Opinion: Ruling on acquitted defendant costs will speak volumes

The Government has a choice to make – one that will be watched closely by City lawyers who routinely defend companies and clients facing proceedings brought by the Serious Fraud Office, the Financial Services Authority and the Office of Fair Trading.

Stephen Parkinson
Stephen Parkinson

Will it appeal a High Court ­judgment that has struck down a scheme which forced acquitted defendants to bear most of the costs they had paid for their defence? It is a choice that will reveal much about the approach of the new ­Government to questions of constitutional principle over the next few years.

On the face of it, the case was all about money rather than principle. The Government has had to deal with high and rising costs from funding the expenses of ­successful defendants in criminal proceedings. A small number of City cases take up a large part of the estimated £100m or so costs each year of the ­Government’s central funds scheme. Two such cases recently left the Ministry of ­Justice (MoJ) facing bills of £21m and £40m respectively (it declined to name the cases).

It was concerns about rising ­expenditure that led the MoJ to introduce a new scheme last year to ensure that costs of successful defendants were capped to the amount they would have recovered if they had been legally aided. But the ­overriding priority that the MoJ gave to balancing its books led it to ignore both legal and constitutional principle.

The legal principle is straightforward and well known. A minister cannot ­exercise a power for a purpose or objective which is not permitted by the primary ­legislation conferring the power. The MoJ’s new scheme had to be made under regulations, and those regulations could only be made if they were consistent with the principles in Part II of the Prosecution of Offences Act 1985. One of those principles was that awards of costs to successful defendants should be of such an amount “as the court considers to be reasonably sufficient to compensate the defendant for any expenses which he has properly incurred in the proceedings” (Section 16).

In its judicial review, the Law Society argued that the new scheme was ­inconsistent with that principle and the court agreed. It found that the statute did not allow the Lord Chancellor to ­implement rates or scales which, though he thought they were reasonable, were not intended to provide the compensation which the Act required.

The second error was more significant since it goes to the heart of the way that we are governed. The previous ­Government defied the results of its own consultation exercise and avoided Parliamentary scrutiny in its determination to get its own way. The consultation exercise ­produced almost universal opposition to the proposal.

The Law Society said that it struck at the very heart of the principles of justice. It was simply not acceptable for any ­individual who had been acquitted to have to bear the costs of their defence. That stance had to be right. Defendants to criminal proceedings do not choose to be prosecuted. If they are, they should not be penalised for paying for private ­representation. Unfortunately, the ­Government pressed on, declaring that “those who can afford to pay towards the costs of their defence should do so”.

In its judgment, the court stressed that it was not its job to decide issues of policy, but it left no doubt about its view. It said that “the new regulations involve a ­decisive departure from past principles” and that the issue was one of “some ­constitutional moment”. It doubted that Parliament had intended that such a change could properly be achieved ­without Parliamentary scrutiny.

Will the MoJ appeal? An MoJ spokesman commented after the case that the result was disappointing because the scheme had been “designed to prevent
spiralling legal costs” while still ensuring appropriate legal support.

Ken Clarke’s civil servants still do not get it. Let’s hope he does.

Associate Sophie Kemp assisted with this article