Cunningham, R (on the application of) v Exeter Crown Court

Tuesday, 28 February 2003

Judgment

1. LORD JUSTICE CLARKE: This is an application for judicial review of a decision of the Crown Court at Exeter. On 28 November 2001, the Magistrates' Court at Exeter fined the claimant, Patrick Cunningham, £15,000 for an offence of knowing that a place in respect of which a public entertainments licence was in force would be used otherwise than in accordance with the conditions of the licence, contrary to paragraph 12(2) of Schedule 1 to the Local Government (Miscellaneous Provisions Act) 1982. In short, the licence limited numbers at the Cavern Nightclub to 220, whereas on 9 May 2001 there were many more people than that. When a senior fire officer attended, following complaints of overcrowding, there was an issue as to how many people were present. The fire officer estimated about 400, whereas the claimant estimated between 310 and 330.

2. The claimant pleaded guilty before the magistrates. In addition to the fine, he was ordered to pay £421.60 costs. The claimant appealed to the Crown Court against the amount of the fine. That appeal was by way of re-hearing under section 79(3) of the Supreme Court Act 1981 and was heard by Mr Recorder Miller and two justices on 5 April 2002. The fine was reduced to £12,000 but the court refused an application by the claimant for costs out of central funds. It gave no reason for that refusal. The note which counsel, Mr Barker, who appeared before the Crown Court and has appeared before us today, made, contains these exchanges after the recorder had given reasons for reducing the fine to £12,000.

"Counsel: Since the appeal has been successful, may I apply for a defendant's costs order?

"Recorder: No.

"Counsel: I am not asking for costs against the local authority but costs from central funds.

"Recorder: No."

3. On 8 August 2002, Richards J granted permission to apply for judicial review on the express basis that it was arguable that the refusal of a defendant's costs order was unlawful, either because of the absence of reasons per se or on the ground that the court erred in the exercise of its discretion. He added that the success, albeit only partial success, on appeal was a factor in favour of the order, and that in the absence of reasons it was not possible to say what, if any, factors the court took into account against the making of an order or, therefore, whether it struck a reasonable balance.

4. The prosecution, namely the local authority, was represented before the Crown Court but does not appear and is not represented on this application; nor is the Crown Court. Mr Barker submits on behalf of the claimant that the refusal to award costs to the claimant was wrong in principle and irrational, especially without giving any reasons.

5. The power to award costs to a successful defendant, which is known as a defendant's costs order, is contained in section 16 of the Prosecution of Offences Act 1985 which provides, so far as relevant, as follows:

"16(3) Where a person convicted of an offence by a magistrates' court appeals to the Crown Court under section 108 of the Magistrates' Courts Act 1980 (right of appeal against conviction or sentence) and, in consequence of the decision on appeal --

(a) his conviction is set aside; or

(b) a less severe punishment is awarded;

-- the Crown may make a defendant's costs order in favour of the accused."

That section contains no guidance as to how the discretion should be exercised. There are, however, two Practice Directions which are relevant to such orders; namely, Practice Direction (Crime: Costs ) [1991] 1 WLR 498 and, Practice Direction (Crime: Defence Costs ) [1999] 1 WLR 1832. Paragraphs 1.1 and 1.5 of the 1991 Practice Direction provide:

"1.1 This Direction shall have effect in magistrates' courts, the Crown Court, the Divisional Court of the Queens Bench Division and the Court of Appeal (Criminal Division) where the court, in the exercise of its discretion, considers an award of costs in criminal proceedings or deals with criminal legal aid costs and contributions.

"1.5 Where a court orders that the costs of a defendant, appellant or private prosecutor should be paid from central funds, the order will be for such amount as the court considers reasonably sufficient to compensate the party for expenses incurred by him in the proceedings . . . "

Paragraph 2.2 of the 1991 Practice Direction as substituted by paragraph 2 of the 1999 Practice Direction, expressly relates to this Crown Court and is in these terms:

"2.2 Where a person is not tried for an offence for which he has been indicted or committed for trial, or has been acquitted on any count in the indictment, the court may make a defendant's costs order in his favour. Such an order should normally be made whether or not an order for costs inter-partes is made, unless there are positive reasons for not doing so. Examples of such reasons are:

(a) The defendant's own conduct has brought suspicion on himself and has misled the prosecution into thinking that the case against him is stronger than it is."

Although the Practice Directions do not contain any paragraph which expressly refers to the approach to be adopted on appeals to the Crown Court. Paragraph 2.4 provides that the Crown Court "may make a defendant's costs order in favour of a successful appellant: see section 16(3)".

