[2025] EWCA Crim 1289

Relevant case law:

We were referred to, and have considered, a substantial bundle of authorities. We extract from the case law the following points.

In Simpsons Motor Sales (London) Ltd v Hendon Corporation [1964] 3 All ER 833 (“Simpsons Motor Sales”), the losing party in an action in the Chancery Division was ordered to pay the costs of the successful party. An issue arose as to the proper amount to be paid in respect of counsel’s fee. Pennycuick J held, at p838C:

“… one must envisage an hypothetical counsel capable of conducting the particular case effectively but unable or unwilling to insist on the particularly high fee sometimes demanded by counsel of pre-eminent reputation. Then one must 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.”

In R v Dudley Magistrates’ Court, ex parte Power City Stores Ltd (1990) 154 JP 654 (“Dudley Magistrates”) a magistrates’ court had dismissed the charges against the accused and made a defendant’s costs order. In assessing the amount to be paid under that order, the justices’ clerk disallowed a claim for the fee of leading counsel, on the ground that the matters alleged against the accused could more than adequately have been dealt with by a senior solicitor or junior counsel. On an application for judicial review, a Divisional Court quashed that determination. Provisions corresponding, mutatis mutandis, to those in s17(1) and (2A) of the POA 1985 were then contained in s16(6) and (7). Woolf LJ (as he then was) stated a test which has subsequently been followed by courts ordering the payment of costs out of central funds:

“It appears to me that subs (6) and subs (7) presuppose that, in properly assessing the amount of costs that are to be allowed in respect of a defendant’s costs order, the appropriate taxing authority will carry out a two-stage exercise, first of all, consider what amount will be reasonably sufficient to compensate the defendant for any expenses properly incurred by him in the proceedings. In order to fulfil the requirements of stage 1 he has to ask himself first of all, whether the expenses are ones which were properly incurred by the defendant. …

Having come to the conclusion that the expenses are properly incurred the court’s next task is to consider the amount which is reasonably sufficient to compensate the defendant for those costs. That is a question of quantum. If there are no untoward circumstances that is the end of the task of the taxing authority under the provisions of s16. However, there can be a situation where subs (7) comes into play. That is a situation where the court is of the opinion that there are circumstances which make it inappropriate that the person, in whose favour the order is made, should recover the full amount mentioned in subs (6). Subsection (7) is dealing with a situation where there is something which causes the court to consider that what would normally be the result of taxation should not apply to this particular case.”

On the specific issue as to the fee of leading counsel, the court held that the appropriate question, which the justices’ clerk should have asked himself, was whether the defendant had acted reasonably in instructing the counsel they did, and not whether more junior counsel or a solicitor could adequately have dealt with the case. Having asked himself the wrong question, the clerk had not considered the second stage of the test at all. The effect of the court’s order was that the justices’ clerk would be required to accept that it had been reasonable to instruct leading counsel, and to assess what fees were properly recoverable in respect of leading counsel’s fees.

In Wraith v Sheffield Forgemasters Ltd [1998] 1 WLR 132 the taxation of costs in a civil action raised an issue as to whether the successful party could properly claim for their solicitors’ work at the rates applicable to London (where the solicitors were based) rather than Sheffield (where the cause of action arose and the proceedings were heard). At p96F the Court of Appeal upheld the approach stated by Potter J at first instance: the court should first consider whether costs were reasonably incurred and, if they were, should then consider what was a reasonable amount. In respect of the first question, costs might not have been reasonably incurred if they had been increased by engaging a solicitor who was “an unsuitable or ‘luxury’ choice”; but the focus was primarily upon the reasonable interests of the party in whose favour costs were awarded, and whether that party’s choice of solicitor was reasonable having regard to the extent and importance of the litigation to a reasonably minded party. In respect of the second question:

“… solicitors’ hourly rates will be assessed, not on the basis of the solicitor’s actual charging rates, but (in a case where the decision to retain was reasonable) on the basis of the broad costs of litigation in the area of the solicitor retained or (in a case where the choice made was not reasonable) of the type or class of solicitor who ought to have been retained.”

