Royal Courts of Justice
Strand, London, WC2A 2LL
B e f o r e :
THE HON. MR JUSTICE GRAY
|The Queen (on the application
Bhatt Murphy and
Bindman & Partners and
Birds, Solicitors and
Fisher Meredith and
Hickman & Rose and
Hodge, Jones & Allen and
|- and -
|Secretary of State for the Home
The Independent Assessor
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Official Shorthand Writers to the Court)
Rabinder Singh QC, Heather Williams QC, Phillippa Kaufman (4)
(instructed by Hodge, Jones & Allen (1&2); Fisher Meredith (3); Bindman & Partners (4)) for the Claimants
Jonathan Swift (instructed by Treasury Solicitor) for the Defendants
Hearing dates: 10-11 May 2007
Crown Copyright ©
Lord Justice May:
The statutory and discretionary schemes
"There is no statutory provision for the payment of compensation from public funds to persons charged with offences who are acquitted at trial or whose convictions are quashed on appeal, or to those granted free pardons by the exercise of the royal prerogative of mercy. Persons who have grounds for an action for unlawful arrest or malicious prosecution have a remedy in the civil courts against the person or authority responsible. For many years, however, it has been the practice for the Home Secretary, in exceptional circumstances, to authorise on application ex gratia payments from public funds to persons who have been detained in custody as a result of a wrongful conviction.
In accordance with past practice, I have normally paid compensation on application to persons who have spent a period in custody and who receive a free pardon, or whose conviction is quashed by the Court of Appeal or the House of Lords following the reference of a case by me under section 17 of the Criminal Appeal Act 1968, or whose conviction is quashed by the Court of Appeal or the House of Lords following an appeal after the time normally allowed for such an appeal has lapsed. In future I shall be prepared to pay compensation to all such persons where this is required by our international obligations. The international covenant on civil and political rights [article 14.6] provides that:
'When a person has by a final decision been convicted of a criminal offence and when subsequently his conviction has been reversed, or he has been pardoned, on the ground that a new or newly discovered fact shows conclusively that there has been a miscarriage of justice, the person who has suffered punishment as a result of such conviction shall be compensated according to law, unless it is proved that the non-disclosure of the unknown fact in time is wholly or partly attributable to him'.
I remain prepared to pay compensation to people who do not fall within the terms of the preceding paragraph but who have spent a period in custody following a wrongful conviction or charge, where I am satisfied that it has resulted from serious default on the part of a member of a police force or of some other public authority.
There may be exceptional circumstances that justify compensation in cases outside these categories. In particular, facts may emerge at trial, or on appeal within time, that completely exonerate the accused person. I am prepared, in principle, to pay compensation to people who have spent a period in custody or have been imprisoned in cases such as this. I will not, however, be prepared to pay compensation simply because at the trial or an appeal the prosecution was unable to sustain the burden of proof beyond a reasonable doubt in relation to the specific charge that was brought."
"(1) Subject to subsection (2) below, when a person has been convicted of a criminal offence and when subsequently his conviction has been reversed or he has been pardoned on the ground that a new or newly discovered fact shows beyond reasonable doubt that there has been a miscarriage of justice, the Secretary of State shall pay compensation for the miscarriage of justice to the person who has suffered punishment as a result of such conviction or, if he is dead, to his personal representatives, unless the non-disclosure of the unknown fact was wholly or partly attributable to the person convicted.
(2) No payment of compensation under this section shall be made unless an application for such compensation has been made to the Secretary of State.
(3) The question whether there is a right to compensation under this section shall be determined by the Secretary of State.
(4) If the Secretary of State determines that there is a right to such compensation, the amount of the compensation shall be assessed by an assessor appointed by the Secretary of State."
Subsection (5) provides that "reversed" shall be construed as referring to a conviction having been quashed "on an appeal out of time". Subsection (4) embraces a power to award as compensation costs both of establishing innocence and of making the claim for compensation itself.
"I have decided reform is needed to the arrangements under which state compensation is paid for miscarriages of justice.
The purpose of the reforms which include some important changes being made by the Assessor, with my full support, is to modernise and simplify the system, and to bring about a better balance with the treatment of victims of crime. In summary, with immediate effect:
I will not consider any new applications under the discretionary scheme for compensation;
I will introduce time limits for all applications;
the Assessor will assess compensation in respect of applicants' legal costs by reference to the level of fees paid for Legal Help pursuant to the Community Legal Service (Funding) Order 2000;
A single scheme
Currently I pay compensation under two schemes: a statutory scheme under section 133 of the Criminal Justice Act 1988 and a discretionary scheme which operates on the basis of the statement made by the then Home Secretary to the House of Commons on 29th November 1985.
