Grimes v Crown Prosecution Service

Thursday, 27th November 2003

J U D G M E N T

1. LORD JUSTICE BROOKE: This is an appeal by the intervener against that part of an order made by Wilson J in concurrent proceedings in the Administrative Court in the Family Division on 20th April 2003 whereby he made no order as to costs as between any of the parties before him. The proceedings had been initiated by the Crown Prosecution Service ("CPS") against the defendant, Anthony Grimes, who is the intervener's former husband. He played no part in the matter with which we are concerned on this appeal, which relates to the rival claims by the CPS and Mrs Grimes to the whole and to half of a sum of £54,265.00 held by two firms of solicitors on a joint deposit account.

2. The claim of the CPS arises out of its wish to enforce a confiscation order in the sum of £59,017 made against the defendant in the Southwark Crown Court in June 2001, two months after he had been sentenced to seven and a half years imprisonment for his involvement in a 10-year old conspiracy to make counterfeit bank notes. Mrs Grimes' claim, on the other hand, arose out of her contention that the defendant had owned their matrimonial home on trust for the two of them in equal shares, so that she was entitled to half the net proceeds of sale, being the monies held on the joint deposit account. Alternatively, she sought an order that the balance between her proved entitlement, if any, and half the net proceeds of sale be paid to her as a lump sum in full and final settlement of all her claims against Mr Grimes for ancillary relief following their divorce.

3. Mr and Mr Grimes married in December 1991, and received their decree absolute of divorce in January 2002. The judge found they lived together, with her two daughters of a previous marriage, between February 1990 and July 1995 when the marriage broke down. Mr Grimes originally started to live with her in her home in Penge in February 1990, and the judge found that they had moved together to 8 Brushwood Drive, Bermondsey when that property was completed and sold to Mr Grimes by developers in July 1990. The property was bought for £100,000 with the help of a 100% interest only mortgage. The judge found that Mrs Grimes paid £125, being half a non-refundable commitment fee, to secure the property, and £2,600, which was lent to her by her mother, as an insurance premium associated with the purchase. Although the judge felt that the reason the wife gave him for the property being in her husband's sole name did not make sense to him, he felt that it might have made sense to them, and on the basis of the oral evidence of Mr Grimes and her mother he found that the intention of the parties was that the property should be owned beneficially by them in equal shares.

4. The judge found that the wife made contributions to household expenses from short-term jobs between 1990 and 1993. After she left in July 1995 she agreed with her husband that the property should be first let and then sold, with the proceeds being divided equally. In 1999 she met her husband, who had moved back into the property, and they agreed that the property should be put on the market as soon as some works of redecoration were completed. These plans were thwarted when the CPS obtained a restraint order in May 2000 following Mr Grimes' arrest, but the order was varied in January 2001 so as to permit the sale of the property and the freezing of its net proceeds. The judge found that Mrs Grimes paid five sums totalling £5,071 towards the mortgage instalments between September 1999 and June 2000.

5. In the proceedings that led up to the making of the confiscation order Mr Grimes did not contest the Crown's contention that he received sums totalling £500,000 in 10 years from the proceeds of his criminal activities. Indeed, that was an agreed figure. The Crown had contended that the house was the epicentre of the conspirators' activities. Mr Grimes did not suggest in those proceedings that his wife had any financial interest in the property, although the confiscation order was made without prejudice to any claim she might make. Mr Pawlak has shown us a series of letters from the wife's solicitors from 27th September 2000 onwards asserting a claim to a half share of the proceeds, and we have been shown the transcript of the discussion at the Crown Court at the time the confiscation order was made, which shows very clearly that the judge was aware of Mrs Grimes' claim, but left it to her to assert her claim in these proceedings.

6. Wilson J declared himself continuously irritated by the absence of documentary evidence to support Mrs Grimes' story, but he eventually decided to believe her and to hold that the parties' intentions had always been that she owned a beneficial half interest. In reaching this conclusion he was influenced by the evidence that she had registered her interest in the property at the Land Registry in October 1996 when she heard a rumour that her husband might be intending to sell. He was also impressed by the payments she made in 1999-2000, and by a draft consent order in the divorce proceedings (which was never filed to the court) whereby Mr Grimes agreed that his wife should receive 50% of the net proceeds of the sale.

7. The judge said that even if he had not found her to be beneficially entitled to 50%, he would have made a property transfer order with the same outcome. He said in this context that Mrs Grimes was now 52, in poor health, with no assets and no private pension provision, and no hope of receiving maintenance payments from her husband. She was living in council property on state benefits.

