Evans & Ors v The Serious Fraud Office

For a costs order under section 19 of the Prosecution of Offences Act 1985, the court must identify an unnecessary or improper act or omission, resulting costs, and whether to order payment. “Improper” conduct is conduct that would not have occurred had the party conducted the case properly. This differs from the wasted-costs jurisdiction against legal representatives.

A costs application against a public prosecutor is exceptional and summary. A charging decision will generally be improper only if no reasonable prosecutor could have made it. However, a prosecutor acts improperly if, after decisive legal deficiencies are exposed, it persists with legally unsustainable and fundamentally shifting cases without new material. Indemnity costs may be appropriate where such conduct takes High Court litigation outside the norm.

The Serious Fraud Office charged six applicants with conspiracy to defraud arising from arrangements under which mining-site freeholds and restoration obligations were transferred from Celtic Energy Ltd to British Virgin Islands companies.

Hickinbottom J dismissed the charge before arraignment in the Crown Court: R v Evans and Others [2014] EW Misc 5 (Crown C). The SFO then sought a voluntary bill of indictment on altered legal bases. Fulford LJ refused that application: Evans & Others v Serious Fraud Office [2014] EWHC 3803 (QB).

Five applicants sought costs. The issues were whether the SFO’s conduct satisfied section 19 of the Prosecution of Offences Act 1985 and whether the voluntary-bill costs should be assessed on the standard or indemnity basis.

1. The applications succeeded. The court made a section 19 order for the five applicants’ costs of the criminal proceedings from, and including, the hearing on 23 September 2013. The SFO was also ordered to pay the voluntary-bill costs on the indemnity basis, subject to assessment.

2. The applicable section 19 test was that in Director of Public Prosecutions v Denning (1992) 94 Cr App R 272. An act or omission is improper if it would not have occurred had the party conducted its case properly. That test is contextual and must not be replaced by the stricter test governing wasted costs against individual representatives under section 19A. The contrary observations in R (Director of Public Prosecutions) v Sheffield Crown Court [2014] EWHC 2014 (Admin) were obiter and were not followed.

3. Section 19 remains a summary and exceptional remedy against a public prosecutor. It must not become a collateral appeal against prosecutorial judgment. A decision to charge will generally be improper only where no reasonable prosecutor could have made it. The SFO’s decision to investigate and charge was not improper, given the available evidence, the apparent dishonesty and counsel’s advice.

4. After the dismissal case was fully articulated on 23 September 2013, however, the SFO acted improperly in contesting it. There was no material change in the evidence. Its original case depended on Mr Davies’s opinion being bogus, but it was abandoned in favour of a legally incompatible case premised on obligations having transferred. Later attempts to identify unlawfulness were either doomed in law or advanced too late. No reasonable prosecutor would have continued in that manner.

5. The instruction of counsel who had advised potential prosecution witnesses gave proper cause for concern, but the summary evidence did not justify a separate finding that the SFO had acted improperly on that ground.

6. The voluntary-bill application was outside the norm. It repeated the failure to analyse the legal basis of the prosecution, misunderstood the dismissal ruling, and advanced new bases that Fulford LJ held were too late and a misuse of the exceptional procedure. Those circumstances justified indemnity costs.

This first-instance costs judgment followed earlier stages in the same litigation.

• High Court (Queen’s Bench Division): Fulford LJ refused the SFO’s voluntary-bill application and remitted consequential costs matters to Hickinbottom J: Evans & Others v Serious Fraud Office [2014] EWHC 3803 (QB).
• Crown Court at Cardiff: Hickinbottom J dismissed the original conspiracy-to-defraud charge before arraignment: R v Evans and Others [2014] EW Misc 5 (Crown C); [2014] 1 WLR 2817.