England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISON
ADMINISTRATIVE COURT
(MR JUSTICE McCOMBE)

		Royal Courts of Justice Strand, London, WC2A 2LL
		14 June 2010

Lord Justice Ward:

1. This is an appeal brought by Mr Ronald Olden, with the permission of Longmore LJ, against orders made by McCombe J on 19 February 2009 and, again, on a reconsideration on 17 March 2009 making no order for the cost of a restraint order which had been granted to the Crown Prosecution Service, the respondent to this appeal.
2. The appellant was arrested on 4 August 2004 and interviewed by a police officer regarding allegations of deceptions practised by him. I shall explain more about that in a moment. On 26 November 2004, a restraint order was obtained under section 77 of the Criminal Justice Act 1988 on an application made by the CPS without notice. Costs were reserved. The appellant made no application to vary or discharge that order. On 8 February he was convicted on three counts of obtaining property by deception, on 17 counts of obtaining a money transfer by deception and on two counts of obtaining services, namely the use of a bank account, by deception.
3. The appellant was at the material time an undischarged bankrupt and it was undisputed that he had obtained two false passports in false names, passing himself off as Trevor Paul Ellis and Martin Dubrey and a false driving licence in the name of Terence Leslie Batters, his third alias. Using these false identities, he opened bank and building society accounts and then took out mortgages and obtained unsecured and secured bank loans in those assumed names. He was sentenced to a term of four years in prison.
4. He appealed on a number of grounds. He was successful on only one of them. On 9 March 2007, the Court of Appeal Criminal Division said in the judgment of Dyson LJ (as he then was) that, with regard to the appellant's submission that the trial judge erred in not stopping the case at the conclusion of the prosecution, paragraph 44:

"In our judgment, the judge was right to say there is a case to answer on the evidence before the jury. There was evidence on all the counts on which the appellant was convicted from which the jury was entitled to draw the necessary irresistible inference that a lending decision based on a false identity, to a person who was or had been bankrupt and who made applications on forms which contained false statements was one procured by deception, that is to say that the deception operated on the mind of the lender. …

In our view, the judge was right to hold there was a case to answer. Indeed, in our view it was a strong case."

5. Nonetheless, the appellant's appeal succeeded on what most would think to be a highly technical and fortuitous ground, namely that the Crown failed to establish that the actual officer who arrested the appellant did not himself have the necessary reasonable ground for making that arrest, notwithstanding the fact that the detective constable who was investigating this series of mortgage frauds had ample ground to suspect Mr Olden (otherwise known as Ellis or Dubrey or Batters). Because that arrest was unlawful, the interview subsequently conducted by the detective constable and the searches which resulted from it were also held to be unlawful. In those circumstances the convictions had to be quashed. Some might say that the appellant was a lucky boy.
6. Meanwhile, so far as the restraint order is concerned, it was subject to variations being made from time to time. There were, I think, 15 of them in all. In most, no order for costs was made, but occasionally costs were reserved. It is not in dispute that the order which should be made in respect of those instances where costs were reserved should be the same as the order overall.
7. The restraint order was discharged by Walker J on 18 May 2007. No reference was made to the costs in that order. The appellant applied for his costs and that too was considered by Walker J, who made a conditional order that unless within 14 days of the service of the order on the Crown Prosecution Service the order should be varied so that the CPS pay the appellant's costs of the proceedings and the costs of that application. The CPS duly opposed that order, albeit a few days late as to which no point is taken.
8. And so the matter came back before the court. It was dealt with by McCombe J, who on 16 February 2009 made, as I have said, no order for costs, giving as his reasons these. They are of course short and perfunctory, which is to be expected of a busy judge dealing with paper applications that descend in a heap upon him day by day, so McCombe J said only this, page 47:

"In my judgment, this is indeed a case in which the defendant brought the prosecution upon himself. The making of the restraint order was an inevitable corollary of that prosecution in allowing the decision in R v Connolly, 1 November 1995 and the Practice Direction (Costs: Criminal Proceedings) [2004] 2 All ER 1070. I consider it is right to direct that there be no order for costs."

