The Hacking Trial Costs Issue – News UK withdraw their claim for millions: Saunders’ Memo

Back in June, when Rebekah Brooks, Stuart Kuttner, Cheryl Carter and Mark Hanna were all acquitted at the phone hacking trial, their barristers made it clear they would be applying (as is their right) for a refund of their court costs. Already, at this point, it was clear that News UK would have to be party to these hearings on costs, since they had indemnified all the cleared defendants bar Charlie Brooks. The initial quantum for that claim was reported to be £25 million in legal costs. This was reduced two weeks ago to £7 million by the Crown Prosecution Service on the basis of equivalent legal aid, rather than private, legal costings. 

At issue, however, during any costs proceedings would have been the conduct of News UK, the ultimate beneficiaries of any ruling. Though various (unpublished) legal arguments have been exchanged between counsel and the judge, Mr Justice Saunders said he would be seeking outside advice as to whether the corporate behaviour was an issue in the trial costs. On notice of this, News UK withdraw its application on Tuesday night, just before this issues would have been raised in open court. News UK have put out a statement that they made this decision to save tax payers money and additional legal costs

Mr Justice Saunders explanation of events is below

 

R –v- Brooks and others

Memo on costs application
At the end of last term I made various directions about the hearing of the applications for costs by those Defendants who were acquitted and wished to pursue one. As a number of things have changed over the vacation, it is appropriate that I set out in public what has happened.
It had already been agreed that, in addition to the parties, News UK as successors to News International would be entitled to make submissions to me. They paid for the defence of all the Defendants in the trial except for Charlie Brooks and Clive Goodman. They also paid for the defence of Lee Sandell and Paul Edwards who were due to be tried later but the prosecution have now offered no evidence against them. Any payments made as a result of orders for costs in favour of Defendants who were supported by News International would be paid to News UK.
Before the vacation I had been told in open court that the Ministry of Justice wished to take part in the hearing of the application for costs. That was confirmed in a letter from the Ministry dated 6.8.2014 in which the Deputy Director of the Legal Aid and Legal Services team stated that the Lord Chancellor had instructed two leading counsel to act on his behalf ‘to perform the traditional role of prosecuting counsel to assist the court as well as to advance arguments on his behalf.’ The Ministry wished to become involved because ‘the Lord Chancellor holds both policy responsibility and the budget for central funds.’
I then gave directions to ensure that skeleton arguments on behalf of the Lord Chancellor and the Prosecution were served first so that the Defendants and News UK would be able to respond to their arguments and any matters of fact or law that they raised.
By letter dated 15th August I was notified by the Ministry of Justice that they would ‘revert to the usual process in this matter’. That meant, I learnt later, that they no longer wished to make representations in writing or orally. I am afraid that meaning was not immediately apparent to me from the letter but I received clarification later.
By a note dated 2.9.2014 the prosecution set out certain matters of legal principle for the assistance of the court but indicated that they were not making any positive submissions in relation to the entitlement of any Defendant to the benefit of a costs order. They did suggest, without giving any particulars, that matters concerning the relationship between News International and the News of the World and the conduct of News International could affect the exercise of my discretion. Unfortunately News UK did not receive this note and they were not aware of the issues raised until I circulated a further document.
Having received those responses, I was concerned that at the hearing, the Defendants and News International would have no idea of issues of fact and law which arguably might be relevant to the exercise of my discretion.
I therefore decided to set out in a document, issues of law and fact on which I wanted assistance and which, it might be argued, could affect the exercise of my discretion. Before doing so, I invited any comments from the parties whether this was an appropriate way of proceeding. No objections to this course were received by me.
I accordingly drafted and circulated some ‘questions for the hearing.’ The reason for doing this was to enable the parties including News UK to make submissions as to the correct answers to the questions and make any submissions as to fact. None of the submissions made or the issues that have been raised should be understood in any way to reflect on the not guilty verdicts which we all respect. The questions included some relating to the relationship between News International and the News of the World and the conduct of News International after the arrest and prosecution of Clive Goodman in 2006 up to the start of the investigation known as Operation Weeting. I indicated that I would allow News UK to call evidence, if they wished to, to explain or contradict any matter of fact which had emerged during the trial. In response I received submissions from News UK to the effect that it would be wrong in law to take into account the position of News International as the owner of the News of the World or its conduct as relevant factors in the exercise of my discretion. News UK also argued that it would be inconsistent with its rights to take into account evidence given at a trial in which they were not a party and could not challenge. All the Defendants supported that submission without adding to it. The prosecution submitted that I had a broad discretion and that I was entitled to take into account matters relating to News International in exercising my discretion whether to award costs.
Having considered the submissions that were made, I took the view that a matter of legal principle was involved which was not easy to resolve. Accordingly I asked the Attorney General to assist me by providing an ‘amicus’ who would make submissions on the law which he agreed to provide.

Before I received the submissions of the amicus, I received a communication from News UK stating that they would not be seeking the recovery of the costs that they had expended in paying for the defence of the Defendants. Mr. Smith QC stated in open court why News UK had made that decision. He made it clear that, by not continuing to seek repayment of the costs, News UK were not conceding that News International’s relationship with the News of the World or their conduct were relevant matters for the exercise of my discretion. They also did not accept, if those matters were relevant to the exercise of my discretion, that anything that they had done would properly result in the application for costs being refused.
The result of their decision is that Rebekah Brooks, Cheryl Carter, Mark Hanna, Lee Sandell and Paul Edwards have withdrawn their applications for costs. There was a period when Stuart Kuttner did not have the benefit of an indemnity and he continues to claim for legal costs during that period which are estimated at £130000. Charlie Brooks has paid his own costs which are estimated at £500000 plus VAT.
I have heard from Counsel for Stuart Kuttner and Charlie Brooks in support of their application for costs. They referred in their submissions to their skeleton arguments and to the specific questions that I raised in relation to their applications in the ‘questions for the hearing’ that I circulated. In those circumstances I consider that the press should have the parts of the questions for the hearing relating to their applications and their skeleton arguments. In relation to the questions directed at News UK and the parties who have withdrawn their application I do not consider at the moment that it would be right to release them. They have not had the opportunity to deal with the questions and it may look to the public that the questions represented my view. They do not they were matters on which I wished to hear submissions.
Similar considerations apply to the skeleton arguments. They have not been referred to in court because the applications were never made and they are accordingly in my judgment not part of the public hearing.

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