Evans & Ors v The Serious Fraud Office [2015] EWHC 1525 (QB)

[2015] EWHC 1525 (QB)Case Nos: T20137190 & T20141089Venue IN THE CROWN COURT IN CARDIFFANDIN THE HIGH COURT OF JUSTICEQUEEN'S BENCH DIVISIONVenue Cardiff Civil Justice Centre2 Park StreetVenue CardiffCF10 1ETDate 03/06/15
Before
MR JUSTICE HICKINBOTTOM
Between
ERIC EVANSApplicantsDAVID ALAN WHITELEYApplicantFRANCES BODMANApplicantSTEPHEN DAVIESApplicantRICHARD WALTERSApplicant(6) LEIGHTON HUMPHREYSApplicantTHE SERIOUS FRAUD OFFICERespondent
Patrick Harrington QC and Benjamin Douglas-Jones(instructed by Blackfords LLP) for Eric EvansPhilip Hackett QC and David Hassall(instructed by Declan McSorley & Jon Lewis Solicitors) for David Alan Whiteley for Frances Bodman did not appear and was not representedMichael J Beloff QC, Guy Ladenburg and James Potts(instructed by Charles Russell Speechlys LLP) for Stephen DaviesNicholas Purnell QC and Jonathan Barnard(instructed by Hugh James) for Richard WaltersJohn Charles Rees QC and Jonathan Elystan Rees(instructed by de Maids) for Leighton HumphreysRichard Christie QC and Lisa Arbon-Donovan(instructed by the Serious Fraud Office) for RespondentWritten submissions: 27 February to 3 June 2015
Approved Judgment
[1]The background to the costs applications now before me is set out in my judgment dated 12 February 2015, and I need not repeat it at length here.[2]However, briefly, on 18 February 2014 in the Crown Court at Cardiff, prior to arraignment, I dismissed the single charge of conspiracy to defraud on which the Serious Fraud Office (“the SFO”) sought to try the six Applicants (now reported as R v Evans and Others [2014] EW Misc 5 (Crown C); [2014] 1 WLR 2817) (“the Dismissal Application”). I adjourned issues of costs generally. On 14 November 2014, Fulford LJ sitting as a Judge of the Queen’s Bench Division, refused the SFO’s application for a voluntary bill of indictment containing two counts, one in identical terms to that which I dismissed and a second count, also of conspiracy to defraud but with different particulars (now reported as Evans & Others v Serious Fraud Office [2014] EWHC 3803 (QB); [2015] Lloyd’s Rep FC 59) (“the VB Application”). Fulford LJ remitted consequential matters, including costs, to me.[3]The Applicants each applied for one or more of the following costs orders against the SFO, namely: i) in respect of the Dismissal Application, an order under section 16 of the Prosecution of Offences Act 1985 (“the 1985 Act”); ii) also in respect of the Dismissal Application, an order under section 19 of the 1985 Act; and iii) in respect of the VB Application, an order that the SFO pays his costs on the indemnity basis. Unless otherwise indicated, in this judgment “section 16” and “section 19” are references to section 16 and section 19 of the 1985 Act respectively.[4]The costs claimed under(i) are small and largely uncontroversial. In relation to(ii) and (iii), on 12 February 2015, following a three-day hearing, I handed down judgment on two preliminary issues (now reported as [2015] EWHC 263 (QB)) (“the Costs Preliminary Issues Ruling”), finding as follows: i) the statutory precondition for the exercise of the court’s jurisdiction under section 19 of the 1985 Act (i.e. that the SFO as prosecutor was responsible for an “unnecessary or improper act or omission” that caused the Applicant to incur costs) was satisfied, and the costs so caused were the relevant Applicant’s costs of the criminal proceedings from 23 September 2013; and ii) the Applicant’s costs of the VB Application should be assessed on an indemnity basis.[5]It had been agreed that submissions on quantum should await the judgment on the preliminary issues, as it was expected that I could deal with any further issues (notably the assessment of any costs found to be due, and any interim payments to be made in respect of the costs of the VB Application) on the basis of written submissions only.[6]Thus, since handing down that judgment, I have received written submissions on the three matters that remain to be dealt with by me, namely: i) the assessment of the costs to be paid under section 19 of the 1985 Act; ii) the assessment of the costs of the costs hearing; and iii) the amount of any interim payment on account of the costs of the VB Application.[7]Very weighty submissions have been lodged, which set out the respective parties’ positions more than clearly. I am quite satisfied that, with one exception, following determination of the preliminary issues, as expected I can deal with the issues between the parties and make the required determinations properly and justly on the basis of the oral and written submissions to date, without a further hearing; and that, given the historic levels of costs at every stage of this case to date, a further hearing would be disproportionate and is unnecessary. The one exception is the section 19 claim made on behalf of Mr Whiteley. For the reasons I briefly set out below (paragraphs 53-58), that claim gives rise to a point of law which has been the subject of very recent further submissions – including submissions made today – and, in my view, it requires further consideration. I have therefore adjourned that issue to be considered at an oral hearing.

