R (G) v S and S

This is an application by a private prosecutor for leave to appeal a ruling staying the prosecution as an abuse of process, made at Birmingham Crown Court on 11 August 2017. The application is brought under s.58 of the Criminal Justice Act 2003. The reporting restrictions pursuant to s.71 of that Act apply, until conclusion of the trial in the Crown Court, subject to any further order of this court.

The respondents were jointly charged on an indictment alleging four counts of fraud contrary to the Fraud Act 2006. At the outset of proceedings an application was made to the judge to stay the proceedings as an abuse of process. As is well-known, abuse of process may take one of two forms. The second form is in issue in this application. That is to say that the assertion made is that it would not be fair for the respondents to be tried or that it would offend the court’s sense of justice to permit the prosecution to proceed, so that a stay is necessary to protect the integrity of the criminal justice system. It is also well-established that a stay of criminal proceedings will be an exceptional course and a remedy of last resort. This second limb requires a balance of competing interests. None of the foregoing propositions was controversial in this application.

The facts show that the applicant was a businessman who entered into a business partnership or arrangement with the respondents. The applicant’s case is that in 2008 the parties agreed to enter into a commercial transaction involving three properties including two public houses, The Jug of Ale and the King’s Arms. His case is that in relation to those properties it was agreed that there would be a joint equal venture with the applicant having 50% ownership and the respondents, via a holding company, the remaining 50%. The applicant asserts that he invested a little over £400,000 and that he was defrauded of those monies. He asserts that he is beneficially entitled to 50% of the properties by way of a resulting trust, or has rights under a constructive trust or is entitled to a remedy on the grounds of unjust enrichment.

The allegations in the indictment assert that the respondents dishonestly and in abuse of position transferred ownership of the two properties to another, having previously used the properties as security for loan facilities without the consent of the applicant, grossly overestimating their value, and risking any equity available to the applicant. No part of the £400,000 has been repaid, nor has he received any share of rental income for the Jug of Ale, which reopened as a restaurant in 2013. The sales of the two premises had taken place after the respondents knew that the applicant was planning to commence civil proceedings.

Civil proceedings were served in March 2016. It was only at the end of April 2016 that the respondents’ solicitors informed the applicant’s solicitors about the sales.

In the civil proceedings the applicant claims a declaration that he is or was the 50% beneficial owner of both properties or, alternatively, the restoration of his money. The respondents raise a dispute as to the nature of the initial agreement with the applicant and contest that he had any beneficial interest in the properties. They dispute the validity of deeds relied on, and whilst accepting that there was an investment of about £400,000, assert that the appellant failed to adhere to the agreement with the result that the respondents had to make their own arrangements to secure funding for renovations to the property.

In the summer of 2016 the prosecutor began to consider a private prosecution for fraud. Evidence was prepared and sent to the police. There was no express invitation to the police to investigate. In effect, the police were being asked to permit the applicant to proceed with the private prosecution, having been informed that that was the applicant’s intention. The police, who decided not to investigate, did not demur. The primary purpose of this approach was to seek to secure the position of the applicant at the end of a trial when the issue of costs would arise.

At the end of 2016 the applicant referred the matter to the Crown Prosecution Service. In July 2017 the Crown Prosecution Service notified the parties that it had considered the evidential and public interest tests to be fulfilled and that it did not intend to take the case over, either to proceed with it or to terminate it.

In the interim an application had been made by the applicant in December 2016 to a district judge in relation to the civil proceedings. The applicant sought a stay of those proceedings until the conclusion of criminal proceedings against the respondents. That application was opposed by the respondents and the district judge declined to grant the stay.

In ruling, the judge in the Crown Court noted that the abuse of process argument was premised on the assertion that this private prosecution was tainted by an oblique motive, the purpose being to put pressure on the respondents in relation to the civil proceedings which covered the same subject matter as the criminal proceedings. The judge recorded that if he found on the balance of probabilities that that was made out he had a discretion to order a stay. The judge accepted that the mere fact that the better tribunal for deciding many of the issues in the criminal case was the High Court would not be a ground for ordering a stay. He stated that the question was whether there had been an abuse of the process of the court by way of an attempt to use the criminal proceedings to manipulate the outcome of the civil dispute to such an extent that the court ought to order a stay.

