The Serious Fraud Office (SFO) has received stinging judicial criticism for the approach it adopted to the prosecution of six defendants connected to Celtic Energy Limited (Celtic). Despite the SFO’s case having been dismissed, the SFO unsuccessfully sought to re-start the proceedings by applying to the High Court for leave to prefer a voluntary bill of indictment, an exceptional step which allows the prosecution to depart from the normal charging process. Mr Justice Hickinbottom held that the SFO was liable to pay the costs of certain of the acquitted defendants (totaling up to £7m) as a result of the SFO (i) improperly continuing the prosecution, notwithstanding the fact that substantial flaws had been raised by the defendants; and, (ii) subsequently applying for a voluntary bill of indictment. In so doing, he stated that the SFO’s legal analysis in the case had been subject to “regular, cataclysmic change, each successive change being fundamental” and that the changes “lacked legal merit and….[e]ach was, from the outset, doomed to fail.”

Crown Court Hearing

In January 2013 the SFO charged two senior executives at Celtic and four lawyers advising the company with conspiracy to defraud. Celtic specialised in opencast mining. The SFO alleged that Celtic had used a fraudulent device to avoid obligations to restore certain mining land to countryside and agricultural use. In February 2014 the charges against all of the defendants were dismissed, primarily because the SFO had substantially changed its case on multiple occasions between laying the original charges and the dismissal hearing. The trial judge, Mr Justice Hickinbottom, held that this offended the defendants’ right to know the case they faced and to have a proper opportunity to meet it.

Voluntary Bill of Indictment

When a case has been dismissed, no further proceedings may be brought unless a High Court judge grants leave for a voluntary bill to be preferred. A voluntary bill will only be granted if: (i) the court which originally heard the case made a basic and substantive error of law that is clear or obvious; (ii) new evidence has become available that the prosecution could not have put before the court at the time of the dismissal hearing which (along with any existing evidence) provides the prosecution with a sustainable factual basis for the charge; or (iii) there was a serious procedural irregularity at the original trial. This is a civil process which is only used in exceptional circumstances.

The SFO made their application on the basis that the trial judge, Mr Justice Hickinbottom, had made an error of law in dismissing the case. The application came before Lord Justice Fulford, who held that there had been no such error. He concluded that the effect of granting the voluntary bill would be to allow the SFO to treat the original proceedings as a “dummy run”, bringing “virtually the same proceedings but in a form in which they could have been brought if proper thought had been given by the prosecution to them in the first place”. He feared that “...the SFO in this case failed at the outset to identify the proper legal underpinnings of the charges…”.

Lord Justice Fulford remitted the matter back to the Crown Court for a decision on costs. On 12 February 2015 Mr Justice Hickinbottom made a wasted costs order against the SFO, covering the entirety of the costs incurred by the defendants from September 2013, the date on which one of the defendants had raised in Court the errors in the SFO’s case, to February 2014, the date on which the case was dismissed. This decision was made on the basis that, after the September hearing, “no reasonable prosecutor in the shoes of the SFO would have contested that application [the defendants application to dismiss the charges] in the manner that the SFO in fact did.” In addition to this, the SFO was ordered to pay on an indemnity basis the costs incurred by the defendants in opposing the SFO’s unsuccessful application to prefer the voluntary bill of indictment.


It was recognised as far back as 1865 that prosecutors “are to regard themselves as ministers of justice, and not to struggle for a conviction” (R v Puddick (1865) F & F 497). Prosecutors are under an obligation to take decisions based upon an impartial and professional assessment of the available evidence, independently and with objectivity within the framework laid down by the law and the Code for Crown Prosecutors, among other things. It has long been recognised that, in acting in the public interest, prosecutors must wield their powers appropriately and proportionately, always with an eye on the impact of their decisions on the defendants as well as the administration of justice. In this case, six defendants were investigated and prosecuted over many years on what the court found to be a woefully ill-conceived basis.

In Celtic, the SFO seem to have been “struggling for a conviction” even after the case had been unequivocally dismissed. Furthermore, although Celtic involved allegations of substantial losses, the facts themselves were not particularly complex – and quite how the SFO failed at the outset to identify the proper legal underpinnings of the charges is a question that remains unanswered.

In recent public statements, the SFO has been taking an increasingly aggressive stance about its authority alone to investigate and bring prosecutions in complex fraud. The SFO’s recent decision to close an unrelated investigation into Autonomy suggests that the SFO accepts that not all investigations must lead to prosecutions. However, the SFO must also recognise that not all prosecutions must lead to convictions and it should be wary of seeking imprisonment and financial penalties at any cost. Whilst it is hoped that the story of Celtic will not be repeated, companies and individuals should remain vigilant when dealing with the SFO and would be wise to carefully examine the basis on which it purports to be exercising its wide-ranging powers.