6. Paragraph 2.8 of the 1991 Practice Direction in which "the court" is the Court of Appeal Criminal Division, is in these terms:

"2.8 In considering whether to make such an order, the court will have in mind the principles applied by the Crown Court in relation to acquitted defendants; see paragraph 2.2 above."

Such an order is a reference to a defendant's costs order. Paragraph 2.6 recognises the power of the Court of Appeal Criminal Division to make a defendant's costs order in favour of a successful appellant.

7. It is, to my mind, plain from those provisions that the same approach should be adopted by the Crown Court on appeals from the magistrates as, for example, by the Court of Appeal Criminal Division on appeals from Crown Courts. Mr Barker further submits that the refusal to award costs to the successful appellant was wrong in principle on the simple basis that he had to incur costs in order to appeal to the Crown Court and that, since his appeal was successful, justice requires that, save for good reason, he should be awarded his costs either from the respondent to the appeal or from central funds. He submits that there was here no reason to refuse to award him his costs, that the order should have been made for costs to be paid out of central funds and that the refusal to make the order was Wednesbury unreasonable. There was, he says, not only no reason to refuse the application, but every reason to grant it, because otherwise much of the reduced fine would be, as it were, wasted because of the costs reasonably incurred to secure the reduction.

8. The Crown Court has confirmed that there is no record of any reason being given for the decision on costs. However, in a letter to this court dated 11 November 2002, the Crown Court Operations Branch said this:

"In the appeal to the Crown Court, the defendant relied upon the guidelines of the Court of Appeal in R v Howe and Sons , 6 November 1998, concerning level of fines. Howe was not cited before the magistrates. The Crown Court allowed the appeal, stressing that the magistrates were not at fault and that if the Howe guidelines had been cited to them, they might have reached a different conclusion; see counsel's note of judgment at page 17 of the application. In deciding whether to allow the defendant the costs of the appeal, the Recorder was fully aware of the discretion of the Crown Court to allow costs out of the central funds. Having heard all the facts of the appeal and discussed the matter, the recorder and the justices refused costs. The basis for that refusal is, therefore, evident from the judgment on the appeal."

9. The reference to counsel's note of the judgment is a reference to these two paragraphs in that note:

"We have noted that the offences are contrary to regulations made in 1982 and that the maximum fines were set 20 years ago and maybe should be reconsidered, but the maximum fine is £20,000. From the case of Howe which was on different facts but which provides guidance for assessing the gravity of health and safety matters, we have considered the appropriate amount. We feel that if the magistrates had had the advantage of reading the case of Howe , it was not their fault it was not placed before them, they might have reached a different conclusion."

In a note taken by a representative of the claimant's solicitors, the point is put somewhat more strongly, namely that, if the magistrates had had full details of the case of Howe , they would probably have reached a lower figure. It thus appears that the point taken in the letter of 11 November is that the reason the orders were refused is evident from the judgment on the appeal and is that the justices might have fined the claimant less if they had been referred to the decision of the Court of Appeal Criminal Division in Howe , which they were not.

10. Mr Barker has referred us to a number of cases including: Eagil Trust Co Ltd v Piggott-Brown and Another [1985] 3 All ER 119, R v Birmingham Juvenile Court ex parte H (1992) 156 JP 445, Fox v Central Criminal Court [2002] EWHC 1430 Admin (unreported), 28 June 2002, and English v Emery Reimbold & Strick Ltd [2002] EWCA Civ 605, [2002] 1 WLR 2409.

11. In the Eagil Trust case, which was a civil appeal, Griffiths LJ, with whom Sir John Arnold P agreed, said at page 122 B:

"A professional judge should, as a rule, give reasons for his decision. I say 'as a general rule' because in the field of discretion there are well established exceptions. The most obvious and frequently used is the exercise of the judge's discretion on costs. As a general rule, the judge gives no reasons for the way in which he is exercising his discretion on costs, although if he were to make an unusual award of costs, it is clearly desirable that he should give his reasons for doing so. Another recent example of the judge not being required to give his reasons is when he refuses leave to appeal to the Court of Appeal, having refused leave to appeal from an Arbitrator (see Lord Diplock in Antaios Cia Naveira SA v Salen Rederierna AB, The Antaios [1985] AC 191 at 205)."

12. Mr Barker submits that that statement, at any rate so far as it relates to costs, cannot stand having regard to article 6 of the European Convention on Human Rights and the Human Rights Act 1998, and the decision of the Court of Appeal in the English v Emery Reimbold case. I agree. All courts must give reasons for their decisions, however brief.