The existence of the second, discretionary scheme is confusing and anomalous. The scheme predates the introduction of international standards and agreements in this area and addresses cases beyond the UK's international obligations. The scheme currently costs over £2m a year to operate but benefits only between five and ten applicants. I do not believe that the discretionary scheme can continue to be justified.
Applications for compensation already received by the Office for Criminal justice Reform will continue to be considered both under section 133 and the discretionary scheme. However, with immediate effect I will entertain new applications for compensation only under the statutory scheme.
Other immediate changes
Claims for compensation have increased in complexity in recent years and may drag on for several years. This reflects the absence of time limits on the process, as would be expected if the case had come to court, lack of clarity about the maximum amounts payable, and the absence of limits on legal fees, which are reimbursed at private work rates. Currently, applicants are invited simply to submit their claims for compensation and to detail their financial loss. Compensation payments for miscarriages of justice have increased sharply over the last few years and are now running at an average of well over £250,000, with more than ten per cent of that amount also paid in legal fees. In contrast, no legal costs are payable under the scheme for victims of crime, and the average amount received by each victim is less than one fiftieth of what is paid to those eligible under the miscarriages of justice scheme.
The Assessor has also decided that legal costs in relation to applications for compensation will, with immediate effect, be paid by reference to the fees for publicly funded civil cases as provided for in the Legal Help contained in the Community Legal Service (Funding) Order 2000. This change will apply to all existing cases (both under the statutory and discretionary scheme) which are currently awaiting a decision from the Assessor on the amount of compensation, as well as to all existing cases (both under the statutory and discretionary scheme) where the question of eligibility for compensation is being considered by the Office for Criminal Justice Reform, and to all new cases for compensation under the statutory scheme received by the Office for Criminal Justice Reform. However, in the case of applications already received by the Office for Criminal Justice Reform or already under consideration by the Assessor, the change will apply only in relation to legal costs incurred after today and compensation in respect of legal costs before today will be paid on the same basis as before."
"Before examining each of those issues, I shall consider the way in which the courts should interpret and apply the ex gratia scheme, set out as it is in the form of a statement of ministerial policy. The first consideration is that it is just that, a statement by the Home Secretary of the day, to which his successors have adhered, of what he intends to do. It is not a statute. The second is that it is an ex gratia scheme directed to circumstances that the Home Secretary, on a case by case basis, might consider exceptional and, which, on that account and in his discretion, merit payment of compensation from public funds. Given those considerations, whilst decisions of a Home Secretary under the scheme are susceptible to judicial review, both as to matters of general interpretation and individual application, intervention by the courts in either respect should, it seems to me, be highly guarded."
Auld LJ said at paragraph 28 of possible changes to the scheme:
"He [the Home Secretary] is entitled to introduce such change, providing it is not irrational or otherwise unlawful and gives such public or private notice as is necessary or appropriate, especially in the case of an ex gratia and discretionary policy such as this. As I have said, the application of the ex gratia scheme is not by its subject matter and the circumstances in which the claimant first may have recourse to it, a natural area for attack on the grounds of long-term legitimate expectation or inconsistency."
"In making ex gratia payments the Home Secretary is disbursing public money. But he is not doing so pursuant to any statutory duty or statutory power. There is no statute to be construed. He is exercising a Crown prerogative. He is accountable for what he does with public money to Parliament and, in particular, to the House of Commons. The making of ex gratia payments is lawful if, but not unless, there is parliamentary authority for the disbursements: see Auckland Harbour Board v The King  AC 318, 326-327, per Viscount Haldane. Your Lordships have, not surprisingly, not been addressed on this aspect of the ex gratia scheme but presumably ex gratia payments in wrongful conviction cases are authorised by some provision in the annual Appropriation Act.
