Reforms to defendants costs orders

Historically, a successful legal defence of a prosecution leading to an acquittal gave rise to an automatic right to recover costs.  However, since reforms came into effect in October 2012, the position has changed dramatically, to the detriment of defendants.  There has recently been a slight widening of the scope for recovering legal costs, but the position remains unsatisfactory for defendants and particularly for organisations.

The position prior to 27 January 2014 in respect of legal costs was that:

  • An organisation, such as a limited company, could not recover legal costs in a Defendant’s Costs Order (“DCO”), except in respect of costs in the Supreme Court.  The only alternative means of recovering costs will be in the very limited circumstances when “Wasted Costs” orders against the Prosecuting Authority are justified.  This would only happen in exceptional cases, for instance if the Court considers that the prosecution was one that no reasonable person would have commenced; and
  • An individual could recover costs in a DCO, limited to legal aid rates, in Magistrates Court proceedings, or an appeal from the Magistrates Court to the Crown Court under s108 of the Magistrates’ Court Act, but could not recover costs in Crown Court proceedings.

This position only applies to proceedings commenced on or after 1 October 2012. Proceedings commenced before this date are unaffected by the new regime and costs can be recovered in the event of acquittal in the usual way.

As of 27 January  2014 the position has changed in respect of Crown Court proceedings.  Costs are now recoverable for individuals in Crown Court proceedings, but are only limited to legal aid rates and can only be recovered where an application has been made for legal aid and the defendant has been refused on grounds of financial ineligibility.    The position of organisations remains unchanged – as a general rule they cannot recover their legal costs, except in the circumstances outlined above.

The government justified their previous stance on the basis that legal aid in Crown Court cases was not means tested. Now a threshold test requiring an individual to have a household disposable income of less than £37,500 must be met to receive legal aid in these proceedings and as a result, the position has been altered to reflect the new regime.

The 27 January 2014 change applies retrospectively, so prosecutions which conclude with a discontinuance or acquittal after this date can permit a defendant to recover costs.  However, the practical effect of this will be minimal in the short term, as defendants who are not currently legally funded will not have previously applied and been refused on the newly introduced grounds of “financial ineligibility”.

It is striking to note that additional hurdles are placed in the way of attempts to recover costs in the Crown Court, where the potential consequences of conviction are invariably greater, and costs are usually more, when compared to the Magistrates’ Court position that gives recovery of costs as a default.

This not only serves to ensure that currently on-going privately funded cases will not lead to an entitlement to costs on acquittal (assuming no legal aid application is made in the interim) and restricts a client’s right to choose their legal representatives, as only firms which have a contract with the Legal Aid Agency are eligible to apply for legal aid funding.

In practice, it is likely in specialist matters that referrals will be made to legal aid firms early on in an individual’s representation by specialist private firms.  This will allow an application to be made on behalf of individuals who are likely to be refused funding, so that they can proceed with specialist representation on a privately paying basis, whilst benefitting from the right to recover some costs in the event of an acquittal, having previously made a legal aid application.

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

Paul Matthews

Partner - Head of Regulatory (Yorkshire and North East)

I am a Partner in the Regulatory team and a corporate defence specialist who provides up-front regulatory compliance advice and representation to businesses and senior managers in relation to investigations and prosecutions by regulatory bodies.

Steffan Groch

Partner and Head of Regulatory - Head of Sectors

I head up DWF's national Regulatory team as well as leading the firm’s ‘go to market’ sector expertise. I am also Chair of the UK Health and Safety Lawyers Association.