What information does a private prosecutor have to put forward to get a proper summons issued?
Typically in a private prosecution the defendant will not be put on notice that the prosecutor seeks to apply for a summons. To protect the fairness of the process, a duty of candour (more commonly referred to as a duty of “full and frank disclosure”) applies. The test of what is relevant is outlined in a case handed down on 23 May 2018. In R (on the application of Kay and another) -v- Leeds Magistrates’ Court and Another [2018] EWHC 1233 (Admin) the Divisional Court (Sweeney J and Gross LJ) gave a fulsome warning about private prosecutions and the importance of the duty of candour.
The Divisional Court have made clear that “[c]ompliance with the duty of candour is the foundation stone upon which such decisions are taken”. Sweeney J added “In my view, its importance cannot be overstated.”
Facts in the Case
On 7th April 2016, a private prosecutor, Marek Karwan (“Mr Karwan”), the managing director of a polish company, Adriana SA, laid an Information in support of an application for a summons against Scan-Thors (UK) Limited (“Scan-Thors”) and its Managing Director, Martin Kay (“Mr Kay”), in respect of four counts of fraud.
The allegation of fraud was based on the fact that untrue or misleading representations had been made to Mr Karwan’s company, namely that Scan-Thors required a 5% discount upon furniture products that Adriana was supplying because the ultimate customer, DFS, required such a discount.
In making that application, Mr Karwan failed to bring to the attention of the judge who dealt with the application that:
- He had sometime earlier entered into a binding ‘Settlement Agreement’ with the Scan-Thors and Mr Kay in which he had undertaken not to prosecute them for the matters the subject of the information and summonses.
- The very matters that were subject to the private prosecution had been considered (twice) by the Polish Regional Public Prosecutor and reviewed by a Polish Regional Court, each of which (respectively in detailed written justifications and a detailed judgment) had reached the conclusion that there was no evidence of the Claimants having committed any criminal offences.
- He only attempted to bring criminal proceedings in Poland when he had found himself at risk of losing £560,000 in arbitration proceedings between the company he worked for and Scan-Thors.
- His company had lost those proceedings and been compelled to pay £560,000.
- The intended defendants to the prosecution were claiming commission payments and damages in excess of £4 million in ongoing arbitration proceedings.
- It was Mr Karwan’s intention (as shown by what later happened) to use the fact of the criminal proceedings in this country as the basis of an application to suspend the ongoing arbitration proceedings in Poland.
Mr Karwan’s explanation for not bringing the settlement agreement to the court’s attention was that he thought it was irrelevant, since he considered it was unenforceable and was governed by Polish law.
Mr Karwan instructed solicitors to make the application for the summons. The application was supported by a small number of witness statements, asserted a loss of £3million and asserted that it was believed that both the evidential and public interest tests of the Full Code Test was met. Mr Karwan, via his legal team, contended that all he had to do on the application for the summonses was to put before the court evidence to show the commission of the offence.
The District Judge, after hearing both sides, refused to set aside the summonses, and held that the appropriate venue for the determination of this issue is the Crown Court.
The Divisional Court
The Divisional Court took the opportunity to re-emphasise that the right of private prosecution is expressly preserved by s6 of the Prosecution of Offences Act 1985.
After reviewing the relevant authorities, the Court then set out the matters that must be considered by the Magistrate when deciding whether to issue a summons:
(1) The magistrate must ascertain whether the allegation is an offence known to the law, and if so whether the essential ingredients of the offence are prima facie present; that the offence alleged is not time-barred; that the court has jurisdiction; and whether the informant has the necessary authority to prosecute.
(2) If so, generally the magistrate ought to issue the summons, unless there are compelling reasons not to do so – most obviously that the application is vexatious (which may involve the presence of an improper ulterior purpose and/or long delay); or is an abuse of process; or is otherwise improper.
(3) Hence the magistrate should consider the whole of the relevant circumstances to enable him to satisfy himself that it is a proper case to issue the summons and, even if there is evidence of the offence, should consider whether the application is vexatious, an abuse of process, or otherwise improper.
(4) Whether the applicant has previously approached the police may be a relevant circumstance.
(5) There is no obligation on the magistrate to make enquiries, but he may do so if he thinks it necessary.
(6) A proposed defendant has no right to be heard, but the magistrate has a discretion to:
(a) Require the proposed defendant to be notified of the application.
