R (on the application of) Allseas Group SA v Paul Sultana

On an appeal under regulation 10, a costs judge may reconsider the determination afresh and may increase or decrease the sum allowed, subject to the statutory limits on evidence and objections.

For a private prosecution, reasonably sufficient compensation is assessed by asking whether the legal representatives were reasonably chosen and whether the resulting costs were reasonable. Those questions are linked. Where a reasonable choice of central London solicitors has been made, central London rates may provide the appropriate starting point. A tendering exercise is not invariably required where it would be an empty gesture.

Guideline hourly rates are starting points, not maximum rates. They may be adjusted for time, complexity, difficulty, skill, responsibility and other relevant factors. Publicly funded CPS rates are not ordinarily a suitable comparator for privately funded prosecution costs.

Allseas Group SA privately prosecuted Paul Sultana following an alleged fraudulent investment scheme. The prosecution resulted in his conviction after a retrial. The Crown Court made an order under section 17 of the Prosecution of Offences Act 1985 for payment of prosecution costs from central funds, leaving quantification to the Legal Aid Agency’s determining officers.

Allseas claimed approximately £5 million. Following determination and redetermination under the Costs in Criminal Cases (General) Regulations 1986, the claim was reduced by more than half. Seventeen grounds of appeal were advanced, ten having been resolved by agreement.

The outstanding issues included the jurisdiction of the costs judge, solicitors’ and counsel’s hourly rates, brief fees and refreshers, research, noting briefs and internal photocopying.

1. Jurisdiction and approach. The appeal was successful in part. Regulation 10 permitted the costs judge to approach the determination afresh and to alter the amount allowed. Restrictions on new evidence and grounds applied to the appellant, not to the Lord Chancellor’s response. The costs judge could not exercise the court’s separate power under section 17(2A), which belonged to the court making the costs order. A Singh reduction could be applied to excessive time for categories of work, but not to reduce an hourly rate. Hindsight was impermissible.
2. Solicitors’ rates. The choice of Mishcon was objectively reasonable. The reasonableness of that choice necessarily informed the assessment of reasonably sufficient compensation. The absence of a tendering exercise did not itself create doubt, since tendering would have been an empty gesture in the circumstances. The central London GHRs were therefore the appropriate starting point. They were adjusted for the passage of time and then increased to reflect the exceptional complexity, scale, difficulty, responsibility and volume of work. Rates of £400 for Grade A, £300 for Grade B, £250 for Grade C and £150 for Grade D were allowed, subject to lower rates actually claimed.
3. Counsel. Publicly funded CPS rates were not an appropriate comparator. Where tendering was inadequate, doubt was to be resolved by reference to the guidance in Evans v Serious Fraud Office, including the identified private-funding rates. Mr Laidlaw’s negotiated hourly rate and trial brief fees were reasonable. His refreshers were allowed for sitting and qualifying non-sitting days, with reduced sums for short hearings. Mr Smitten’s brief and refresher fees were limited to one half of the amounts allowed for leading counsel because there had been no market testing. His pre-brief work was allowed at the applicable hourly rate.
4. Other items. A fee for Ms Lloyd’s document review was increased. One hour of unusual legal research was allowed; ordinary research within the solicitor’s expertise was treated as overhead. The noting briefs were allowed at the agreed daily rate. Internal photocopying was disallowed as an overhead in the absence of exceptional circumstances.
5. The remaining assessment was to be calculated consistently with those conclusions, with the parties to agree the number of qualifying refreshers where possible.

The appeal was brought from the Legal Aid Agency determining officer’s redetermination under regulation 9 of the Costs in Criminal Cases (General) Regulations 1986. The costs judge altered the redetermination under regulation 10.