CO/2782/2012 
Neutral Citation Number: [2013] EWHC 191 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION 
DIVISIONAL COURT 
Royal Courts of Justice 
Strand
London WC2A 2LL 

Tuesday, 29 January 2013
 
B e f o r e:

LORD JUSTICE LEVESON 

MR JUSTICE NICOL 

HIS HONOUR JUDGE MICHAEL STOKES QC 
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Between: 
HUNTER 
Claimant

v 

NEWCASTLE CROWN COURT 
Defendant 
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Computer‑Aided Transcript of the Stenograph Notes of  
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Mr A Lakha, QC (instructed by Byrne and Partners LLP) appeared on behalf of the Claimant
Ms K Dunn (instructed by Crown Prosecution Service) appeared as an Interested Party
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J U D G M E N T
1.	LORD JUSTICE LEVESON:  On 28 November 2011, in the Crown Court at Newcastle‑upon‑Tyne, this appellant and his co‑defendant twin brother appeared before His Honour Judge Thorn QC to stand trial on an indictment alleging fraudulent trading, contrary to s.933 of the Companies Act 2006 and two further counts of contravention of sections 19 and 21 of the Financial Services and Markets Act 2000.  The appellant's brother had previously pleaded guilty to the latter two offences and there were then discussions between the Crown and the defence as to the sum of £986,508 held in bank accounts of the business in which both brothers had an interest.  Thereupon, the prosecution accepted the pleas tendered and offered no evidence against the appellant.  Judge Thorn entered verdicts of not guilty after which the appellant's legal advisers made an application under s.16(2) of the Prosecution of Offences Act 1985 for an order that the entirety of the appellant's costs should be paid out of central funds.  After hearing submissions, Judge Thorn refused the application.  It is against that refusal that the appellant now appeals by way of case stated.
2.		The facts found by the judge are set out in the Case Stated in these terms:
"1. Without impugning the NG verdicts, the learned Judge found that the Appellant had brought the prosecution upon himself, given the Prosecution Draft Opening (8.2.10) and the Exhibits referred to.  
Not least: 
A. This twin and his Co‑Defendant brother Alexander, set up Global Marketing Corporation Ltd.  This eventually accrued £1,591,854.60 on which no tax was paid and in respect of which no accounts were filed.  
B. This company and websites which they were both involved in setting up, were used as bogus means of setting up tip sheets in respect of the American Stock Market.  
C. In particular, they gave advice based on invented story‑lines eg. in the names of 'Michael Cohen' or 'Prof Finn' which in turn were based on a false address in Leeds and later in Whitley Bay.   
D. This Defendant held shares in the Company and his name and details were used repeatedly on the websites.  
E. As to the nature and extent of his involvement with this company and websites, cp [sic] that of his twin brother, this was never entirely clear save that it was substantially less than that of his brother.  
2. By inference, the Defence had also misled the Police and Prosecution into thinking the case against him was stronger than it was:  
A. Given this Defendant's mainly 'No Reply' interviews on 3.4.09 & 12.7.10 [See also Ashenden and Jones v UK (2011) ECHR 1323.] 
B. Further at no stage was there any Defence Statement from this Defendant.  (The PCMH was held on 10.3.11, with a four week Trial listed for 7.11.11)."  
3.	Recording the submissions of the parties, Judge Thorn noted that the application for a 'full defence costs' order was made without notice or skeleton argument and by reference only to para. 6.14 of Archbold and paras. 10‑12 and 24.2 of what was a joint Defence 'Position Statement'.  He posed the questions:
"1. Is this Appeal by way of Case Stated NOT a matter 'relating to a trial on Indictment', so that as such there IS jurisdiction to Appeal? 
2. If the Court has jurisdiction to review this, was the Crown Court justified in refusing the Appellant his reasonable Defence Costs out of Central Funds?"
