Holloway v Harrow Crown Court & Others [2019] EWHC 1731 (Admin)
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Holloway v Harrow Crown Court & Others [2019] EWHC 1731 (Admin) was a claim for judicial review in the Divisional Court in which Mr Holloway sought to quash a costs order made against him under regulation 3 of the Costs in Criminal Cases (General) Regulations 1986, following the discontinuation of a private prosecution for blackmail he had brought against the respondents.
The background concerned the proposed purchase by Mr Holloway of a property owned by the respondents, the three Bhui brothers, at whose home he and his wife had lived since 2014. Mr Holloway alleged that after an agreed purchase price of £480,000 had been reached, the respondents demanded a further £70,000 plus interest in cash, in denominations no greater than £20, as a condition of completing the sale and threatened that otherwise he and his family would have to vacate the property and previously paid deposits totalling over £90,000 would be withheld until the property was sold to another buyer. On 13 June 2017, instead of paying the additional sum, Mr Holloway sent a letter accusing the respondents of “mafia like tactics” and extortion. The sale nevertheless proceeded for £480,000. On 6 November 2017 Mr Holloway and his wife laid informations seeking summonses for blackmail and conspiracy to blackmail against the three respondents, alleging an unwarranted demand for £76,325.39 in cash backed by menaces. The District Judge issued summonses and the case was sent to Harrow Crown Court. Before the Plea and Trial Preparation Hearing the respondents requested that the Director of Public Prosecutions take over the prosecution. The Crown Prosecution Service intervened, took over conduct, and offered no evidence on 29 May 2018. The respondents were acquitted.
The respondents then applied to the Crown Court under regulation 3 for an order that Mr Holloway pay their costs, contending that he had brought the prosecution without adequate evidence and that there had been a failure of disclosure. Central to their case was an exchange of emails from December 2016 which Mr Holloway had not disclosed. Those emails recorded that the agreed sale price was £550,000 but that because Mr Holloway’s mortgage offer was only £480,000 the balance of £70,000 plus interest would be treated as a loan repayable over a maximum of three years, provided completion occurred within six weeks. Deputy Circuit Judge Fraser Morrison found that the commencement and continuation of the prosecution was an improper act which had caused the respondents to incur costs. He held that a price of £480,000 had been agreed but was not legally binding until contracts were exchanged, so the respondents were entitled to seek a higher price and to walk away if it was not agreed. He described this as “robust bargaining” which was “perfectly legal” and concluded there was insufficient evidence to provide a realistic chance of conviction, as the demand was not unwarranted and the threat that Mr Holloway would have to leave the property if the demand was not met was merely the obvious consequence of failing to exchange contracts. The judge did not determine whether payment of costs should be ordered because of a failure to make proper disclosure.
Mr Holloway challenged the ruling by judicial review, advancing several grounds. Helen Malcolm QC submitted that there were factual disputes as to the existence of an option agreement, the nature of the price negotiations, and the extent of threats made, all properly a subject for evidence and cross-examination at trial; that there was clear evidence of a demand for cash outside the formal conveyance, the nature and circumstances of which could arguably have supported a finding that it was unwarranted and unlawful; that there was evidence of threats amounting to menaces; that Mr Holloway had taken counsel’s advice after the summons was issued and received positive advice so it could not be improper to rely on it; and that the December 2016 emails dealt with a possible loan over three years and not a demand for cash as a condition of exchange, and in any event the time for disclosure had not yet arrived. William Martin for the respondents submitted that there was never a realistic chance of conviction for the reasons given by the Crown Prosecution Service and the judge, and that Mr Holloway’s failure to disclose the December 2016 emails showed he had not conducted the case properly.
Lord Justice Males, with whom Edis J agreed, found that the judge had failed to engage with either party’s real case. The judge had not addressed Mr Holloway’s point that a demand for £70,000 in cash, in small notes, coupled with a threat to retain over £90,000 until the property was sold, outside the formal conveyance, could constitute an unwarranted demand and might be evidence of something untoward. Describing the demand as no more than “seeking an increased price” in “robust negotiations” missed the point. Conversely, the judge had not addressed whether Mr Holloway had brought the prosecution with an ulterior motive or in bad faith as alleged; had made no finding on the significance of the December 2016 emails; had not mentioned the October 2014 text which cast doubt on the claimed option agreement; had declined to adjudicate on the disclosure complaint; and though twice observing that Mr Holloway had neither reported the matter to the police nor sought legal advice before bringing the prosecution, had not said what conclusions he drew. The judge’s reasoning therefore could not stand.
