England and Wales High Court (Administrative Court) Decisions

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

		Royal Courts of Justice Strand, London, WC2A 2LL
		13/12/2013

Lord Justice Moses:

1. At about 4.30 p.m. on Friday 11 January 2013 Her Honour Judge Mowat was faced with an application by leading counsel for the respondent BDO LLP for costs against DLA Piper LLP, the appellant. She had just refused an application for a witness summons against the respondents. The appellants, DLA Piper, are solicitors who were acting for a defendant, Mark Woodbridge; he was alleged to have committed offences of false accounting and conspiracy to defraud in relation to his employer, Torex Retail PLC. The respondent, BDO LLP, the well-known United Kingdom accountancy firm, had been Torex's auditors.
2. HHJ Mowat rejected the statutory basis on which BDO sought its costs. But she took the view that she had an inherent power to make an order of costs against DLA Piper and she did so. DLA Piper now appeal by way of Case Stated.
3. BDO no longer advances the statutory basis on which it had relied before the judge. It contends, nonetheless, that the judge did have an inherent power to make an order for costs. If that is wrong, it requests this court to remit to the judge an application for wasted costs. In any event, BDO contends that this court has no jurisdiction to hear an appeal by DLA Piper against the judge's order for costs. DLA Piper responds that, if this court has no jurisdiction, it should reconstitute itself as a Divisional Court and treat the appeal as an application for judicial review, permission for which should be granted, and that this court should quash the judge's order for costs.
4. DLA's application for a witness summons was made under s.2 of the Criminal Procedure (Attendance of Witnesses) Act 1965. A witness summons requiring a person to give evidence or produce a document under s.2(2) may only be issued on an application (s.2(3)). The application must be made in accordance with Crown Court rules (s.2(7)). Those Crown Court rules may require an application to be made by a party to the case (s.2(8)(a)).
5. Where the application is for a witness summons requiring a proposed witness to produce in evidence a document, Rule 28.5 of the Criminal Procedure Rules 2012 applies. By Rule 28.5(4):-

"The court must not issue a witness summons where this Rule applies unless –

(a) everyone served with the application has had at least 14 days in which to make representations, including representations about whether there should be a hearing of the application before the summons is issued…"

6. It was pursuant to that rule that BDO was served with the application for a witness summons on 27 December 2012 and attended court on 11 January 2013 to resist the summons. But once it did so successfully, did the court have power to order costs? Mr Andrew Radcliffe QC accepted, on behalf of BDO, with his customary fairness, that the court had no power under the Criminal Procedure (Attendance of Witnesses) Act 1965 to order costs. He accepts, therefore, that the primary basis of his application on 11 January 2013 was, as the judge appreciated, erroneous. The 1965 Act does make provision for costs but only in circumstances where a person applies to the Crown Court to set aside the summons. The Act does not confer any power on the Crown Court to make an order for costs where a person attends to resist a summons. This is a bizarre omission because the Criminal Procedure Rules envisage the attendance of` the person on whom a witness summons has been served and the 1965 Act only permits an application to be set aside where a person has not been served.
7. By s.2C of the 1965 Act:-

"(1) If a witness summons shall be issued under s.2 above is directed to a person who –

a) applies to the Crown Court

b) satisfies the Court that he was not served with the application to issue the summons and that he was neither present nor represented at the hearing of the application, and

c) satisfies the Court that he cannot give any evidence likely to be material evidence or, as the case may be, produce any document or thing likely to be material evidence,

the Court may direct that the summons shall be of no effect."

"(8) Where a direction is made under this section if a witness shall be of no effect, the person on whose application the summons was issued may be ordered to pay the whole or any part of the costs of the application under this section."

