England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT

		Royal Courts of Justice Strand London WC2
		17th June 2005

1. MR JUSTICE ELIAS: This is a case stated from the justices for the Central and South West Staffordshire. It concerns the question whether the costs awarded by the justices in the action between Mr Nedic and the South Staffordshire District Council were unreasonable, and whether the justices erred in law in the costs they awarded in the sum of £20,000.
2. The background can be gleaned from the case stated itself. On 29th May 2004 an information was preferred by the respondent alleging 14 breaches of standard and specific conditions of a licence which had been granted to the appellant on 16th October 2003 under the Caravan Sites and Control of Development Act 1960. The alleged breaches occurred between 22nd December 2003 and 7th February 2004. Not guilty pleas were entered on 12th August 2004. At that stage it appears that it was intimated that there might be a legal argument to be advanced by the defence, although skeleton arguments were not ordered. The trial was set down to take place on 13th and 14th December 2004. On 9th December the defendant indicated that he would plead guilty to 10 of the allegations but not to the other four, and the prosecution agreed not to pursue those. The hearing was therefore cancelled on 13th December.
3. At the hearing before the justices on 14th December the justices in the case stated have indicated that they found certain relevant facts, including that the defendant had failed to comply with the relevant conditions and that there had been considerable correspondence prior to the informations being laid involving a number of written warnings. They also received a schedule of prosecution costs. The defendant had indicated that he would be in a position to pay any fine or costs which were made against him. The fines imposed by the justices were in total £1090. The costs were £20,000.
4. It was contended by the defendant before the magistrates that the costs were wholly excessive and disproportionate, given the nature of the breaches and the amount of work involved. There was a summary of the prosecution costs but not a detailed one. It was suggested that the hours relied upon by the prosecution must be inaccurate and did not represent the true cost of the investigation. Those hours were 325 hours in relation to the investigating officer's time and 134 hours for the respondent's internal lawyers. Counsel's fee of just over £3,500 was not disputed. The respondent contended that the work had been properly done and was just and reasonable. They contended that they were entitled to recover their full costs, that they had to prepare for trial, and that it was not a simple case until the pleas had been entered.
5. The magistrates were referred to certain authorities, including R v Northallerton Magistrates' Court, ex parte Dove (1999) 163 JP 657, and R v Associated Octel Ltd [1997] 1 Cr.App.R.(S) 435. The magistrates in the case stated then say this:

"We were of the opinion that:

6.1 That the claim for costs was just and reasonable. We took account of the fact that the appellant pleaded guilty; that some of the allegations were no longer proceeded with; that the claim for photocopying appeared excessive and therefore reduced the order for costs from £22,256 to £20,000 and fined a total of £1,890 for the ten admitted breaches.

6.2 The appellant did not apply for the matter to be adjourned for the question of costs to be resolved and was prepared for representations to be made on the disputed issues on the 14th December 2004.

6.3 The order for costs reflected the work undertaken by the respondent in its capacity as a public authority with a duty to investigate and prosecute breaches of conditions.

6.4 The appellant brought the prosecution on himself in his failure to comply with written warnings received by the respondent over the operation of the site prior to the grant of the licence.

6.5 The order for costs operated to compensate the respondent for work undertaken and not to punish the appellant for pleading not guilty.

6.6 The appellant had substantial means at his disposal to pay any order for costs."

I simply note that there is no reference there to the principle relied upon by the appellant in this case, that the award of costs should not be disproportionate to the fine imposed. Mr Mason says that the justices must have had that in mind because they were referred to the Northallerton case, but there is no express recognition of the principle in that part of the case stated.

