The Divisional Court has required the Director of the Serious Fraud Office to pay the Claimants’ costs on an indemnity basis following their successful challenge to search warrants obtained by the SFO.
In R (on the application of Rawlinson & Hunter Trustees SA & Ors) v Central Criminal Court & Director of The Serious Fraud Office  EWHC 3218 (Admin) the Divisional Court considered the issue of costs following its substantive decision at  EWHC 2254 (Admin).
The litigation concerned search warrants obtained by the SFO under s.2(4) of the Criminal Justice Act 1987 during an investigation into the Tchenguiz brothers, well known businessmen, and companies and trusts through which they carry on their businesses.
The Divisional Court found that the Information put before the Circuit Judge sitting in the Old Bailey by the SFO materially misstated the position and that the SFO failed to draw the Judge’s attention to points which weighed against the warrants being granted. The Divisional Court quashed the search warrants and found that the warrants were unlawful, as were the entries, searches and seizures conducted pursuant to those warrants.
The SFO accepted that it should pay the Claimants’ reasonable costs (it is the usual rule that the unsuccessful party in a judicial review claim pays the winner’s costs). However, the SFO disputed that it should have to pay indemnity costs under CPR r.44.4. Where indemnity costs are ordered, any doubts as to whether the costs were reasonably incurred or reasonable in amount are resolved in the recieving party’s favour. Indemnity costs are appropriate only where there has been a significant level of unreasonableness or otherwise inappropriate conduct.
The Divisional Court accepted the application for indemnity costs, save with respect to the cost of duplicated preparatory work by solicitors acting for Rawlinson & Hunter and for Vincent Tchenguiz (whose interests were closely aligned) and the cost of a second QC. The appearances in this case were a veritable line up of legal talent with 3 of the 5 parties having 2 QCs and at least 1 junior apiece, as is becoming commonplace in commercial litigation. The Divisional Court found that the employment of more than 1 QC was not reasonable.
In the Robert Tchenguiz claim, the Court said at :
“… we have concluded for the reasons set out in the judgment that this was an exceptional case and that the conduct of the former Director [of the SFO] in Lord Woolf’s words in Excelsior takes this case “truly out of the norm”. This was essentially the result of the unacceptable approach of the former Director [of the SFO] to his vitally important duties of disclosure on the applications for search warrants in this case and [before the Circuit Judge] then to his subsequent failure to appreciate these very significant failures until a very late stage of the [judicial review] proceedings.”
The Courts have repeatedly emphasised the importance of the heavy duties imposed on officers applying for search warrants ex parte. These duties are explored in an article for Police Professional by James Berry and Oliver Williamson that will be reproduced on the this blog next month.
Tchenguiz emphasises that where a search warrant application is found to be unlawful, not only will the occupier of the premises that were searched be able to claim damages for trespass to property and goods, but also they may be able to claim their costs on an indemnity basis.