9. Unfortunately, due to some administrative error in the office, it appears that the appellant's submissions were not before the judge and so it was agreed that the matter go back for reconsideration by McCombe J in the light of the appellant's solicitors' letter of 25 February 2009 and upon the CPS agreeing that the judge should deal with the matter. The appellant's undated written submissions were also taken into account.
10. Unfortunately, we do not have anything in the papers before us to indicate what the appellant's view was. We do, however, have the skeleton argument submitted by Mr Hall, who appears today, though we have not called upon him on behalf of the CPS. The judge on 17 March again ordered no order for costs, this time giving these reasons, page 48:

"Having considered the additional material, I remain of the view that the defendant brought the prosecution upon himself. This is plain from the judgment of the Court of Appeal allowing his appeal. I do not consider that the matter is affected by the finding that the arrest was unlawful. The arrest, the interview and the decision to prosecute were all carried out in good faith. It is right that each party should bear its/his own cost."

11. On behalf of the appellant, Mr Christopher Pigram submits that the judge fell into error. His attack is launched against the judge's reasons given on 16 February. It is not at all clear to me to what extent those reasons given were carried into the reconsideration, except insofar as the judge remained of the view that the defendant had brought the prosecution upon himself. But, assuming for a moment that they did still affect the second judgment, the complaint is that the judge erred because the case of Connolly provided no help to him and should not have been brought into account and the judge was wrong to direct himself in accordance with the Practice Direction dealing with costs in criminal proceedings.
12. For my part, I am not prepared to accept those criticisms. Connolly was a case where little could be gained from the way McCullough J approached it because the transcript of the judgment does not include the judge's own directions, clearly given in the course of argument, as to the starting point for consideration. But Connolly, a case on its own facts, a drug offence in that case, did take account of the conduct of the accused and it is that bit and only that bit upon which McCullough J relied.
13. Insofar as the criminal practice is concerned, of course the point is well made that these proceedings for this restraint order brought under the Criminal Justice Act 1988 are not criminal proceedings, but are civil proceedings, as the Court of Appeal has already established and as is common ground in this court. But if one looks at the criminal practice and takes a very broad view of it, its principles are not far from those recited in the Civil Procedure Rules Rule 44, and I do not for myself consider that fact and that reference undermines the judge's discretion.
14. The crucial issue in this appeal and the principal ground upon which Mr Pigram founded his argument was that the learned judge in reciting the criminal Practice Direction must be taken to have ignored the civil practice which governed the matter before him: that is the practice contained in CPR Rule 44. I reject that argument. I do so because in the skeleton argument which was before the judge in the court below Mr Hall made it abundantly plain what the law was and what the relevant facts were. Mr Hall (in that skeleton argument) drew the judge's attention to the relevant legal principles. He referred in particular to the fact that the order made by McCullough J in Connolly was one which was "clearly in accordance with CPR Part 44.3(4) and 44.3(5)". The court can take into account the conduct of the parties, which includes Rule 44.3(5):

"conduct before, as well as during, the proceedings and in particular the extent to which the parties followed any relevant pre-action protocol;"

He went on to recite paragraphs (b), (c) and (d) of the rules. The material rule is of course that which allows the court to take a conduct into account. As to that, Mr Hall recited these conclusions as to the facts:

"12. There can be no doubt that the restraint order was correctly obtained by the Crown Prosecution Service, both in the light of the documents seized and the admissions made in interview. There were reasonable grounds to believe that a confiscation order might be made in proceedings which have not yet concluded. The evidence that Mr Olden had committed the offences was strong.

13. The CPS were not only right to obtain a restraint order -- it would have been extraordinary if the Crown Prosecution Service had not. Numerous mortgage advances had been secured by Mr Olden giving false details. Mr Olden did not dispute that he had employed false details to do so. There was every likelihood of successful confiscation proceedings.

14. Mr Olden took calculated risks in committing the alleged offences. He deliberately gave false details, hoping that this would not come to light and that he would benefit by reason of the mortgage advances falsely obtained -- but for this behaviour, the CPS would have had no grounds for obtaining a restraint order. Mr Olden's behaviour was, and remains, disgraceful. Whether or not the proceedings ultimately resulted in a conviction, Mr Olden by his own admission engaged in a prolonged and deliberate course of deception."

