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Financial Crime Appeals

By Richard Fisher QC

 

Private prosecution – costs out of central funds – confiscation order

 

Ketan Somaia

 

[2019] EWHC 1227 (QB)

 

INTRODUCTION

The High Court considered whether s.17 of the Prosecution of Offences Act 1985 (“POA 1985”) permitted a private prosecutor (Mr Mirchandani) to claim payment out of central funds in respect of his costs incurred in bringing enforcement proceedings in the High Court in relation to an unpaid confiscation order made pursuant to the Criminal Justice Act 1988 (“CJA 1988”). The private prosecutor’s costs included costs awarded against him in favour of an interested party to the proceedings who prevailed in a hearing to determine whether certain monies transferred to them were tainted gifts.

 

 

THE FACTS

The private prosecution related to an allegation of fraud. Following conviction at trial there then followed confiscation proceedings and a confiscation order was made on 12 January 2016 in the sum of £20,434,691. On the 6 September 2016 the prosecutor applied for a receiver to be appointed under s.80 of the CJA 1988 and commenced proceedings in the High Court. The proceedings were commenced against a number of parties and included applications for declarations that certain transfers of money were tainted gifts under s.74(1) of the CJA 1988. The proceedings were mostly settled except for those relating to the defendant’s former wife (Alka Gheewala), who succeeded. A costs order was made against the private prosecutor in respect of Alka Gheewala’s legal costs. Mrs Justice Jefford DBE originally decided that the private prosecutors’ total costs (including the costs awarded to Alka Gheewala) fell to be met from central funds but on presentation of his bill to the LAA of £578,801.69 for his own costs and £297,477.68 in respect Alaka Gheewala’s costs, the Lord Chancellor intervened and the original decision was set aside and heard afresh by the same judge.

 

The POA 1985, Pt II is concerned with defence, prosecution and third party costs in criminal cases. Section 6 relates to prosecutions instituted and conducted otherwise than by the CPS and therefore includes private prosecutions. Section 16 is concerned with defence costs and s.17 with prosecution costs.

 

The prosecutor applied under s.17 of the POA 1985 which provides that the court may “in any proceedings in respect of an indictable offence order payment out of central funds of such amount as the court considers reasonably sufficient to compensate the prosecutor for any expense properly incurred by him in the proceedings.” The prosecutor’s central submission was that that the enforcement proceedings, although not “criminal proceedings”, existed solely as a result of the criminal and confiscation proceedings and were provided for under the CJA 1988 to enable assets to be seized or received “in respect of an indictable offence.” It was submitted that the wording of s.17 is wide enough to encompass such civil proceedings.

The Lord Chancellor’s case was that the right to bring a private prosecution is derived from s.6 of the POA 1985 and the proceedings in respect of which an application for costs may be made must be criminal proceedings (relying on Steele Ford & Newton v Crown Prosecution Service [1994] 1 A.C. 22). Furthermore, although confiscation proceedings were part of the sentencing process and therefore part of criminal proceedings, enforcement proceedings in the High Court for the appointment of a receiver were purely civil proceedings (Re Norris [2001] UKHL 34), brought exercising the powers in the CJA 1988 and not s.6 of the POA 1985.

 

 

THE RULING

The judge found that s.17 of the POA 1985 was broad enough to encompass civil proceedings in the High Court to enforce a confiscation order and not limited to “criminal proceedings.” However, the legislative background examined in Steele Ford & Newton v CPS provided strong indications that the legislative intent was that s.17 should only apply to criminal proceedings and should not have such broader application. The judge decided that enforcement proceedings in the High Court and the determination of the issues relating to third party recipients were not “criminal proceedings” considering R (on the application of Lloyd) v Bow Street Magistrates Court [2003] EWHC 2294 (Admin), nor were they to be categorised as such by the Access to Justice Act 1999 (and s.14 of LASPO 2012) as “proceedings before a court dealing with an individual convicted of an offence, including proceedings in respect of a sentence or order.” In addition, as a defendant could not recover costs out of central funds (s.16 of POA 1985) it would be surprising if the prosecutor could under s.17. The regulations under POA 1985 do not provide for the determination of costs in the High Court. The amendments to the POA 1985 by LASPO 2012 (by the insertion of (2A) to (2C)) are such that unless fixed by the court, there is no mechanism to determine the amount to be paid out of central funds to the prosecutor in proceedings in the High Court.  

 

 

COMMENT

The issues were finely balanced. It could seem unfair that in pursuing enforcement proceedings in the High Court, this decision places a private prosecutor in a worse position than a State prosecutor pursuing enforcement whose legal costs would be funded by the State. As private prosecutions are on the rise, particularly in financial crime, thought may be given to amending the statute and costs regulations so as to provide for a private prosecutor’s position otherwise they may not be inclined to proceed where a confiscation order is not satisfied.

 

More generally, the ability of private prosecutors to recover their costs, win or lose, in criminal proceedings has received recent press attention (see Catherine Baksi’s article in The Times on 23 May 2019). It has been reported that between 2015 and 2018 almost £10million came out of the public purse to cover the legal costs of private prosecutors in criminal proceedings.  This must of course be compared to the current position for an accused who, when tried and acquitted, is restricted to recovering their legal costs to those equivalent to legal aid rates which are not likely to reimburse them in full in respect of the legal costs they have incurred. That position is considered by many to be an iniquitous position and is compounded by the prohibition under POCA 2002, on a restrained defendant, from being able to access funds to pay for legal representation. Many consider that both matters should be reviewed and changed to the position, as was, under the CJA 1988 and is the case in Civil Recovery proceedings under POCA 2002.

 

In this case the private prosecutor had successfully brought criminal proceedings resulting in a conviction and a confiscation order and under the applicable statute and costs rules/regulations he was able to recover his legal costs. In circumstances where the confiscation order had not been satisfied it might be thought that he had no option but to proceed to enforcement under the relevant provisions of the CJA 1988 which resulted in lengthy and partly contested applications in the High Court. Will this decision mean therefore that private prosecutors will be reluctant to pursue enforcement if they won’t recover their costs from central funds? That could mean more confiscation orders remain unpaid. Whether or not to pursue enforcement and incur the costs of such proceedings may be determined by how much of the order remains unsatisfied compared to the value of the identified assets to enforce against, as well as whether part of the confiscation order was to compensate the victim who may of course be the private prosecutor themselves. Could the CPS take up enforcement proceedings following on from a private prosecution and would they want to? Will convicted defendants who have not paid a confiscation order be able to frustrate matters and evade enforcement in cases where a private prosecutor won’t take on enforcement proceedings due to the fact that they could not recover their costs under the Act and regulations?

 

Would the ruling have been any different had the confiscation order and enforcement proceedings been brought under POCA 2002 where the Crown Court and not the High Court have jurisdiction? The judge did not have to decide whether enforcement proceedings in the Crown Court under POCA would satisfy s.6/s.17 and whether they are “criminal proceedings” but she did state, obiter, at paragraph 36 of the judgment that “It is unclear to me what the Lord Chancellor’s position would be in respect of such proceedings but I infer that it would be argued that that does not alter the position under s.17 because the enforcement proceedings are still not “criminal proceedings” but involve the Crown Court exercising a civil jurisdiction.” I agree with that, but we will have to await an enforcement case under POCA to see whether that interpretation is followed or not.

 

 

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