Factual and Procedural Background
The case concerns costs applications following the dismissal of a conspiracy to defraud charge against six Applicants by the Crown Court at Cardiff on 18 February 2014. The Serious Fraud Office ("the SFO") had sought to prosecute the Applicants, but the charge was dismissed prior to arraignment. Subsequently, the SFO sought to bring a voluntary bill of indictment with two counts, which was refused by Fulford LJ in the Queen's Bench Division on 14 November 2014. The court remitted consequential matters, including costs, to the trial judge.
The Applicants applied for costs orders against the SFO under sections 16 and 19 of the Prosecution of Offences Act 1985 ("the 1985 Act") in respect of the dismissal application, and for costs on an indemnity basis in respect of the voluntary bill application ("VB Application"). The court had previously ruled on preliminary issues relating to these costs applications, including the statutory precondition for section 19 orders and the basis of assessment for the VB Application costs.
Following the preliminary ruling, the court received written submissions addressing the assessment of costs payable under section 19, the costs of the costs hearing itself, and any interim payments on account of the VB Application costs. The court determined that all matters except one—the section 19 claim made on behalf of one Applicant—could be decided on written submissions without a further hearing. That particular claim raised a point of law requiring oral hearing, which was adjourned accordingly.
Legal Issues Presented
- Whether the Applicants are entitled to costs under section 16 and/or section 19 of the 1985 Act in respect of the dismissed conspiracy to defraud charge.
- The appropriate approach and principles for assessing costs under section 19, including the scope and limits of the court's jurisdiction to delegate assessment tasks.
- The basis for awarding costs on an indemnity basis in respect of the VB Application.
- The proper quantum of costs payable to each Applicant and the appropriateness of interim payments on account of such costs.
- Whether the court should remit part of the costs assessment to a detailed oral hearing for one Applicant's section 19 claim due to a novel legal point regarding brief fees and representation orders.
Arguments of the Parties
Applicants' Arguments
- The Applicants sought costs under section 16 and section 19 of the 1985 Act for the dismissal application and costs on an indemnity basis for the VB Application.
- They argued that the SFO’s conduct amounted to unnecessary or improper acts or omissions causing them to incur costs, justifying costs orders under section 19.
- The Applicants maintained that the rates charged by counsel and solicitors, although high, were reasonable given the complexity and novelty of the case, and that retaining specialist counsel was justified.
- They claimed that costs of the costs applications themselves should be recoverable under section 19.
- One Applicant raised a legal point concerning the treatment of brief fees in light of a representation order, requiring further oral submissions.
Serious Fraud Office's Arguments
- The SFO accepted liability for some costs but disputed the quantum, arguing that certain rates and hours claimed were excessive or unreasonable.
- They contended that the jurisdiction to refer matters to the National Taxing Team or Senior Court Costs Office for assistance in assessing section 19 costs was unclear or absent.
- The SFO challenged the reasonableness of counsel’s high hourly rates and the amount of time spent on some tasks, including duplication of work and administrative activities.
- They accepted that an interim payment on account of VB Application costs was appropriate but urged a cautious approach to the amount awarded.
- Regarding one Applicant’s section 19 claim, the SFO limited liability to a portion of brief fees paid during a specific period and disputed entitlement to the remainder.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| R v Evans and Others [2014] EW Misc 5; [2014] 1 WLR 2817 |
Dismissal of conspiracy to defraud charge; factual background to costs applications |
Provided factual and procedural context for the costs applications |
| Evans & Others v Serious Fraud Office [2014] EWHC 3803 (QB); [2015] Lloyd's Rep FC 59 |
Refusal of voluntary bill of indictment; remitting costs matters |
Established the procedural background and remitted costs issues to the trial judge |
| R (HM Commissioners of Customs and Excise) v Leicester Crown Court [2001] EWHC 33 (Admin) |
Three-stage approach to section 19 costs orders |
Adopted the approach to determine unnecessary acts, incurred costs, and discretionary assessment of costs payable |
| R v Thuraisamy Pathmanabhan (Southwark Crown Court, 2013) |
Use of National Taxing Team or Senior Court Costs Office to assist in costs assessment |
Referenced as an example where such assistance was sought, though details were not provided |
| Simpsons Motor Sales (London) Limited v Hendon Corporation [1965] 1 WLR 112 |
Assessment of counsel’s fees based on a hypothetical reasonable fee |
Guided the court's assessment of reasonable counsel fees in the case |
| The Lord Chancellor v John Charles Rees QC [2008] EWHC 3168 (QB) |
Distinction between publicly funded and privately funded costs assessment |