4.		There is no doubt that s.28(1) of the Senior Courts Act 1981, which provides for appeal by way of case stated, is a convenient mechanism for challenging such decisions of the Crown Court as are open to challenge, not least because of the ability of the parties to make submissions both as to the relevant facts to be included in the case, and as to the questions to be posed for the High Court, all of which can be taken into account by the judge when stating the case.  It is, however, critical to underline that the power of this court to review such decisions is limited by s.28(3) of the Act which makes it clear that s.28(1) shall not apply to a judgment or other decision of the Crown Court relating to trial on indictment.  There is an equivalent provision in s.29(3) of the Act which deals with applications for judicial review (in respect of which the High Court has no power in respect of the jurisdiction of the Crown Court "in matters relating to trial on indictment").  
5.		In his skeleton argument and today, Mr Abbas Lakha QC relies on Reg v Wood Green Crown Court ex parte DPP [1993] 1 WLR 723 as authority for the proposition that a refusal to grant a defendant's costs order is reviewable, although he recognises that the authorities upon which that case relied have since been overruled by the House of Lords in Re Ashton [1994] 1 AC 9.  He submits that this latter case does not affect the authority of Wood Green Crown Court and, in any event, those cases are readily distinguishable.  The strand of authorities, dealing with what constitutes a "matter relating to a trial on indictment" therefore, requires careful review. 
6.		The starting point is In Re Smalley [1985] AC 622 which concerned estreating the recognisance of a surety, held by the House of Lords not to relate to a trial on indictment.  In his speech, Lord Bridge accepted (at 642) that the words "trial on indictment" must include the trial of a defendant who pleaded guilty.  He discerned the legislative purpose of this exclusion as being to avoid delay for a defendant who would have a remedy by way of appeal against conviction and to underline that prosecutors had never enjoyed a right of appeal or review when unsuccessful (although this latter premise is no longer accurate in the light of appeals pursuant to s.57 of the Criminal Justice Act 2003).   
7.		Lord Bridge went on to consider questions of costs.  As for an order that a defendant make a contribution to his own costs, he expressed unease that there should be no remedy "no matter how gravely flawed by errors or law or procedure the order may be", but he did not overrule the relevant decision (Reg v Crown Court at Cardiff ex parte Jones [1974] 1 QB 113).  He went on, however, to discuss the statutory criterion in relation to legal aid and added:
"This is quite a different criterion from such as would govern the discretion whether or not to make any of the orders for costs which may be made under s.3(1)(a) or s.4(1) of the Costs in Criminal Cases Act 1973.  The exercise of that discretion is intimately related to the conduct of the trial; indeed, it may be said to be an integral part of the trial process".  
8.		The provisions of s.4(1)(b) of the Costs in Criminal Cases Act 1973 concerned the payment of costs by the prosecutor if the accused is acquitted.  In his speech, Lord Bridge does not specifically deal with s.3(1)(b) (which concerned orders of payment of defence costs out of central funds), but it is difficult to see why similar reasoning should not apply to the current legislation (contained within the Prosecution of Offenders Act 1985) bearing in mind para 2.2.1 of the Practice Direction (Costs in Criminal Proceedings) July 2010, which enjoins the court to make a defendant's costs order unless there are positive reasons for not doing so (of which the example provided is that the defendant's own conduct has brought suspicion on himself and has misled the prosecution into thinking that the case against him was stronger than it was).  In each case, the court is required to make a judgment of the comparative positions and responsibilities of the prosecutor and the defendant. 
9.		The House of Lords returned to the issue of legal aid costs in Re Sampson [1987] 1 WLR 194 and decided that subsisting contribution orders made by the Crown Court under the provisions of s.32(1) of the Legal Aid Act 1974 were not subject to judicial review because such orders were matters 'relating to trial on indictment' because as being an integral part of the trial process.  Lord Bridge referred to his speech in Smalley and said (at 196):
"It is in any event clear, I apprehend, that certain orders made at the conclusion of a trial on indictment are excluded from judicial review as relating to trial on indictment; not because they affect the conduct of the trial, but rather because they are themselves an integral part of the trial process.  This is obviously true of the verdict and sentence.  It is equally true, according to the provisional view that I expressed in In Re Smalley of certain orders for the payment of costs made under the Costs in Criminal Cases Act 1973 ... 