13. It may be noted that it has recently been held in North Range Shipping Ltd v Seatrans Shipping Corporation [2002] EWCA Civ 405, [2002] 1 WLR 2397, that reasons must now be given in the case of the other example given by Griffiths LJ. The approach laid down by Lord Diplock in the Antaios case is no longer satisfactory. In the English v Emery Reimbold case, Lord Phillips MR, giving the judgment of the court, said at paragraph 14:

"It is an unhappy fact that awards of costs often have greater financial significance for the parties than the decision on the substance of the dispute. Decisions on liability for costs are customarily given in summary form after oral argument at the conclusion of the delivery of the judgment. Often no reasons are given. Such a practice can, we believe, only comply with Article 6 if the reason for decision in respect of costs is clearly implicit from the circumstances in which the award is made. This was almost always the case before the introduction of the new Civil Procedure Rules where the usual order was that costs follow the event. The new rules encourage costs orders that more nicely reflect the extent to which each party has acted reasonably in the conduct of the litigation. Where the reason for an order as to costs is not obvious, the judge should explain why he or she has made the order. The explanation can usually be brief. The manner in which the Strasbourg Court itself deals with applications for costs provides a model of all that is normally required."

He also said this with regard to costs in paragraphs 27 to 30:

"27. At the end of a trial, the judge will normally do no more than direct who is to pay the costs and upon what basis. We have found that the Strasbourg jurisprudence requires the reason for an award of costs to be apparent, either from reasons or by inference from the circumstances in which costs are awarded. Before either the Human Rights Act or the new Civil Procedure Rules came into effect, Swinton Thomas LJ, in a judgment with which the Vice-Chancellor, who was the other member of the Court, agreed, said this in the Mayor and Burgess of the London Borough of Brent v Aniedobe (unreported) 23 November 1999, in relation to an appeal against an order for costs:

"' . . . this Court must be slow to interfere with the exercise of a judge's discretion, when the judge has heard the evidence and this court has not. It is also, in my view, important not to increase the burden on overworked judges in the county court by requiring them in every case to give reasons for their orders as to costs. In the great majority of cases, in all probability, the costs will follow the event, and the reasons for the judge's order are plain, in which case there is no need for a judge to give reasons for his order. However, having said that, if a judge does depart from the ordinary order (that is in this case the costs following the event) it is, in my judgment, incumbent on him to give reasons, albeit short reasons, for taking that unusual course'.

"28. It is, in general, in the interests of justice that a judge should be free to dispose of applications as to costs in a speedy and uncomplicated way and even under CPR this will be possible in many cases.

"29. However, the Civil Procedure Rules sometimes require a more complex approach to costs, and judgments dealing with costs will more often need to identify the provisions of the rules that have been in play and why these have led to the order made. It is regrettable that this imposes a considerable burden on judges, but we fear that it is inescapable.

"30. Where no express explanation is given for a costs order, an appellate court will approach the material facts on the assumption that the judge will have had good reason for the award made. The appellate court will seldom be as well placed as the trial judge to exercise a discretion in relation to costs. Where it is apparent that there is a perfectly rational explanation for the order made, the court is likely to draw the inference that this is what motivated the judge in making the order. This has always been the practice of the Court - see the comments of Sachs LJ in Knight v Clifton [1971] Ch 700 at 721. Thus, in practice, it is only in those cases where an order for costs is made with neither reasons nor any obvious explanation for the order that it is likely to be appropriate to give permission to appeal on the ground of lack of reasons against an order that relates only to costs.

14. In my judgment, the same principles apply to applications for costs in criminal cases, including applications for defendant's costs by a successful appellant to the Crown Court. The court should give the reason or reasons for its decision on costs unless the circumstances make the reasons obvious; for example, where costs are ordered to follow the event. Even then it seems to me to be at least desirable that a short reason or reasons for the order should be given. The statement of the reason or reasons may be very brief indeed. The reason or reasons should simply be sufficient to indicate, both to the parties and to any court of review, why the order was made. However, a court of review will only interfere, whereas Lord Phillips put it in a somewhat different context in paragraph 30, an order is made with neither reasons nor any obvious explanation for the order. This court can, of course, only interfere where the court erred in principle.

15. That approach is, in my view, consistent with paragraph 2.2 of the Practice Direction. Thus, the Crown Court should award the successful defendant his costs, either against the respondent to the appeal or out of public funds as appropriate, unless there are positive reasons for not doing so.