15. Thus Mr Hall submitted that Mr Olden had indeed brought the proceedings upon himself by his behaviour and that the restraint proceedings were a direct and foreseeable consequence of that activity. He submitted that Mr Olden's admitted behaviour was reprehensible, the case against him was strong and his acquittal had nothing to do with the merits of the matters with which he had been charged. And so the concluding submission of Mr Hall was:

"31. Accordingly, the Court is respectfully invited to exercise its discretion under CPR Part 44 by making no order as to costs. Alternatively, (if the Court is minded to conclude that the CPS should nonetheless bear some of the costs) the Court is asked to reduce the amount payable by Mr Olden by a percentage which reflects his conduct in this matter."

16. In the light of that skeleton argument plainly before the judge, I find it impossible to accept that the judge did not have the Civil Procedure Rules in mind and did not direct himself in accordance with them.

17. It seems to me, therefore, that we should approach this appeal on this basis:

1. These are to be treated as civil proceedings and not criminal proceedings.

2. Consequently, the Civil Procedure Rules and not the Criminal Cost Rules govern the matter.

3. Although it is always useful, as Brooke LJ held in the case of Grimes v the Crown Prosecution Service [2003] EWCA Civ 1814 at paragraph [18], to recite the fact that CPR 44 is being applied, a judge should not be criticised for not expressly referring to it if is manifestly obvious that he has applied the principles which are stated within that rule.

4. Consequently, the starting point is that costs follow the event.

5. The event may sometimes be difficult to define, but in a case as I am dealing with with restraint orders, the proper starting point can be taken from the order of Schiemann J in Re W (Drug Trafficking Restraint Order Costs), (1994) Times, 13 October and approved by Simon Brown LJ in Hughes & Others v Customs and Excise Commissioners [2002] EWCA Civ 734. That starting point is to this effect:

"If he is acquitted [the accused person's] assets are unfrozen. The question essentially is: should the innocent individual pay the costs of taking part in proceedings initiated by the Commissioners of Customs and Excise or should the public at large? In my judgment it should be the public at large. Prosecutions are launched, and if someone is acquitted by the verdict of the jury, then one can see in restrospect that he should not have been troubled in the matter. There is no blame to be attached to the Customs and Excise, but it seems to me that in principle the public should pay."

6. That sort of approach is confirmed by the new guidance given in respect of restraint orders, which were published in March 2010, to the effect that if a defendant is acquitted, the general rule is that the defendant is entitled to claim his costs of the restraint proceedings from the prosecution. Nonetheless, as that guidance makes clear, "costs are nevertheless a matter of discretion for the court determine".

7. Thus, we are thrust back to CPR Rule 44.4 or 44.5 and the need to have regard to conduct of the parties.

8. Mr Pigram submits that in having regard to a conduct, one must also have regard to the fact that the defendant accused in this case drew to the attention of the investigating officer during his interview his belief that the arrest had been unlawful. So it was found to be. That, however, does not absolve the defendant in my judgment from the consequences of his dishonest dealings in this case. As Rule 44.5 makes clear, the conduct of the parties includes "(a) conduct before, as well as during, the proceedings".

17. Material to this appeal is, therefore, the systematic dishonest use made by the defendant of his assumed identities for the purpose of deceiving the various lenders, as is not disputed and cannot be disputed by Mr Olden. That is, in my judgment, conduct of a wholly reprehensible sort. It is conduct which the court is bound to take into account and it is, in my judgment, conduct which McCombe J did take into account as being the factor which influenced his decision and led to the wholly proper conclusion that the right order was no order for costs in this case. The fact that he added that the prosecution was conducted in good faith is not a factor which vitiates that judgment. It is a part of the background. It is a factor.
18. There is material to the judge's consideration, but the overwhelming factor of importance was the disgraceful dishonesty (to coin Mr Hall's phrase) of the appellant. In those circumstances he could not expect otherwise than to have no order for costs being made in respect of the restraint proceedings. I would, therefore, dismiss the appeal.

Lord Justice Toulson:

19. I agree.

Mr Justice Hedley:

20. I also agree.

Order: Appeal dismissed