Assessment of the Section 19 Costs: Relevant Provisions

[8]As I explained in the Costs Preliminary Issues Ruling (at [85]-[87]), section 16 provides that, where a defendant is charged and he successfully defends that charge, he is generally entitled to his defence costs from central funds. However, in respect of criminal proceedings commenced between 1 October 2012 and 27 January 2014 – including, as is common ground, these proceedings – paragraph 2(2) of Schedule 10 to the Legal Aid, Sentencing and Punishment of Offenders Act 2012 inserted a section 16A(1) into the 1985 Act, which provides that, subject to exceptions not presently relevant:
“A defendant’s costs order may not require the payment out of central funds of an amount that includes an amount in respect of the accused’s legal costs…”
. Therefore, in respect of criminal proceedings commenced in that period, under section 16, a successful defendant was able to recover only out-of-pocket expenses, such as fares to court. Section 16 costs are thus limited in these proceedings. (For completeness, I should say that the Costs in Criminal Cases (Legal Costs) (Exceptions) Regulations inserted a new section 16A(5A) into the 1985 Act under which, for proceedings commenced after 27 January 2014, legal costs are again recoverable but effectively only at legal aid rates.)[9]However, the 1985 Act provides for a number of special costs orders. Section 19 – the relevant statutory provision in this case – provides for costs orders against a party where costs have been incurred as a result of unnecessary acts or omissions on his part, in the following terms:
“The Lord Chancellor may by regulations make provision empowering magistrates’ courts, the Crown Court and the Court of Appeal, in any case where the court is satisfied that one party to criminal proceedings has incurred costs as a result of an unnecessary or improper act or omission by, or on behalf of, another party to the proceedings, to make an order as to the payment of those costs.”
[10]The relevant regulations are the Costs in Criminal Cases (General) Regulations 1986 (SI 1996 No 1335) (“the 1986 Regulations”). Regulation 3 provides (so far as relevant):
“(1) … [W]here at any time during criminal proceedings [the court] is satisfied that costs have been incurred in respect of the proceedings by one of the parties as a result of an unnecessary or improper act or omission by, or on behalf of, another party to the proceedings, the court may, after hearing the parties, order that all or part of the costs so incurred by that party shall be paid to him by the other party. (2) Before making an order under paragraph (1), the court shall take into account any other order as to costs (including a legal aid order) which has been made in respect of the proceedings. (3) An order made under paragraph (1) shall specify the amount of costs to be paid in pursuance of the order…”
[11]That regulation is complemented by CrimPR rule 76, which sets out the relevant procedure (see CrimPR rule 76.1(1)(a)). Rule 76.8 concerns the procedure in respect of “Costs resulting from unnecessary or improper act etc”, i.e. an order under section 19. Rule 76.8(7), reflecting regulation 3(3) of the 1986 Regulations, specifies that “if the court makes an order, it must assess the amount itself…”. Rule 76.8(5) provides:
“Where the court considers making an order on its own initiative, it must— (a) identify the party against whom it proposes making that order; and (b) specify – (i) the relevant act or omission, (ii) the reasons why that act or omission meets the criteria for making an order, and (iii) with the assistance of the party who incurred the costs, the amount involved.” (a) identify the party against whom it proposes making that order; and (b) specify – (i) the relevant act or omission, (ii) the reasons why that act or omission meets the criteria for making an order, and (iii) with the assistance of the party who incurred the costs, the amount involved.”
[12]However, particularly relevant to the matters before me is CrimPR rule 76.2, “Costs orders: general rules”, which applies to all costs orders including those made under section 19. That rule provides, so far as relevant to these applications:
“(3) In deciding what order, if any, to make about costs, the court must have regard to all the circumstances, including – (a) the conduct of all the parties; and (b) any costs order already made. (4) If the court makes an order about costs, it must – (a) specify who must, or must not, pay what, to whom; and (b) identify the legislation under which the order is made, where there is a choice of powers. (5) The court must give reasons if it – (a) refuses an application for a costs order; or (b) rejects representations opposing a costs order. (6) If the court makes an order for the payment of costs – (a) the general rule is that it must be for an amount that is sufficient reasonably to compensate the recipient for costs— (i) actually, reasonably and properly incurred, and (ii) reasonable in amount; but (b) the court may order the payment of— (i) a proportion of that amount, (ii) a stated amount less than that amount, (iii) costs from or until a certain date only, (iv) costs relating only to particular steps taken, or (v) costs relating only to a distinct part of the case. (7) On an assessment of the amount of costs, relevant factors include – (a) the conduct of all the parties; (b) the particular complexity of the matter or the difficulty or novelty of the questions raised; (c) the skill, effort, specialised knowledge and responsibility involved; (d) the time spent on the case; (e) the place where and the circumstances in which work or any part of it was done; and (f) any direction or observations by the court that made the costs order.” (a) the conduct of all the parties; and (b) any costs order already made. (a) specify who must, or must not, pay what, to whom; and (b) identify the legislation under which the order is made, where there is a choice of powers. (a) refuses an application for a costs order; or (b) rejects representations opposing a costs order. (a) the general rule is that it must be for an amount that is sufficient reasonably to compensate the recipient for costs— (i) actually, reasonably and properly incurred, and (ii) reasonable in amount; but (b) the court may order the payment of— (i) a proportion of that amount, (ii) a stated amount less than that amount, (iii) costs from or until a certain date only, (iv) costs relating only to particular steps taken, or (v) costs relating only to a distinct part of the case. (a) the conduct of all the parties; (b) the particular complexity of the matter or the difficulty or novelty of the questions raised; (c) the skill, effort, specialised knowledge and responsibility involved; (d) the time spent on the case; (e) the place where and the circumstances in which work or any part of it was done; and (f) any direction or observations by the court that made the costs order.”
[13]Rule 76 is reinforced by the Lord Chief Justice’s Practice Direction (Costs in Criminal Proceedings) [2013] EWCA Crim 1632 (“the Costs PD”). Reflecting the analysis of Lord Woolf CJ in R (HM Commissioners of Customs and Excise) v Leicester Crown Court [2001] EWHC 33 (Admin) at [12]), paragraph 4.1 states:
“The court may find it helpful to adopt a three-stage approach (a) Has there been an unnecessary or improper act omission? (b) As a result have any costs been incurred by another party? (c) If the answers to (a) and (b) are ‘yes’, should the court exercise its discretion to order the party responsible to meet the whole or any part of the relevant costs, and if so what specific sum is involved?”
. In relation to the section 19 applications before me, the preliminary issues left stage (c), i.e. the assessment of the specific sum.[14]Given the difference between the amounts of costs claimed and those conceded by the SFO in this case, Mr Richard Christie QC and Miss Lisa Arbon-Donovan for the SFO urged me to employ the services of the National Taxing Team (“the NTT”) or the Senior Court Costs Office (“the SCCO”) to make enquiries and prepare a report on the likely amount of the costs incurred by each of the relevant Applicants (paragraphs 3-8 of their Written Submissions dated 23 March 2015). In support of that submission, they relied upon paragraph 4.2.6 of the Costs PD, which provides, in the context of wasted costs orders under section 19A of the 1985 Act:
“Though the court cannot delegate its decision to the appropriate authority, it may require the appropriate officer of the court to make enquiries and inform the court as to the likely amount of costs incurred. By [CrimPR rule 76.9(5)], the court is entitled to the assistance in this respect of the party who incurred the costs incurred.”
[15]CrimPR rule 76.9(5) is in the same terms as CrimPR rule 76.8(5) quoted above, save that, in (a), it refers to “the representative [rather than ‘party’] against whom it proposes making that order”.[16]Mr Christie and Miss Arbon-Donovan submit that: i) Although both paragraph 4.2.6 of the Costs PD and CrimPR rule 79 concern wasted costs orders against legal representatives under section 19A, they have been treated as applying to section 19, e.g. in R v Thuraisamy Pathmanabhan in which, in a section 19 application at Southwark Crown Court in 2013, they say that His Honour Judge McCreath asked for some assistance from the NTT – although I have not been provided with any details of the assistance requested or given. ii) In any event, paragraph 1.2.4 of the Costs PD (which applies generally) states: “… Where the court is required to specify the amount of costs to be paid it cannot delegate the decision, but may require the appropriate officer of the court to make enquiries to inform the court as to the costs incurred, and may adjourn the proceedings for enquiries to be made if necessary. The rules provide that a party who has incurred wasted costs should provide assistance to the court as to the amount involved: [CrimPR] rule 76.8(5), 76.9(5)” iii) They submit that in this regard, as a matter of principle, no proper distinction can be drawn between section 19A and section 19.[17]However, in their Written Submissions dated 30 April 2015, Mr John Charles Rees QC and Mr Jonathan Elystan Rees for Mr Humphreys – supported to an extent by other Applicants – submitted that the jurisdiction to refer a matter to the NTT or SCCO is anything but clear, in terms of scope or even existence. The Crown Court, although a senior court, is a creature of statute and the status of any inherent jurisdiction is therefore, at best, dubious. In respect of its statutory powers, CrimPR rules 76.8(5) and 76.9(5) apply only to cases in which the court is considering making an order on its own motion, not (as in this case) on an application by one or more defendants. Further, the jurisdiction appears to be restricted to one in which the relevant officer is asked to inform the court of the amount of costs in fact incurred by the defendants – clear in this case – rather than (e.g.) to assist with the assessment of the amount that it would be reasonable for them to have incurred, which is the non-delegable function of the Crown Court judge.[18]In the event, I do not have to determine this issue of jurisdiction: I am confident that, on the basis of the material the parties have lodged, I am able properly and justly to assess the section 19 costs of the relevant defendants. Therefore, I have not sought the assistance of the NTT or the SCCO. However, given that further section 19 applications in which significant sums are claimed are likely to arise in the future – particularly with the continuing restriction in respect of section 16 costs – the jurisdiction of Crown Court judges to seek assistance from the NTT and/or the SCCO when required to assess section 19 costs may well be worthy of further consideration by the Criminal Procedure Rules Committee (or, possibly, by the Lord Chief Justice in the context of the Costs PD), so that the scope of any such jurisdiction is clarified.