An order that the prosecutor pay the whole or any part of the costs of an acquitted defendant under s.(4)1(b) is not appealable, nor is any decision under s.3(1) either to make or to refrain from making an order for payment of costs out of central funds in favour of the prosecution or the defence.  The common characteristic of all decisions made by the Crown Court under these provisions is that the court is exercising a discretion in the light of what it has learned in the course of a trial as to the nature of the case, both for the prosecution and the defence and in the light of the conduct and outcome of the trial itself: see guidance given by the Practice Direction (Costs: Acquittal of Defendant) [1981] 1 WLR 1383.  It follows that all such decisions are so intimately bound up with the trial process that they must be treated as an integral part of it and thus must be considered as made in the exercise of the Crown Court's jurisdiction 'relating to trial on indictment' and accordingly are not subject to judicial review." 
10.		It is of note that this observation does extend to the entirety of s.3(1) of the 1973 Act.  That includes payment of costs out of central funds.  Dealing with the payment of a legal aid contribution, Lord Bridge went on to underline that the court would have to consider the nature and conduct of the prosecution and defence and the outcome of the trial.  These factors were "indistinguishable from those which would apply to the decision whether or not to order payment out of central funds under s.3(1)(b) of the Costs in Criminal Cases Act 1973 of the costs of an unassisted defendant" which must be "influenced by the same factors, intimately related to the trial itself...".  He observed that his earlier expressed doubts about Reg v Crown Court at Cardiff ex parte Jones were unfounded having made it clear:
"I am satisfied that a legal aid contribution order, like any other order with regard to costs which the Crown Court may make at the conclusion of a trial on indictment, is an integral part of the trial process and thus belongs to the court's 'jurisdiction relating to trial on indictment' and is not subject to judicial review."   
11.		Given that Lord Bridge in Smalley had specifically accepted that 'trial on indictment' included 'trial' of a defendant who pleaded guilty (so that there was no special knowledge within the judge which emanated from the evidence that had been heard), it is difficult to see why there should be a difference if the 'trial' consists only of the prosecution offering no evidence.  In both cases, the judge will have been appraised of the case, will have had a chance fully to familiarise himself with the evidence and the issues and will be in the best position to decide (for this type of application) whether the defendant has brought suspicion on himself and misled the prosecution.  Neither is it fanciful to suggest that a defendant's costs order could be sought after a plea of guilty if, for example, the plea was only to a very small part of the indictment: as a matter of principle, it would be very odd if these situations were dealt with differently.
12.		Against the background of these decisions of the House of Lords, it is necessary to consider the authority on which Mr Lakha relies, namely, R v Wood Green Crown Court ex parte Director of Public Prosecutions [1993] 1 WLR 723.  Because of failure to respond to requests for information, the defence sought to stay the prosecution as an abuse of process whereupon the prosecution offered no evidence and decided not to resist any application for costs wasted as a result of their failures.  In the event, the judge ordered that the prosecution pay the entire defence costs after committal.  Upon application by the DPP, the Divisional Court concluded that the award of costs following a not guilty verdict, where no evidence had been offered, was not a matter relating to trial on indictment so that the High Court could exercise its supervisory responsibility.
13.		Mann LJ (with whom Leonard J agreed) cited both Smalley and Sampson and went on (at 728B):
"Since 1987 this court has proceed on a case by case basis in the light of the guidance given by Lord Bridge [in Smalley and Sampson].  We were referred to the most recent cases in the procession.  Thus, the court has held that an order granting or refusing a stay on the ground of abuse of process does not affect the conduct of a trial on indictment: Reg v Norwich Crown Court ex parte Belsham [1992] 1 WLR 54; that an order granting or refusing an application to quash an indictment for want of any jurisdiction does not affect the conduct of such a trial: Reg v Manchester Crown Court ex parte Director of Public Prosecutions [1993] 1 WLR 693), and that an order made in dismissal proceedings under s.6 of the Criminal Justice Act 1987 is not made as an integral part of the trial process: Reg v Central Criminal Court ex parte Director of the Serious Fraud Office, The Times, 8 September 1992."