Used to support principles on assessing reasonable fees and rates |
| R v Orrow [2011] 3 Costs LR 519 |
Assessment of privately funded defence counsel fees |
Informed the court’s view on appropriate hourly rates and reasonableness of hours |
| Higgs v Camden [2003] EWHC 15 (QB) |
Higher fees for Commercial Court practitioners compared to criminal courts |
Supported differentiation of rates based on practice area |
| R v Martin [2007] 1 Costs LR 128 |
Criminal counsel fees generally lower than civil counterparts |
Supported the court’s approach to reasonable rates for criminal counsel |
| R v Zinga [2014] EWCA Crim 1823 |
Reasonable hourly rates for senior junior and leading counsel in complex criminal prosecutions |
Provided comparative guidance on appropriate hourly rates |
| Dyson Appliances Limited v Hoover Limited [2003] EWHC 624 (Ch) |
Assessment of reasonable interim costs payments |
Informed the court’s discretion in ordering interim payments on account of costs |
| United Airlines Inc v United Airlines Limited [2011] EWHC 2411 (Ch) |
Principles governing interim costs payments |
Supported the court’s approach to cautious and reasonable interim payments |
| Blakemore v Cummings [2009] EWCA Civ 1276 |
Standards for interim costs payment assessments |
Reinforced the court’s discretion and approach to interim payments |
| Khan v The Lord Chancellor [2003] EWHC 12 (QB) |
Recovery of professional time of litigants in person |
Referenced in relation to a claim for professional time by one Applicant |
Court's Reasoning and Analysis
The court began by outlining the statutory framework governing costs orders under sections 16 and 19 of the 1985 Act, including relevant procedural rules under the Criminal Procedure Rules and the Costs Practice Direction. Section 16 generally entitles successful defendants to recover costs from central funds but was limited in this case by legislative amendments restricting recoverable costs to out-of-pocket expenses for proceedings commenced between October 2012 and January 2014. Section 19 permits costs orders against a party responsible for unnecessary or improper acts or omissions causing another party to incur costs.
The court emphasized that the assessment of section 19 costs requires a summary, broad-brush approach, focusing on reasonable compensation for costs reasonably incurred as a result of the identified improper conduct. The judge must consider all relevant factors, including the conduct of the parties, complexity and novelty of the case, skill and effort involved, time spent, place and circumstances of the work, and any court directions.
Regarding the quantum of costs, the court applied established principles to assess reasonable hourly rates and reasonable hours, rejecting excessively high rates and hours unsupported by the evidence. The court applied the hypothetical counsel test from Simpsons Motor Sales to determine reasonable counsel fees and considered guideline rates for solicitors, adjusting for complexity and location. The court also rejected claims for professional time by an Applicant where no added value was demonstrated.
The court declined to seek assistance from the National Taxing Team or Senior Court Costs Office for cost assessments, finding the material provided sufficient for a just determination, but noted that the scope of such assistance might warrant future clarification.
For one Applicant, a novel legal issue concerning the interaction of brief fees and representation orders was identified, necessitating an oral hearing to resolve that point before the section 19 costs claim could be finally assessed.
Interim payments on account of VB Application costs were ordered on a cautious basis, reflecting the court’s discretion to estimate a reasonable sum likely to be awarded on detailed assessment, with the court mindful that the detailed assessor is not bound by the interim orders.
Holding and Implications
The court made the following DISPOSALS:
- The Respondent (SFO) is ordered to pay the Applicants specified sums under section 16 of the 1985 Act for out-of-pocket expenses incurred in the dismissal applications.
- The Respondent is ordered to pay the Applicants specified sums under section 19 of the 1985 Act, reflecting reasonable compensation for costs incurred due to the SFO’s unnecessary or improper acts or omissions.
- The Respondent is ordered to pay the Applicants specified sums in respect of the costs of the costs applications relating to the voluntary bill, summarily assessed.
- Costs of the voluntary bill application itself are to be subject to detailed assessment on an indemnity basis if not agreed.
- Interim payments on account of the voluntary bill application costs are ordered for several Applicants in specified amounts.
- The section 19 costs claim of one Applicant (David Alan Whiteley) is adjourned for an oral hearing to resolve a legal point regarding brief fees and representation orders before final assessment.
- All payments are to be made by a specified deadline.
The decision directly resolves the quantum and procedural handling of costs in this complex prosecution and costs litigation, providing clarity on the application of sections 16 and 19 of the 1985 Act and related procedural rules. It does not establish new legal precedent but offers a detailed application of existing principles to a factually and legally complex case.