Section 19 Assessment: The Correct Approach

[19]There was much common ground with regard to the correct approach of the court in assessing costs under section 19.[20]On the basis of the relevant provisions of the statutory scheme, the following propositions can be made. i) If making a section 19 order, the court has to order that a specified amount is paid by one party to another party (regulation 3(3) of the 1986 Regulations and CrimPR rule 76.9(5)(a)). This requires the judge to assess the costs to be paid (CrimPR rule 76.8(7)). ii) Unless the judge considers it appropriate to depart from the general rule (and gives reasons for doing so), the assessment must be of an amount that reasonably compensates the receiving party for costs “actually, reasonably and properly incurred” as a result of the unnecessary or improper act or omission identified, and “reasonable in amount”, in this context “reasonableness” incorporating a degree of proportionality. Where, as in this case, there is no evidence that any costs claimed have not been incurred or that any costs have been improperly incurred, the assessment is thus of an amount that reasonably compensates the receiving party for costs reasonably incurred as a result of the identified unnecessary or improper act(s) or omission(s). iii) The statutory scheme envisages a summary assessment, adopting a broad-brush approach. Unlike a summary assessment of costs in civil proceedings, there is no fixed procedure; and the judge may adopt any procedure that gives all relevant parties a fair opportunity to make representations. iv) The judge must satisfy himself that the amounts claimed do not offend the indemnity principle. This is most easily done by the relevant receiving party lodging a certificate in the usual form, confirming that the sums claimed do not exceed the sums charged to the client. v) In making the assessment, the judge must take into account all relevant factors, including those set out in CrimPR rule 76.2(7). vi) I cannot accept the contention made on behalf of the SFO that, as the conduct of the prosecutor triggers the section 19 jurisdiction, conduct should not be taken into account when making an assessment of the specific sum to be paid: the conduct of the paying party is expressly included as a relevant factor in “an assessment of the amount of costs” (CrimPR 76.2(7)(a): emphasis added) as well as being the trigger for a section 19 order. Conduct is a potent factor in assessing the relevant amount of costs where it has directly or indirectly led to the expenditure of additional costs. vii) In making the assessment, the judge has a very wide discretion. There is no appeal: his determination will only be subject to challenge on public law grounds. viii) The judge is required to give reasons for his decision; but in the context of the fact that he is making a broad-brush summary assessment. His reasons need therefore cover only the main issues between the parties. The judge does not explain why he has come to the precise figure to which he has come – yet alone descend to the consideration of individual items that would be appropriate in an assessment by a taxing authority – so long as the parties can understand broadly why he considers that figure reasonably to compensate the receiving party for costs reasonably incurred as a result of the identified unnecessary or improper act(s) or omission(s). There is simply no requirement that a receiving party should give the detail required on a detailed assessment, and the judge should not be drawn into performing anything akin to a detailed assessment: indeed, I echo the comments of His Honour Judge Eccles in R v Binning (Unreported, Oxford Crown Court 29 May 2014) in which he deprecated “any practice in criminal cases that increases costs yet further by the drafting of bills and the carrying in of detailed objections”. ix) The costs of making an application under section 19 (or the costs of responding to an indication by the court of its own motion that it is considering a section 19 order) are costs which may be treated as incurred as a result of the identified unnecessary or improper act or omission, and so may themselves be claimed under section 19.

Section 19 Assessment: The Relevant Factors in this Case

[21]The relevant factors in the assessment before me include: i) The conduct of the parties in respect of the relevant criminal proceedings. As Fulford LJ and I both found, the SFO failed to identify the legal underpinnings of the charges against the Applicants, “and it instead varied its case in law against [them] as the arguments unfolded and in response to [my] restrained and penetrating enquiries” (VB Ruling at [93]). The result was that the SFO was forced to concede at the Dismissal Hearing that the case it had brought to the Crown Court had no realistic prospect of success. Thereafter:
“167. … Having accepted that the case as it had been sent to the Crown Court was unarguable, the SFO continued to fail to analyse the legal case against the Applicants with appropriate rigour, casting round for some means of saving the case and grasping at a succession of straws in the form of cases with, if anything, decreasing rather than increasing legal coherence and merit. 168. In my judgment, this is a quite exceptional case. This was not simply an error of judgment: once the dismissal application had been formally notified and its essential basis set out, no reasonable prosecutor in the shoes of the SFO would have contested that application in the manner that the SFO in fact did.” (Costs Preliminary Issues Ruling, at [167]-[168]). In particular, the first, late-abandoned iteration of the case involved novel and complex issues of planning and property law which required the retention of specialist counsel over and above the criminal counsel retained. The SFO retained specialist Chancery counsel: each of the Applicants clearly acted reasonably in retaining such counsel themselves. Given the novelty of the issues raised, the importance of the issues to the SFO’s case and the different ways in which those legal issues bore upon the various Applicants, I am unimpressed by the contention that the Applicants acted unreasonably in not retaining the same counsel (or, at least, acted unreasonably in each retaining separate counsel) to deal with these issues. As I observed in the Costs Preliminary Issues Ruling at [154(vi)], as a result of the SFO abandoning the first iteration of its case, which had raised the planning and property issues upon which specialist counsel had been instructed, “all of the expenditure of costs by the Applicants upon this issue were entirely wasted, in the sense that the issues to which the costs went did not arise in the case after the first iteration had been abandoned.” ii) Complexity and novelty of the case. The dismissal hearing did not only involve novel and complex issues of planning and property law, it involved similarly challenging issues of criminal law, notably the scope of conspiracy to defraud. Within that, the SFO contended, entirely novelly, that a conspiracy to defraud could be constituted by lawful means to a lawful end. Because of the significance of the Dismissal Ruling on this point, it has been widely reported (including at [2014] 1 WLR 2817). iii) Skill etc of those involved. As I have indicated, the Dismissal Hearing involved particularly challenging issues of both criminal law, and planning/property law, which required legal representatives (but notably counsel) of particular experience and expertise. iv) Time. I shall deal with the time spent when I consider the individual claims. v) Place and circumstances. The SFO urged that it be dealt with in London. There was a direction from the court that the case be heard in Cardiff. In the circumstances, although appropriate solicitors and even counsel may well have been available in Wales, it was clearly reasonable for those Applicants who instructed legal representatives in London to do so. vi) Any direction or observations of the court. See (i) above. vii) The seriousness of the charge. The Applicants included two well-established South Wales businessmen, three solicitors (two of whom were partners in a well-established South Wales firm) and a Queen’s Counsel. The charge was in respect of a fraud involving approximately £150m. Each of the Applicants was alleged to have made significant personal benefit from the fraud. Had the Applicants been found guilty, each would have faced a considerable prison sentence. Furthermore, the charge involved open cast mining in West Wales, in which the Welsh Government, local government and the local community had a deep interest. In context, the allegation was gravely serious, such that “proportionality” adds little to “reasonableness”
.

