The High Court reached a landmark decision in the case of Fuseon Ltd v Senior Courts Costs Office and The Lord Chancellor  EWHC 126 which reaffirmed the principle that a large proportion of costs can be awarded out of central funds to the successful party in a private prosecution.
On appeal, the Judge found that Master Rowley had erred in law by using as a comparator the costs that the Crown Prosecution Service would have incurred had it undertaken the prosecution. Instead, he should have asked himself whether the claimant had acted reasonably in instructing a London firm of solicitors to carry out the prosecution (which it did), having regard to the evidence of whether any local firms could have undertaken the work.
Summary of Facts
The claimant, Mr Laycock, carries on the business of a small letting agents based in Horwich, near Bolton, Lancashire. Between January 2009 and May 2015 Mr Laycock’s co-director of the agency was Timothy Shinners.
It was discovered by Mr Laycock that Shinners had been committing fraudulent activities that accrued liabilities in the excess of £100,000.
When discovering the fraudulent activities Mr Laycock informed the Greater Manchester Police. However due to the citing effects of “austerity”, it was deemed that they would not investigate as they were required to prioritise the investigation of other criminal activities.
What action did the claimant take after the CPS refused to act?
In November and December of 2015, Mr Laycock began to research into private prosecution services however, failed to find a firm in his local area, then chose to instruct a specialist London based private prosecution firm. The chosen firm then instructed a forensic accountant and counsel.
The final indictment contained 6 counts in total. The indictment included 2 counts of false representation; two counts of making articles for use in fraud; and one each of theft and fraudulent trading.
Was the private prosecution successful?
The trial took place over eleven days at Preston Court, before HHJ Knowles QC and a jury. Mr Shinners was convicted on four counts and sentenced to 3 years imprisonment.
On 7 July 2017 HHJ Knowles QC ordered
“that a payment be made to the prosecution out of central funds in respect of prosecution costs, including the cost of the investigation, and the sum to be paid shall be determined”.
The determination of costs following the successful private prosecution
The Crown Court has been specifically told that the claimant’s costs were £427,909.66 inclusive of VAT. On 24 November 2017 the determining officer allowed the claimant the sum of £150,000 plus VAT (£180,000) in respect of the prosecution costs which was later redetermined on 23 February 2018 to be determined in the sum of £200,000 plus VAT (£240,000).
The claimant appealed the decision to Costs Judge, Master Rowley, who gave judgement on 20 April 2019 dismissing the appeal. To further this the claimant requested the master certify points of principle of general importance to enable the claimant to appeal to the High Court. The High Court (rightly) reached a different conclusion to Master Rowley.
Analysis of the High Court Judgment
The Costs Masters decision contained errors in law by wrongly upholding the delegated officer’s decision that held:
- The London based Solicitor’s London charging rated which Mr Laycock used in his prosecution, as well as their travel expenses to Lancashire, were not the appropriate yardstick.
- In applying the Singh reduction the claimant’s recoverable costs should be reduced by reference to the costs of the Crown Prosecutions Service if it had conducted the prosecution.
The errors were clearly significant given that the claimant was out of pocket more than £180,000 (which had required Mr Laycock to take out a business loan and was absurdly a higher amount than the original £100,000 that Sinners was found to have accrued through fraudulent activities).
This holds significance as it undermines the intention of the legislature with the purpose to protect those who bring private prosecutions. This also holds more significance as in first instance the police refused to become involved claiming lack of resources.
What is a Private Prosecution?
Private prosecutions are prosecutions for a criminal offence initiated by a private citizen or entity which is not acting on behalf of the police or any prosecuting authority. A private prosecution is essentially the same as a standard criminal trial but one which is not brought by the Crown Prosecution Service (CPS).
Recoverability of Costs
A successful private prosecutor can potentially be entitled to recover costs from either the state or from the defendant.
Costs from the state
Pursuant to section 17 POA 1985, costs for a Crown Court trial can be recovered regardless of whether the defendant is convicted. Reasonable expenses properly incurred by a prosecutor can be recoverable. However, if the CPS take control of an investigation, expenses can only be claimed for before the CPS started to handle the case. The Court in R (Virgin Media Ltd) v Zinga  1 Cr App R2 helpfully articulated the correct approach to awarding state costs.
Costs from the defendant:
Pursuant to section 18 POA 1985, the court can order a convicted defendant to pay towards a private prosecutor’s costs. Costs will only be considered by a Court after an order has been made on compensation or confiscation.
Under the Costs in Criminal Proceedings Practice Direction (CrimPD Costs), the Private Prosecution Service can serve on the defence a full costs breakdown. However, the defence is also entitled under section 19 POA 1985 to seek to recover costs if they have incurred costs due to an improper act or omission (R v City of Westminster Magistrates’ Court  EWHC 232 (Admin)).
Who can bring a Private Prosecution?
Any individual or company can bring a private prosecution. It is a misconception that only the police, CPS or government agency (such as Trading Standards or the Director of the Serious Fraud Office) can bring a prosecution.
Traditionally, private prosecution actions were almost solely used by charitable or public interest bodies such as the RSPCA. Commercial organisations regularly undertake private prosecutions. This is undertaken by trade organisations such as FACT (Federation against Copyright Theft) and BPI (British Recorded Music Industry) but also ordinary commercial companies. Recently, section 6(1) has been increasingly used by individuals and commercial entities as an alternative to or alongside civil litigation.
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