(b) Hear the proposed defendant if he thinks it necessary for the purpose of making a decision.
This useful list encompasses the new “Application for a summons” (7.2) part of the 2018 changes to the Criminal Procedure Rules (2018 No. 132 (L. 2) which now require private prosecutors to fill out a form which includes information the Court consider to be relevant. This form, of course, was not in existence at the time this matter commenced.
The Duty of Candour
The Divisional Court held that the withholding of material information is in itself a critical factor in determining whether a summons should be set aside as an abuse of the process of the court. In this instance, the court had no difficulty in finding that when Mr Karwan’s lawyers applied on his behalf for summonses to be issued, both he and they were subject to the duty of candour. Referring to In re Stanford International Bank Limited [2011] Ch 33, it was observed
“In effect a prosecutor seeking an ex parte order must put on his defence hat and ask himself what, if he were representing the defendant or third party with a relevant interest, he would be saying to the judge, and, having answered that question, that is what he must tell the judge….”
The Test to Quash a Summons
It was held that for the court to quash the summons, the Defendant must demonstrate that:
- that the inaccurate and/or non-disclosure by the prosecutor would have made a difference to the judge’s decision; and
- it is sufficient if it is shown that the inaccurate and/or non-disclosure by the prosecutor might have made a difference to the judge’s decision.
The Divisional Court stated that it had no doubt that the carefully crafted Information put forward failed to comply with the duty of candour. It went on to state:
“Whatever the views of Mr Karwan and his lawyers as to the ‘Settlement Agreement’, it should have been obvious … that there was a duty to disclose to the court…”
The Court concluded that a revelation of the settlement agreement and attendant proceedings would, unhesitatingly, have made a difference to the Judge’s decision. The summonses were quashed.
Commentary
A stark reminder: This case stands a stark reminder to private prosecutors that they are subject to the same obligations as a Minister for Justice as are the public prosecuting authorities and they would be well advised to instruct specialist solicitors who are fully appraised of what those obligations encompass. As with a civil freezing order, obtaining it is one thing and keeping it is quite another. It is important to prepare a well-founded private prosecution that proceeds to sentence or trial.
What if there was a settlement agreement but the fraud was not known about? It is common that fraud is uncovered years after the event. Indeed, commercial relationships have often been severed years prior and agreements made. In this instance, the private prosecutor was fully aware of the fraud that had been allegedly committed against it before entering into the binding settlement agreement. It seems plain that such facts required the attention of the court in its decision making.
However, if the private prosecutor had entered into a binding settlement agreement before becoming aware of the fraud, would it be in the same position? Probably not as the agreement would be null and void on the basis of fraud. However, it must always be considered whether it would have made a difference to the judge’s decision. If it would, or is capable of doing so, it should be brought to the court’s attention.
What did the lawyer know? The other factor of interest is always that which troubles private prosecutors. How reliant are you on what your client is telling you? In this instance, one might presume the lawyers involved would have been heavily reliant on their client’s version of events as it involved contractual business transactions over a long period and foreign proceedings in another language. Even the very existence of other proceedings in foreign countries is not easy to find out about. However, we consider there are three essential questions when taking instructions from clients:
- Has this subject matter (or a connected subject matter) previously been litigated in any jurisdiction by any party?
- When and what was the result?
- How can you prove that result?
Unfortunately, that requires some initial expense to have foreign judgements and pleadings translated and reviewed which may not endear a lawyer to their client. However, the expense will typically be less than the payment of costs by the client (or his or her representative) for bringing a prosecution without due candour which can be awarded under either of the following sections of the Prosecution of Offences Act 1985:
- S19 Provision for orders as to costs in other circumstances which allows costs to be obtained against the private prosecutor where “one party to criminal proceedings has incurred costs as a result of an unnecessary or improper act or omission by, or on behalf of, another party to the proceedings” s19A Costs against legal representatives etc which allows costs against the legal representative focuses on “any improper, unreasonable, or negligent act or omission on the part of any representative”
There are, for good reasons, significant duties on private prosecutors and this case reminds all practitioners in the field to proceed with caution and diligence. It is also incumbent upon us all to ask (and seek evidential confirmation of) the difficult questions and issues in order to protect those clients we represent, and indeed, ourselves.
Authored by Kate McMahon and Ashley Fairbrother