8. So much for the substantive proceedings. When Mrs Grimes sought an order that the CPS pay her costs, the judge said that the matter was not straightforward. This was not conventional civil litigation. There was a wealth of public dissatisfaction about the inability of state authorities to use the confiscatory regime to strip convicted defendants of their ill-gotten gains. The confiscation order was made without opposition in the Crown Court, and the CPS had the power to enforce it. Mrs Grimes had objected to the whole of the fund being taken in satisfaction of the confiscation order. In a clear case, he said, the CPS should negotiate.

9. This case, however, was not clear. The property was not jointly owned, and there was a dearth of documentary evidence. In the end the judge had believed Mrs Grimes' oral evidence. The judge considered that the CPS ought not to have settled the claim: certainly not at 50%, and there was no evidence to suggest that if Mrs Grimes had been offered a smaller proportion she would have accepted it. In those circumstances he made no order as to costs. He said that it was unfortunate that the Legal Services Commission's charge would bite on the sum she recovered.

10. Mr Pawlak, who appears for Mrs Grimes, told us that his client's total costs are likely to be well in excess of £10,000. This will detract seriously from the benefit of her success before Wilson J, if his costs order is allowed to stand. He said that she succeeded on the whole of her case and on all the issues before the judge, and the CPS was the unsuccessful party. He reminded us that the general starting point is that the unsuccessful party should pay the successful party's costs (CPR 44.3(2)(a)), and there was no good reason for departing from this rule in the present case. In particular his client was found to be innocent of any involvement with her husband's criminal activities, and there was no unreasonable conduct on her part and she had been wholly successful (CPR 44.3(4)(a) and (b)).

11. Mr Pawlak complained that the judge had failed to start from the general rule. He had applied a wrong approach by starting with the proposition that the CPS was a public body and a guardian of the public purse, being influenced overmuch from the outset by the consideration that the CPS had a difficult task in enforcing confiscation orders. He said that the appellant had not been unreasonable in the way she had conducted the litigation, and the judge made no finding to that effect. His only criticism, he said, was that he had been concerned that sufficient attempts had not been made to obtain the file of the solicitor who undertook the conveyancing in 1990 on behalf of her husband. Mr Pawlak commented in relation to that that there was no particular evidence that the file, even if it had surfaced, would have revealed anything particularly useful, particularly as the solicitor was acting for Mr Grimes and problems of legal professional privilege might have arisen. He pointed to the fact that the CPS, even at the hearing before Wilson J, was relying on an argument that the wife had not gone to live in the property until she was married in December 1991, relying in this context on their investigations into the electoral roll, which did not reveal her being registered in the property until 1992.

12. In response to that Mr Pawlak has shown us that the wife annexed to her statement in June 2002 a letter from a local doctor showing that she had been registered at his GP's practice under the name of her former husband in September 1990, and a letter from the Inland Revenue about her tax coding in November 1990 also showed this address. A little later her solicitors produced a letter from a local school showing that one of her daughters had joined that school in March 1991. They also pointed out to the CPS in a December 2002 letter, which received no comment in reply, that their client thought that she might have been registered on the electoral roll under her former name until after her marriage.

13. Mr Pawlak complains that the CPS ignored all this evidence and continued to maintain that the wife did not move into the property until the time of the marriage (or shortly after) thereby making it far less likely that there had been any agreement at the time the property was originally bought that it should be held in joint names. He urges this upon us as an illustration that the CPS were not acting reasonably in the litigation. He is also critical of the fact that the CPS made no concessions, despite the evidence of Mrs Grimes' mother in a statement made towards the end of 2002 to the effect that she had lent the sum of £2,600 (which had been in part repaid), and that she was making efforts to obtain from the Abbey National documentary evidence of the source of the money. This was further evidence, Mr Pawlak says, which the CPS ought to have taken into account when weighing up the merits of this litigation to the effect that significant sums were being paid from the wife's side at the time that the property was bought.

14. Mr Pawlak urges that the CPS is not insulated from the general rule about costs orders just because it is a public body, and that the judge's approach was wholly wrong. He drew our attention to some well-known cases, either when judicial review proceedings are brought in the public interest and there is no order as to costs, or when the police have to act for parties to a licensing appeal, when it may very well not be proper for them to be ordered to pay costs when they are performing a public function of providing the court with information. He said that their cases raised different issues.