6. I should say a little about the nature of the conditions and breaches which were admitted, save in respect of four of the charges. The breaches were of the following kind: that certain sheds on the caravan park were not considered to be of non-combustible material; that there was only one fire extinguisher instead of two at a particular fire point; that there was no notice provided at the fire point indicating action to be taken in case of fire; that there had been no inspection of electrical installation within the appropriate period; that a certain area made available for children's games was not adequately surfaced and that a site plan was not displayed on the site notice. There were three complaints relating to different dates when work had been undertaken on the site outside permitted hours, namely after 1 o'clock on Saturday and on a Sunday.
7. I refer to those matters because it is plain that the nature of the case itself was far from a complex one. These are matters of fact. No doubt they needed some investigation and witnesses to appear in court to make good the allegations, but there are no complex issues arising from these matters in themselves. Mr Fisher for the appellant submits that the figure of £20,000 was manifestly excessive. He contends that the magistrates erred in three ways in particular. First, he says that since it was made plain that he was challenging the amount of costs, and in particular was suggesting that the hours expended could not possibly relate to the time spent investigating these particular matters, in the circumstances there ought to have been cross-examination of the Council's witnesses. They were making a claim and they should have proffered witnesses to make good that claim. He did not specifically indicate that he wished to cross-examine the witnesses, but he says that he did enough by indicating, as recognized in the statement of case, that he was challenging the claim put forward by the Council, both as to whether the hours worked were properly spent as alleged and also the amount being claimed. Second, he says that the sum claimed is simply unreasonable. There were a number of elements to his claim here. He submitted that the rate of £40 was an inappropriate figure and appeared to have covered overheads. Those overheads in turn appear to have included certain administrative costs which were apparently separately claimed for. More importantly, he submits that the hours could not have been spent on investigating the case. He accepts that there was a lot of contact between officers from the Council and the appellant in relation to other matters, and says that there may perhaps have been some failure to quantify specifically what related to the prosecution itself. He also says that it is impossible for any solicitor in a case of this kind to have claimed to have done 131 hours of legal work. Finally, he relies on a principle which he says emerges from the authorities, that the costs should not be disproportionate to the fine which has been imposed. In this case he says that there is a gross disproportion. The costs are some 11 times the amount of the fine.
8. Mr Mason for the authority submits that there is no fixed rule that the costs should not be disproportionate to the fine. That may be so in the standard case but there may justifiably be exceptional cases (and this is one) where the full costs incurred may be recovered. He submitted that, in principle, the authority which incurred the costs of the prosecution should be entitled to recover them, otherwise it falls to be borne by the public purse. He said that the magistrates were faced with a claim from the authority as to how many hours they had in fact spent, and they were entitled to conclude that the work had been done as indicated. He emphasised that originally the case was down for two days. It was not as straightforward as it may appear. He submitted that it would be wrong for the court to conclude that it was not a reasonable decision, in the Wednesbury sense, for the justices to have fixed the sum that it did.
9. I should refer briefly to the principle being relied upon, that there should not be a disproportion between the costs awarded and the fine imposed. In the case of Whalley 56 Cr.App.R. 304, there is the following observation from Phillimore LJ:

"So far as this order for costs is concerned, the court thinks that it ought to have been made as a fixed order, namely, to pay the costs of the prosecution not exceeding £X, and that sum ought to have been arrived at with regard to the appellant's means as broadly expressed, and having regard to the amount of the fine. It would be quite wrong to impose a very small fine and a very heavy order for costs; the two must go in step."

I pause to note that the judge there was indicating that regard will be had to the means, but that in any event, even if we are dealing with a man of means, nonetheless the fine and the order for costs must go in step. There are other authorities which apply this principle. In the case of Firmston 6 Cr.App.R.(S) 189 the appellant was convicted of theft from a shop, and the sentencer, rather compassionately in the circumstances, granted an absolute discharge but ordered the payment of costs not exceeding £400. The principle of Whalley was relied upon by the defendant, who said that it was wrong in principle to make such an order for costs given the sentence imposed. The principle in Whalley was followed. In that case the costs of not to exceed £400 was changed to an order that the prosecution costs should not exceed the sum of £100. This was done notwithstanding that the judge, Kilner Brown J, observed that the appellant had been extremely fortunate and that it would have been what he described as rough justice had the order for costs remained as fixed by the court. The principle was applied again in the case of Jones (1988) 10 Cr.App.R.(S) 95, where the court held that the award of costs of £583 was out of proportion to a fine of £100. A figure of £250 was substituted. Finally, I refer to the Northallerton case which was referred to the justices. This was a decision of the Divisional Court of the Lord Chief Justice, Lord Bingham, and Ognall J. Lord Bingham set out a number of propositions which he gleaned from the authorities, including the cases to which I have made reference. They were as follows:

"(1) An order to pay costs to the prosecutor should never exceed the sum which, having regard to the defendant's means and any other financial order imposed upon him, the defendant was able to pay and which it was reasonable to order the defendant to pay.