The judge’s conclusion was that the proceedings had been brought from an oblique and improper motive in order to put additional pressure on the defendants in respect of a debt which was properly being litigated elsewhere. For that reason he granted a stay.

In coming to that conclusion the judge noted that Parliament had authorised the continuance of private prosecutions, but went on to pose the question why this applicant had not requested the police to investigate or the CPS to take over the case. What the applicant had said to the CPS was that if the CPS took over the case and carried on with it, all well and good, otherwise the prosecutor wanted to carry on with his private prosecution. The judge concluded that the only answer as to why the applicant had not pressed the police to take on the task of investigation and the CPS to take on the cost and trouble of a prosecution was that the prosecutor wanted personally to control the prosecution and to choose how it proceeded.

In this context, the judge cited at paragraph 25 of his ruling an exchange with the applicant’s counsel in which he asked what would happen to the proceedings if the respondents paid £400,000. Counsel responded that he would have to take instructions and that a costs issue would arise. The judge concluded from that exchange as follows:

“I am afraid my answer is that the criminal proceedings would be dropped. I am entirely convinced that the purpose of this criminal prosecution is to apply pressure in the civil proceedings.”

The judge then continued:

“26.

There are numerous other aspects of the case that indicate that the motives of the prosecutor have nothing to do with the interests of justice, leave alone the general public, save insofar as that coincides with the prosecutor’s own financial interests, best expressed in the civil claim.

27.

There is the absence of any fraud claim in the civil proceedings for which no sensible explanation is offered, save that it was a decision of counsel in the fraud case, no doubt bearing in mind the ethical rule against pleading fraud, unless there was a solid and sustainable evidential basis for it. There is the introduction into the prosecutor’s written submissions before this court of an attack on a man called Arun Khattak which is manifestly malicious and irrelevant to any issues in the case…there is the introduction into the prosecution papers of an irrelevant attack on one of the defendants’ personal marital affairs. There is the use, or attempted use, of material disclosed in the PNB litigation, to which the prosecutor was not a party, though his solicitors then acted for the claimant bank. There is the bare fact that the solicitors in the civil litigation and the criminal litigation are the same, giving rise to absolutely no confidence in the court that they will have the necessary levels of independence to conduct the criminal case.

28.

There are a number of other issues into which I need not go. My conclusion is clear. These criminal proceedings are brought from an oblique and improper motive, the putting of additional pressure on the defendants in respect of a debt, which is properly being litigated elsewhere.”

The reference to PNB litigation above relates to the fact that the respondents mortgaged the properties to the Punjab National Bank (PNB) and then failed to pay interest or repay the loan. The PNB brought proceedings and that litigation was settled at the door of the court. PNB had been represented by Cubism Law, the applicant’s solicitors in the current civil and criminal proceedings.

Section 67 of the Criminal Justice Act 2003 provides that:

“The Court of Appeal may not reverse a ruling under this Part unless it is satisfied –

(a)

that the ruling was wrong in law,

(b)

that the ruling involved an error of principle, or

(c)

that the ruling was a ruling that it was not reasonable for the judge to have made.”

Mr Pownall QC put forward a number of grounds of appeal:

It was argued that since the material in respect of which the respondents complain formed part of the bundle of a pre-trial review hearing in the civil proceedings at the PTR and other hearings they entered the public domain pursuant to the exception at CPR 31.22(1)(a). In any event, if it was unfair for the prosecution to rely on particular evidence, that should be dealt with by reference to s.78 of the Police and Criminal Evidence Act 1984 rather than using the power to stay proceedings as an abuse of process. See DPP v Jimale [2001] Crim.L.R.138.