8. It is, accordingly, plain that a person may only apply to the Crown Court to set aside a summons if he was not served with a Notice of Application and was neither present nor represented. If he satisfies those conditions and succeeds then he may be awarded costs.
9. Contrast the situation where he attends to resist a summons as he is required to do pursuant to Rule 28.5(4) of the 2012 Rules. In those circumstances, although he may succeed in resisting the summons, neither the 1965 Act nor the Rules confer any power on the Court to order costs. As the judge remarked, there is a glaring lacuna within the statute and the Rules and the appeal raises the question whether the judge, as she believed, could fill that gap.
10. Mr Radcliffe QC contended that the gap could be filled if the Crown Court invoked its inherent jurisdiction to order that a solicitor personally pays the costs thrown away. No one suggested that that inherent jurisdiction did not exist, stemming, as it does, from the power of the court to control its own officers. Authority for this inherent jurisdiction was, so Mr Radcliffe contended, to be found in Practice Direction (Criminal Proceedings: Costs (Senior Courts)) [2010] 1 WLR 2351):-

"1.2.3 The Senior Courts also have the power under their inherent jurisdiction over officers of the court to order a solicitor personally to pay costs thrown away. The inherent jurisdiction of the court should be invoked only to avoid a clear injustice: Symbol Park Lane Ltd v Steggles Palmer [1985] 1 WLR 668. Where the legislature has stepped in with particular legislation in a particular area (eg, the wasted costs provisions) then, within that particular area, the existing inherent jurisdiction will be ousted or curtailed, at any rate in so far as the particular legislation is negative in character: Shiloh Spinners Ltd v Harding [1973] AC 691; Harrison v Tew [1990] 2 AC 523. Given the present provisions relating to costs, the exercise of the inherent jurisdiction will occur only in the rarest of circumstances.

…

4.6 Awards of costs against solicitors under the court's inherent jurisdiction.

4.6.1 In addition to the power under regulation 3 of the General Regulations to order that costs improperly incurred be paid by a party to the proceedings and the power to make Wasted Costs Orders under section 19A of the Act, the Senior Courts (which includes the Crown Court) may, in the *2363 exercise of its inherent jurisdiction over officers of the court, order a solicitor personally to pay costs thrown away by reason of a serious breach on the part of the solicitor of his duty to the court.

4.6.2 No such order may be made unless reasonable notice has been given to the solicitor of the matter alleged against him and he is given a reasonable opportunity of being heard in reply.

4.6.3 This power should be used only in exceptional circumstances not covered by the statutory powers: see para 1.2.3."

11. As the Practice Direction foresees, it is difficult, if not impossible, to envisage circumstances in which costs could be ordered against a solicitor personally in the exercise of the inherent jurisdiction of the court in circumstances where statutory provisions in relation to Wasted Costs Orders could not be deployed.
12. There seems to me a fatal flaw in the attempt to invoke the inherent jurisdiction of the Court. The application for the witness summons was made on behalf of the defendant, Mr Woodbridge. BDO argued that the applicant for the summons was DLA Piper itself. The judge adopted that argument and seems to have believed that the applicant was DLA Piper (see transcript pages 10H-11A). The applicant for the summons was not DLA Piper but, as s.2(8)(a) of the 1965 Act envisages and as the Criminal Procedure Rules 2012 provide (28.3(1)), it is a "party" who makes the application. The party was the defendant, Mr Woodbridge. The mistake seems to have arisen because of the form of the application for a witness summons. This form is the form set out in the Practice Direction to which Rule 28.4(1) of the 2012 Rules refers. The form gives the name of the defendant, Mark Woodbridge, and under part A, "information about the applicant" there is written "I represent the defendant" and the name of a solicitor and the address of DLA Piper UK LLP. That makes it plain that the party to the application is Mr Woodbridge and his representative, the solicitor named. There was no warrant for treating DLA Piper as the applicant.
13. In those circumstances, the only basis for ordering costs against the solicitor would be the basis for which statute provides, namely, a Wasted Costs Order under s.19A of the Prosecution of Offenders Act 1985. By s.19A the court has power to order legal representatives to pay the whole or any part of wasted costs as defined in s.19A(3):-

"'Wasted costs' means any costs incurred by a party –

(a) as a result of any improper, unreasonable or negligent act or omission on the part of any representative or any employee of a representative; or

(b) which, in the light of any such act or omission occurring after they were incurred, the court considers it is unreasonable to expect that party to pay."

