In the recent judgment of Fuseon Limited v Senior Courts Costs Office, the High Court assessed the method for determining a costs award from central funds following a private prosecution. The judgment is a major advantage to would-be private prosecutors. It means that provided a private prosecutor has entered into the prosecution in good faith and has exhausted attempts to have the matter investigated and prosecuted by the police, they are now assured that their costs will not be pegged to CPS billing rates.
The Judgment in Fuseon
Between January 2009 and May 2015, Fuseon Ltd (the claimant before the High Court and private prosecutor in the criminal proceedings), which was in the business of a letting agent in Bolton, was defrauded by one of its co-directors, Mr Timothy Shinners, to an amount in excess of £100,000. Upon learning of the fraud, the second co-director informed Greater Manchester Police, which declined to investigate, citing the effects of “austerity”, which they said required them to prioritise the investigation of other forms of criminal activity.
Not content to let the matter pass, the second co-director began looking for alternative remedies until he identified a central London firm, specialist in providing private prosecution services. The trial of Mr Shinners took place over eleven days in R (Fuseon Ltd) v Timothy Shinners, whereupon Mr Shinners was convicted of four counts and sentenced to three years’ imprisonment.
Following conviction, the trial judge ordered a payment be made to the prosecution out of central funds in respect of prosecution costs, including the cost of the investigation, and that that sum was to be determined. The judge had been specifically told that the private prosecutor’s costs were approximately £430,000. The determining officer, however, allowed an amount of only £150,000, later rising to £200,000 upon a request for redetermination by the private prosecutor. An appeal by the private prosecutor against that redetermination was rejected by a costs judge, who also refused to certify a point of principle of general importance so as to enable an appeal to the High Court. The issue eventually came before the High Court exercising its inherent jurisdiction to supervise a decision of a costs judge in cases where there is real injustice in the decision made.
In R v Dudley Magistrates’ Court ex parte Power City Stores Limited and Another, the Divisional Court held that where a Magistrates’ Court makes a costs order to a defendant, the test for deciding whether leading counsel’s fee should be allowed is whether the defendant has acted reasonably in employing leading counsel. The test is not, notably, whether the case could have been conducted by a senior solicitor or junior counsel. Having determined that matter, the court should then go on to determine whether leading counsel’s fee was itself reasonable.
In R (Virgin Media Ltd) v Zinga, the Court of Appeal followed the approach set out in Dudley Magistrates’ Court, in the context of an order for costs made in the Crown Court to a private prosecutor under s.17 of the Prosecution of Offences Act 1985. In Zinga, the court emphasised that it would rarely, if ever, be reasonable to begin a private prosecution without first consulting the State prosecuting authorities and confirming their unwillingness to prosecute, and also examining and testing the competition in the relevant market by seeking tenders and quotations before making their a decision as to which lawyers to instruct.
In Fuseon, the High Court took account of the fact that the private prosecutor had endeavoured to have the matter prosecuted by the police, and furthermore, upon being told the police would not investigate, pursued the matter with his local MP, who advised him to raise a formal complaint. It was only after doing so, he was told by the police that they did not have the resources to prosecute every crime. The court was content that the private prosecutor had little or no knowledge about private prosecutions or where to turn in order to remedy the fraud perpetrated against him. He thus began to research firms in his locality who could act for him in bringing the private prosecution, but was unable to identify any with the sufficient expertise to do so.
The court dismissed the notion that acting reasonably implied assessing whether there were in the local area, firms containing such persons as former public prosecutors who would have no difficulty in bringing the prosecution. The proper question was whether it was reasonable for the private prosecutor to have instructed the more expensive firm of London solicitors. The answer to that question was plain: the private prosecutor had done everything that could reasonably be expected of a person in his position. He had made enquiries of his solicitors, and had researched the matter substantially online but had been unable to find firms more local than the London firm offering private prosecution services for fraud. In the context of the market available, the instruction of the London firm was not a “luxury” choice by the private prosecutor, but one that was reasonable and justifiable.
