High Court ruling in Allseas Group SA v Paul Sultana addresses key issues in recovery of legal costs from central funds

Citation: [2023] EWHC 2731 (SCCO)
Judgment on

Introduction

The High Court’s decision in the case of R (Allseas Group SA) v Paul Sultana provides an insightful examination of the principles surrounding the recovery of legal costs by a private prosecutor from central funds under section 17 of the Prosecution of Offences Act 1985. The ruling addresses key issues related to hourly rates for legal work, the manner of selecting and instructing counsel, and the perceptions of reasonable expenses incurred in the proceedings. This analysis aims to distill the essential legal principles laid out in the judgement and relate them to the provided case law content.

Key Facts

Allseas Group SA (the Appellant) successfully prosecuted Paul Sultana for a fraudulent investment scheme, leading to his conviction and an 8-year prison sentence. The Appellant then sought compensation for its legal expenses from central funds. The Costs Judge, Leonard, had to assess whether the rates and methodologies used by the Appellant’s legal team in charging for their services, including the tendering process for the selection of counsel, were reasonable under the governing statutes and regulations.

The judgement in this case hinged on several pivotal legal principles. Firstly, the judgment reiterates the two-stage test from section 17 of the Prosecution of Offences Act 1985:

  1. Determining whether expenses were reasonably and properly incurred.
  2. Assessing if the amount claimed provides a reasonably sufficient amount to compensate for those expenses.

The court referenced the “hypothetical counsel” test in Simpsons Motor Sales (London) v Hendon Borough Council, which is used to evaluate if the appointed counsel’s fees align with what a hypothetical counsel would charge, factoring in expertise and ability but excluding unusually high fees demanded by most high-profile counsel. Furthermore, the application of Regulation 7 and the Costs in Criminal Cases (General) Regulations 1986 stipulates that doubt must be resolved against the applicant.

The importance of the market rate when choosing legal representatives, as laid out in the R (on the application of) Virgin Media Ltd v Zinga, was also affirmed. The court highlighted that the hourly rates for solicitors and the quantum of counsel’s fees have to be both reasonable for the work done and representative of the market, subject to a thorough tendering process reflecting a competitive market environment unless circumstances dictate otherwise.

The court also rejected the comparator approach—using the rates of Crown Prosecution Service (CPS) when assessing private prosecution costs—as incompatible with the principles cited in Zinga.

Outcomes

Upon scrutiny, the court approved partially the Appellant’s costs claims. The court permitted increases to the hourly rates determined by the Determining Officer for solicitors based on adjusted Guideline Hourly Rates (GHRs) due to the case’s complexity and difficulty, aligning with what a reasonable market rate is deemed to be in central London. It upheld that the Appellant was justified in retaining its selected legal representatives without undertaking a tendering process due to their unique suitability for its complex case.

For counsel’s fees, a discrepancy was highlighted due to a lack of tendering. The court applied the principles set out in Evans v Serious Fraud Office and the “hypothetical counsel” test for assessing reasonable hourly rates and brief fees. The court also decided that the absence of tendering injected doubt into the fees charged by junior counsel, which was resolved by allowing junior counsel’s fees at half of the leading counsel’s fees instead of the original two-thirds.

Conclusion

The case of Allseas Group SA v Paul Sultana consolidates the established legal framework governing the recovery of costs by private prosecutors from central funds. It emphasizes the indispensability of a comprehensive tendering process unless a direct and reasonable exception applies. Additionally, the judgement reaffirms the significance of aligning legal fees with the prevailing market rate, properly adjusted for time and case-specific complexities. This ruling underscores the necessity of methodical, informed, and transparent financial management in legal proceedings, ensuring both reasonableness and propriety in the recovery of costs.

Related Summaries