Private Prosecution Stayed as an Abuse of Process: Costs Recovered

The issue of recovering legal costs for a defendant who successfully applied to stay a private prosecution, on grounds of abuse of process, was considered and decided upon by the Court of Appeal (Criminal Division) in Muhammed Asif v Adil Iqbal Ditta and Noreen Riaz [2021] EWCA Crim 1091 (judgment 15th July 2021).

A private prosecution was commenced at the City of Westminster Magistrates’ Court by Muhammed Asif against Adil Ditta and Noreen Riaz. The charges, including fraud, theft and concealing or transferring criminal property were sent to the Crown Court sitting at Southwark pursuant to section 51 of the Crime and Disorder Act 1988. HHJ Tomlinson heard applications on behalf of both defendants to dismiss the charges on the grounds of insufficiency of evidence, alternatively to stay them as an abuse of the process of the court. He stayed the proceedings as an abuse in relation to both defendants and dismissed the charges against Mrs Riaz alone. 

Mr Asif filed a notice of appeal and application for permission to appeal against the judge’s terminating ruling pursuant to section 58 of the Criminal Justice Act 2003. The application was refused by Davis LJ. Mr Asif renewed  his application for permission to appeal to the full court. In agreement with the Single Judge, Davis LJ, the Court of Appeal refused the renewed application. 

The Prosecution Case

In this private prosecution, Mr Asif alleged that the defendants had defrauded him of more than £1 million. Two separate frauds were alleged: the first, relating to a joint venture investment in land, and the second, concerning Mr Asif’s shares in a company. 

The abuse of process stay applications were based on the following grounds : that Mr Asif was acting as a proxy prosecutor for a Mr Gohir; that the most significant elements of the alleged frauds were undocumented, and that Mr Gohir’s covert role meant that the court could have no confidence that the prosecutor’s obligations as a Minister for Justice would be complied with. It was said further that the absence of civil litigation was telling, and that  Mr Asif’s motives were abusive. Further, as Mr Asif was out of the jurisdiction, any order for costs made against him (as opposed to the proxy prosecutor, Mr Gohir) would be difficult, if not impossible, to enforce. 

In written submissions made following the hearing, Mr Asif offered to pay £150,000 by way of “security for costs”. 

In staying proceedings HHJ Tomlinson observed that in his invariable experience a private prosecution was coupled with parallel civil proceedings seeking financial recovery. This was an abject failure to do so, supported by reasons which were incomprehensible. Mr Asif’s very late offer to provide security for costs in the sum of £150,000 rendered it harder, not easier, to understand why civil proceedings had not been instituted. Mr Gohir, a serial fraudster, was a witness who was “at the very least critical to the sheer probity of this prosecution”. Mr Asif’s motivation was all too obvious, namely to obtain financial recompense in his own private interests. More specifically:

“where it is respectably arguable that the prime unambiguous motivation is leverage to enforce a person’s liability as the prosecutor or those close to him see it, it becomes more improbable that such a prosecution could be thought to be in the public interest.” 

HHJ Tomlinson said he could be satisfied that Mr Asif was a front man or proxy prosecutor for Mr Gohir. It followed that the prosecution was an abuse of the process of the court.

Davis LJ gave detailed reasons for refusing leave to appeal: 

“1). This is a proposed appeal against a terminating ruling in respect of a private prosecution. The judge (Judge Tomlinson, sitting in the Southwark Crown Court) did not give leave to appeal. Accordingly, by s.57(4) of the CJA 2003, an appeal can only be brought by leave of the Court of Appeal. The papers have been referred to me as a judge of that court under Rule 38.9. I have decided to deal with the question of leave to appeal on the papers and not to refer the application directly to the Full Court.

2). On any view, this is a remarkable case.

3). As the judge found, the whole flavour of the proceedings is civil in nature. True it is that the counts are framed in fraud, theft and laundering. Nevertheless, they in fundamentals rely on alleged oral agreements and representations on the part of the first defendant which are not evidenced in writing and on the defendants’ alleged conduct thereafter.

4). It is a feature of this case that there has been no prior attempt to bring civil proceedings against these defendants. Nor has there been any prior attempt to refer the matter to the police or SFO with a view to a prosecution being initiated.

5). Having considered the papers, I cannot conceive that this case would satisfy either limb of the Full Code Test applicable to public prosecutors. That said, however, I accept that a private prosecutor is not bound by the Full Code Test: see, for example, R (Charlson) v Guildford Magistrates [2007] 3 All ER 163. I also accept that a private prosecutor is not ordinarily required to show a public interest in commencing a private prosecution under a Public Act: Ewing v Davis [2007] 1 WLR 3223.

