Private Prosecutions

When individuals or companies have suffered financial loss through dishonesty, they often head for the civil courts. Sometimes the injured party thinks that a fraud should be the subject of a prosecution but the public authorities are slow or reluctant to proceed. In suitable cases, a private prosecution is an option that should be considered.

If a public agency decides to prosecute, parallel civil proceedings may not be resolved until after the outcome of the criminal case. The civil proceedings – and the way they have been conducted on both sides – may have an impact on the viability of any private prosecution.

Although the standard of proof is higher in the criminal courts, this should not of itself rule out consideration of a private prosecution because there may be significant advantages.

Civil litigation can be side tracked into procedural wrangling and difficult arguments about costs. Criminal prosecution can, perversely, be cheaper, is often quicker, and – with a strong case – can be a more attractive option for deterrence and for the recovery of losses.

The Revival of the Private Prosecution

The right to bring a private prosecution goes back for centuries but, in modern times, has been preserved in statute by section 6 of the Prosecution of Offences Act 1985.

In civil cases, there is always the risk of an adverse costs order. It is very rare for the private prosecutor to be ordered to pay the costs of a successful defendant. For that to happen, there must have been an unnecessary, or improper act or omission by or on behalf of the prosecutor . With a properly conducted private prosecution, the risks of such a finding are very limited, but it is a factor which should be borne in mind, and it could amount to professional misconduct for a lawyer not to advise the client accordingly.[1]

The successful prosecutor in the Crown Court may be able to recover a significant proportion of its costs from central funds. Appropriately advised and conducted, a private prosecution has relatively few downsides.

A decade ago, the health of the private prosecution in England and Wales was faltering. Lord Justice Auld in his Review of the Criminal Courts, and Lord Bingham in Jones v Whalley [2006] UKHL 41, [2006] 4 All ER 113 had both expressed some disdain at the survival of this ancient right, exercised traditionally where the state had either failed or declined to act. It did not seem to them to fit in with the modern world; and it is certainly an anomaly in the European context. Whilst private victims can become party to state prosecutions in many European jurisdictions (the partie civile), it is rare that they can instigate, control and pursue prosecutions themselves.

Over the last ten years, however, there have been two developments which have changed the landscape: first, the Serious Fraud Office (SFO) has spent millions of pounds of public money in high-profile but unsuccessful prosecutions, leaving them with reduced opportunities in the future to pursue all those that they should; then, the grim hand of austerity has strangled much of the life out of the criminal justice system in England and Wales. Morale is low. With the resources available to the Crown Prosecution Service also now very limited – in particular the funds available to conduct large and complex fraud prosecutions – and little appetite to pursue the smaller ones, private prosecutions have seen a significant resurgence in popularity.

First steps

So how to go about a private prosecution? The first step must always be the preservation and collection of the evidence – and all related material for consideration in connection with disclosure. Emails and documents need to be gathered together and retained. The use of civil remedies such as Norwich Pharmacal, Bankers Trust or special disclosure orders may be considered, particularly if civil proceedings are under way.

If the fraud is internal to a company, the company will need to secure its servers. Private investigators and forensic computer experts can assist.

Once sufficient prima facie evidence has been assembled, and advice obtained on the strength of the case, the procedure is relatively straightforward. The private prosecutors – solicitors and barristers – will have to convince a potentially sceptical district judge that the process is being used appropriately , when the information is laid before him. If that is achieved, a summons will be issued, and the proceedings will be under way.

Might the Authorities Step In?

The Director of Public Prosecutions (DPP) has a long-standing power to take over and continue or, if he thinks fit , discontinue the case. This power is conferred by section 6 (2) of the Prosecution of Offences Act 1985. If he is invited to intervene , the DPP, through the Crown Prosecution Service, will apply the standard two-stage test under the Code for Crown Prosecutors. The first test is an evidential one: whether “there is sufficient evidence to provide a realistic prospect of conviction”. The second test is whether there is a public interest in the prosecution. This test will not be met if for example the prosecution appears to relate to some private vendetta or there is otherwise an inappropriate motive for the prosecution to be brought. Another issue, perhaps unspoken, will be the depth of the CPS’s pocket. If the prosecution is being conducted properly, and there is evidence that the private prosecutor has considered and adopted the two-stage test, the CPS may be unlikely to second-guess the private prosecutor’s decision. This process can take a long time – sometimes over a year for the CPS to make the decision.