On behalf of the respondents it was submitted that the judge had given clear and cogent reasons underlying his decision to grant a stay on the grounds that the prosecution was tainted by an oblique motive. Mr Khangure QC submitted that it had been agreed that if it was shown that the proceedings were tainted by an oblique motive, the judge was entitled to order a stay. It seems to us therefore that this application must fail unless this court is satisfied that the terms of s.67 (see above) are met.

It was submitted that the judge had given due consideration to the decision in Dacre which had been cited to him at the hearing below and had properly come to the conclusion that the primary motivation of the Prosecutor constituted an oblique motive. This was justified, given the judge’s particular findings on the matters relating to Mr Khattak and to the personal life of a respondent, the use of documentation from the PNB litigation, counsel’s response to the judge’s question as to what would happen if the £400,000 was paid, the dealings with police and CPS, and the failure to allege fraud in the ongoing civil proceedings.

In short, the judge had rightly made the findings he had and reached the ultimate conclusion correctly. The applicant had failed to demonstrate that the judge’s ruling fell within s.67 and this court should not interfere.

At the heart of the judge’s ruling is a finding that this prosecution should be stayed as an abuse of process because it was fatally tainted by an oblique motive, namely, use of the criminal proceedings in order to apply pressure on the respondents in relation to the civil proceedings which covered, essentially, the same subject matter. The judge supported that conclusion by reference to a number of considerations developed in his judgment and summarised above. In essence, the applicant’s submission is that the matters relied on by the judge for his ultimate conclusion were wrongly or improperly relied on.

At paragraph 28 of the judge’s ruling he had stated that there were a number of other issues into which he did not need to go. In the course of submissions to us, Mr Khangure sought to sustain the judge’s decision, in addition to his main submissions, by reference to some of those other issues. We have concluded that since the judge did not identify which particular issues he had in mind, let alone provide any analysis or reasoning in relation to them, it was not for this court to speculate upon them. To do so would have the effect of considering the judge’s decision by reference to wholly unknown factors upon which the judge may or may not have placed varying degrees of weight. We were satisfied that the only proper course was to consider the judge’s decision by reference to those matters which he had expressly identified as underlying his conclusion.

It is clear to us that the judge was well aware of the decision in Dacre. We have seen a transcript of the hearing below in which there are references to the case and we note that the phrase “oblique motive” was used by Latham LJ at [26]. In relation to the second ground on which a stay for abuse may be granted, Latham LJ stated:

“And in this context, both motive and conduct can clearly be relevant. As far as motive is concerned, proceedings tainted by mala fides or spite or some other oblique motive may fall into this category…”

We note that at [27] Latham LJ referred to R v Bow Street Stipendiary Magistrate, ex p South Coast Shipping Co. Ltd [1993] QB 645, where it was held that the mere presence of an indirect or improper motive in launching a prosecution did not necessarily vitiate it; the court would be slow to halt such a prosecution in the case of mixed motives, unless the conduct was truly oppressive.

At [28] he also referred to In re Serif Systems Ltd [1997] CLY 1373 where Auld LJ said:

“In my view, it is arguable that improper motive is a relevant matter, depending on the circumstances, in considering whether criminal proceedings before magistrates are an abuse of process. This is not necessarily a matter of mixed motives of the sort to which Lloyd LJ referred to in the South Coast Shipping Co. case…it is for consideration whether there is a primary motive and one which is so unrelated to the proceedings that it renders it a misuse or an abuse of the process.”

It is clear from those passages that mixed motives are to be distinguished from an oblique motive which is so dominant and so unrelated to the proceedings that it renders them an abuse of process. Mr Khangure accepted that very many private prosecutions may be brought with mixed motives, and that that cannot be the test. His argument, however, was that in this case, for the reasons given by the judge, this was not a case of mere mixed motives.

Mr Khangure’s concession in relation to mere mixed motives was properly made (see [29] of Dacre and [59] and [60] of D Limited v A and Others [2017] EWCA Crim 1172 (a decision made available to the court and the parties but to which at the time of this judgment reporting restrictions apply).