16. Further, where there are such positive reasons for not doing so, and the court decides not to make an order for costs in favour of the appellant, or for all his costs, the court should give short reasons for its decision. There may, of course, be many possible reasons why a court might properly refuse an application by a successful defendant, as Mr Barker recognised in argument. They include these two cases: first, the Crown Court might allow an appeal against sentence as an act of mercy to the appellant. That might, depending upon the circumstances, be a reason for refusing to order payment of his costs out of public funds. The second is a case where the advocate for the appellant wholly failed to put sufficient information before the justices, whether it be facts or a particularly important authority. All will depend upon the circumstances.

17. In the instant case, as I have indicated, the court gave no reasons for refusing the application. The letter of 11 November, to which I have referred, suggests that the reasons are evident from the judgment. It may be that the letter intends to refer to the conclusion that the justices would or might have fined a lesser amount if their attention had been drawn to the decision of the Court of Appeal Criminal Division in F Howe and Sons (Engineers) Ltd [1999] 2 Cr App R(S). The Recorder expressly held that the justices were not at fault and it may be that the court refused to make an order for costs on the basis that the appellant should have drawn their attention to Howe and that he had, therefore, himself or his advisers to blame for the level of the fine, and that it was for that reason that he should be deprived of his costs.

18. The problem with that analysis is that the court did not put it to counsel for the claimant in order to give him an opportunity to make submissions to the contrary. The vice of failing to put a point of that kind to counsel can be seen from the facts of this case. Mr Barker did not appear before the magistrates, but he did appear before the Crown Court. Given the somewhat robust response to his application for costs, he did not think it appropriate to take the matter any further. However, he tells us, and we entirely accept, that the representative of his instructing solicitors who had appeared before the magistrates had earlier tugged his gown to say that the case of Howe had been referred to in the Magistrates' Court. It thus appears likely that Howe was, indeed, referred to before the Magistrates' Court, although it is fair to say that that representative is no longer employed by the solicitors and we have not heard from him today.

19. Mr Barker has referred us to an extract from the Magistrates' Court sentencing guidelines issued in May 2001, which refers to the case of Howe . It says under the heading, "New guidance" that some important guidance regarding the sentences of companies for certain categories of offence has now been given in the judgment of Howe and in the Sentencing Advisory Panel's recent advice to the Court of Appeal on environmental offences. It adds that Howe relates to health and safety matters but that the judgment can equally apply to environmental offences. It then adverts to a number of points, the first two of which relate specifically to fines on companies, and the third is that a deliberate breach of the legislation by a company or an individual, with a view to profit, seriously aggravates the offence.

20. It appears that the Crown Court may have inferred that the case of Howe was not referred to before the magistrates because it was not told that it was. Mr Barker has told us, as indeed is clear from the reasons given by the Crown Court in relation to the substance of the appeal, that although he referred to the case of Howe in the course of his submissions to the Crown Court, the thrust of his submission that £15,000 was manifestly excessive depended on all the circumstances of the case, which included these: the claimant was the joint owner of the club, he is not a company but an individual, he acted immediately on the police being called, he immediately admitted the offence, he made full admissions in interview, he pleaded guilty before the magistrates, he installed an electronic counting system to ensure that there could be no overcrowding in the future and he had run the club for 8 years and had a clean record. It was submitted by Mr Barker to the Crown Court, as indeed is recognised in the Recorder's judgment, that having regard to the plea and to the fact that the maximum fine was £20,000, and having regard to all circumstances, the fine of £15,000 was manifestly excessive. He thus submits that Howe played a small part in his submissions to the Crown Court.

21. There is considerable force in those submissions. In my judgment, the Crown Court was wrong in principle to refuse to make a defendant's costs order without giving reasons. Moreover, so far as I can see, the only possible basis upon which it could even have been argued that such an order should not have been made, was a failure on the part of the claimant's solicitor to put Howe before the court. Yet That point was not put to counsel for the claimant and it appears that Howe was or may well have been put before the Magistrates' Court.

22. In all these circumstances, it appears to me that there is no rational basis appearing from all the circumstances upon which the Crown Court could properly refuse to make an order. For these reasons, I would take the same course as was taken in the Fox case, where this court applied similar principles to a decision of the Central Criminal Court. That course is to quash the order and direct the Crown Court to award the claimant his costs of the appeal to the Crown Court out of central funds. I would also award the claimant the costs of this application out of central funds. My reasons are essentially those which I have given in relation to the substance of the matter. The application for judicial review has been successful and costs should follow the event.

23. MR JUSTICE JACK: I agree.

24. LORD JUSTICE CLARKE: Thank you very much, Mr Barker.

25. MR BARKER: Thank you, my Lord.