The Law Society is celebrating victory in defeating the previous Government’s plans to make acquitted defendants pay most of the costs of their own defence. A High Court judgment handed down on 15 June by Lord Justice Elias and Mr Justice Keith has ruled unlawful an attempt by the previous Lord Chancellor, Jack Straw, to cap the costs paid to people acquitted in criminal cases.

The Law Society’s case for judicial review concerned the Prosecution of Offences Act 1985, section 16 which gives the courts the power to award costs to successful defendants of such an amount “as the court considers to be reasonably sufficient to compensate the defendant for any expenses which he has properly incurred in the proceedings.” Until last October, regulations made under the Act stated that the test to be applied in determining awards of costs was to be the test set out in section 16. This scheme came under scrutiny by the MoJ as a result of budget overruns and the impact of a small number of very high cost cases. It decided therefore to take advantage of a power contained in the Act to set rates or scales for payments of costs out of central funds and to introduce a scheme which limited recoverable costs to legal aid rates.

The Government estimated that its new scheme would save £20 million each year. The cost of this was to be borne by individuals, an average of £16,200 per case in the Crown Court, representing the difference between the average costs of a privately paid case (£19,000) and the average cost of a legally aided case (£2800). The point at issue in the litigation was whether the Lord Chancellor, in setting rates or scales, can decide what is “reasonable” to allow the defendant, even if as a consequence the amount that will be recovered falls well short of the amount the defendant actually incurred.  The grounds on which the Law Society alleged that the new scheme is unlawful are: the scheme is for improper purposes; there is an irrational distinction depending on who fixes the costs and also between defence and prosecution; defendants are deprived of a fair trial; and there is a flawed understanding of the effects of the policy.

In his judgment Lord Justice Elias made it clear that the statute does not allow the Lord Chancellor to decide what is reasonable. In setting out a scheme of rates and scales, he has to respect the statutory purpose set out in the Prosecution of Offences Act. The Act was intended to provide reasonable compensation for successful defendants. He said: “The question is whether the objectives which the Lord Chancellor is avowedly seeking to achieve by adopting the New Scheme are lawful. In my judgment, they are not lawful.” He went on to say: “The new regulations involve a decisive departure from past principles. They jettison the notion that a defendant ought not to have to pay towards the cost of defending himself against what might in some cases be wholly false accusations, provided he incurs no greater expenditure than is reasonable and proper to secure his defence. Any change in that principle is one of some constitutional moment. It means that a defendant falsely accused by the state will have to pay from his own pocket to establish his innocence.” He concluded: “Accordingly, I would uphold the judicial review on the single ground that the Lord Chancellor has sought to achieve objectives which are inconsistent with the purpose for which he can pass these regulations.”

The full text of the judgement in [2010] EWHC 1406 (Admin) Case No CO/214/2010 can be found at:
http://www.bailii.org/ew/cases/EWHC/Admin/2010/1406.html