RAI v Guildford Magistrates Court & Anor

Factual and Procedural Background

This opinion concerns an appeal by way of case stated pursuant to section 111(1) of the Magistrates Courts Act against a decision of Guildford Magistrates Court dated 2 August 2023. The original decision ordered the applicant to pay compensation of £22,000 and prosecution costs of £6,067.88. The applicant had pleaded guilty to fraud contrary to sections 1 and 3 of the Fraud Act 2006, involving failure to disclose information relating to housing benefit and council tax reduction claims, resulting in overpayments totaling approximately £24,393.15. The applicant was sentenced to six months imprisonment suspended for two years, with 200 hours unpaid work, and ordered to pay the compensation and costs, with the surcharge reduced to nil and a 28-day collection order issued.

Legal Issues Presented

1. Whether the magistrates were correct to conclude the applicant had the means to pay compensation of £22,000 given his means and personal circumstances.
2. Whether it was just and reasonable to make a costs order of £6,067.88 given the applicant’s means and personal circumstances.
3. Whether it was correct to make a 28-day collection order and direct the applicant to contact the HMCTS Fine Collection Team to arrange payment by instalments.
4. Whether ordering the applicant to pay costs rather than the surcharge was contrary to the relevant statutory provisions, specifically section 161A(1) Criminal Justice Act 2003 (now repealed and replaced by section 42 Sentencing Act 2020).

The opinion also addresses the legal consequences of the repeal of section 161A(1) and the application of section 42 of the Sentencing Act 2020 concerning mandatory surcharges.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Court's Reasoning and Analysis

The court first clarified that the appeal by case stated is limited to legal error or jurisdictional excess and does not constitute a merits appeal. The magistrates’ order for costs was found unlawful on its face because the statutory surcharge, which is mandatory unless the offender cannot pay both compensation and surcharge, was reduced to nil despite the magistrates concluding the applicant had means to pay compensation and costs. This contradiction indicated an error of law.

Regarding the compensation order, the magistrates failed to make clear findings about the applicant’s disposable income and did not consider the length of time over which the applicant could realistically repay £22,000. The order for payment in 28 days was deemed irrational given the applicant’s financial circumstances, including a monthly disposable income of approximately £250 after debts.

The court emphasized that it is unlawful to fix a compensation amount without specifying payment instalments and duration, and that delegating these details to the fines office is improper. The magistrates’ approach conflicted with statutory requirements under the Sentencing Act 2020 and the Courts Act 2003, as well as established case law.

The court also reviewed relevant sentencing guidelines and case law, noting that compensation is normally payable within 12 months but may extend up to three years in exceptional cases. Longer repayment periods have been upheld only in highly unusual circumstances. The magistrates did not engage with these principles adequately.

Furthermore, the magistrates were entitled to question the applicant’s credibility regarding his financial disclosures, particularly given his admitted dishonesty in credit card applications. However, the magistrates failed to make findings about the applicant’s disposable income and thus did not properly assess his ability to pay compensation and costs.

Holding and Implications

DISMISSED IN PART AND QUASHED IN PART

The court quashed the magistrates’ order requiring payment of compensation and costs and the nil surcharge. It directed that the financial orders be reconsidered by a differently constituted bench, either a district judge or lay magistrates, in accordance with the legal principles set out in this judgment.

The decision underscores the mandatory nature of surcharges under section 42 of the Sentencing Act 2020, the necessity for magistrates to make clear findings on an offender’s financial means including disposable income, and the requirement to specify repayment terms within compensation orders rather than delegating these to enforcement agencies. No new precedent was established; rather, the court reaffirmed existing statutory and case law requirements to ensure lawful and just financial orders in magistrates’ courts.