(2) Such an order should never exceed the sum which the prosecutor had actually and reasonably incurred.

(3) The purpose of such an order was to compensate the prosecutor and not to punish the defendant. Where the defendant had by his conduct put the prosecutor to avoidable expense he might, subject to his means, be ordered to pay some or all of that sum to the prosecutor. But he was not to be punished for exercising a constitutional right to defend himself.

(4) While there was no requirement that any sum ordered by justices to be paid to a prosecutor by way of costs should stand in any arithmetical relationship to any fine imposed, the costs ordered to be paid should not in the ordinary way be grossly disproportionate to the fine. Justices should ordinarily begin by deciding on the appropriate fine to reflect the criminality of the defendant's offence, always bearing in mind his means and his ability to pay, and then consider what, if any, costs he should be ordered to pay to the prosecutor. If, when the costs sought by the prosecutor were added to the proposed fine, the total exceeded the sum which in the light of the defendant's means and all other relevant circumstances the defendant could reasonably be ordered to pay, it was preferable to achieve an acceptable total by reducing the sum of costs which the defendant was ordered to pay rather than by reducing the fine."

The fifth proposition concerned whether the defendant had the means to pay and is not relevant to this case. It is pertinent to note that in that case the criminal court imposed a fine of £1,000 and a costs order of £4,624. They apparently assessed the costs first and tempered the amount of the fine in the light of the costs order that they had made. Lord Bingham said this about that approach:

"This is, I think, a case in which the justices could have structured their order differently, and had they done so it would have been very hard to attack. If, however, a fine of £1,000 or thereabouts reflected in the justices' considered judgment the criminality of this offence committed by the applicant, then I find it very hard to resist the conclusion that the costs order was disproportionate. It certainly exceeded grossly the amount of the fine which the justices imposed."

As I understand it, Lord Bingham was indicating that had the fine been larger the overall sum might have been justifiable. The award of costs based on, say, a fine of £2000, reaching the same overall figure, may have been legitimate, but the principle of proportionality meant that, having fixed the fine at £1000, the costs awarded were excessive. It was not a case of the defendant not having the means, but it seems to me that the principle of proportionality was being applied here.