So, on the footing that the requisite parliamentary authority exists, the ex gratia payments are lawfully made under the prerogative power of the Crown. It is now well established that the Crown prerogative origin of the power to make ex gratia payments does not exclude the scheme under which the payments are made from judicial review: see R v Criminal Injuries Compensation Board, Ex p Lain  2 QB 864 and R v Criminal Injuries Compensation Board Ex p P  1 WLR 845. But the scope of the courts' powers of intervention are, in my opinion, limited by the nature of the prerogative power in question. The Secretary of State for the time being is not bound by the statement of policy made by his predecessor. He is not bound to make an ex gratia payment to a person whose case falls within the current statement of policy and he is not bound to refuse a payment to a person whose case falls outside it. Provided the Secretary of State avoids irrationality in his decisions about who is and who is not to receive ex gratia payments, and provided the procedure he adopts for the decision-making process is not unfair, I find it difficult to visualise circumstances in which his decision could be held on judicial review to be an unlawful one."
Although this passage refers to the operation of the discretionary scheme rather than to a decision to withdraw it, it generally supports Mr Swift's reference to the fragile nature of any expectation that the scheme would continue – see also R v Secretary of State for the Home Department ex parte Mullen  1 AC 1 at paragraph 12.
The individual claimants
i) Did the Secretary of State act unfairly or in breach of the claimants' legitimate expectation in abolishing the discretionary scheme without giving notice or an opportunity to interested parties to make representations?
ii) Was the Secretary of State in breach of a duty to provide adequate and intelligible reasons for abolishing the long-standing discretionary scheme?
iii) In the alternative to (ii), was the decision flawed because the Secretary of State took into account an irrelevant consideration in seeking to achieve a better balance with the compensation afforded to victims of crime?
In my view, the claimants' case on issues (ii) and (iii) taken alone are weak, and I shall in due course address them quite briefly. The main burden of oral submission rightly concentrated on issue (i).
"To qualify as a subject for judicial review the decision must have consequences which affect some person (or body of persons) other than the decision-maker, although it may affect him too. It must affect such other person either:
(a) by altering rights or obligations of that person which are enforceable by or against him in private law; or
(b) by depriving him of some benefit or advantage which either (i) he had in the past been permitted by the decision-maker to enjoy and which he can legitimately expect to be permitted to continue to do until there has been communicated to him some rational grounds for withdrawing it on which he has been given an opportunity to comment; or (ii) he has received assurance from the decision-maker will not be withdrawn without giving him first an opportunity of advancing reasons for contending that they should not be withdrawn."
The case concerned a ministerial decision, made without consultation purportedly under article 4 of the Civil Service Order in Council 1982, to vary immediately the terms and conditions of service of staff employed at GCHQ to the effect that they would no longer be permitted to belong to national trade unions, despite a well-established practice of consultation with trade unions about important changes in terms and conditions of service. The application for judicial review of this decision failed on the grounds of national security. But it was held that, apart from considerations of national security, the applicants would have had a legitimate expectation that unions and employees would be consulted before the minister made her decision. The decision-making process would thus have been unfair and amenable to judicial review. The employees did not have the legal right to prior consultation, but they had a legitimate expectation arising from the invariable rule, ever since GCHQ began in 1947, that there had been prior consultation when conditions of service were significantly altered – see Lord Fraser of Tullybelton at page 401 E. Lord Fraser said at page 401 B that legitimate expectation may arise either from an express promise given on behalf of a public authority or from the existence of a regular practice which the claimant can reasonably expect to continue. The test in that case was whether the practice of prior consultation was so well established by 1983 that it would be unfair and inconsistent with good administration for the government to depart from the practice.
"Perhaps more conventionally the concept of legitimate expectation is used to refer to the claimant's interest in some ultimate benefit which he hopes to retain (or, some would argue, attain). Here, therefore, it is the interest itself rather than the benefit which is the substance of the expectation. In other words the expectation arises not because the claimant asserts any specific right to a benefit but rather because his interest in it is one that the law holds protected by the requirements of procedural fairness; the law recognises that the interests cannot properly be withdrawn (or denied) without the claimant being given an opportunity to comment and without the authority communicating rational grounds for any adverse decision."
He referred to various authorities, including the Rochdale case, as clear examples of this head of legitimate expectation. I need not refer to his third and fourth categories.
"Thus the only touchstone of a category 2 interest emerging from Lord Diplock's speech is that the claimant has in the past been permitted to enjoy some benefit or advantage. Whether or not he can then legitimately expect procedural fairness, and if so to what extent, will depend upon the court's view of what fairness demands in all the circumstances of the case. That, frankly, is as much help as one can get from the authorities. Lord Diplock's analysis supersedes, as I believe, all earlier attempted expositions of this doctrine such as that found in McInnes v Onslow Fane  3 All ER 211,  1 WLR 1520.