In Barry v Birmingham Magistrates’ Court [2009] EWHC 2571 (Admin) a Divisional Court confirmed that a person who wanted to bring a private prosecution was not invariably required to make a complaint to the police before applying to a justice of the peace for a summons. The failure to do so might, however, be a relevant circumstance to be taken into account by the justice in deciding whether to issue a summons.

In R (on the application of the Law Society) v Lord Chancellor [2010] EWHC 1406 (Admin) (“Law Society”) a Divisional Court granted an application for judicial review of the Lord Chancellor’s making of a new reg 7 of the General Regulations, the effect of which was to limit a successful defendant to the recovery of costs under a defendant’s costs order at legal aid rates. The new regulation was held to be ultra vires the power conferred by s20 of the POA 1985, which could not be used to undermine or subvert the principle of compensation set out in s16(6). Elias LJ, with whom Keith J agreed, held at [48] that the amount a defendant would have to pay to secure the services of a lawyer would be determined by the prevailing market; at [49], that it was common ground that lawyers could not usually be hired privately at legal aid rates; and at [51], that the Lord Chancellor could not stipulate what sums he deemed to be a reasonable reward for the services of a lawyer.

At [52], Elias LJ stated that the obligation under s16(6) was to provide a sum of money which was reasonably sufficient to compensate the successful defendant. The relevant measure, he said, was the principle of compensation, “albeit one which is constrained by considerations of what is reasonable and proper expenditure”. He accepted, at [53], a submission that, in context, compensation meant recompensing the defendant for the expenditure that had been incurred, within those constraints.

In R (Virgin Media Ltd) v Zinga [2014] EWCA Crim 52, [2014] 1 WLR 2228 this court was concerned with an appeal against a compensation order made following a successful private prosecution. Lord Thomas CJ, giving the judgment of the court, noted at [57] that retrenchments in the funding of the CPS and the Serious Fraud Office made it seem inevitable that the number of private prosecutions would increase, particularly in areas relating to the criminal misuse of intellectual property. He observed that in the overwhelming majority of such cases, a prosecution would serve the public interest in addressing such criminal conduct. At [58], the Lord Chief Justice continued:

“However, it must be noted that the expense to the public purse may be greater given the way in which section 17 of the Prosecution of Offences Act 1985 operates and the fact that the use of criminal proceedings circumvents the fees charged in the civil courts for the recovery of damages by way of compensation. Consideration of the interrelationship of a reduction in the provision of funds to public prosecutors, the prospect of an increase in the sums paid to successful private prosecutors under section 17 and the avoidance of fees in the civil courts is entirely a matter for the executive branch of the state and in particular the Ministry of Justice.”

The successful private prosecutors in that case applied for their costs of the appeal to be paid out of central funds. We shall refer to the decision of the court (differently constituted) on that application (R (Virgin Media Ltd) v Zinga [2014] EWCA Crim 1823, [2014] 5 Costs LR 8) as “Zinga”. The court considered s17 of the POA 1985, reg 7 of the Costs General Regulations, and paragraph 2.6.1 of the Costs Practice Direction. It also considered Guidance published by the Ministry of Justice to the effect that determining officers assessing the costs of a private prosecutor would be guided by the rates set out in the Senior Courts Costs Office Guide to the Summary Assessment of Costs in civil cases.

At [19] Lord Thomas CJ confirmed that in considering costs recoverable under a defendant’s costs order there were two questions, as stated in Dudley Magistrates:

Whether it was proper and reasonable to instruct the solicitors and/or advocates actually instructed. It did not matter whether the work could have been done adequately by someone by someone less experienced, provided it was proper and reasonable to instruct those instructed.

If it was proper and reasonable, then the costs were recoverable, provided the costs were reasonable.”

At [20], it was held that there was no good reason not to adopt the same approach to the identical language in s17 of the same Act.

