Ezz, R (on the application of) v HM Treasury

A derogation permitting access to frozen assets for reasonable legal fees must be interpreted restrictively and in light of the purpose of the asset-freezing regime. The competent authority must scrutinise claimed fees carefully, but need not identify the only reasonable figure. It may adopt a rational benchmark and adjust it to reflect the relevant local market. A purchasing-power-parity conversion is not irrational merely because specialist legal services may not track general living costs, particularly where the applicant supplies no reliable evidence of comparable local fees.

The claimant, who was designated under European Union measures freezing assets connected with the alleged misappropriation of Egyptian state funds, sought judicial review of HM Treasury’s method for licensing payment of his Egyptian criminal defence lawyers. HM Treasury used maximum London Senior Courts Costs Office rates and adjusted them by a purchasing-power-parity conversion rate.

The claimant argued that the conversion was irrational because the specialist legal services required were subject to different market conditions from ordinary living costs. The court also considered whether the claim was out of time, but found it unnecessary to determine that issue.

1. Permission and outcome. Permission to bring the claim was granted, but the claim for judicial review was dismissed.
2. Applicable legal framework. Article 4(1)(b) of the EU Regulation is a derogation from the general freezing provisions in Article 2. It must therefore be interpreted restrictively and in light of the regime’s aims. HM Treasury had to determine what fees were reasonable, rather than simply accept the fees quoted or their bona fides. The purpose of the regime, including recovery of misappropriated state funds while respecting fair-trial rights, justified careful scrutiny of applications.
3. Rationality. The rationality of the purchasing-power-parity adjustment could not sensibly be isolated from the licensing decision as a whole. The applicant bore the onus of showing that the claimed fees were reasonable. Here, despite repeated requests, he produced no reliable evidence of comparable fees charged by other Egyptian lawyers for similar corporate-crime work. The evidence consisted largely of generalised assertions, and HM Treasury’s own enquiries produced limited assistance.
4. HM Treasury had first adopted the maximum London legal rates as a benchmark, which recognised the importance of the proceedings. In the absence of direct evidence about the Egyptian market, adjusting that benchmark by an internationally accepted purchasing-power-parity ratio was within the range of reasonable responses. The fact that specialist legal services might not correspond precisely with the basket of goods and services used to calculate the ratio did not make the approach irrational.
5. The court did not need to decide whether the legally reviewable decision was made by the letter of 20 July 2015 or the letter of 18 August 2015. The objective meaning of the correspondence, rather than the ministerial purpose behind it, was the relevant question.