15. Miss Barber, on the other hand, despite the judge making no reference at all to the scheme set out in CPR 44.3, submitted that the judge must have been aware of the general rule and the fact that he was making an exception to the general rule, because this was an oral judgment and he would have had Mr Pawlak's submissions to this effect ringing in his ears. She reminded us that we ought not to interfere with the decision by the judge in the exercise of his discretion, particularly in relation to costs, unless we were satisfied that he was clearly wrong or set about his task in an entirely wrong manner. She referred to the overall objective of the Civil Procedure Rules, which calls for maximum cooperation between the parties, and she referred us to the judge's exasperation that certain aspects of oral evidence were not supported by documentary evidence. She said that the wife did not make her claim out on paper and that the CPS was entitled to test her case in court. She contended that the CPS, like any other litigator, was not obliged to settle a case which was based on bare assertion and unsupported by evidence, particularly where evidence could be expected, and that to impose such an obligation would be wholly contrary to the principles and spirit of the CPR.

16. She then urged upon us the matters which affected the judge's mind, which related to the particular role of the CPS. The CPS was not like an ordinary party to conventional litigation. It was not privy to the arrangements between the defendant and the intervener about the purchase of the house, and it had an obligation, in the public interest, to seek a restraint order and to make efforts to enforce the confiscation order. Accordingly, although the CPS can, and do, negotiate settlements in appropriate cases, it may not be possible to negotiate settlement in some cases where they are confronted simply by assertions of fact by a wife who lays claim to assets which had been frozen without supporting documentary evidence which they could reasonably expect to see.

17. She said that PC Baugh had made a witness statement which made clear his concerns about the paucity of evidence, and that Mrs Grimes had not taken steps to explain why she could not provide further evidence, particularly documentary evidence, either before the hearing or at the hearing. She was concerned that, if the CPS were obliged to pay Mrs Grimes' costs of making good her claim in court, then they would be in an untenable position, spending public money to fund litigation for interveners who would have been criticised by the court, as Mrs Grimes was, for "an irritating dearth of documents" in support of her claim. She contended that it was Mrs Grimes' fault that this matter had come to court, because she had failed to place the CPS in a position whereby settlement might be possible. She cited a number of cases which illustrate, in different ways, the court's approach to costs issues in rather different circumstance than these.

18. In my judgment there is great force in Mr Pawlak's submission that the judge set about the exercise of his discretion in the wrong way. This is the second occasion within two weeks when a division of this court of which I have been a member has been concerned with an appeal in which complaint is made about an order for costs made by the judge when it was not apparent that the judge had set about his duties in the structured way set out in CPR 44.3. Of course, there is no need for judges to refer to that rule explicitly, provided that they follow its philosophy. Its philosophy required Wilson J to start with the proposition that the general rule was that the CPS, as the unsuccessful party, should have to pay the costs of the successful party. It would then follow from that that the judge should consider carefully whether there were any of the specific matters listed in CPR 44.3(4) which would take this case out of the ordinary rule and then consider all the circumstances.

19. It appears to me that the judge embarked on his task from the wrong end, focusing first on the position of the CPS, as a public body, and then seeking to find reasons why Mrs Grimes should displace a general rule that the public body should not have to pay the costs of a successful party in circumstances like these.

20. In these circumstances, it appears to be one of those cases in which, the judge having set about his task from the wrong end, this court has to exercise its discretion afresh on the materials before it.

21. One starts with the general rule. Mrs Grimes had to come to court. There had been no offer made to her to which the court's attention was drawn which made it unnecessary for her to come to court. When she came to court what she had said on paper in her affidavit was believed by the judge. I entirely understand the contention that it would have been unreasonable for the CPS to concede the totality of her claim in advance: they had their public duties to perform in relation to the need to enforce the confiscation order, and there were oddities about Mrs Grimes' statement, particularly in relation to the reasons why the property was put in her husband's sole name. But that does not, in my judgment, mean that the CPS were entitled to behave, as litigants far too often behaved before the CPR came in, by simply standing back and saying, "We will make no offer at all for the court to consider when it decides what order as to costs is a reasonable one to make. We will simply see you in court."

22. The inevitable consequence of that approach, if accepted, would be that the value of an intervener's claim, if successful, would inevitably be reduced by the sums she had to pay to her lawyers, whether or not she had the support of the Legal Aid Fund. Miss Barber did not suggest that the CPS should be immune from the ordinary obligations of an unsuccessful party to pay the successful party's costs, but the CPS's stance in this case came near to this position. The CPS has a duty under CPR 1.3 to help the court to further the overriding objective, and it would be the reverse of justice if the court were to be perceived to be upholding a policy which led the CPS to think that it did not have to make any offer at all and could come to court for an expensive contested hearing, simply leaving the successful party to lose much of its success by an order for costs which it could not recover.