6). The judge stayed the proceedings on the grounds of abuse of process (he also held that he would in any event dismiss them as against the second defendant). He did so under limb 2 of the well-known test relating to abuse of process. It is well established that the jurisdiction to stay on such a basis is only rarely and exceptionally to be exercised. Further, the general principles for stay on the ground of abuse are no different for private prosecutions.

7). I also bear in mind two other points in favour of the prosecutor:

1. The Crown Court has the power to dismiss where, in its view, a case is insufficiently made out (as indeed occurred here with regard to the second defendant)

2. The Crown Court has power of its own motion to refer a private prosecution for the consideration of the DPP, who may in an appropriate case then take over the prosecution and discontinue under s.6 of the PofO Act 1985 (see, for example, Thakrar [2019] 2 Cr. App. R. 171).

A stay on the ground of abuse of process limb 2 cannot be used as a mere substitute for those possibilities. (It also follows, conversely, that the fact that the judge refused to dismiss as against the first defendant in this case has no real bearing on his decision on abuse of process. The relevant considerations are different.)

8). All that said, I consider that the judge was fully entitled to stay the proceedings as he did. This is essentially for the two (linked) reasons which he gave.

9). The first is that he was entitled, in my opinion, to conclude on the available evidence that the ostensible prosecutor Mr Asif was in truth a front or proxy for Mr Gohir. Mr Gohir has a significant background in fraud (including carousel fraud). The proceedings are designed to mask his true involvement. The judge placed principal reliance on this ground.

10). If that is not enough, the second (linked) point is in my view conclusive. That is that this private prosecution is being used for a collateral purpose and for an improper motive.

11). I can accept that mixed motives are not of themselves a bar to a private prosecution: see R v Bow Street Magistrates [1993] QB 645; D Ltd v A [2017] EWCA Crim 1172 at paragraphs 59 - 60. But that is not the position here. The criminal proceedings are, as I see it, being used entirely to achieve financial recovery from the defendants. That was in effect openly admitted by leading counsel for the prosecution in answer to highly pertinent questioning from Judge Hehir at the previous restraint hearing on 29 March 2019 (and the transcript of which hearing Judge Tomlinson expressly took into account): (see at p 4 lines 3 - 13 of that transcript). There, leading counsel accepted that what the prosecutor “wants at the end of the day is he wants his money back and…the criminal courts are ideally suited to catering for the ultimate remedy of the return of his funds…”. He also frankly conceded that to litigate matters in the Crown Court was considered “much more cost-effective”. See also at page 15 lines 5 – 22 of the transcript, being part of Judge Hehir’s ruling. It is further admitted in paragraph 7 (x) of the Notice of Appeal that the purpose of the proceedings is to “recover property taken from the prosecutor” in what is said to be commission of a criminal act.

12). So the prosecutor is not in truth using the criminal proceedings as a means to obtain condign punishment for criminality. Rather, he is using them as “leverage” (in the word of the judge) to achieve recovery of money from the defendants said to be due to him. That is an abuse of the process of the Crown Court. Moreover, he is doing so entirely to avoid the inconvenient consequences (to him) of use of civil proceedings: such as uncertainty of success in civil proceedings, quantum of costs, giving security for costs (albeit I note the late voluntary offer of £150,000), perhaps not having to pay costs at all if unsuccessful, avoiding (by applying for a Restraint Order rather than a civil freezing order) having to offer a cross-undertaking in damages; and so on. This shows the oppressive nature of these criminal proceedings vis-à-vis the defendants.

13). This collateral purpose and this improper motive is yet further, to my mind, illustrated by the prosecutor’s position adopted towards the solicitor, Mr Bunting (a point on which Judge Hehir had been understandably concerned). Mr Bunting was represented to Judge Hehir as “complicit in the fraud”. Mr Bunting, however, is not a party to this prosecution. Yet he is a party to civil proceedings commenced against him and his firm, but to which civil proceedings the defendants in the prosecution conspicuously are not a party! That is revealing; as is the fact that, on the pleadings in the civil case (which I have seen), commenced in the name of Mr Asif as claimant, the allegation against Mr Bunting is solely one of negligence. So fraud is not asserted against Mr Bunting in the civil proceedings, where the standard of proof is lower, but is asserted against him in the prosecution, where the standard of proof is higher. This again demonstrates the entirely tactical manoeuvring underpinning this private prosecution.

14). Looked at overall, I thus conclude that the decision of Judge Tomlinson (even if some of his propositions, for example with regard to the public interest, may have been rather too widely stated) was justified. This private prosecution in the Crown Court is being pursued, in reality on behalf of Mr Gohir, simply as a device or lever to achieve monetary restitution from the defendants and with a view to evading the use of civil proceedings for that purpose. It is an affront to the process of the Crown Court and to the court’s sense of justice that it should be used for such a purpose. The case is in this regard plainly distinguishable on the facts from a case such as R (G) v SS [2017] EWCA Crim 2119.