14.		He then turned to the narrower question posed by Lord Bridge, namely whether the order was "so intimately bound up with the trial process that it must be treated as an integral part of it" and dealt with the submission on behalf of the DPP that the position was "entirely different" where there had been no trial with which the requisite degree of intimacy could be established.  He observed (at 728G):
"[Counsel] pointed out that had the judge had occasion to rule on and grant the application for a stay then a subsequent order for costs would not have been an integral part of the trial because by hypothesis the stay would have prevented there being any trial: see ex parte Belsham [1992] 1 WLR 54, 63. That must be right in this court.  The same must now be so where the order follows the quashing of an indictment for want of any jurisdiction: compare the Manchester Crown Court case [1993] 1 WLR 693. 
In the present case the recorded verdicts in favour of the defendants have, by virtue of section 17 of the Criminal Justice Act 1967, "the same effect as if the defendant[s] had been tried and acquitted on the verdict of a jury".  The section confirms the conclusion which is reached by a consideration of whether what here occurred within the ordinary meaning of the word 'trial' extended as it is in order to cover the process where a defendant pleads guilty on arraignment ... it plainly does not so fall."
15.		Mann LJ recognised that it would be thought strange that a precisely similar order made after a trial would be within the exclusion but that this was an "inevitable one in consequence of the established approach to the construction of s.29(3)."
16.		The Divisional Court clearly felt driven to this conclusion by reason of the authority cited to it: that much is evident by the sentence, "That must be right in this court".  The two central decisions used to exemplify the case by case development of the law provided by Lord Bridge are, however, no longer good law.  The Manchester Crown Court case was taken to the House of Lords and reversed (see Re Ashton and others, R v. Manchester Crown Court ex parte DPP [1994] 1 AC 9), during the course of which, both ex parte Belsham and a similar decision in Reg v Central Criminal Court ex parte Randle were expressly overruled: it was decided that an application to stay proceedings for abuse of process did constitute a decision "relating to a trial on indictment".
17.		Mr Lakha argues that although these cases were overruled in Re Ashton, this does not affect the authority of Wood Green Crown Court ex parte DPP.  In one sense, he is right: those cases were all concerned with applications for judicial review, following decisions on abuse of process which brings proceedings to an end: in this case, the proceedings were brought to an end by the Crown's decision to offer no evidence.  Similarly, preventing an appeal in these circumstances would not undermine the right to a review at the behest of a convicted defendant as a ground of appeal.  The difference, therefore, was that in this case, the jurisdiction was essential so as to provide some mechanism for appeal or review.  Such a mechanism is not, however, available if the court refuses to make a defendant's costs order after a trial (see, for example, Re Meredith [1973] 1 WLR 435, 57 Cr App R 451) and it is difficult to see why there should be a right of appeal in one case but not the other.
18.		More significantly, Mr Lakha recognises that his argument is undermined by the decision of this court only brought to his attention this morning, namely Reg v Harrow Crown Court ex parte Perkins, 162 JP 527, CO 2620/97, 30 March 1998 (Rose LJ and Sullivan J): we are grateful to Ms Dunn for bringing it to our attention also.  The facts are effectively identical: the prosecution offered no evidence after a defence case statement and the judge entered a verdict of not guilty, but then declined to make a defendant's costs order.  Sullivan J (as he then was) analysed Smalley and Sampson and went on to consider Wood Green.  He noted that, absent that decision, he would have concluded that there was no jurisdiction to challenge, not least because entering a verdict pursuant to s.17 of the Criminal Justice Act 1967 "shall have the same effect as if the defendant had been tried and acquitted on the verdict of the jury".  