Section 19 Assessment: Rates etc

[22]In relation to the sums claimed, a substantial part is of course attributable to counsel’s fees and solicitors’ costs. Whilst of course, in the open market, it is open to a solicitor and his client to agree the scope of work that will be done, and any package of charges for solicitors and counsel in respect of that work, such charges are only recoverable from an opponent if they are reasonably incurred and reasonable in amount.[23]With regard to counsel’s fees, the assessment of criminal costs is still usually based upon a basic brief fee and refreshers (see Part II of the Taxing Officers’ Notes for Guidance (2002)), with hours of preparation being only one factor to be taken into account rather than forming the basis of a mathematical calculation. On an assessment, a determining officer “must, in the exercise of his discretion, determine a sum which, with the refreshers and any subsidiary fees he considers proper, would provide reasonable remuneration” (paragraph 2.7 of the Taxing Officers’ Notes for Guidance). In whatever form counsel’s fees have been agreed, on any assessment it is the court’s primary task to assess reasonable remuneration for the job.[24]Guidance as to the correct approach to counsel’s fees was given by Pennycuick J in Simpsons Motor Sales (London) Limited v Hendon Corporation [1965] 1 WLR 112, a review of a taxation of the defendant corporation’s bill of costs. He said (at page 118E-F):
“… [O]ne must envisage an hypothetical counsel capable of conducting the particular case effectively but unable to or unwilling to insist on the particularly high fee sometimes demanded by counsel of pre-eminent reputation. One must then estimate what fee this hypothetical character would be content to take on the brief…. There is, in the nature of things, no precise standard of measurement…”
. The judge went on to say that the assessment of the fee would be fact-specific (“… the same measure may not always be applicable in the infinite variety of cases which can arise…”, at page 118G); and that the appropriate figure must be assessed by the master or judge “using his knowledge and experience” (also at page 118G).[25]I was referred to a number of other authorities. Because they are necessarily fact specific, they are of limited assistance, although the following points can be drawn from them. i) In the assessment of publicly funded work, it is not appropriate to use privately funded comparators: because privately funded work is essentially market driven, whilst publicly funded work is closely regulated (The Lord Chancellor v John Charles Rees QC [2008] EWHC 3168 (QB)). Similarly, it is not appropriate to use publicly funded comparators when assessing privately funded costs (see R v Orrow [2011] 3 Costs LR 519 (“Orrow”)). ii) Nor do I consider that the time generally allowed for reading documents in Very High Cost Crime Legal Aid cases provides a reliable comparator for reading and digesting the documents in this case, which comprised to a large extent highly technical commercial, planning and property documents. iii) The courts have recognised that those practising in (e.g.) the Commercial Court can command higher fees than those practising in the criminal courts (Higgs v Camden [2003] EWHC 15 (QB) at [49] per Fulford J as he then was); and, indeed, generally those practising in criminal work can reasonably expect to receive less payment for their work than their civil counterparts (R v Martin [2007] 1 Costs LR 128). iv) The fact that insurers have monitored and approved counsel and solicitors’ charges as a case progressed is a factor that the court may take into account in determining whether those charges are reasonable, and indeed may be an important factor (Orrow). v) In the case before me, some of the leading criminal counsel involved were paid at rates of £600-750. Looking at the cases as a whole, they do not support the proposition that rates at that level equate with “the going rate” for even the most complex of criminal cases. Whilst the facts were very different, in R v Zinga [2014] EWCA Crim 1823, a highly complex and lengthy prosecution, an hourly rate of £220 was determined reasonable for the senior junior for the private prosecutor – particularly experienced in the field – being the equivalent of not more than £440 for a leading counsel. In Orrow, an hourly rate of £400 was approved for a privately instructed defence leading counsel in a corporate manslaughter case. Mr Rees QC says, from his own experience, that an hourly rate of £850 has been charged in criminal cases, including by the leading counsel who acted for the respondent in The Lord Chancellor v John Charles Rees QC; but in none of the reported cases to which I was referred does a figure of £500 or more appear to have been approved on an assessment.[26]Whilst complexity of course may warrant a higher fee, where a case involves particularly heavy hours over a lengthy period of time, that may warrant a reduction in the hourly rate to reflect the likely if not guaranteed hours involved. On the other hand, the rate must also reflect the inability of counsel to take on other work during the relevant period, if that indeed be the case.[27]In the case before me, the leading and junior counsel who appeared for Stephen Davies QC did so on the basis of an hourly rate of £250 and £125 respectively. The SFO, rightly, does not suggest that those rates are unreasonable: they are rates which were agreed by the Bar Mutual Indemnity Fund who supported Mr Davies’ defence of the charge, which are recognised as being less than commercial rates to which counsel agree because they are acting for a fellow barrister. As such, nor are they benchmark rates.[28]The leading counsel for the other Applicants worked on a rate of between £600 (Mr Patrick Harrington QC for Mr Evans) and £750 (Mr Phillip Hackett QC for Mr Whiteley, Mr John Kelsey-Fry QC for Mr Walters, and Mr Rees QC for Mr Humphreys). Junior counsel worked on the following rates: £375 (Mr David Hassall for Mr Whiteley), £350 (Mr Ben Douglas-Jones for Mr Evans), £300 (Mr Jonathan Barnard for Mr Walters), and £250 (Mr Rees for Mr Humphreys). Some counsel have charged a lower rate for travel time etc.[29]I accept that this case warranted counsel of particular calibre, experience and expertise. However, on the basis of my knowledge of the case – and my knowledge and experience of counsel’s fees generally – I do not consider that the rates charged are reasonable in the context of a section 19 assessment. I consider that the hypothetical counsel referred to by Pennycuick J in Simpsons Motors would have reasonably been charged out at approximately £480 per hour, and his hypothetical junior at a rate of approximately £240. I stress that I consider those rates are “top end” rates for criminal work: and, whilst I do not say that in another case they might not be exceeded – although, I suspect, not by very much – they take into account the especial experience and expertise of particularly eminent leading counsel, from which flows more efficient working than would be the case with less experienced and expert counsel.[30]With regard to solicitors’ charges, although designed for summary assessment in civil claims, the starting point is the guideline hourly rates for summary assessment. For the reasons I have given, I consider those Applicants who instructed solicitors in London were reasonable to do so; and, given the complexity of the issues involved, where a solicitor has done particularly challenging work, higher rates might be warranted. However, the solicitors’ hours claimed in this case have to be considered in the light of the heavy input from counsel – particularly in respect of the dismissal application, which involved essentially legal issues, albeit against a complex factual background.