23. I have considerable sympathy for the CPS, not only in this matter but in a large number of other matters which I have seen over the years as a judge concerned with this particular jurisdiction. I can understand the concern of the judge that there were documents which might have been produced; and I have no doubt that if the CPS had made a well-pitched offer in advance of this hearing, even if it had been significantly lower than an offer to concede the whole of the sum claimed, the CPS might very well have been able to protect its position as to costs. But here there was no sign of such an approach. It is depressing to see the number of unanswered letters from September 2001 onwards that Mrs Grimes's solicitors wrote to the CPS asserting their claim. It is even more depressing to see the letter of 1st October 2002 in which the solicitors wrote in some detail about the additional evidence which had come to light and to ask whether the CPS were willing to narrow the issues. It received no response at all.

24. To some extent both parties were at fault for not doing all they could to resolve this dispute without the uneconomic costs of a hearing before a High Court judge, and it may very well be that mediation is a more appropriate way of resolving many of these disputes now that experience of mediation, and of successful mediation, has grown so much.

25. However that may be, in the absence of any such well-pitched offer, I am compelled to the conclusion that the appropriate order for costs in this case is the usual order that costs should follow the event. Accordingly, I would allow this appeal.

26. LORD JUSTICE SEDLEY: It is right to say that the Crown Prosecution Service did not respond to a viable suggestion made in correspondence to the appellant's solicitors.

27. It is also apparently the case that Detective Constable Baugh had in his hands the husband's passbooks which showed the wife's payments towards the mortgage interest, and that, given that these were made as late as 1999 and 2000, these pointed to the existence of a beneficial interest.

28. But even accepting that neither of these things made it unreasonable for the CPS to test the appellant's case at an oral hearing, it seems to me that the CPS must for its part accept that it was no less reasonable for the appellant to stick to her guns. And it was the appellant who, however narrowly, was vindicated.

29. If therefore this was a case in which both sides were justified in going on, absent a compromise, to an oral hearing, each did so at its own risk as to costs.

30. The reason why the judge did not approach the case in this way, as it seems to me, is that he regarded the CPS as having a special litigation position or status. As my Lord has made clear, it does not. What it will have in many cases is an argument on the reasonableness of its stance which derives from the nature of its legal functions and the purpose of confiscation orders. For the rest, and I think contrary to the approach taken by the judge, this proceeding was no different from an interpleader in a judgment creditor's action. The Crown when it comes before the courts of this country does so as a litigant like any other.

31. I am also troubled by what seems to me a contradiction between paragraphs 35 and 36 of the judgment. In the latter paragraph, the judge said:

"If it [the CPS] had no prior insight into the likely credibility of the wife's oral evidence, then it was perfectly entitled to say that the state required her to come to court and establish the matters which she was asserting in her affidavit."

In the prior paragraph, however, he had said:

"This, however, in my view was not a case on the part of the wife which, on paper, was in any way bound to succeed; nor even, on paper, could it be said that it would probably succeed."

The case put on paper by Mrs Grimes was, in my respectful view, fully capable of succeeding, providing it was believed. Of course the CPS was entitled to probe it and to submit that it should not be believed. But in this it failed.

32. I do not therefore think it necessary for the CPS to have laid itself open to criticism if it is to be made liable for a successful opponent's costs in a case like the present; and for my part I am willing to accept Miss Barber's doughty defence of the CPS's conduct of the case. But that leaves a simple situation in which two parties, each behaving reasonably, have met in court, where one has lost and ought therefore to expect, other things being equal, to pay the other's costs.

33. Other things would not be equal if, for example, Mrs Grimes had sat until trial on documents which then clinched her case -- especially in the face of DC Baugh's affidavit pointing out the kinds of documentation that were conspicuously missing; nor if she had introduced at trial significant facts not relied on in her affidavit. But she did neither of these things. She simply went to trial on such evidence as she had and she was believed.

34. Had she been disbelieved, I have no doubt that she would have had to pay the CPS's costs. In the opposite event, I see no reason, like my Lord, why the opposite result should not have followed.

35. In these circumstances I agree that the appeal should be allowed and that there should be substituted for the judge's order an order that Mrs Grimes recover her costs before Wilson J from the CPS.

36. MR JUSTICE EVANS-LOMBE: I agree with the judgments of both my Lords.

Order: Appeal allowed as above with costs subject to detailed assessment.