Moving on, we do not consider that the criticism made in Ground 5 is made out. We regard the phrases which are the subject of criticism at [26] and [28] of the judge’s ruling as being adjectival in nature, rather than representing a separate strand of reasoning. Mr Pownall rightly recognised that this was not his best point and did not press it. It is clear to us that the judge’s finding at [20], that the mere fact that the better tribunal for deciding many of the basic issues in the criminal case is the High Court is not a ground for ordering a stay, demonstrates that questions of the better forum for dealing with the dispute were not part of his reasoning supporting a finding of oblique motive.

On the other side of the coin, we do not think that the judge’s finding that the applicant wanted personally to control the prosecution was of itself a factor of any significant weight. See also observations of the court at [60] of D Limited v A and Others. We will return shortly to the related questions of the applicant’s involvement with police and CPS.

In similar vein, we do not think that the judge was right to attach weight to the fact that fraud was not pleaded in the civil proceedings. It is a matter for the pleader in civil proceedings to frame the case in the way he chooses. It was not necessary for him to characterise the respondents’ conduct as constituting a fraud, the pleading of which may have consequences in the civil forum. Moreover, it is clear that the Crown Prosecution Service, having assessed the evidence, had concluded that the evidential test for fraud was passed in the proposed criminal proceedings.

Those matters, however, do not lie at the heart of the judge’s conclusion. It is plain from the ruling and was accepted that at the heart of the judge’s decision was the exchange with prosecuting counsel as to what would happen if £400,000 was paid in the civil proceedings. Notwithstanding counsel’s answer, the judge concluded that in those circumstances the criminal proceedings would be dropped. This in turn led him to the conclusion that the purpose of the criminal proceedings was to apply pressure in the civil proceedings. We are concerned that the judge supplied the answer he did to the hypothetical question which he had posed. It overlooked the fact that the applicant had sought to have the civil proceedings stayed whilst the criminal prosecution progressed, but was unsuccessful after this was resisted by the respondents. In addition, prior to that unsuccessful application for a stay, the civil proceedings had previously been stayed for a short period to allow settlement discussions to take place. The respondents’ solicitor’s witness statement shows that the applicant “failed in every aspect to enter into settlement discussions as agreed, regardless of the defendant’s attempts”.

Furthermore it seems to us that counsel’s response was a proper one and that it did not justify the judge’s conclusion in the absence of evidence that the applicant had sought or proposed any such settlement of the criminal proceedings. The situation is very different from that in R v Gloucester Crown Court ex p Jackman [1992] Lexis Citation 2517 (CO/1275/91: 10 November 1992). In that case, the private prosecutor in criminal proceedings had offered an overall settlement by withdrawing criminal proceedings for theft valued at £362, brought after the proposed defendant had initiated civil proceedings for wrongful dismissal in a much more substantial sum. Not only was it found that the offer had been made and that the prosecution was a bargaining factor in the wider litigation, but the civil litigation would have covered different territory from the theft allegation.

Allied to the judge’s conclusion based on the question posed to counsel, (which we do not think was justified in its reliance on counsel’s response and its failure to take account of relevant facts), are the issues surrounding the applicant’s contacts with police and CPS. These undoubtedly coloured the judge’s view of the matter and led into his conclusion based on prosecuting counsel’s response.

We have already commented on the judge’s view of what he found was the applicant’s wish to maintain control over the criminal proceedings, but the matter goes further than that.

In July 2016 the applicant contacted Action Fraud, a police-affiliated organisation described as the National Fraud and Cyber Crime Reporting Centre. It presented its evidence in support of a private prosecution and received a crime reference number. In the absence of further response from Action Fraud, the applicant’s solicitor wrote to West Midlands Police in August 2016, asking for contact “so that we can discuss obtaining permission from yourself to commence this prosecution”. In September 2016 Action Fraud responded by saying it had reviewed the applicant’s report and would not be sending it on to any local force to commence an investigation since it had not identified any leads that would result in a successful criminal investigation. The judge was clearly influenced by the fact that the applicant had not requested the police to investigate, but was only interested in obtaining permission to proceed with the prosecution. No police permission is required to proceed with a private prosecution; we were given to understand that an approach to police may be relevant to the question of costs after a trial.