Interim Payments: The Law

[31]Costs in respect of the VB Application are subject to the Civil Procedure Rules and, following the Costs Preliminary Issues Ruling, the SFO has been ordered to pay the costs of the relevant Applicants, those costs to be the subject of a detailed assessment on the indemnity basis in due course.[32]CPR rule 44(2)(8) provides:
“Where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs unless there is good reason not to do so.”
In this case, the SFO do not contend that there is any good reason not to make such an order; indeed, in its response to the application it “readily [accepted] that an interim payment is appropriate in respect of the VB [Application] costs” (paragraph 50 of Written Submissions dated 23 March 2015).[33]In assessing a “reasonable sum” for these purposes, although in the past the courts have calculated the figure in a mathematical way (e.g. in Mars UK Limited v Teknowledge Limited [1999] 2 Costs LR 44, where Jacob J made an interim order in an amount comprising 60% of the sum he considered likely to be awarded on a detailed assessment), it is now clear that the court is not bound to apply such an approach. The current view is that, whilst adopting a generally cautious and conservative approach, the court does not have to determine the irreducible minimum that is likely to be ordered but rather a reasonable estimate of what is likely – some cases say, “very likely” or even “reasonably certain” – to be awarded (see Dyson Appliances Limited v Hoover Limited [2003] EWHC 624 (Ch), United Airlines Inc v United Airlines Limited [2011] EWHC 2411 (Ch) and Blakemore v Cummings [2009] EWCA Civ 1276). In making that assessment, the court has a wide discretion, a number of the cases referring to the necessarily “rough and ready” basis upon which the assessment needs to be made. The taxing officer who performs the detailed assessment is, of course, not bound or guided in any way by the interim order made – which is one reason why an interim order should be conservative, as it may be that the taxing officer will in due course take a different, more stringent line with regard to assessment of the costs as a whole than does the judge making the interim order. The Individual Claims:

Introduction

[34]I now turn to the individual claims.[35]In respect of the section 19 claims, as I have indicated (see paragraph 20(ix) above), it is open to defendants to claim the costs of the section 19 applications themselves as section 19 costs. In respect of the applications in respect of the costs preliminary issues, it would be all but impossible to tease out the costs spent on the section 19 application (the large majority) from the costs of the application that the VB Hearing costs be paid on an indemnity basis (the small minority), I propose summarily to assess the costs of both, initially together. Whilst the assessments have different foundations – the former in section 19 and the CrimPR, and the latter in the CPR – that appears to me to be the most efficient course, to which no party objected. I then propose to apportion the aggregate sum 80% as to the section 19 application and 20% as to the VB application for indemnity costs, to reflect the time and effort spent on each.[36]Therefore, in respect of each Applicant, I shall deal with in turn: i) any section 16 claim made; ii) any section 19 claim made in respect of the Dismissal Application; iii) any claim made for the costs of the costs applications (including any application under section 19, and any application that the costs of the VB Application be on an indemnity basis); and iv) any claim for an interim payment of costs of the VB Application.[37]In respect of VAT, for Mr Davies and Mr Walters, VAT is recoverable and so is not claimed against the SFO. For Mr Evans, Mr Whiteley and Mr Humphreys, VAT is not otherwise recoverable and so is claimed from the SFO.[38]Most of the Applicants have lodged certificates confirming that the charges and disbursements claimed are no higher than those charged to their clients. On all the evidence before me, I am satisfied that none of the claims breaches the indemnity principle. Eric Evans Section 16

Eric Evans

[39]Mr Evans makes a section 16 claim for £1,141.65. The only issue taken by the SFO is in respect of the claimed train fare on 14 November 2014 to a hearing in London, in the sum of £650. Assuming that to be a first class return fare from South Wales, it is unclear how the fare could have been that much. I will reduce it to £395; and make an order under section 16 in the sum of £886.65. Section 19: Dismissal Proceedings[40]Mr Evans was granted legal aid on 31 October 2013, and a section 19 claim is made only in respect of costs to that date, i.e. for the period 23 September to 31 October 2013.[41]The claim as set out in the most recent schedule is for £125,112.62, comprising £71,850 solicitors’ charges, £48,952.78 counsel’s fees and £4,309.84 disbursements (£4,122.84 copying and £187.00 travel). These figures are all VAT inclusive, as VAT is not otherwise recoverable by Mr Evans. The SFO accepts that £75,661.28 is recoverable, but no more.[42]In assessing the costs, I take into account the fact that Mr Evans played a central role in the criminal proceedings, having been the architect of the plan that the prosecution alleged was fraudulent, and consequently being the first name on the indictment.[43]The main issues raised by the SFO are as follows: i) The rates used in this paragraph are VAT exclusive. ii) As I have indicated, Mr Harrington QC was charged at £600 and Mr Douglas Jones at £300. I consider rates of £480 and £240 reasonable. The time spent by counsel is somewhat high, given that the period for which a claim is made is short: but, as the SFO accept, it is anything but grossly excessive. iii) With regard to counsel, a specific point is made that junior counsel spent 16 hours researching planning and land issues. Whilst some effort was required to ascertain that specialist counsel would be required, I accept that, in this case, that should have been clear from an early stage and perhaps without the equivalent of two days’ work. However, the amount involved is relatively small. iv) Solicitors’ charges are on the basis of a Grade B rate of £250 (travel time being reduced to £100 per hour), all three fee-earners being Grade B. The Grade B guideline rate for Cardiff Inner is £192. However,(a) no Grade A fee earner was employed on this case, warranting an uplift in the Grade B rate, at least for the most senior Grade B solicitor employed; but(b) some of the work was relatively low grade and could have been done by a lower grade fee earner such as a paralegal (although possibly at the expense of further time being spent). Overall, on rates, the solicitors’ charges are high; but not by very much. v) The SFO questions the time spent by solicitors on scheduling witness statements, exhibits and NAEs (all served in a schedule) but, whilst the time spent might be high, the need for (and reasonableness of) such an exercise is explained in the response. However, I accept that the time spent by solicitors overall appears somewhat high. vi) The SFO say that the relevant documents were provided to the defence team in digital format, and the outside copying of the documents was unnecessary – and, in any event, ought to have been included in the fee earner rates as overheads. Given the high number of hours claimed, there is a strong argument that the copying was not such as to fall outside usual overheads.[44]In all the circumstances, I consider that a reasonable sum for the section 19 order to be £97,500 inclusive of VAT. Costs of the Costs Proceedings[45]The claim is for £137,591.00 including VAT, comprising £32,160.00 solicitors’ charges, £105,431.00 counsel’s fees (including £311.00 disbursements). Mr Evans did not have the benefit of a representation order for this part of the proceedings.[46]The main issues raised by the SFO are as follows: i) Counsel’s rates: see above. ii) I accept that the costs issues were complex, novel and challenging. Whilst I do not accept that it was unreasonable for counsel (e.g.) to attend the judgment hand down with his client in the circumstances of this particular case, the SFO contend, with some force, that the amount of time spent by counsel on costs issues was nevertheless unreasonably high. Indeed, in my view, even on the basis that counsel (as opposed to solicitors) bore the brunt of this work, 92 hours of work for leading counsel and 88 hours for junior counsel seems much too high. iii) Solicitors’ rates: Both fee earners were Grade B and were charged out at £200 per hour excluding VAT. The rate for each is reasonable. iv) However, again the time spent by the solicitors on costs issues – a total of over 130 hours – is excessive, given the essentially legal nature of the issues and the obvious reliance of the solicitors on counsel which is reflected in the hours I consider reasonably spent by counsel on the matter.[47]In all the circumstances, I consider that a reasonable sum for the costs of the costs applications to be £72,500 inclusive of VAT, divided £58,000 as to the section 19 claim and £14,500 as to the VB indemnity costs application. VB Costs Interim Payment[48]On behalf of Mr Evans, £516,408.38 including VAT is claimed for the VB Application, comprising £114,645 solicitors’ charges, £393,306.70 counsel’s fees, £7,315.03 disbursements and £1,141.65 out-of-pocket expenses of Mr Evans himself. Again, Mr Evans did not have the benefit of legal aid for the VB Application.[49]In addition to the same submission with regard to counsel’s rates, the SFO submits that the amount of time spent by counsel was, again, unreasonably high: e.g. 90 hours of time spent by counsel with Mr Evans was unreasonable for an issue that was argued on the basis of legal principles not the facts; it was unreasonable for both fee earners to attend the same conferences and otherwise duplicate work with each other and with counsel; and various scheduling work was unnecessary or (if required) could have been done by a more junior member of staff. There is some force in some of those submissions; although, given the changes in the SFO case, I do not accept that it was unreasonable for a solicitor to attend the dismissal hearing.[50]I appreciate that costs will in due course be assessed on an indemnity basis. However, in my view, there is some considerable force in the contention that the hours of both counsel and solicitors seem very high.[51]Taking the cautious view that I must – and not in any way giving any indication to the taxing officer who will in due course be required to assess these costs on a detailed basis and will take his own view, on fuller information than I have – I shall order an interim payment of £200,000. I accept that that figure may, during the detailed assessment procedure, appear parsimonious; but, on the basis of the limited materials I have seen, I do not consider that I could have the requisite confidence in a higher figure at this stage. David Alan Whiteley Section 16

