”). He was, however, informed that given recent budgetary cuts, GMP were prioritising other forms of crime and would be unable to assist.

In the absence of support from GMP, the only means of redress available to Mr Laycock and Fuseon was to commence a private prosecution. This would enable the fraudster to face the appropriate criminal sanctions for his crime. However, at that time (the end of 2015), one of the only firms in the country offering services in respect of private prosecutions was this firm, Edmonds Marshall McMahon (“EMM”). We are based in London, to which the legal services market in private prosecutions was effectively restricted, given the specialist and unusual the nature of such prosecutions.

Mr Laycock, who lives in Bolton, undertook extensive market research before instructing EMM. That research involved contacting well-known criminal defence solicitors in his local area, asking them if they could undertake the private prosecution and, if not, for suggestions as to who would; speaking to clerks at barristers’ chambers; speaking to his insurers, as well as spending considerable time searching Google for firms which specialised in private prosecution work. He found that no firms in either the local area or the Northern region generally, at the tail end of 2015, undertook specialist private prosecution work.

Accordingly, EMM were instructed in late January 2016 to prosecute the case. Following an 11-day trial before HHJ Knowles QC, Mr Shinners was convicted and sentenced to three years in prison. HHJ Knowles QC ordered that Fuseon’s costs be reimbursed to him from central funds.

The Determining Officer (“the DO”)

An assessment of Fuseon’s costs duly proceeded. A bill of costs was produced and was assessed by a Determining Officer (“DO”). The DO, however, only reimbursed to Fuseon a fraction of the amount it had spent in the prosecution. The DO only permitted Fuseon to recover the costs at “local rates” of solicitors in Bolton, as opposed to the rates actually charged by EMM, based in London. The DO also imposed an arbitrary reduction to the amount he awarded to Fuseon.

Fuseon appealed on the basis that such expertise in private prosecutions was only available in London, and so it had no choice but to instruct EMM, a central London firm.

Costs Master

Fuseon then appealed the decision of the DO to a Costs Master who held that, whilst there can be no criticism of EMM’s rates as being untoward for EMM’s location (i.e. London) and that those rates were in fact reasonable for work of the kind involved here, the question simply remained “whether or not [the DO] was correct to consider that the use of Central London solicitors was not justified.”

The Master held (i) an experienced criminal defence firm (who may have employed former state prosecutors) in the north would be capable of carrying out the private prosecution; and (ii) the aggregate sum of the costs incurred produced a figure which did not seem to be reasonable overall when compared with the nature of the case (i.e. the application of hindsight). Therefore, a reduction to the amount allowed should be applied.

The Judgment

Mr Justice Lane disagreed with the Master. He held that Mr Laycock “had done everything that could reasonably be expected of a person in his position.”

Whilst it was argued that the decision to instruct EMM was a “luxury” choice, the Judge held that the instruction of EMM was something an ordinary reasonable litigant would do in the circumstances, noting that “The duties on prosecutors are, in significant respects, different from and more onerous than those placed on defence teams.”

The judge also held that it was an error of law to consider the Crown Prosecution Service (“CPS”) could be used as a comparator when assessing the relevant market of private prosecutors and therefore the costs of a private prosecution could not be compared to the level of costs that might be claimed by the CPS.

The effect of the Master’s decision was to cause very substantial prejudice to Mr Laycock and his company and not to disturb the Master’s decisions would risk the “perpetuation of an erroneous approach to the award of costs in private prosecutions, which in turn risks damaging the position of private prosecutions in the constitutional framework.”

Comment

The judge was right to note the constitutional importance of private prosecutions. The Supreme Court has repeatedly emphasised this point, stating there is “long-standing constitutional significance attaching to the right of private prosecution” since it provides individuals with a means of redress where the state chooses not to act on a crime (see the opinion of Lord Mance in Regina (Gujra) v Crown Prosecution Service [2012] UKSC 52). Indeed, the Lord Chancellor’s position in recent cases has been that private prosecutors “will need to recover expenditure close to actual levels, otherwise they would be out of pocket,” which “would deter them from bringing such prosecutions”. R (Law Society) v Lord Chancellor [2010] EWHC 1406 (Admin).

Private prosecutions are an important tool in order to protect against state inertia.  Providing preliminary steps are taken by a prospective private prosecutor to research appropriate solicitors’ firms, and the prosecution is brought and conducted properly, they will be entitled to recover their reasonable costs in bringing the prosecution.

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