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Philip Hackett Q.C and David Hassall of 4-5 Gray’s Inn Square had previously acted for the senior partner of a firm of solicitors in resisting the prosecution’s allegations in this matter and then in resisting the prosecutions application for a voluntary bill of indictment after the dismissal of the charges.

Fulford LJ, who had dismissed the application for the voluntary bill of indictment referred the issue of costs back to the trial judge Hickinbottom J.

In a precedent setting ruling the judge awarded costs on the indemnity basis against the Serious Fraud Office in respect of the application for a voluntary bill of indictment.

In an equally important judgement Hickinbottom J also awarded costs against the serious fraud office in respect of the criminal prosecution and made an order under section 19 of the Prosecution of Offences Act 1985.

He considered whether the statutory precondition for the exercise of the court’s jurisdiction under section 19 of the 1985 Act (i.e. that the SFO as prosecutor was responsible for an “unnecessary or improper act or omission” that caused the Applicant to incur costs) was satisfied. this was not previously and issue in criminal cases because a successful defendant was entitled to costs from central funds.

However, that changed from 1 October 2012, when paragraph 2(2) of Schedule 10 to the Legal Aid, Sentencing and Punishment of Offenders Act 2012 came into effect. That inserted a section 16A(1) into the 1985 Act, which provides that, subject to exceptions not presently relevant

“A defendant’s costs order may not require the payment out of central funds of an amount that includes an amount in respect of the accused’s legal costs…”

It is therefore likely that more and more successful defendants will wish the Court to exercise its jurisdiction under sec 19. Hickinbottom J did so in this case on the basis that

“As is clear from the Dismissal Ruling and the VB Judgment, in this case, the legal analysis by the SFO throughout this case was inadequate. Fulford LJ found (and I agree) that this failure was from the outset. He said (and, again, I respectfully agree) that, as the result of the failure to analyse the case properly, the case presented to the Applicants changed with the wind, most iterations in turn collapsing under the slightest breeze, to the real prejudice of the Applicants. It is simply not acceptable for the SFO to pursue a substantial prosecution without having properly tested the legal basis upon which that prosecution is brought, and to maintain that prosecution through a number of fundamental changes still without performing such an analysis.

It was clear from the application that the case as put forward in the first iteration had no realistic prospect of success, as the SFO belatedly accepted. The other iterations were attempts to save a fatally-holed ship, that presented as a sequence of different cases that stood no real prospect of success or were in essence too late. Having accepted that the case as it had been sent to the Crown Court was unarguable, the SFO continued to fail to analyse the legal case against the Applicants with appropriate rigour, casting round for some means of saving the case and grasping at a succession of straws in the form of cases with, if anything, decreasing rather than increasing legal coherence and merit”

Click link to see full Judgments:

Costs Judgment

Dismissal of application for voluntary bill of indictment

Dismissal of conspiracy to defraud indictment


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