In Fuseon, the court also examined what is commonly known as the “Singh reduction”, which states that for the purposes of assessing costs, there is a “necessity of standing back from the total hours claimed on each class of work done to assess whether globally it was reasonable.” In Fuseon, the determining officer and the Master had applied the Singh reduction after a consideration that it was necessary to have regard to the costs that would have been expended by the CPS had the prosecution been undertaken by it rather than the private prosecutor.
The private prosecutor argued the importance of ensuring that private prosecutors can recover expenditure close to actual levels, which if otherwise, would deter such prosecutions from being brought. He also argued that the prevailing market for private prosecutions manifestly did not include the CPS. The court agreed and could find no justification for the designated officer’s introduction of the CPS as an appropriate comparator for the purposes of applying the Singh reduction. None of the case law justified the use of the CPS in determining the relevant market for private prosecutions.
Despite CPS costs being an inappropriate comparator for the purposes of the Singh reduction, the court made clear it would not necessarily always be wrong to take account of such comparative costs when determining a costs award to a private prosecutor. In cases where an individual resolved to embark on a private prosecution with no regard as to whether the State was willing and able to prosecute, a comparison with the CPS might be legitimate.
In 2014, Lord Thomas, then Lord Chief Justice of England and Wales, ended his judgment in Zinga, with some “observations for the future.” In his assessment, it was:
“[I]n the public interest that the CPS is properly resourced to conduct … difficult and complex proceedings. The consequence of the CPS not being so resourced is detrimental to the public purse. The costs of a private prosecution, whether successful or unsuccessful, are recoverable from the taxpayer; the use of private prosecutors will almost inevitably cost the State much more than the use of a State prosecutor, such as the CPS.”
It was Lord Thomas’ experience that there would unlikely be any difference in quality between a prosecution brought by the State and a private prosecution, and thus it could not be right as a matter of principle for resources to be deployed by the State in such a way as to provide an opportunity for prosecutions to be brought by private interests at a cost to the State likely to be far greater than had the public prosecutor conducted the case.
Lord Thomas’ observations came following a period of significant reduction in government spending on the police and criminal justice system. Between 2009 and 2014, spending on the police services in England and Wales reduced by approximately 14%, and although the rate of reduced spending slowed thereafter, it did continue between 2014 and 2019 by a further 2%.
The police and other investigators are responsible for conducting inquiries into any alleged crime and for deciding how to deploy their resources. This includes decisions to start or continue an investigation and on the scope of the investigation. Had an investigation into Mr Shinners’ conduct been pursued by Greater Manchester Police, the CPS would almost certainly have decided it passed both stages of the Full Code Test, and thus, ideally, would have prosecuted the case. The reality, however, is that under the strain of reduced budgets, the police have to make choices, some of which result in viable cases not being investigated. In Fuseon, the regrettable consequence of that, created an inability in the public authorities to pursue a prosecution which would have cost £150,000, but which nonetheless may result in the taxpayer being liable to cover the costs of a private prosecution, taken in its place, for three times that amount. The further indication from Fuseon, is that investigations into fraud and other financial crime are likely to be one category of cases neglected when the police come to determine how best to deploy their resources.
The judgment is obviously, however, of huge benefit to would-be private prosecutors. They can be reassured, firstly, that providing the private prosecution is undertaken in good faith and as a last resort – the private prosecutor having first alerted the authorities to the alleged criminality – and, secondly, having undertaken a diligent and reasonable assessment of the market for private prosecutors, they will be in a position to recover their full costs without them being fixed to CPS rates.
  EWHC 126 (Admin)
 New Law Journal, March 16, 1990
 R v Dudley Magistrates’ Court ex parte Power City Stores Limited and Another (New Law Journal, March 16 1990)
  4 Costs LR 879
  4 Costs LR 879, paragraph 22
  EWHC 126 (Admin), paragraph 54
  EWHC 126 (Admin), paragraph 84-90
 R v Supreme Court Taxing Office ex parte John Singh and Co  1 Costs LR 49
  5 Costs LR 879, paragraph 43
 Code for Crown Prosecutors, paragraph 3.2: https://www.cps.gov.uk/publication/code-crown-prosecutors