The Law Society of England and Wales, R (on the application of) v The Lord Chancellor

Delegated regulations made under section 20 of the Prosecution of Offences Act 1985 must give effect to the statutory compensation principle. Under section 16(6), a successful defendant is entitled to an amount reasonably sufficient to compensate for expenses properly incurred, assessed by reference to the prevailing market for the relevant legal services.

The Lord Chancellor cannot use delegated powers to impose a blanket cap at legal-aid rates in order to save public money, shift costs to acquitted defendants or reshape the private legal-services market. A fundamental change to that compensation principle requires primary legislation.

The claimant sought judicial review of a scheme made by the Lord Chancellor for awarding costs from central funds to defendants who successfully resisted criminal proceedings. The scheme was implemented by the Costs in Criminal Cases (General) (Amendment) Regulations 2009 under section 20 of the Prosecution of Offences Act 1985.

The scheme limited costs determined by an appropriate authority to rates no higher than legal-aid rates. The claimant argued that this unlawfully departed from the compensation principle in section 16(6), was irrationally discriminatory, interfered with fair-trial rights and rested on a flawed assessment of its effects. The central issue was whether the Lord Chancellor could pursue those objectives through delegated regulations.

Claim upheld on Ground 1; remaining grounds dismissed. Elias LJ gave the judgment, with Keith J agreeing.

1. The power under section 20 of the Prosecution of Offences Act 1985 had to be used to carry into effect the principles in Part II, including the compensation principle in section 16(6). Applying Padfield v Minister of Agriculture, Fisheries and Foods [1968] A.C. 997, the Lord Chancellor could not exercise the delegated power for objectives outside the statutory purpose.

2. Section 16(6) required payment of an amount reasonably sufficient to compensate a successful defendant for expenses properly incurred. The relevant question was whether the expenditure was reasonable in the prevailing market, not whether cheaper representation might have been obtained, what rate the Lord Chancellor considered a reasonable reward, or what the public purse could afford. The reasoning in Balchin v South Western Magistrates’ Court [2008] EWHC 3037 (Admin), R v The South Devon Magistrates Court ex parte Hallett CCO/3786/99 and KPMG Peat Marwick McLintock v HLT Group Ltd [1995] 2 All E R 180 supported that approach.

3. Section 16(7) permitted departure from full compensation only in exceptional cases and required a case-specific assessment of what was just and reasonable. It did not authorise general regulations that systematically produced payments below reasonably incurred costs.

4. The legal-aid cap was therefore unlawful. The Lord Chancellor’s purposes of securing savings, shifting part of the burden to successful defendants and influencing market rates could not lawfully be achieved through these regulations. Those objectives would require primary legislation.

5. On the alternative grounds, the difference between summary and detailed assessment was not irrational if the scheme were otherwise lawful. The different treatment of defendants and private prosecutors also had rational public-interest justifications. The Article 6 complaint failed for want of sufficient evidence that serious defendants would thereby be left without representation. Failure to answer every peripheral consultation point was not itself unlawful; a fundamentally flawed factual basis could be, as illustrated by R (on the application of Lunt) v Liverpool City Council [2009] EWHC 2356, but no such fundamental error was shown.

6. The court considered that the unlawfulness lay in the rates and scales document rather than the 2009 Regulations themselves. It was minded to declare the scheme unlawful and quash the rates and scales, subject to further argument on the final remedy.