David Alan Whiteley

[52]Mr Whiteley makes no section 16 claim.

Section 19: Dismissal Proceedings

[53]Mr Whiteley was granted legal aid on 18 October 2013. Prior to that date, Mr Whiteley had been represented by Declan McSorley & Jon Lewis Solicitors. Their retainer came to an end on the grant of a representation order, under which Morgans Criminal Law were the appointed firm.[54]Mr Whiteley’s section 19 claim as set out in the most recent schedule is for £234,163.12, comprising £38,715.88 solicitors’ charges, £195,264 counsel’s fees and £183.24 disbursements (all figures including VAT which is not otherwise recoverable by Mr Whiteley, and therefore recoverable from the SFO). The SFO appear to accept that £107,274.58 is recoverable, but no more.[55]The main issue raised by the SFO concerns a brief fee of £200,000 (excluding VAT) which was agreed by Declan McSorley & Jon Lewis for Mr Hackett QC in June 2013 for all work leading up to the dismissal application and the basic fee for the hearing of that application. Two payments totalling £50,000 were made to Mr Hackett prior to 23 September 2013. A further sum of £50,000 was paid on 11 October 2013. When legal aid was granted, Mr Hackett did not to make a claim under the legal aid scheme; but he continued to represent Mr Whiteley, with junior counsel, Mr Hassall who was appointed under the terms of the representation order.[56]The SFO contend that they are only liable for – at most – the single instalment of Mr Hackett’s fees paid between 23 September and 18 October 2013, i.e. £50,000. Mr Whiteley seeks 80% of the brief fee for Mr Hackett as representing his fees for the relevant period, together with small amounts of the two juniors’ fees which, he says, fall within the scope of the section 19 order.[57]The correct approach to Mr Hackett’s brief fee has been the subject of further recent submissions, made at my request. Both parties appear to agree that a point of law is raised; and, after careful consideration and with some considerable regret, I consider that I cannot deal with that issue without the benefit of further submissions.[58]I shall therefore direct that Mr Whiteley’s substantive section 19 costs claim shall be set down for a short oral hearing before me, as soon as possible. Only junior counsel need attend.

Costs of the Costs Proceedings

[59]The claim is for £89,970, comprising £14,160 solicitors’ charges and £75,810 counsel’s fees (including £660.00 disbursements), all figures being VAT inclusive.[60]The main issue raised by the SFO was in relation to counsel’s hourly rates, which reduces their fees to approximately £50,000; but the SFO also raises, albeit more gently, issues concerning the number of solicitors’ hours.[61]In all the circumstances, I consider that a reasonable sum for the costs of the costs applications to be £62,000 (inclusive of VAT), divided £49,600 as to the section 19 claim and £12,400 as to the VB indemnity costs application. I shall make a formal order in relation to the £49,600 after hearing submissions on the legal point referred to above and assessing the costs of the substantive section 19 costs claim.

VB Costs Interim Payment

[62]On behalf of Mr Whiteley, £432,983.88 is claimed for the VB Application, comprising £114,975.71 solicitors’ charges, £314,775 counsel’s fees and £3,233.17 disbursements.[63]In addition to the same submissions with regard to counsel’s rates – Mr Hackett’s VAT-inclusive charges were £215,100 and Mr Hassall’s £99,675 – the SFO submits that the rise in hourly rate for the Grade A solicitor from £200 to £295 is unwarranted and unreasonable, a substantial amount of the work done by the Grade A solicitor should have been done by a lower grade fee earner, and there was duplication within the solicitors’ team.[64]Again, I have to approach the assessment of an appropriate interim payment on a cautious basis. With the same caveats as expressed in respect of Mr Evans, I shall order an interim payment of £200,000.

Frances Bodman

[65]The only costs application made by Ms Bodman is a claim for £890.80 under section 16, in respect of which the SFO has made no objection. I shall make an order in that sum. Stephen Davies Section 16

Stephen Davies

[66]Mr Davies makes no section 16 claim.

