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SECTION 32 |
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32.1 |
Introductory |
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| (a) |
The Proceeds of Crime Act 2002 makes provision for the confiscation of the
assets of persons convicted of criminal offences and, in certain circumstances, of those "tainted"
by criminality. Where the Director of the Assets Recovery Agency is empowered to bring
proceedings for a recovery order under the Act he may also apply to the High Court for a
property freezing order or an interim receiving order which prohibits any person, to whose
property the order applies, from dealing with that property. The court may make exclusions
from that prohibition for certain purposes including the meeting of reasonable legal expenses.
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| (b) |
The Proceeds of Crime Act 2002 and the Regulations made thereunder make
special provision for two types of proceedings in the Supreme Court Costs Office:-
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| (i) |
during civil recovery proceedings, referrals to determine the amount which
exclusions should allow for reasonable legal costs: and
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| (ii) |
at the conclusion of civil recovery proceedings, the assessment of any person's
reasonable legal expenses in those proceedings where the court has made a
recovery order which provides for the payment of those expenses.
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| (c) |
The Proceeds of Crime Act 2002 (Legal Expenses in Civil Recovery Proceedings)
Regulations 2005 (SI 2005/3382) specify the hourly rates of remuneration which may be allowed
in respect of work done by legal representatives. Higher rates may be allowed for cases
involving substantial, novel or complex issues of law or fact and the rates are increase for legal
representatives whose offices are situated in certain London post code areas and districts.
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32.2 |
Exclusions to Meet Reasonable Legal Expenses |
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| (a) |
Where the court makes a property freezing order, or an interim receiving order, on
an application without notice it will normally make an exclusion from the order to enable the respondent to meet his reasonable legal costs of taking advice in relation to the order, preparing a
statement of assets and, if so advised, apply for the order to be set aside or varied. The initial
exclusion will not normally exceed £3,000.
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| (b) |
When the court makes a property freezing order or an interim receiving order
before a claim for a recovery order has been commenced, the court may also make an exclusion
to enable the respondent to meet his reasonable legal costs, so that, when the claim is
commenced, he may file an acknowledgment of service and any written evidence on which he
intends to rely, or may apply for a further exclusion for the purpose of enabling him to meet his
reasonable costs of the proceedings.
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| (c) |
Save as mentioned below, when the court makes an order or gives directions in
civil recovery proceedings it will at the same time consider whether it is appropriate to make or
vary an exclusion for the purpose of enabling any person affected by the order or directions to
meet his reasonable legal costs. However, in order to obtain an exclusion going beyond the
preliminary steps mentioned in sub paragraphs (a) and (b) above the person whose costs are to be
provided for must make and file a statement of assets.
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| (d) |
The court will normally refer to a Costs Judge any question relating to the amount
which an exclusion should allow for reasonable legal costs in respect of proceedings or a stage in
the proceedings.
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| (e) |
An exclusion made for the purpose of enabling a person to meet his reasonable
legal costs will specify:
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| (i) |
the stage or stages of civil recovery proceedings to which it relates;
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| (ii) |
the maximum amount which may be released in respect of legal costs for each
specified stage; and
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| (iii) |
the total amount which may be released in respect of legal costs pursuant to the
exclusion.
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| (f) |
Once expenses provided for by an exclusion have been incurred a person may
seek the Director's agreement to the release of an interim payment in respect of those expenses.
The amount which may be released is the amount which the Director agrees, or 65% of the
amount claimed, whichever is the greater.
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| (g) |
If a person becomes aware that his legal costs have exceeded or will exceed the
maximum amount allowed for a specified stage, or the total amount allowed for all stages, he
should apply for a further exclusion or for a variation in the existing exclusion as soon as
reasonably practicable.
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32.3 |
Procedure on Referrals Relating to Exclusions |
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| (a) |
Where a matter has been referred to a Costs Judge, either party may make an
application to the SCCO on Form N244 accompanied by a copy of the relevant order, copies of
any evidence relied on in support and a statement of parties.
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| (b) |
If the application is made by the person whose reasonable legal costs are to be
provided for:
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| (i) |
the evidence in support should include an estimate of costs substantially in the
form illustrated in Precedent H in the Schedule of Costs Precedents annexed to
the Costs Practice Directionpdp-43; and
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| (ii) |
when fixing the date for hearing the Costs Judge will also give a direction as to
the filing and service of any points of dispute on the estimated costs.
163
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| (c) |
A specimen form of order for directions on applications made by a person whose
costs are to be provided for is included in the Appendix, below, para A-11.
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| (d) |
On receipt of an application the SCCO will endeavour to list it for a date for
hearing not less than 14 days after nor more than 42 days after the date of issue. The party
making the application should specify his preferred dates for hearing in that period. Ideally, he
should specify at least one day in each week of that period.
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32.4 |
Assessment of Costs Following A Recovery Order |
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| (a) |
The Regulations set out the procedure for determining the amount payable in
respect of legal expenses once the High Court has made a recovery order which vests property in
the trustee for civil recovery and provides for the payment of those expenses out of that property.
The Regulations also specify the hourly rates of remuneration which may be allowed in respect
of work done by legal representatives.
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| (b) |
The amount of costs provided for by a recovery order may be agreed with the
Director of the Assets Recovery Agency. In such a case the Director will give notice of the
agreed sum to the person seeking costs and to the trustee for civil recovery.
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| (c) |
If the legal expenses are not agreed with the Director, the person seeking them
must commence detailed assessment proceedings in accordance with CPR Part 47. Generally
speaking the procedure is as set out in Sections 3 to 17 of this Guide (briefly, service of a bill
plus notice of commencement and certain other documents, obtaining a default costs certificate or, if points of dispute are served, serving a reply and/or filing a request for a detailed assessment
hearing).
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| (d) |
The notice of commencement plus other documents must be served not later than
two months after the date of the recovery order.
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| (e) |
Unless the costs are subsequently agreed or unless a default costs certificate is
obtained, a request for a detailed assessment hearing must be filed in the Supreme Court Costs
Office not later than two months after the expiration of the period for commencing the detailed
assessment proceedings.
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| (f) |
Further details of the procedure to be followed are set out in Section 49A of the
Costs Practice Directionpdp-43. Notice in particular:
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| (i) |
the paying party is the trustee for civil recovery;
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| (ii) |
the notice of commencement must also be served on the Director of the Assets
Recovery Agency;
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| (iii) |
in addition to the documents usually served with a notice of commencement (as to
which, see para 4.4(b) of this Guide) the receiving party must also serve a
statement giving the date, amount and source of all interim payments which have
been released in respect of the costs in question;
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| (iv) |
in addition to the documents usually filed with a request for a detailed assessment
hearing (as to which, see para 8.2(a) of this Guide) the receiving party must also
file copies of all exclusions from property freezing orders or interim receiving
orders which relate to the costs to be assessed and copies of every estimate of
costs filed by the receiving party in support of an application for such an
exclusion; and
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| (v) |
the costs will be assessed on the standard basis, subject to the Regulations
specifying the hourly rates which may be allowed.
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| (g) |
If the sum payable in respect of a person's legal expenses exceeds the total
amount which has been released in respect of those expenses, the trustee for civil recovery must
pay the balance out of the assets recovered.
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| (h) |
The trustee for civil recovery may only make a payment in respect of a person's
legal expenses to the solicitor who is instructed to act for that person or, where appropriate, to
the solicitor who was so instructed when the legal expenses to which the sum relates were
incurred.
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| (i) |
If the sum payable in respect of a person's legal expenses is less than the total
amount which has been released in respect of those expenses, the person to whose expenses the
sum relates must repay the balance to the trustee.
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