19.		Sullivan J also observed that the moment the judge directs the acquittal could not affect the principle and, having analysed Wood Green, concluded that it must be regarded as having been wrongly decided in the light of the subsequent House of Lords decisions.  Rose LJ agreed, saying:
"For my part ... I can see no difference in principle between a Crown Court judge's refusal to make a costs order in favour of the defendant, when ordering a stay for an abuse of process or when entering a verdict of not guilty under s.17 of the Criminal Justice Act 1967 or at any stage of the proceedings.  In each case, it seems to me that such an order, like an order made at the end of the trial as in ex parte Meredith relates to trial on indictment.  The decision of the Divisional Court in Reg v Wood Green Crown Court ex parte DPP cannot, in my view, survive the overruling by the House of Lords in Re Ashton of the Divisional Court's decision in ex parte Belsham and the other authorities which were fundamental to the reasoning in the Wood Green case."
20.	In any event, the Wood Green reasoning deals with part only of the rationale identified in Smalley and Sampson: in reality, once the phrase 'relating to trial on indictment' includes a decision so intimately bound up with the trial process that it must be treated as an integral part, necessarily includes any result after a trial and is apt to include a guilty plea, there is no reason for taking a different view when a verdict of not guilty is entered by direction.  The strange result postulated by Mann LJ was a consequence of the understandable view that other decisions of the Divisional Court had interpreted the two House of Lords decisions in such a way that led to that conclusion.  Stripped of these decisions, it is possible to read Smalley and Sampson in their true light.  
21.		I have considered it appropriate to set out the case law in some detail not least because, independent of the decision of this court in Harrow Crown Court, for my part, I had reached the same conclusion. In that regard, it is worth noting that in Reg v Bolton Crown Court ex parte CPS [2012] EWHC 3570 (Admin), Richards LJ (with whom Ouseley J agreed) observed that, in the light of the decision in Ashton, the Wood Green case should "be treated with considerable caution": it does not appear that Harrow Crown Court decision was brought to their attention.  In my judgment, it goes further than Richards LJ observed: both the decision and its reasoning are entirely undermined and the law has been as expressed in Harrow Crown Court for over 14 years.
22.		Neither is it necessary to face this decision with concern.  The Case which Judge Thorn stated found as a fact that the appellant had brought the prosecution upon himself and, by inference, had misled the police and prosecution into thinking the case was stronger than it was.  Mr Lakha challenges these findings with a skeleton argument that deploys many more facts than those found in the Case (which itself raises issues) and would involve the court in a detailed analysis of the prosecution papers, the impact of  what is described as a joint Position Statement and its status, if any.  Judge Thorn (who had conduct of the trial, was familiar with the prosecution case and, presumably, the Position Statement) was in by far the best position to decide whether the appellant should recover his costs from central funds.
23.		In the event, it is inappropriate for this court to enter into that exercise.  It has no jurisdiction to do so on the basis that the decision as to costs related to a trial on indictment as that expression is to be construed.  In the circumstances, I would answer the first question posed in the Case Stated accordingly.  The second question does not, therefore, fall for decision.  
24.	MR JUSTICE NICOL:  I agree. 
25.	HIS HONOUR JUDGE STOKES:  I agree. 
26.	LORD JUSTICE LEVESON:  Thank you.
27.	MR LAKHA:  My Lord, I am not in a position at this stage to invite the court to take the matter any further.  Obviously I need to take instructions and, if appropriate, I understand that I have 28 days in which to invite the court.
28.	LORD JUSTICE LEVESON:  Yes, by all means consider the matter, Mr Lakha.  In the light of the Harrow case, you may have difficulty even getting over the first hurdle, quite apart from the second hurdle.
29.	MR LAKHA:  Indeed.
30.	LORD JUSTICE LEVESON:  Anything else? 
31.	MISS DUNN:  No thank you.
32.	LORD JUSTICE LEVESON:  Thank you very much indeed. 
33.	MR LAKHA:  Thank you, my Lord.