14. It is worth noting that the power is only available against someone who is not a party. Since the power to make a Wasted Costs Order is extended to negligence (beyond the grounds for invoking the inherent jurisdiction of the court as identified in Holden and Co v CPS [1990] 2 QB 261) it is difficult to see what circumstances would justify the Crown Court exercising its inherent jurisdiction whilst not making a Wasted Costs Order, as 4.6.1 of the Practice Directions 2010 recognises. Moreover, no such order may be made unless reasonable notice is given (4.6.2). BDO pointed out that there was a representative of DLA Piper in court, but that representative was appearing for the party, Mr Woodbridge, and the representative had had no notice whatever that any application was to be made, either for wasted costs or for the court to exercise its inherent jurisdiction. This is not surprising since the application was made in the erroneous belief that the court had statutory power under the 1965 Act to order costs should BDO be successful in resisting the issue of the summons.
15. Besides, the judge never purported to be invoking her power to discipline one of the court's officers, let alone make a Wasted Costs Order. It is plain that she judge believed that the costs should "follow the event" and that by that means she could fill in the gap in the legislation and the Rules (see transcript, pages 10-11). Whatever the circumstances in which the inherent power of the court should be invoked, I do not believe it can be used to fill in so glaring a legislative gap. The legislation (s.2C 1965 Act) had made specific provision for the award of costs but only when a party sets aside a summons. It has chosen not to confer such a power on the court in circumstances where a party attends and successfully resists the issue of the summons. That that was a legislative gap which Parliament has overlooked seems likely. However purposive the construction, it does not seem to me possible to draft a completely new provision analogous to the specific provision which had been made by Parliament under s.2C(8) of the 1965 Act. The glaring gap is miles away from satisfying the three conditions identified by Lord Diplock in Jones v Wrotham Park Settled Estates [1980] AC 74 at 105. As Lord Diplock remarked, the process must be one of construction. There is nothing in the 1965 Act to construe. Parliament simply did not provide for costs to be awarded against a party who unsuccessfully applies for a witness summons.
16. Since the judge believed she could fill in the gap left by Parliament, the order should have been made against the party making the application. She erroneously identified that party as DLA Piper. She did not exercise that inherent power because of DLA Piper's misconduct. On the contrary, as the Case Stated records, the judge did not criticise DLA Piper "for misconduct or anything". Indeed, whilst making no finding of fact, she indicated that she did not believe there had been any serious misconduct such as to justify a Wasted Costs Order. For those reasons, there was no basis for making an order for costs against DLA Piper in the exercise of the court's inherent jurisdiction. DLA Piper was not a party to the application and the judge identified no misconduct such as to justify any order against Mr Woodbridge's legal representatives.

Appeal or Judicial Review

17. The main argument concerned the jurisdiction of this court to hear an appeal by way of Case Stated. By s.28(1) of the Senior Courts Act 1981 an appeal by way of Case Stated may only be made by a party to the proceedings:-

"28(1) Subject to sub-section (2) any order, judgment or other decision of the Crown Court may be questioned by any party to the proceedings, on the ground that it is wrong in law or is excess of jurisdiction, by applying to the Crown Court to have a Case Stated by that court for the opinion of the High Court."