Whilst it is perfectly normal for the private prosecutor to have a degree of self interest in the bringing of a prosecution, the test is an objective one: some public interest in the prosecution being brought. Ideally , it is good to keep in relatively close contact with the police and law enforcement authorities – though in a typical case the private prosecutor will have asked the police to investigate and been turned down as a result of the resources problems identified earlier.

The Issue of Consistency

In the case of Gujra, the Supreme Court held that the two-stage test provided an appropriate degree of consistency for the conduct of all prosecutions . They expressed concern that an inconsistent approach could lead to a defendant being prosecuted by a private prosecutor where there was no, or insufficient, evidence to give rise to a realistic prospect of conviction.

It is always important to seek professional advice: there have been cases where badly judged attempts to launch private prosecutions have gone spectacularly wrong. In October 2015, the former managing director of Leeds United Football Club, David Haigh decided to instigate proceedings against a senior lawyer and two executives of his former employer, GFH Capital, in relation to what he claimed was an unlawful attempt to engage in human trafficking, by luring him to Dubai. He failed to establish his case and ended up with a bill of more than £200,000 in costs – payable to the defence – after the failure of his private prosecution.

At the time of applying for the summonses, Haigh himself was in custody in Dubai. The district judge, in ordering him to pay the costs, observed that it was “wholly improper” of him to have launched the proceedings. He considered that seeking the issue of summonses whilst he himself was in custody and failing to raise his complaint in the first instance with the state’s law enforcement agencies were both relevant factors.

But the Haigh case is a notable exception . Many successful private prosecutions are brought. On one estimate, up to 50% of prosecutions in the Magistrates’ Court are not brought by the CPS though a number will be brought by other state agencies. On a daily basis, cases are brought by the Federation Against Copyright Theft, the RSPCA, utility companies and stores. There is no reason why any aggrieved company or individual should not follow suit successfully – providing they have a balanced approach, a good legal team and commitment to the task.

Disclosure, witnesses and abuse of process

The thorny problem of disclosure is an issue which needs to be considered from the beginning. All relevant material needs to be identified and scheduled. The private prosecutor may be a witness as well as the prosecutor – and contact between him and the legal team will need to be controlled and monitored, to avoid suggestions of coaching or adjusting evidence to suit the requirements of the case . Issues of privilege will also need to be considered with care . When is the prosecutor giving and taking legal advice and when is he saying things which may be relevant to reliability of his evidence and therefore discloseable ? Disclosure problems (and other issues arising from the role of the private prosecutor ) can lead to abuse of process applications. A properly conducted prosecution will be able to guard against these problems and fend these off when they are raised , but it is useful to keep an eye on the two leading recent authorities, D Ltd v A and others [2017] EWCA Crim 1172 and R (G) v S and S [2017] EWCA Crim 2119.

The Prospects for Private Prosecutions

There is talk of a two-tier justice system: those who can afford to pay to pursue their wrongdoers and protect their rights, and those dependent on the state to do it for them . Yet, with careful case analysis and management, the prospects for a private prosecutor, who has sufficient resources to seek justice when the authorities refuse to proceed, are realistic in practical terms. Modern day frauds are proliferating – not least in terms of cyber-crime. Whilst there is some discussion of limiting the private prosecutor’s recoverable costs, it remains for the moment a growth industry.

 


Charles Bott QC and Richard Furlong were instructed by Andrew Manners of Morgan La Roche in the successful private prosecution of 2 individuals for fraud on a subsidiary of the Geraud Group.

[1]   See BSB v Mark William Smith, 5 July 2018, summarised here.
Charles Bott QC

Charles Bott QC is Head of Carmelite Chambers. A prominent advocate, who specialises in cases of serious fraud, money laundering and revenue evasion. He is regularly instructed in serious criminal and regulatory cases of all kinds. Charles has consistently been identified by Chambers and Partners as a leading practitioner in both financial and general crime. He has been ranked in Band 1 for financial crime for the last 7 years.

Richard Furlong

Richard has a mixed criminal and civil practice. He has a particular interest in fraud, corruption and money laundering. Recommended as a leader in criminal fraud in Chambers and Partners and the Legal 500.

If you would like to contact Carmelite Chambers in relation to this article, please email clerks@carmelitechambers.co.uk.