However, at [21] the Lord Chief Justice noted that the way in which the legal profession is retained, and the way in which it renders its charges, have changed significantly since the decision in Dudley Magistrates. He observed that it is now commonplace for commercial clients to seek quotations or tenders and to negotiate the basis on which fees are charged. At [22] the court held that in relation to the test in Dudley Magistrates:

In determining the first question, namely whether a person, whether it be a corporate body or private individual, has acted reasonably and properly in instructing the solicitors and advocates instructed, the court will consider what steps were taken to ensure that the terms on which the solicitors and advocates were engaged were reasonable. It was submitted on behalf of the Interveners that they do not pursue private prosecutions lightly but only where state prosecuting authorities are unwilling to prosecute or where the nature of the case makes it inappropriate; as this is the position of highly responsible industry bodies, a court may also have regard to the steps taken to involve State prosecuting authorities.

In any significant prosecution the private prosecutor would be expected properly and reasonably to examine the competition in the relevant market, test it and seek tenders or quotations before selecting the solicitor and advocate instructed.

We must emphasise that it will rarely, if ever, be reasonable in any such case, given the changes in the legal market to which we have referred, to instruct the solicitors and advocates without taking such steps. Although for the reasons we give at paras 23 and 24 below that issue does not arise in this matter, it will be highly material on all future applications.

In determining whether the costs which are charged are proper and reasonable in a criminal case, the court will also have regard to the relevant market and the much greater flexibility in the way in which work is done.

The court will also have regard to the Guidance given by the Ministry of Justice.”

At the conclusion of the judgment, at [38] ff, the court made some Observations for the Future. It referred to what had been said at [58] in the judgment on the appeal against the compensation order (see paragraph 34 above). It accepted that in certain areas of criminal prosecutions, some specialist knowledge of an area of law is necessary, but referred to the expertise and experience of the Specialist Fraud Division of the CPS.

At [43] the court stated that it is in the public interest that the CPS is properly resourced to conduct such difficult and complex proceedings:

“The consequences of the CPS not being so resourced is detrimental to the public purse. The costs of a private prosecution, whether successful or unsuccessful, are recoverable from the taxpayer; the use of private prosecutors will almost inevitably cost the State much more than the use of a State prosecutor, such as the CPS.”

The court concluded the judgment at [45] by stating:

“The experience of this court is that there is unlikely to be any difference of quality between a prosecution brought by the State and a private prosecution. In the present state of public finances and the funds available for the proper administration of justice, it cannot be right that resources are deployed by the State in such a way that an opportunity is provided for prosecutions to be brought by private interests at a cost to the State which is likely to be far greater than if the prosecution were undertaken by the State. No doubt the savings to public expenditure can be used for the benefit of the proper administration of justice.”

In Evans v The Serious Fraud Office [2015] EWHC 1525 (QB), [2015] 3 Costs LR 557 (“Evans”), defendants against whom a charge of conspiracy to defraud had been dismissed were awarded costs from central funds in circumstances where the prosecution was found to have been responsible for an “unnecessary act or omission” (s19 of the POA 1985). At [25(i)], Hickinbottom J (as he then was) accepted that it is not appropriate to use publicly funded comparators when assessing privately funded costs. In relation to counsel’s fees, he applied the test stated in Simpsons Motor Sales (see paragraph 27 above), and held that the rates charged by counsel exceeded the reasonable fees of the hypothetical counsel, and were therefore not reasonable. In relation to the solicitors’ charges, he took the guideline hourly rates for summary assessment as his starting point.

In Kazakhstan Kagazy plc v Zhunus [2015] EWHC 404 (Comm), Leggatt J (as he then was) ruled on applications for payment on account of costs in proceedings in the Commercial Court. At [13] he said:

“In a case such as this where very large amounts of money are at stake, it may be entirely reasonable from the point of view of a party incurring costs to spare no expense that might possibly help to influence the result of the proceedings. It does not follow, however, that such expense should be regarded as reasonably or proportionately incurred or reasonable and proportionate in amount when it comes to determining what costs are recoverable from the other party. What is reasonable and proportionate in that context must be judged objectively. The touchstone is not the amount of costs which it was in a party’s best interests to incur but the lowest amount which it could reasonably have been expected to spend in order to have its case conducted and presented proficiently, having regard to all the relevant circumstances. Expenditure over and above this level should be for a party’s own account and not recoverable from the other party.”