10. I have no doubt that in this case the amount of costs awarded by the magistrates was excessive. I say that for two reasons in particular. First, the number of hours proposed or suggested by the authority as having been the work done in relation to this prosecution could not have been reasonable. This was not, on the face of it, a complex case, and it is inconceivable that, for the necessary investigation for the prosecution and the legal work to be done, a total number of hours in the region of 480 or so could have been spent. I am aware from what I have been told by counsel -- I say this in fairness to the Council -- that they spent a lot of time preparing documentation and legal argument in anticipation of an argument they thought may emerge. It does not appear that that is the basis of the magistrates determination on costs. That information was not before the magistrates. On the basis of the case before them these figures were far higher than could reasonably be incurred for a case of this nature. Had the matter been before them, I in any event doubt whether the Council could have properly recovered costs for anticipating and preparing an argument which they thought might emerge but which had not been indicated to them, and which, if advanced on the day, would have justified an adjournment. I do not think that the Council can prepare for argument that has never been identified or advanced and then seek to impose an order for costs against the defendant.
11. On this ground alone I am satisfied that the figure is not a sustainable one. I do not enter into the question as to whether £40 is too high an hourly rate or whether there are areas of double accounting or anything of that kind. I do not have the evidence. Nothing of that kind can be determined by me. I am also inclined to think that in this case the justices ought to have heard cross-examination of the Council's witnesses. I do not wish to be critical because I am not sure that it was ever put firmly into their heads that it would be sensible to ask the authority to proffer witnesses for the purpose of cross-examination. But where the basis of the case being put forward by the Council was being challenged, then it seems to me that they could not properly accept figures which, on the face of it, were so high as to the amount of work done without at least having the evidence tested. Mr Mason says that that would have occurred had the case been adjourned. I see the force of Mr Fisher's observation that the defendant did not specifically want an adjournment of any sort. It was not for the defendant to adduce evidence of the costs incurred. It was for the prosecution to do that.
12. Furthermore, I am satisfied that the proportionality principle was infringed here. I do accept that a relevant factor will be the means of the defendant. There is no issue here because he accepted that he had the means to pay the costs and the fine, whatever was imposed. But it seem to me that the authorities indicate that, even for a person of means, there is still the principle that the costs awarded should not, in the ordinary way, be disproportionate to the fine. I take on board Mr Mason's observation when he says that "in the ordinary way" envisages exceptions, but if there is going to be an exception to that principle, it seems to me that the court ought to indicate why there is an exception. I would have thought that it would be a rare case.
13. The final point I have to determine, having come to the conclusion that there was an error of law by the justices and that the figure they have indicated cannot stand, is whether I should send the matter back to the magistrates so that the question of costs can be reconsidered by them, or whether in the circumstances I should fix a figure, which I accept will be done in a rather rough and ready way. Mr Mason has urged upon me that I should send the matter back. Mr Fisher asks me to fix a figure today. I have decided to fix a figure because it seems to me that the additional costs incurred in sending the matter back, with further hearings and analysis of material, would add to the costs of this case. Justice can be done in these particular circumstances if I identify the costs which I think are appropriate, given the nature of the fine involved. In fixing the costs I bear in mind that the Council had to prepare for a trial that was going to fight until late in the day. I accept that there were a number of witnesses who would have had to give evidence. Plainly, a certain amount of work was involved. It seems to me that the justice in the case would be met by a costs order of £4,500. That is in place of the £20,000 which was fixed by the justices. It is in the region of two and a half times the fine imposed.
14. MR FISHER: I raise the issue of costs.
15. MR MASON: This is an appeal against the justices' order. In the circumstances I would resist an order for costs to be made against the local authority.
16. MR JUSTICE ELIAS: It would normally be costs out of central funds. I have not got the power to do that. It has to be the Divisional Court. We are not a Divisional Court. That will have to be a two judge court.
17. MR FISHER: I can seek it from the respondent.
18. MR JUSTICE ELIAS: Because of the difficulties in the statute I cannot properly impose it on the local authority. They have come to support the justices' order. You would have had to come in any event because it is a justices' order that is under consideration. The court would have had to be convinced that the justices were wrong. You would have had to be here whether or not the local authority were here.
19. MR FISHER: They have sought to resist it.
20. MR JUSTICE ELIAS: You would have to persuade the court that the court could not have accepted that the justices erred in law. You would have had to run the submissions that you have run even if the local authority had not come along.
21. MR FISHER: I understood that it was out of central funds or the respondent.
22. MR JUSTICE ELIAS: Maybe they have the power. I do not see that it would be just to require a local authority to pay the costs in circumstances where you would have to incur them. This is not an area where you can come to court and say: "We agree the justices got it wrong." That order stands until the court is persuaded that there was an error of law.
23. MR FISHER: I must confess that I was not aware that you did not have the power to award that out of central funds.
24. MR JUSTICE ELIAS: I am notified that I do not have this as a single judge. It is technical. It arises out of the provisions. I am prepared to hear any submission you wish to make in writing.
25. MR FISHER: If we find a provision that you have the power to do so, you would make an order for costs out of central funds?
26. MR JUSTICE ELIAS: Yes. It is a question of whether I have power to do so. That is my difficulty. If you can persuade me that there is a way out of it ----
27. MR FISHER: You are not minded to make an order against the respondent?
28. MR JUSTICE ELIAS: No. It does not seem to be appropriate in this case. You would have had to be here in any event. I do not think that your argument would have been different. I should answer the case that was stated for me at page 15, yes. The answer is yes, there was an error of law and it was unreasonable to impose a costs order in the sum of £20,000 in the circumstances of the case.