18. DLA Piper's right to appeal by way of Case Stated has an unpromising start. The essence of its argument as to the error of the judge in making a costs order against it was that it was not a party to the proceedings. It argued that since the judge had treated it as a party to the proceedings it was entitled to regard itself as a party for the purposes of s.28(1). But as I have indicated, the judge erred and it is not open to DLA Piper to rely upon that error.
19. Nor is it possible to regard BDO's application for costs as separate from the application for a witness summons. It is beyond argument that the order for costs was part of the application for a witness summons. It followed the resolution of that application. The application for costs was not a separate proceeding to which the appellant was a party. In those circumstances, I conclude that DLA Piper could not bring an appeal by way of Case Stated because it was not a party to the proceedings.
20. That, however, is not an end of the matter. Even if it was a party to the proceedings, s.28(2) of the Senior Court Act 1981 provides:-

"(2) Sub-section (1) shall not apply to –

(a) a judgment or other decision of the Crown Court relating to trial on indictment."

21. Section 28(2) is in the same terms as s.29(3) relating to judicial review. Since DLA Piper contend, in the alternative, that it is entitled to challenge the judge's order by way of judicial review it is necessary to resolve the question whether a costs order made against a third party solicitor on the rejection of a witness summons is a decision of the Crown Court relating to trial on indictment. The starting point must be the decision of the divisional court in Ex-parte Rees and Others (The Times, 7 May 1986). The Divisional Court held that it had no jurisdiction to grant judicial review of a witness summons issued by the Crown Court under s.2(1) of the 1965 Act. That decision was followed in R (H) v Crown Court at Wood Green [2007] 1 WLR 1670. Even absent those authorities it is clear to me that a witness summons, whether for a witness or for documents, affects the conduct of a trial on indictment, one of the "helpful pointers" to which Lord Bridge referred in Re Smalley [1985] AC 622 (643G-H and 644A). Orders in relation to the production of documents or evidence from a witness go to the very heart of a trial on indictment and it requires no stretch of the imagination to envisage the interference with the smooth management of such a trial if witness summonses could be challenged by way of judicial review.
22. As I have already indicated, orders for costs following an application are part of the application. Orders for costs at the end of a trial are part of the trial process that fall within the scope of matters relating to trial on indictment. Lord Browne-Wilkinson in R v Manchester Crown Court [1993] 1 WLR 1524 did suggest that an order made against someone other than the defendant might be reviewable (1530). He suggested:-

"It may therefore be a helpful further pointer to the true construction of the section to ask the question, 'is the decision sought to be reviewed one arising in the issue between the Crown and the defendant formulated by the indictment (including the costs of such an issue)?' If the answer is 'yes', then to permit the decision to be challenged by judicial review may lead to delay in the trial: the matter is therefore probably excluded from review by the section. If the answer is 'no', the decision of the Crown Court is truly collateral to the indictment of the defendant and judicial review of that decision will not delay his trial: therefore it may well not be excluded by the section."

