Former Leeds United Managing Director, David Haigh, learnt the hard way that costs in private prosecutions are a double-edged sword and an issue that requires careful consideration before embarking on such proceedings.
Mr Haigh has been ordered to pay more than £200,000 in court costs after a failed private prosecution instigated against a senior lawyer and two executives from his former employer GFH Capital. Mr Haigh had applied for summonses to begin a private prosecution for what he alleged was an unlawful scheme to lure him to Dubai. At the time of making that application he was in custody in Dubai. In the costs ruling District Judge Tan Ikram was critical of Mr Haigh for choosing to seek the issue of summonses whilst in custody and for not raising his complaint in the first instance with the public law enforcement agencies. Taking the totality of the prosecutors conduct into account the Judge came to the “the clear view that it was wholly improper to launch these proceedings”.
Whilst private prosecutions are often seen as a cost-effective and efficient way to access justice, this decision on costs is a salutary reminder of the competing financial risks associated with such proceedings.
So what are the relevant costs considerations for the Private Prosecutor?
First the Good News…
The Private Prosecutor, provided they have instituted and continued the proceedings with good cause, will generally be able to recover the reasonable costs of their investigation and prosecution from Central Funds, even in circumstances when the defendant is acquitted. Because prosecution costs are recoverable from Central Funds this will make prosecution a more attractive option than civil litigation in circumstances where the defendant has limited ability to pay. Moreover, the cost-conscious litigator may be enticed to instigate criminal proceedings knowing that Private Prosecutors are usually not required to pay the defendant’s costs in the event that their prosecution fails and the defendant is acquitted.
The power of a court to award prosecution costs from Central Funds for criminal proceedings is set out at section 17 of the Prosecution of Offences Act 1985 (the Act). This provision allows the court to order the payment from Central Funds “of such amount that the court considers reasonably sufficient to compensate the prosecutor for any expenses properly incurred by him in the proceedings” and if the court considers there are circumstances that make it inappropriate for the prosecution to recover the full amount then they can order “payment out of central funds of such lesser amount as the court considers just and reasonable”.
And then, the Bad…
If there has been misconduct on the part of the prosecution a Private Prosecutor should not be awarded costs out of Central Funds (R v Esher and Walton Justices ex p Victor Value & Co Ltd  111 Sol Jol 473). Furthermore, section 19 of the Act provides the court may order the payment of any costs incurred as a result of any unnecessary or improper act or omission by or on behalf of any party to the proceeding to be met by the party responsible for that conduct.
Accordingly, if the Private Prosecutor wants to secure the best chance of recovering their costs from Central Funds at the conclusion of proceedings it is most important that they consider the following issues before commencing proceedings:
- Can you demonstrate that the motive for commencing proceedings is proper? That is, that it is not purely motivated by self-interest but can also objectively be seen to be in the public interest?
- Have you given the public law enforcement agencies the opportunity to commence proceedings? If not, can you demonstrate why it was reasonable and appropriate for you not to do so?
- If the primary motivation is to recover loss can you demonstrate why it is more appropriate for you to recover your loss through the criminal courts rather than the civil courts?
- Have you or those instructed by you acted in a way in the course of your investigation that could be deemed to be improper or unfair? If so, would you still wish to commence proceedings knowing there is a risk that you may have to meet the legal costs your opponent incurs?
Private prosecutions provide an excellent tool for victims to achieve justice and undoubtedly offer significant attractions from a costs perspective. Advice from lawyers who are experts in this field should always be sought before embarking on this course of action. As Mr Haigh’s case clearly demonstrates, the financial implications associated with initiating a private prosecution can be significant indeed for those who get it wrong.