It seems to us that the applicant was entitled to run the proceedings through his own lawyers if he wished and not to call upon the police to investigate further if he thought fit. We consider that the judge attached too much weight to this interaction in posing the question as to why the applicant did not request the police to undertake the burden of investigation. We note that by the stage the applicant approached the police or its affiliate it had gathered the evidence upon which it wished to rely and had provided it to Action Fraud.

We turn next to contacts with the CPS. Again, the judge posed a similar question as to why the applicant did not try to get the CPS to do his work for him by taking over the prosecution. This led to the judge’s conclusion that the applicant wanted personally to control the prosecution.

In December 2016 the applicant’s solicitor wrote to the Crown Prosecution Service indicating it would provide full access to the CPS for it to review the evidence and asking what material it would like to see in order to be satisfied of the integrity and competence of a private prosecution. The letter also stated that G was keen to pursue a private prosecution and happy to fund the case. If the CPS wished to take over the prosecution that would be a matter for the CPS. What the applicant wished to avoid was the CPS taking over the case with the aim of shutting it down. The CPS considered the matter over a period of seven months, before replying in July 2017. It is plain that it had received evidence and other material in support of the private prosecution. The decision of the Chief Crown Prosecutor for the West Midlands (who we are informed had also sought advice from independent counsel) was that the evidential sufficiency part of the Full Code Test was met and that the public interest stage of that test had also been met. It went on to state that there was no particular need for the CPS to take over the prosecution, either to stop or continue with the prosecution. It pointed out that this decision might be the subject of further review in the event of a change in circumstances.

It is clear from s.6(2) of the Prosecution of Offences Act 1985 that the Director of Public Prosecutions, through the CPS, may take over the criminal proceedings at any stage. That would include circumstances where a private prosecutor was proposing not to proceed further for whatever reason. It would be open to a judge seized of the matter to invite the Director to consider taking over the prosecution in those circumstances.

Once more, we feel that the judge has attached too much weight to this episode. The applicant was apparently a man of some means and prepared to fund a private prosecution. He was anxious that the CPS should not exercise its power to terminate the proceedings, but was not seeking to dissuade the CPS from taking over the prosecution, saying that that was a matter for them. He had provided evidence supporting the prosecution in a manner acceptable to the CPS and they had concluded that both the necessary tests had been satisfied so as to enable the matter to proceed. We understand that part of the process of the CPS’s consideration included the receipt of submissions on behalf of the respondents. There has been no suggestion before us that the CPS failed to do its job properly and, in any event, a court would be slow to interfere with the CPS’s assessment (see R Corner House Research) v Serious Fraud Office [2009] 1 AC 756 at 840 [30]).

It seems to us that the judge had overstated matters in saying that the applicant did not try to get the CPS to do his work. It is clear that his primary concern was that the CPS should not take over and terminate the proceedings. He was content for them to take over and continue the proceedings whilst being prepared to pursue them himself. In the circumstances, we have come to the conclusion that the judge gave insufficient weight to the fact that the CPS had concluded that the necessary tests were met and had misunderstood the thrust of the applicant’s contact with CPS.

It is also noteworthy that CPS legal guidance on private prosecutions, referred to in the Chief Crown Prosecutor’s letter, records that a private prosecutor is not under a duty to inform the CPS that a private prosecution has commenced. This provides further support for our conclusion.

As already indicated, the judge’s conclusions on these issues coloured his overall conclusion of an oblique motive.

There are some further matters mentioned by the judge which we need to deal with. The first of these matters relates to evidence amounting to irrelevant personal attacks on two individuals. Since this material was irrelevant it could never be introduced into evidence. Before the judge, counsel did not seek to justify its use and disavowed it. Before us, Mr Pownall, not instructed below, accepted that that material should never have been included in the papers.