23. Lord Browne-Wilkinson's reference to R v Smith (Martin) was a reference to obiter remarks of Megaw LJ (544H-545). He said he was "by no means convinced" that an order made by the Crown Court against a solicitor in the exercise of its inherent disciplinary jurisdiction would be relating to trial on indictment. The majority of the court in R v Smith (Martin) took the view that an order requiring a solicitor personally to pay the costs thrown away by an adjournment could not be the subject matter of an appeal to the Civil Division of the Court of Appeal. Lord Denning MR discussed whether the solicitor might have recourse to the Divisional Court and suggested that he would not (542B-C). That was not part of his ratio. Similarly, Sir Eric Sachs took the view that because "what a solicitor does touching the conduct of a trial is patently a matter relating to that trial: equally so is an order touching the costs of the trial" (547C). But again, that was not essential to the decision as to whether the Civil Division of the Court of Appeal had jurisdiction. In Re Meredith [1973] 57 Cr. App. R 451 a judge's decision to refuse to order costs in favour of an acquitted defendant was held not to be reviewable (see also R v Canterbury Crown Court ex-parte Regentford [2001] HRLR 18).
24. Mr Keith QC, on behalf of DLA Piper, relied on a distinct strand of authority which, he contended, established that where an order had been made without jurisdiction it could not be described as a matter relating to trial on indictment. This proposition depended upon a decision of the Divisional Court in R v Crown Court at Maidstone ex-parte London Borough of Harrow [2001] Cr. App. R 117. In that case a judge purported to make a Supervision and Treatment Order under the Criminal Procedure (Insanity) Act 1964, although s.5(1) of the 1964 Act precluded such a course. Mitchell J appeared to suggest that an order made without jurisdiction could be judicially reviewed. Similarly, in R (Kenneally) v Crown Court at Snaresbrook [2002] QB 1169 a judge passed a sentence in the form of a hospital order without a conviction. But in R (CPS) v Crown Court at Guildford [2007] 1 WLR 2886 Lord Phillips CJ denied that there was any general principle that a court has power in judicial review proceedings to quash any sentence that exceeds the jurisdiction of the sentencing court. In that case, the judge passed an extended sentence in circumstances where he had no jurisdiction to do so. This Court took the view that there was no jurisdiction to entertain an application for judicial review following the defendant's conviction and sentence.
25. In my view, the mere fact that the judge misdirected herself as to her powers to make costs against DLA Piper does not bring this case within the principle identified by Mitchell J in ex-parte London Borough of Harrow even as restricted by Lord Phillips CJ. The judge plainly had power to make an order for costs against the defendant but misdirected herself as to the identity of the applicant for the summons. That does not seem to me to be an error going to her jurisdiction. Moreover, she had jurisdiction in certain circumstances to make an order for costs against DLA Piper but chose not to exercise it.
26. However, it does seem to me that the fact that the order was made against DLA Piper is of significance in deciding whether this appeal relates to trial on indictment. As Lord Browne-Wilkinson in Manchester Crown Court and Mitchell J observed in LB Harrow, the rationale behind the rule is the need not to interfere with or delay the trial on indictment (see Lord Browne-Wilkinson, Manchester Crown Court 1350). Questions as to whether a solicitor's conduct in relation to an application for a witness summons justifies the making of an order of costs against that solicitor do not seem to come anywhere near interference with the trial on indictment. They are, as Lord Browne-Wilkinson suggested, remote from any decision in relation to a defendant or what witnesses should be called or documents adduced at trial.
27. Support for this view is to be found in this court in R (CPS) v Bolton Crown Court and Johnson [2013] 2 Costs LR 220. The court took the view that an order for payment of costs to defendant's counsel could not be regarded as an integral part of the trial process [14]. Richards LJ concluded:-

"[17] I see difficulties in an approach that depends upon drawing a distinction between jurisdictional error and non-jurisdictional error, but I do not think that that approach is needed in any event for the purposes of the present case. An order made against the Crown and in favour of the defendant at the end of the trial comes squarely within the reasoning in Sampson. As I have already indicated however it seems to me that that reasoning does not apply to an order made at the stage of a PCMH and in favour of counsel rather than between the Crown and the defendant. The fact that the order in question is made under the same legislative provisions as in the Crown Court at Leicester case is not determinative. What matters is the substantive situation with which one is concerned, and for the reasons I have given this particular situation, which is in truth a relatively narrow one, does not seem to me to fall within the exclusion within s.29(3)."