The court proceeded to consider the issues afresh, noting that the section 19 procedure is intended to be summary in nature and that all the material before the Crown Court had been placed before them. Lord Justice Males held that this was a case where it was always clear on any reasonable view, avoiding hindsight, that the prosecution could not succeed. The December 2016 emails presented a picture flatly contradictory to the prosecution case and made abundantly clear that the price agreed in December 2016 was £550,000, but because Mr Holloway’s mortgage was limited to £480,000 the balance of £70,000 plus interest was to be treated as a loan repayable over a maximum of three years, subject to completion within six weeks. When Mr Holloway did not complete within six weeks it was not surprising that the respondents insisted the £70,000 be paid upfront. The demand did not represent an unwarranted increase in price but merely a difference in the timing of payment in view of Mr Holloway’s delay. To have any prospect of conviction the prosecution would have had to persuade a jury that Mr Holloway’s December 2016 email was written under duress, yet there was no trace of such a suggestion in the contemporary messages and the final paragraph of that email, expressing gratitude to the respondents, was inconsistent with it. Nor was there any such suggestion in a witness statement Mr Holloway signed on 30 April 2018 in the criminal proceedings, which asserted that the meeting of 1 December 2016 and events leading up to it did not form part of the criminal conduct complained of and that the demand started after the conveyancing transaction reached its final stage in April 2017. Yet Mr Holloway had presented to the District Judge the 2014 option agreement and text messages from November 2016 in which the respondents said the property value was now £600,000, thus relying on events going back to 2014 as forming part of the background. The omission of the December 2016 emails exposed him at the very least to charges of selectivity and of suppressing unhelpful material, with the result that an incomplete and misleading picture had been presented to the District Judge.
Lord Justice Males emphasised that a private prosecutor, like a Crown Prosecution Service prosecutor, has a duty to undertake an independent and objective analysis of the evidence before commencing proceedings to determine whether there is a realistic prospect of conviction. This case cried out for such an analysis, but none was undertaken. If it had been it would have had to grapple with the significance of the December 2016 emails, both in themselves and as affecting the jury’s likely view of Mr Holloway’s reliability and credibility. The only possible conclusion would have been that there was no realistic possibility of conviction. In this context Mr Holloway’s failure to refer the matter to the police or to take legal advice before commencing the prosecution was significant. It was clear this was deliberate, as he had replied to a question from the District Judge that he had decided not to inform the police but to bring a private prosecution “as there was ample and irrefutable evidence available”. The result was that Mr Holloway, who was clearly not objective but was emotionally affected by these events, commenced and insisted on proceeding with the prosecution despite the doubts expressed by the District Judge and the representations of the respondents, without any proper assessment of whether there was a realistic prospect of a conviction.
Lord Justice Males held that this was undoubtedly “a clear and stark error” within the meaning of the authorities. The decision to prosecute was one to which no reasonable prosecutor who had carried out anything approaching a proper assessment of the evidence could have come. The commencement and continuation of the prosecution was an improper act within the meaning of section 19 of the Prosecution of Offences Act 1985. Undoubtedly it caused the respondents to incur the costs of defending the proceedings. His Lordship reached this conclusion without needing to find bad faith on Mr Holloway’s part. The judge had not made such a finding and it would not be right for the Divisional Court to do so. It was sufficient that there was never any proper assessment of the prospects of conviction and that, objectively considered, this was a case which never had any prospect of success. His Lordship preferred to found the decision on this conclusion rather than on a failure of disclosure. The December 2016 emails were undoubtedly disclosable as material which might reasonably be considered capable of undermining the prosecution case or assisting the defence, but it appeared that the proceedings may have been terminated before the time for prosecution disclosure, in which case there was not strictly a failure to give disclosure, and counsel then instructed had advised, however surprisingly, that the emails need not be disclosed at any rate prior to consideration of any defence statements.
As to discretion, although this was a matter for the Crown Court and not every improper act should lead to an order for costs, the circumstances were such that the only proper exercise of discretion would be for an order to be made. This was for two reasons. First, even allowing for the fact that the test is whether there is a clear and stark error, this was a very clear case. Secondly, the respondents warned at the outset that if a summons were issued they would not only invite the Director of Public Prosecutions to take over the case and discontinue it but would seek an order for costs under section 19, yet Mr Holloway chose to go ahead with the prosecution with his eyes open as to the consequences.
In short, the claim for judicial review was dismissed because although the judge’s reasoning could not be supported, he was right to conclude that there was an improper act by the prosecution as a result of which costs had been incurred, that was the only possible conclusion in the circumstances, and the only proper exercise of discretion was to make an order for costs; the matter was remitted to the Crown Court to determine the amount.
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