Next, there is the introduction of material disclosed in the PNB litigation to which the applicant was not a party. The applicant submits that the judge was wrong in attaching weight to this factor and claims the benefit of the exception provided by CPR 31.22(1)(a). The default position is that a party to whom a document has been disclosed in civil proceedings may only use it for the purpose of those proceedings. The exception provided is where a document has entered the public domain through its use in public court proceedings. The applicant’s reliance on this exception is misplaced. Consideration of SmithKline Beecham Biologicals S.A. v Connaught Laboratories Inc. [1999] 4 All ER 498 shows that this is the case. It is hopeless merely to submit that the documents formed part of a bundle which was before the court in the PNB proceedings. That is wholly insufficient. The proceedings settled at the door of the court without any decision or judgment being rendered by the judge and without any reference in public to any document in the court bundle.

Accordingly, the challenge to the judge’s finding that documents emanating through the disclosure process were improperly used must fail. On the other hand, it has emerged that some of the documents arising from the disclosure process had been provided independently and voluntarily by PNB to the applicant. On the face of it, therefore, it would appear that there are some documents which featured in the disclosure process but which have legitimately come into the hands of the applicant separately from that process. However, it also seems that there will remain some documents which have become available to the applicant improperly as a result of disclosure in the PNB proceedings. The applicant’s solicitors and counsel appear to have thought that those documents could be used in the criminal proceedings without the permission of the civil court or the parties to that litigation. In that respect, they were wrong.

The judge also commented that the fact that the applicant employed the same solicitors in his civil and criminal litigation gave rise to no confidence that they would have the necessary levels of independence to conduct the criminal trial. We do not think that this was a finding which went to the question of oblique motive. Moreover, it overlooks the weight to be attached by the court to the professional standards to be expected of those who represent individuals bringing a private prosecution. In R v Zinga [2014] 1 WLR 2228 Lord Thomas CJ indicated that the court could in part rely on the professional duties of the advocates and solicitors under their professional codes, and on the duties owed to the court. Reference was made to Sir Richard Buxton’s article at [2009] Crim LR 427. In any event, we see no reason why the applicant should not be represented by the same solicitors in his civil and criminal litigation. The matters have a common factual background and he is entitled to avoid the additional expense of hiring separate firms of solicitors, particularly in circumstances where not only the solicitors, but counsel instructed, are bound to adhere to professional standards.

As to these last-mentioned matters, it is clear that they do not form the core of the judge’s conclusion of oblique motive, but rather were intended to provide support for it. We do not consider that the use of the same solicitors in both forms of litigation was of any materiality. The judge was entitled to take into account the factors of the irrelevant personal attacks and the wrongful use of material disclosed in the PNB litigation. Both of those matters could readily be dealt with in any criminal proceedings by applications to exclude the proffered evidence under s.78 of the Police and Criminal Evidence Act 1984 or on other grounds. That is clearly a relevant matter but the question for us is what effect they have in considering the judge’s overall conclusion. Mr Khangure did not place special reliance on those matters. His position was that an overall accumulation of factors underpinned the judge’s decision.

It seems to us, as we have already said, that the two factors which carried the greatest weight with the judge were, firstly, counsel’s response to the judge’s question, which led directly to the finding of a purpose to apply improper pressure in the civil proceedings, and secondly, the contacts with police and CPS which strongly coloured that conclusion. As we have set out above, we find that the judge’s approach and findings on those issues were flawed. As to the other factors identified by the judge, we hold that some were justifiably taken into account but that others were not. In our judgment, such factors as remain supportive of the judge’s overall conclusion were not of a weight or a nature to overcome the flaws we have identified at the heart of the judge’s reasoning.

Our conclusion is that the ruling which was made was one which it was not reasonable for the judge to have made in the circumstances. Accordingly, we give leave to the applicant and, pursuant to s.61(1) of the Act, reverse the judge’s ruling. Pursuant to s.61(4), we order that proceedings on the indictment be resumed in the Crown Court. We think it appropriate in the circumstances to invite the resident judge at Birmingham Crown Court to assign a fresh judge to deal with this matter, given the terms in which the judge expressed himself in his judgment, which might run the danger of leading to a perception of bias in any future proceedings.