28. The substantive issue turns not on whether the summons should be issued or not but on the propriety of making an order for costs against a third party. That seems to me remote from any aspect of the trial process. It seems to me easy and clear to draw a distinction between costs ordered against a party to the trial and costs made against a third party. In the particular circumstances of this case, therefore, I conclude that the issue does not relate to trial on indictment, however broadly those words are defined. In particular, it does not affect the conduct of a trial, it is not an integral part of the trial process and it does not arise in an issue between the Crown and the defendant formulated by the indictment. For those reasons, I conclude that the Divisional Court would have jurisdiction judicially to review the decision of HHJ Mowat to order costs against DLA Piper.
29. The next question which arises is whether this court should reconstitute itself as a Divisional Court and agree to consider whether judicially to review the decision. Mr Radcliffe QC points out that any application for judicial review is way out of time. Moreover, it appears that the appellant had been considering moving by way of judicial review and had then abandoned that course. Besides, the eagle eye of Mr Robinson, a partner in Irwin Mitchell LLP, acting on behalf of BDO LLP, had observed the problem that DLA Piper was not a party to the proceedings and drawn that to the attention of DLA Piper's solicitors on 26 February 2013. At that stage, it appears DLA Piper was considering judicial review, although the idea appears subsequently to have been abandoned.
30. The application for permission for judicial review is out of time. But I do not think that justice can be done unless permission is granted and the order quashed. This court should not decline to do so merely because DLA Piper mistakenly took the wrong course of action. It does not seem to me just that BDO should retain the advantage of the costs order made in its favour when it was so plainly erroneous. After all, it was BDO which had led the judge into error by founding its case on an erroneous statutory basis. In those circumstances, I would grant permission judicially to review the decision of HH Judge Mowat and quash the order for costs against DLA Piper.
31. Mr Radcliffe QC then sought, as a further alternative, an order that this court should remit the matter to HH Judge Mowat to consider making a Wasted Costs Order. Close analysis of the transcript suggests that Mr Radcliffe QC never abandoned the point. He said:-

"…that sub-section (28.5(4) of the Rules) permits you to make the Costs Order. If we are wrong about that, we would make a general costs' application that costs would follow the event. If necessary, I will make a Wasted Costs' Order because this was an utterly inappropriate application to be made against us, we would submit."

Judge Mowat: "Well, for a Wasted Costs' Order there had to be serious misconduct, or it gets very difficult.

Mr Radcliffe: I really do not want to go there."

Later, having purported to act within her inherent jurisdiction the judge said to counsel for acting for the defendant:-

"But as it turns out, you have not satisfied me – I am not criticising you for misconduct, or anything. But you have not satisfied the test for granting the witness summons to me…"

32. Although the judge made no finding one way or the other as to misconduct in the Case Stated, it was not necessary for her to do so because the basis upon which she made the order and therefore the basis of the Case Stated depended on her belief that she could fill in the legislative gap. But she gave a strong indication that she did not believe that the solicitors acting for the defendant had been guilty of any misconduct. It seems to me now far too late to ask her to resurrect the circumstances in which the application was made. It would be wholly out of proportion to remit this matter for further consideration as to wasted costs. I bear strongly in mind the undesirability of taking up the time of the courts with an unnecessary Wasted Costs Order save in the clearest cases. As Openshaw J said in In the Matter of a Wasted Costs Order made against Joseph Hill and Company, Solicitors [2013] EWCA Crim 775:-

"There is an ever-pressing need to ensure efficiency in the courts; the judges, the parties and most particularly the practitioners all have a duty to reduce unnecessary delays. We do not doubt that the power to make a Wasted Costs' Order can be valuable but this case, and others recently before this Court, demonstrate that it should be reserved only for the clearest cases otherwise more time, effort and cost goes into making and challenging the order than was alleged to have been wasted in the first place."

33. Those wise words were never more apt than in this case which was triggered by the late Friday afternoon application for costs on an erroneous statutory basis, which led to the wrong identification of the party making the application for the witness summons and in consequence an erroneous exercise of the inherent power of the Crown Court judge. In such circumstances, it would be wholly out of proportion to order a remittal. For the reasons I have given, I would grant permission to move by way of judicial review, order that judicial review should go, and that the order of the judge be quashed. The parties may make written application as to the costs of these proceedings.

Mr Justice Foskett:

34. Whilst expressing sympathy to the judge for the circumstances in which she was asked to make the order in issue in these proceedings, I respectfully agree with all aspects of the judgment of Moses LJ and that, accordingly, the order of the judge should be quashed.