15). I can see no arguable basis, given the circumstances, for saying that the decision of Judge Tomlinson was wrong in law or principle or was one that it was not reasonable for him to have made. I therefore refuse leave to appeal”.

In upholding the decisions of HHJ Tomlinson and Davis LJ the Court of Appeal relied upon the following:

  • It is well established that a private prosecutor can have another motive as well as being motivated by a public interest factor. Mixed motives are not of themselves a bar to a private prosecution: R v Bow Street Magistrates [1993] QB 645; D Ltd v A at paras 59 to 60. The question is where the line is to be drawn between the public interest motivation and the other “oblique” motive. Identifying the question of whether “the prime unambiguous motivation is leverage to enforce a person’s liability.”
  • The evidence plainly entitled the judge to reach a conclusion that this was a prosecution being brought primarily to accomplish a purpose for which it is not designed. Here, there is the striking anomaly of the absence of any civil proceedings. Further, as Davis LJ noted, there was an open admission by leading counsel for the prosecutor that: “… at the end of the day is he wants his money back and…the criminal courts are ideally suited to catering for the ultimate remedy of the return of his funds…”.
  • There is no evidence that the prosecution is brought with any public interest rationale. While a dominant public interest is not required, as the authorities make very clear, the absence of any expression of a public interest rationale, taken together with the clear expression of an oblique motive is telling.
  • In this case, attempts to recover the moneys were made through negotiations, though civil proceedings had not been commenced, followed by an unsuccessful attempt to settle the dispute. Immediately thereafter these proceedings were started, combined with an application for a restraint order. This on its own provided powerful support for the conclusion reached by the judge that the Court’s process was being used for a primarily indirect or improper purpose.
  • We have no hesitation in concluding that the judge was entitled to consider on the evidence before him that Mr Gohir was the moving force behind this prosecution and Mr Asif was no more than a proxy prosecutor. This was a matter going to conduct, and the attempt to “pull the wool over the Court’s eyes”. He concluded that he was “satisfied …. that [Mr Asif] has indeed been a front man for [Mr Gohir] and he has played a leading role in these proceedings; Mr Asif is indeed the proxy prosecutor”.
  • As noted by Davis LJ, there are also a number of litigation advantages which provide a further oblique and improper motive for not pursuing civil proceedings. One as is conceded, is that of cost effectiveness. First, unlike civil proceedings, the initiation of which involves the payment of a £10,000 court fee, criminal proceedings can be initiated without payment of such a fee. Secondly, as noted in the final section of this judgment, the recovery of the costs from the prosecutor of a failed prosecution is not straightforward, whereas in civil proceedings costs in general follow the event. Moreover, in civil proceedings the claimant might be vulnerable to an application for security for costs; and a claimant seeking a freezing order (the equivalent of a restraint order) would have to provide an undertaking in damages to court (and might well be required to provide fortification of that undertaking by way of a guarantee or payment into court).
  • This prosecution is being used for private tactical and oppressive reasons and the judge made no arguable error in staying the proceedings as an abuse. A consideration of the merits of the prosecution simply reinforces our view. Like Davis LJ we could not “conceive that this case would satisfy either limb of the Full Code Test applicable to public prosecutors.”

Costs

The defendants sought their costs of the first instance and appeal hearings. before this Court and before the Crown Court.

The legal framework of the costs application can be summarised as follows: 

  • Application under section Section 19(1) of the Prosecution of Offences Act 1985 for costs incurred as a result of an unnecessary or improper act or omission by, or on behalf of, another party to the proceedings;
  • Regulation 3 of the Costs in Criminal Cases (General) Regulations 1986 provides that: “where at any time during criminal proceedings … the Court of Appeal is satisfied that costs have been incurred in respect of the proceedings by one of the parties as a result of an unnecessary or improper act or omission by, or on behalf of, another party to the proceedings, the court may, after hearing the parties, order that all or part of the costs so incurred by that party shall be paid to him by the other party.” The order “shall specify the amount of costs to be paid in pursuance of the order.”;
  • The procedure to be followed is set out in rules 45.8 of the Criminal Procedure Rules.  If the court makes an order, it must assess the amount itself. To help assess the amount, the court may direct an enquiry by the Registrar. When deciding whether to direct such an enquiry, the court must have regard to all the circumstances;
  • The Criminal Costs Practice Direction (2015) as amended, (the “Practice Direction”) recommends, at paragraph 1.2.4: “Where the court orders a defendant to pay costs to the prosecutor; orders one party to pay costs to another party or a third party to pay costs; disallows or orders a legal or other representative to meet any wasted costs; or makes a defendant’s costs order other than for the full amount; the order for costs must specify the sum to be paid or disallowed. Where the court is required to specify the amount of costs to be paid it cannot delegate the decision, but may require the assistance of the relevant assessing authority, in practice the National Taxing Team (for magistrates’ courts and for the Crown Court) and the Registrar of Criminal Appeals (for the Court of Appeal): see CrimPR 45.8(8), 45.9(8) and 45.10(8).”