In Fuseon Ltd v Senior Courts Costs Office [2019] EWHC 126 (Admin), [2020] Costs LR 251 (“Fuseon”), a businessman who had suffered loss as a result of fraud reported the matter to the police. The police declined to investigate, citing the effects of “austerity”, which required them to prioritise investigations into other types of crime. The businessman brought a successful private prosecution. He was awarded costs from central funds in an amount substantially less than he had claimed.

On appeal against that award, Lane J at [43] referred to the approach endorsed by the Court of Appeal in R v Supreme Court Taxing Office ex parte John Singh and Co [1997] 1 Costs LR 49 , of not only examining each item of costs claimed, but also “standing back from the total hours claimed for each class of work done to assess whether globally it was reasonable” (“the Singh reduction”). At [100], Lane J expressed the view that the decision in Zinga is inconsistent with using the CPS as a comparator for the purpose of applying a Singh reduction. At [105], he summarised the correct approach as follows:

“As I have already noted, the claimant rightly does not contend that the Singh reduction can play no part in the assessment of costs of private prosecutors. I also do not consider it can be said, as a matter of law, that it will necessarily be wrong to look at CPS costs, when determining the amount of costs to be awarded to a private prosecutor. If an individual resolves to embark on a private prosecution with no regard to whether the state is willing and able to prosecute, a comparison with the CPS might be legitimate. That, however, was not the position in the present case.”

In R (TM Eye Ltd) v Crown Court at Southampton [2021] EWHC 2624 (Admin), [2022] 1 WLR 1114 (“TM Eye”), the trial judge had refused to award private prosecutors any costs from central funds. The private prosecutors’ claim for judicial review of that refusal was dismissed. A Divisional Court held, at [51] – [53], that where an application is made for an order under s17:

… the court must consider first whether to exercise its discretion under section 17(1) in favour of making an order for payment out of central funds. By Crim PR r45.4(5), there is a general rule in favour of an award being made; and often it will be clear that such an award is appropriate. But s17(1) is permissive, and the court is entitled in an appropriate case to decline to make any award.

If the court exercises its discretion in favour of making an award under section 17(1) … it must be an order for the payment in full of such sum as is considered reasonably sufficient to compensate the prosecutor for expenses properly incurred in the proceedings.

Section 17(2A), however, enables the court in an appropriate case to award the private prosecutor less than the full amount of that reasonably sufficient sum. We reject [counsel’s] submission that the court can only do so in cases of misconduct. Parliament has imposed no such restriction: section 17(2A) refers more widely to the court’s considering that there are ‘circumstances that make it inappropriate for the prosecution to recover the full amount’. Rule 45.4(5)(b) and paragraph 2.6.1 of the Practice Direction (Costs in Criminal Proceedings) provide examples of circumstances which may be regarded as making full recovery inappropriate; but those examples are plainly not exhaustive. The court must make a case-specific decision as to whether it is appropriate to award costs from central funds at all and, if so, whether to limit that award in any way.”

It should be noted that the reference in that quotation to Crim PR r45.4(5)(b) is to the terms of that rule which were in force in 2021: the rule has subsequently been amended.

In R (Chapter 4 Corp Dba Supreme) v The Crown Court at Southwark [2023] EWHC 1362 (Admin), [2023] Costs LR 897 (“Chapter 4”), at [29], it was held by a Divisional Court that where a court orders a reduction under s17(2A), and does not itself fix the amount in its order:

“… the order must describe the reduction to be applied. That does not mean that a specific sum must be identified. Rather, the order must set out the percentage reduction or the means by which the reduction is to be calculated.”