In short, the concept of legitimate expectation when used, as in the Durham case, in the category 2 sense seems to me no more than a recognition and embodiment of the unsurprising principle that the demands of fairness are likely to be somewhat higher when an authority contemplates depriving someone of an existing benefit or advantage than when the claimant is a bare applicant for a future benefit. That is not to say that a bare applicant will himself be without any entitlement to fair play. On the contrary, the developing jurisprudence suggests that he too must be fairly dealt with, not least in the field of licensing."
I note that Simon Brown LJ was cautious about extending this category of legitimate expectation to those who hope to attain a benefit which they have yet to achieve. I also accept Mr Swift's submission that the individual claimants in the present proceedings were not even bare applicants for a future benefit. They were unidentified future potential applicants.
"Thus it is clear that it will only be in an exceptional case that a claim that a legitimate expectation has been defeated will succeed in the absence of a clear an unequivocal representation. That is because it will only be in a rare case where, absent such a representation, it can be said that a decision-maker will have acted with conspicuous unfairness such as to amount to an abuse of power. In the Unilever case, the taxpayer had, in effect, been lulled into a false sense of security, and had regulated its tax affairs in reliance on the revenue's course of conduct, and thereby acted to its detriment. In those circumstances, and in the light of the revenue's acceptance of its duty to act fairly and in accordance with the highest public standards, it is not surprising that the court felt able to treat this as a wholly exceptional case."
Duty to give reasons and irrelevant consideration
"The criteria for eligibility under the discretionary scheme set up distinctions (between persons eligible, and persons who were not) that in terms of personal hardship were not regarded as appropriate, and in many cases were not understood – particularly by those who did not meet the criteria for eligibility under the discretionary scheme. Most obviously, the discretionary scheme rested on the premise that it was appropriate to treat some persons acquitted after trial, or following an appeal made in time, differently from others. There were, however, in the region of 200,000 cases per year in which the defendant was acquitted or the case was not proceeded with. In the other instances the applications had rested on the "mere" fact that either the person concerned had been acquitted, or that charges originally made had not been pursued. Thus the situation in practice was that in a small number of instances compensation had been paid under the discretionary scheme, but in the vast majority of cases no compensation was paid following an acquittal.
These points had been highlighted in the course of correspondence with persons who had made applications for compensation that had been refused. Sometimes, people who had been found not guilty at trial (or who had been the subject of charges, subsequently not pursued) understandably regarded themselves as completely exonerated and perceived their situation to be barely distinguishable from those who had been awarded compensation. For example, someone held on remand for a considerable length of time, perhaps pending trial for sexual assault, and subsequently found not guilty because the prosecution could not sustain the burden of proof at trial would almost certainly not receive compensation. However, someone else [who] had been held for just a few hours who subsequently had charges dropped, perhaps because of mistaken identity, could be completely exonerated and might therefore receive substantial compensation.
Insofar as eligibility under the discretionary scheme rested on demonstrating that either the police force, or some other public authority had been responsible for some act of serious default, it was also the case that in such situations a person who made an application under the discretionary scheme might in any event have a claim for compensation that could be pursued through the civil courts in the ordinary course of events. This fact called into question whether this aspect of the discretionary scheme was appropriate. It was recognised that it may well have been the case that persons who received compensation under the discretionary scheme regarded this route as more convenient and less onerous than the route of formal civil litigation. However, the real issue for consideration was not the possible preferences of potential applicants, rather whether it remained appropriate for a discretionary scheme to continue to exist by way of alternative or supplement to civil remedies regularly available in the civil courts."
Conclusion on the first challenge
The Independent Assessor's decision about costs
"But the circumstances in which discretions are exercised vary enormously and that passage cannot be applied literally in every case. The general rule is that anyone who has to exercise a statutory discretion must not 'shut his ears to an application' (to adapt from Bankes LJ on page 183). I do not think there is any great difference between a policy and a rule. There may be cases where an officer or authority ought to listen to a substantial argument reasonably presented urging a change of policy. What the authority must not do is to refuse to listen at all. But a ministry or large authority may have had to deal already with a multitude of similar applications and then they will almost certainly have evolved a policy so precise it could well be called a rule. There can be no objection to that, provided the authority is always willing to listen to anyone with something new to say – of course I do not mean to say that there need be an oral hearing."
Mr Justice Gray: