Motoring defence costs caps overruled

Miss Jeanette Miller, Founding President and CEO of the Association of Motor Offence Lawyers (AMOL) has earned her nickname of “Miss Justice” after legal action launched by the Law Society against the government was successful.

In September 2009, outraged by the impending implementation of motoring defence cost capping regulations, Miss Miller launched an e-petition on the no.10 website. By the time the petition closed, it had attracted almost 22,000 signatures: http://petitions.number10.gov.uk/CostsRecovery

Despite this strong objection, The Ministry Of Justice proceeded to with the implementation of these unjust rules designed to cap the costs of a successfully acquitted defendant. The petition attracted the support from many high profile figures including 26 QC’s and the Criminal Bar Association have fully endorsed the sentiments behind the petition. The petition was also backed by many legal and motoring organizations. Following the petition, the Law Society took up the helm and launched judicial review proceedings against the government in January 2010.

The judgment - handed down on June 15 2010, 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 court said:

“The new regulations involvd 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. Whatever the merits of that principle, I would be surprised if Parliament had intended that it could properly be achieved by sub-delegated legislation which is not even the subject of Parliamentary scrutiny.”

Upon hearing the news, Jeanette said: “I am truly delighted that on this most important issue, justice has been done. The months of hard work and campaigning have paid off to ensure that those who are innocent will not be left with financial ruin to contend with after clearing their names.”

Commenting on the judgment, Law Society President Robert Heslett said: “This is a great victory for the Law Society on behalf of innocent people who have been prosecuted by the state. The High Court’s ruling strikes down the previous Lord Chancellor’s plans, which would have meant that many people who were ineligible for legal aid and who were acquitted could have been seriously out of pocket because of the limits on the costs that they could recover. “This was entirely at odds with the accepted principles of justice. It wasquite wrong for the previous Government to devise such a scheme and I am delighted that the court has struck it down.

Law Society Chief Executive Desmond Hudson added: “Opposition to this policy was a key plank of the Law Society's Manifesto Delivering Justice in the run up to the general election and opposed by the Conservatives and Liberal Democrats when in Opposition. We are glad that this policy has been halted in its tracks. We recognise that there are severe financial constraints on the Ministry of Justice budget but we would urge the Government not to seek to overturn this judgment. 

“Unnecessary and inappropriate prosecutions should be avoided so that innocent people are not forced to go through the trauma and cost of trial process in the first place. Government should look at the system as a whole and we are keen to work with them on this.”

The case 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.”

Courts are either able to make summary assessments or they can refer cases to be taxed by the National Taxing Team.  

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. Accordingly what was a “reasonable” hourly rate for a solicitors firm was determined by reference to the rates charged by comparable firms with similar expertise and in a similar locality.  Equally, in relation to the level of counsel instructed, the proper question was the reasonableness of the instruction.

This scheme came under scrutiny 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 relatively simple: can the Lord Chancellor in setting rates or scales 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?  

In his judgment given today, 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. By implementing rates and scales which did not compensate defendants the Lord Chancellor had acted unlawfully.