At [31], the court described s17(2A) as a provision which:

“… complements the long standing inherent jurisdiction of a trial judge to make comments about matters relevant to the taxation of costs.”

In R (Allseas Group SA) v Sultana [2023] EWHC 2731 (SCCO) (“Allseas”) the circumstances were that private prosecutors had suffered loss as a result of fraudulent activity by a number of persons. They brought civil proceedings against some of those persons. They then learned that the CPS had decided to charge some persons, but not Mr Sultana. Having failed to persuade the CPS to a different decision, they embarked upon a private prosecution and instructed the solicitors who were already acting for them in the civil proceedings and other proceedings relating to the fraudulent activity. After a lengthy trial, the jury were unable to reach a verdict and were discharged. The private prosecutors then applied to the CPS to take over the conduct of the prosecution, which the CPS declined to do. The private prosecutors conducted a retrial, at which Mr Sultana was convicted.

The trial judge made an order pursuant to s17. The costs payable from central funds pursuant to that order were initially assessed by a determining officer. The private prosecutors appealed against her ruling. The Costs Judge who heard the appeal gave a detailed ruling on his determination or assessment (“the words being interchangeable for present purposes”) of the costs.

The judge held, at [78], that neither he, nor the determining officer who had initially assessed the costs, had any power to make an order under s17(2A) limiting the costs to be awarded. The jurisdiction to make such an order could only be exercised by the court which made the order under s17.

The judge noted, at [102], that in the circumstances of that case, the Lord Chancellor had accepted that the private prosecutors’ choice of the solicitors who would act for them in the criminal proceedings was objectively a reasonable choice. The choice had been made without any tendering exercise being carried out. At [116], the judge held that as the choice of solicitors was a reasonable one, it followed that the decision not to undertake a tendering process was also a reasonable one: given that the solicitors were the reasonable choice, “a tendering process would have been an empty gesture”.

In relation to counsel’s fees, the Lord Chancellor submitted that in the absence of any tendering process, the assessment of what would amount to reasonably sufficient compensation should be made by reference to CPS rates. The judge at [162] rejected that submission. Relying on Evans and Fuseon, he held that, even assuming there had been no adequate tendering process, it was not appropriate to use publicly funded comparators when assessing privately funded costs. The judge went on, however, to adopt the ‘hypothetical counsel’ test in Simpsons: at [164] he stated that, based on his own experience of assessing costs, he did not find it credible that counsel competent to take on the case would have done so for fees “at anything like the level suggested by the Lord Chancellor”.

At [165] ff, the judge said that left a question of principle to be addressed:

… In the absence of any or any adequate tendering process on selecting of prosecuting counsel, precisely how is the element of doubt (which must, by reference to regulation 7(3) of the 1986 Regulations, be resolved against the Appellant) to be resolved?

I would observe that a tendering exercise is not simply a matter of identifying and choosing the cheapest available option. The cheapest option may not be the best one. It was incumbent upon the Appellant only to make a reasonable choice in all the circumstances. The point of the tendering process is that it helps to establish that that was done. To assume that the Appellant should have chosen the least expensive option, and to award costs accordingly, would be to repeat the error identified by Woolf LJ in R v Dudley Magistrates’ Court.

Zinga, at paragraph 19, makes it clear that if the choice of legal representative is reasonable, then that legal representative’s costs will be recoverable, in so far as reasonable. Where the choice of legal representative is not reasonable, or there is doubt as to whether the choice of legal representative is reasonable, then in my view the correct approach must (bearing in mind Wraith and the other authorities to which I have referred) be to identify the level of cost that would have been attendant upon a reasonable choice, and to assess reasonable costs accordingly, by reference to the work actually done.”

Adopting that approach, the judge concluded, at [169] that any element of doubt created by an inadequate tendering process could, so far as hourly rates were concerned, be resolved by having due regard to the guidance given in Evans.

After that lengthy review of many of the cases cited to us, we return to the submissions. It is common ground that all the charges which have been brought against the respondents allege indictable offences, and that s17 is accordingly engaged.