Section 19: Dismissal Proceedings

[67]With regard to his section 19 claim, the claim as set out in the most recent schedule is for £209,210.10, comprising £82,435 solicitors’ charges, £120.882.65 counsel’s fees (including £2,018.07 expenses) and £5,892.45 disbursements (including £5,348 for copying). All figures exclude VAT which is recoverable by Mr Davies. In addition, Mr Davies claims £27,500 for his own time on a professional basis (under the principle illustrated by Khan v The Lord Chancellor [2003] EWHC 12 (QB)), and makes a small claim as a litigant in person. The SFO appears to accept that £172,264.62 is recoverable.[68]Because of the indemnity principle, the SFO will get the benefit of the much reduced rates for counsel, the leaders charging only £250 per hour and the juniors £125 per hour, i.e. the standard rates paid by the Bar Mutual Indemnity Fund, it being one of the traditions of the Bar that barristers appear on behalf of other barristers on a pro bono basis or for significantly reduced rates. The rates charged by the solicitors (e.g. £250 for a Grade A partner, and £85 for a Grade D trainee are also unexceptional – indeed low by comparison with London Central guideline rates – and are not seriously challenged. They are patently reasonable.[69]In relation to counsel’s fees, it is difficult to challenge any substantial part of these, the hours appearing to be reasonable. I am unimpressed by the argument that it was unnecessary for different leading counsel to deal with different parts of the case – so that aggregate hours are unreasonably high as a result of duplication – because it seems that that was a necessary consequence of the package agreed by the Indemnity Insurers which included the low agreed rate.[70]The solicitors’ hours claimed comprise nearly 250 hours of one Grade A fee earner; and about the same number of hours of Grade D time, the vast majority of that time being spent by just one trainee. Particular issues raised by the SFO in respect of solicitors’ hours are as follows: i) The SFO criticise the general nature of the solicitors’ entries, e.g. “All day spent on the phone and emails… Preparing documents for counsel and for skeleton hearing…”; and the high hours billed for administrative tasks such as putting together indexes and bundles, and dealing with IT problems. ii) The SFO also challenges the need for both a solicitor and a trainee to attend (e.g.) conferences with counsel; but such duplication may be warranted, at least to an extent, where, as here, a trainee is expected to perform some of the tasks on the case (including a note of the conference) which may lead to costs savings. iii) It also criticises the inclusion of research time; but, as those representing Mr Davies correctly say, time on research is recoverable where it involves new or challenging areas of law, as did this case in profusion. iv) The SFO also says that hand delivery of items to counsel and researching legal points should not reasonably be recoverable; but these are modest sums. In my view, given the split of time between effectively one Grade A and one Grade D fee earner, looked at as a whole the solicitors’ hours are high, but not grossly so. There is, again, an argument that the solicitors’ hours are such that the copying charges should reasonably be included as ordinary overheads.[71]A claim is also made for 50 hours of Mr Davies’ own time, “from outset to initiation” (in fact, as I understand it, for the period 14 October 2013 to 9 February 2014), at a rate of £550 per hour (as I understand it, a rate based on his usual rate as a leading counsel in commercial matters). It is claimed on the basis that this was work in which he employed his own training, skills and professional experience, that could and would have been done by an engaged barrister if he had not done it. However, leaving aside the fact that the rate claimed is high, having considered the schedule of these costs and the descriptions given, I am afraid I am unpersuaded that he added any real value to the efforts of his team of counsel and solicitors. Insofar as he did, then I would be minded to reduce the payments to them. On what I have before me, I am unpersuaded that any of these costs should be recoverable.[72]In all the circumstances, I consider that a reasonable sum for the section 19 order to be £187,500.

Costs of the Costs Proceedings

[73]The claim is for £107,717.40, comprising £54,195.50 solicitors’ charges, £50,682.80 counsel’s fees (including £1,170.30 disbursements) and £2,839.10 (including £1,867.20 copying).[74]The SFO raise only the same issues as it raised in relation to the section 19 order on the Dismissal Application. Mr Beloff QC spent 65 hours on the matter, supported by admittedly high hours (173 hours) from the main junior (Mr Potts). Given that profile, Counsel’s fees cannot be significantly challenged, particularly as Mr Beloff’s analysis of the relevant law was the most comprehensive and he led the Applicants’ arguments at the hearing before me.[75]However, I accept that the solicitors’ hours are very high, e.g. (as the SFO point out) in regard to such matters as (e.g.) working on Mr Beloff QC’s oral submissions (about 20 hours), getting the papers ready for the costs hearing (about 33 hours) and the trainee reading the judgment (5 hours). There are other items which appear on their face to be irrecoverable (e.g. preparing a press release).[76]In all the circumstances, I consider that a reasonable sum for the costs of the costs applications to be £82,000, divided £65,600 as to the section 19 claim and £16,400 as to the VB indemnity costs application.

VB Costs Interim Payment

[77]On behalf of Mr Davies, £215,169.88 is claimed for the VB Application, comprising £90,466.50 solicitors’ charges, £114,826.65 counsel’s fees and £9,876.73 disbursements. Furthermore, Mr Davies makes a small claim as a litigant in person (in relation to similar tasks for which he claims at £550 per hour in relation to the section 19 claim); but he has throughout been represented, and therefore such a claim cannot be made.[78]The SFO make similar submissions in relation to these costs. Again, it seems to me that figures for counsel’s fees are quite hard, whilst those claimed for the solicitor’s charges may be considerably softer.[79]Adopting the same cautious approach and with the same caveats as expressed in respect of Mr Evans, I shall order an interim payment of £150,000. Richard Walters Section 16

Richard Walters

[80]Mr Walters makes a section 16 claim but restricted to his fares etc for the 23 September 2013 hearing, i.e. £185.50. The SFO has taken no issue with that claim, and I shall make an award in that sum.

Section 19: Dismissal Proceedings

[81]With regard to his section 19 claim, Mr Walters did not take an active part in the Dismissal Application, being represented by a junior (Mr Barnard) at a rate of £300 per hour on effectively a watching brief. A leader was instructed to advise at £750 per hour; but only five hours are claimed.[82]The claim as set out in the most recent schedule is for £69,049.85, comprising £49,595 solicitors’ charges, £18,900 counsel’s fees and £554.85 travel expenses. The SFO accept that about 75% of that is recoverable.[83]The SFO do not appear to contend that it was unreasonable for Mr Walters to retain a watching brief in relation to the dismissal application; and, given the proneness of the SFO to change its case, I consider it was clearly reasonable for him to be represented as he was.[84]The main issue raised by the SFO is as to rates, with which I have dealt – the rates for both counsel and solicitors are higher than I have indicated appropriate – and objection is taken to certain items as being in respect of Celtic Energy matters not the dismissal claim. It is said that the costs of Mr Walters’ team were overall high, given that they did not actively engage in the dismissal process; but there is not great force in that submission.[85]In all the circumstances, I consider that a reasonable sum for the section 19 order to be £57,500.

Costs of the Costs Proceedings

[86]The claim is for £105,007.87, comprising £28,299 solicitors’ charges, £76,352.81 counsel’s fees (including £1,352.81 travel and hotel expenses) and £356.05 disbursements.[87]The main issue raised by the SFO is again in relation to counsel’s fees, which were a brief fee of £50,000 for leading counsel and £25,000 for the junior. As with the other Applicants, these seem high to me by about a third.[88]In all the circumstances, I consider that a reasonable sum for the costs of the costs applications to be £70,000, divided £56,000 as to the section 19 claim and £14,000 as to the VB indemnity costs application.

VB Costs Interim Payment

[89]On behalf of Mr Walters, £427,500.24 is claimed for the VB Application, comprising £57,875.50 solicitors’ charges, £367,500 counsel’s fees and £2,124.74 disbursements.[90]The SFO’s primary submission is that Mr Purnell’s brief fee of £300,000 was grossly excessive, particularly given the time he recorded in preparation appears to have been only just over 60 hours. Mr Barnard’s brief fee of £67,500 was also excessive, it is said, representing nearly £400 per hour. On what I have seen, those submissions appear to have considerable force. The brief fees may be justifiable on the detailed examination that will be given to them on assessment; but the leader’s brief fee in particular appears very much too high on the basis of the limited information I have seen.[91]Again, I have to approach the assessment of an appropriate interim payment on a cautious basis. With the same caveats as expressed in respect of other Applicants, I shall order an interim payment of £180,000. Leighton Humphreys Section 16

Leighton Humphreys

[92]Mr Humphreys makes a section 16 claim for £432.10. The SFO has taken no issue with that claim, and I shall make an award in that sum.