More specifically as to Costs incurred as a result of unnecessary or improper act or omission (i.e. under section 19(1) of the 1985 Act), paragraph 4.1 provides that:

"4.1.1 … the Court of Appeal (Criminal Division) 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 proceedings as distinct from his legal representative: s.19 of the Act and reg.3 of the General Regulations. The court may find it helpful to adopt a three stage approach. (a) Has there been an unnecessary or improper, act or omission? (b) As a result have any costs been incurred by another party? (c) If the answers to (a) and (b) are “yes”, should the court exercise its discretion to order the party responsible to meet the whole or any part of the relevant costs, and if so what specific sum is involved? Criminal Procedure Rules 2020 (SI 2020/ 759), r.45.8 sets out the procedure. …” 

The central phrase “an unnecessary or improper act or omission” was set out in DPP v Denning [1991] 2 QB 532 at 541, where Nolan LJ said that the meaning of the word “improper”: “… does not necessarily connote some grave impropriety. Used, as it is, in conjunction with the word "unnecessary", it is in my judgment intended to cover an act or omission which would not have occurred if the party concerned had conducted his case properly.”

The test was applied by Hickinbottom J in Serious Fraud Office v Evans [2015] EWHC 263 (QB). At paragraph 148 the judge set out the considerations:

“i) ….

ii) In respect of an application under section 19 of the 1985 act, a threshold criterion is that there must be "an unnecessary or improper act or omission" on the part of the paying party, i.e. an act or omission which would not have occurred if the party concerned had conducted his case properly or which could otherwise have been properly avoided.

iii) In assessing whether this test is met, the court must take a broad view as to whether, in all the circumstances, the acts of the relevant party were unnecessary or improper.

iv) ….

v) The section 19 procedure is essentially summary; and so a detailed investigation into (e.g.) the decision-making process of the prosecution will generally be inappropriate.

vi) Each case will be fact-dependent; …. Generally, a decision to prosecute or similar prosecutorial decision will only be an improper act by the prosecution for these purposes if, in all the circumstances, no reasonable prosecutor could have come to that decision.”

In R v Cornish [2016] EWHC 779 (QB) Coulson J reviewed the authorities on the meaning of unnecessary or improper act or omission in regulation 3, and derived from them the following principles: 

“(a) Simply because a prosecution fails, even if the defendant is found to have no case to answer, does not of itself overcome the threshold criteria of s.19.

(b) Improper conduct means an act or omission that would not have occurred if the party concerned had conducted his case properly.

(c) The test is one of impropriety, not merely unreasonableness. The conduct of the prosecution must be starkly improper such that no great investigation into the facts or decision-making process is necessary to establish it.

(d) Where the case fails as a matter of law, the prosecutor may be more open to a claim that the decision to charge was improper, but even then, that does not necessarily follow because no one has a monopoly of legal wisdom, and many legal points are properly arguable.

(e) It is important that s.19 applications are not used to attack decisions to prosecute by way of a collateral challenge, and the courts must be ever vigilant to avoid any temptation to impose too high a burden or standard on a public prosecuting authority in respect of prosecution decisions.

(f) In consequence of the foregoing principles, the granting of a s.19 application will be very rare and will be restricted to those exceptional cases where the prosecution has made a clear and stark error as a result of which a defendant has incurred costs for which it is appropriate to compensate him.”

The Evans and Cornish principles apply to private prosecutions (R (Haigh) v City of Westminster Magistrates’ Court [2017] EWHC 232 (Admin); 181 J.P. 325, DC), and in R (Holloway) v Harrow Crown Court [2019] EWHC 1731 (Admin)).

Costs Decision

The Court of Appeal made the following general observations in relation to costs: 

  • The legal principles applicable to public prosecutions apply equally to private prosecutions.
  • Court of Appeal has the power to remit the costs which relate to the Crown Court proceedings back to the Crown Court or can itself determine the costs aspects of the case. The Court of Appeal does have the power to make an order as to costs under section 19(1) and 19(2)(a) of the Prosecution of Offences Act and regulation 3 of the Regulation;  

Conclusion

The decision illustrates again that the abuse of process remedy is alive and kicking. This is one of those rare cases in which the Court of Appeal (Criminal Division) rejected a prosecutors appeal under the terminatory rulings provisions. The decision is also of interest because it concerns and examines the recovery of costs by a defendant who successfully obtained a stay of a private prosecution.