Defending Private Prosecutions: Lessons To Be Learned
On 11th June 2018, after a re-trial lasting some six weeks, Mr Paul Sultana was convicted of one count of conspiracy to defraud Allseas SA Limited. The allegations arose out of a convoluted scheme which had offered Allseas significant returns on an investment of €100 million in 2011. When the deal unravelled, Mr Sultana was arrested by the police and interviewed. The CPS went on to charge and prosecute one of his co-conspirators for money laundering but decided not to proceed against Mr Sultana. Allseas, was dissatisfied with this decision and decided to bring its own prosecution. This became the largest private prosecution ever brought in the United Kingdom.
Private Prosecutions for fraud have increased exponentially in the last five years as financial pressures on the justice system have taken hold and the growing trend has raised concerns of a “two-tier” system of justice for complainants in which if you have the funds to prosecute a case which the State has not pursued you have the opportunity to do so; if you do not, you are stuck with any decision made that the matter should not be prosecuted.
The case of Allseas raised a variety of interesting issues.
Firstly, the prosecution was commenced after the case had already been tried and judgement issued in the High Court. It has become increasingly common for cases of alleged fraud and/or regulatory breaches to be tried both in the High Court and in the Crown Court. Whilst in this case a decision to prosecute had not been taken at the time of the civil proceedings, defence practitioners should always be mindful that the possibility exists of this taking place. Decisions on the conduct of the civil defence may have a significant impact on the criminal trial, particularly bearing in mind obligations of disclosure imposed on defendants in civil cases. A feature of this case was that the same firm of solicitors represented the claimant in the civil proceedings and prosecuted the case on the complainant’s behalf in the criminal court.
The role of a claimant’s representatives in the civil case is clearly significantly different to the obligations on a prosecutor as a “Minister of Justice” in criminal proceedings. An application to stay the prosecution on the grounds of abuse of process in this case was based in part on submissions about the conflict this created and the impact it had on the disclosure process. The Court rejected this stating that the civil and criminal teams in this case were independent of each other and thus the court could be reassured that prosecutorial obligations could be carried out properly.
A further interesting point which arose in this case was whether or not the jury should be informed that it was a private prosecution. There was an issue between the parties as to the motivation of the complainant in bringing the prosecution. The default position of course is that the parties in a case are named on the indictment. In these proceedings, the Prosecution had not done so seeking in fact to keep the name of the prosecutor from the jury on the basis that it was “irrelevant”. The defence submitted that a relevant issue in the case was the motivation of the prosecutor. The court ruled that the identity of both parties should be known to the jury, however, if the defence sought to cross examine the complainant on his motivation for bringing the prosecution he would be entitled to put before the jury that the High Court had issued judgement in his favour.
Thirdly, the notion that privately prosecuted cases alleviate the burden on the tax payer is, in the author’s opinion, erroneous. Section 17 of the Prosecution of Offences Act empowers the Court to order the payment from central funds of such amount as the Court considers reasonably sufficient to compensate the prosecutor for any expenses properly incurred by him in the proceedings. Section 17 also states that where a court considers that there are circumstances that make it inappropriate for the prosecution to recover the full amount, the Court can make an order for the amount it considers just and reasonable. The power to award costs from central funds is available to the court whether the prosecutor wins or loses.
The statute provides that a private prosecutor is entitled to his/her costs regardless of outcome. This is in direct contrast to the position of a defendant who chooses to pay for her/his defence. A defendant can only apply for costs in cases where s/he is acquitted. Moreover, the legislation requires that s/he must have made an application for legal aid which was refused in order to be able to reclaim any part of the cost incurred for his/her representation.
No such restriction is imposed on a private prosecutor and indeed it is arguable that Section 17 is drafted such that the default position is that the prosecutor will receive his costs “properly” incurred. There is no requirement that the costs were “reasonably” incurred.
It is plain therefore that the manifestly unfair situation where an acquitted defendant may not recover the costs of his/her representation but the prosecutor does is a genuine possibility. Furthermore, this applies whether or not the prosecutor is a UK resident or tax payer. Thus, an acquitted UK taxpayer may be left with a huge bill whilst a complainant who may be both very wealthy and not a UK taxpayer is reimbursed by the public purse.
This scenario gives rise to very real concerns about unfairness resulting from an inequality of arms. It is not scaremongering to envisage a very well -resourced private prosecutor, knowing that it is likely to have its expenses reimbursed, to use its funds to leave no stone unturned by, for example, having access to experts and the like. Conversely the defendant may not have the same access to resources and her/his defence may be constrained by decisions made by the Legal Aid Agency.
What of the privately paying defendant whose application for costs can only be made if he is acquitted? Even then, he/she may not have the resource to counter every step taken by the Prosecution.
It is a widely-held view that large fraud cases are not being investigated by the Police and prosecutions are not pursued by the Crown Prosecution Service because of budgetary restraints which has created the trend of private prosecutions. However, if costs are awarded by the courts there is clearly no saving to the public purse. What has arisen is a steady and significant erosion of the guarantee of the right to a fair trial because of an inequality between defence costs orders and those available to the private prosecutor.
In conclusion, the principal lesson learned from this case is that defence practitioners should be alive to the fact that civil fraud claims may evolve in to criminal prosecutions and be mindful of the impact this may have on the conduct of the criminal proceedings including disclosure. Whilst the jurisprudence on staying civil proceedings until the outcome of criminal proceedings is known, is not entirely favourable, nonetheless careful consideration should be given to applications to stay civil proceedings until after the conclusion of criminal investigations.