Section 19: Dismissal Proceedings

[93]With regard to his section 19 claim, the claim as set out in the most recent schedule is for £646,164.76, comprising £153,640 solicitors’ charges and £492,524.76 counsel’s fees (inclusive of some disbursements such as travelling expenses). All figures are inclusive of VAT which Mr Humphreys cannot recover. The SFO accept that about £200,000 is recoverable, but no more.[94]The main issues raised by the SFO are as follows: i) Counsel’s rates: Mr Rees QC was charged at £750 per hour. I consider a rate of £480 reasonable. There is no significant issue with Mr Rees’ rate of £250 per hour. ii) The SFO also challenge the reasonableness of the hours each counsel spent in the matter: Mr Rees QC over 380 hours, and Mr Rees 290 hours preparation before the hearing. They take, by way of example, the 59 hours preparation (Mr Rees QC 38 hours and Mr Rees 21 hours) between the close of the December 2014 hearing and my asking for further assistance on a discrete point in January 2015, when the parties were simply awaiting judgment. There is no compelling breakdown of that, or other time spent by counsel on the case. I do not consider it was reasonable for Counsel to have been working on other aspects of the case, certainly to that extent, when judgment in relation to dismissal was awaited. It is unclear why counsel for Mr Humphreys spent so very much more time on the dismissal application than did counsel for the other parties. There is no reason apparent why that should have been so. iii) Furthermore, the qualified solicitor’s time (over 500 hours, all Grade A at £250 per hour) is, the SFO say with force, also grossly excessive – particularly given the experience, expertise and obvious effort of counsel in the case – and a considerable amount of the work could have been, and should have been, performed by a lower grade fee earner. iv) There is force in these arguments. The rate for leading counsel I have indicated reduces Mr Rees QC’s charges by one-third in any event. Furthermore, the hours spent by the three members of Mr Humphreys’ legal team – well over a thousand hours for this limited period – were in my view very substantially above the reasonable mark. Mr Rees QC and Mr Rees of course practice at the criminal bar: Mr Humphreys did not employ specialist planning or property counsel. Although the Messrs Rees made some submissions in relation to the planning and property issues,(a) these were limited, and(b) there was no element of duplication inevitable in the teams with specialist counsel from the relevant fields. I accept that Mr Rees QC did lead for the defendants on some of the criminal issues before the court – e.g. those in relation to the Fraud Act – but, overall, there is in my view no good reason why the efforts of the legal team on Mr Humphreys behalf should reasonably have been so much more extensive or expensive that those of the other Applicants.[95]In all the circumstances, I consider that a reasonable sum for the section 19 order to be £275,000 plus VAT, i.e. £330,000.

Costs of the Costs Proceedings

[96]The claim is for £238,326 (including VAT), comprising £8,760 solicitors’ charges and £229,566 counsel’s fees (including some disbursements).[97]The solicitors’ hours claimed (under 30 hours) are not significantly high, although three Grade A fee earners were involved with some duplication inevitable. The main issue raised by the SFO is again with regard to leading counsel’s fees. The fees charged for Mr Rees QC (just over £160,000 excluding VAT) are reduced to just over £100,000 by virtue of the rate being reduced from £750 to £480 – but that is based upon nearly 200 hours of preparation being done prior to the costs hearing. Mr Rees’ charges were £30,000, based on just over 100 hours of preparation. It is unclear why Mr Rees QC did nearly twice as many hours on preparation as his junior: I remain unconvinced by the explanation given in the Written Submissions dated 23 March 2015 that the split of work was reasonable.[98]In all the circumstances, I consider that a reasonable sum for the costs of the costs applications to be £85,000, divided £68,000 as to the section 19 claim and £17,000 as to the VB indemnity costs application.

VB Costs Interim Payment

[99]Mr Humphreys does not seek an interim payment in respect of the costs of the VB Application.

Conclusion and Order

[100]I have considered, looking at the matter as a whole, whether the sums I have assessed and specified under section 19 will reasonably compensate the Applicants as receiving parties for the costs they each reasonably incurred as a result of the identified unnecessary or improper acts and omissions of the SFO; and I am satisfied that they will. I make that clear, because there are some, relatively minor discrepancies between various schedules of costs that have been lodged by the Applicants. I do not consider any of those differences to be material.[101]Therefore, for the above reasons, I shall make the following

order

1. In respect of the applications to dismiss, the Respondent shall pay the Applicants the following costs under section 16: Eric Evans £886.65 Frances Bodman £890.80 Richard Walters £185.50 Leighton Humphreys £432.10 2. In respect of the applications to dismiss, the Respondent shall pay the Applicants the following costs under section 19: Eric Evans £155,500 (£97,500 plus £58,000) Stephen Davies £253,100 (£187,500 plus £65,600) Richard Walters £113,500 (£57,500 plus £56,000) Leighton Humphreys £398,000 (£330,000 plus £68,000) 3. In addition to the sums in paragraphs 1 and 2, in respect of costs of the costs application with regard to voluntary bill, the Respondent shall pay the Applicants’ costs, summarily assessed as follows: Eric Evans £14,500 David Alan Whiteley £12,400 Stephen Davies £16,400 Richard Walters £14,000 Leighton Humphreys £17,000 4. Other than the costs ordered to be paid in paragraph 3, the Respondent shall pay the Applicants’ costs of the application for a voluntary bill to be the subject of a detailed assessment on an indemnity basis if not agreed. 5. The Respondent shall pay to the Applicants the following sums on account of the costs ordered to be paid under paragraph 4: Eric Evans £200,000 David Alan Whiteley £200,000 Stephen Davies £150,000 Richard Walters £180,000 6. All payments to be made by 4pm on 17 June 2015. 7. In relation to Mr Whiteley’s section 19 costs claim, the following directions shall apply:(i) The claim shall be adjourned to be heard orally in court, reserved to Hickinbottom J, time estimate one and a half hours, only junior counsel for Mr Whiteley and the SFO need attend. Submissions to be restricted to the effects of the grant of a representation order, especially upon the brief fee of Mr Hackett QC; and how that should be reflected in a section 19 costs order.(ii) Skeleton arguments shall be lodged and served at least 10 days before the hearing; and solicitors for Mr Whiteley shall lodge a bundle of documents, to include the skeleton arguments, any authorities (including statutory provisions etc) and relevant contemporaneous documents at least 7 days before the hearing. The parties will be notified as to where to lodge that bundle.(iii) Parties to lodge with Hickinbottom J’s clerk dates of unavailability by 4pm on Friday 5 June 2015, for the period to 31 July 2015. The hearing shall be fixed taking into account dates of unavailability lodged; but, if necessary, it may be listed on a date when one or more counsel of choice are not available.(iv) If the parties compromise the claim, then they must notify Hickinbottom J’s clerk, and thereafter lodge with her a draft order, as soon as possible.

Cited in 12 later judgments

and 3 more of the most senior