In R v AB and others (2017) EWHC Crim 534 the Court of Appeal (Criminal Division) has held that a local authority did not have power under Section 222 of the Local Government Act 1972 to bring a prosecution for defrauding the Legal Aid Agency (“the LAA”). The Fraud Investigation Department (“FID”) of the authority had carried out an investigation for the LAA. No issue was raised as to the power to investigate. The Court said:-
“43. In our judgment it is clear from the cases to which we refer that the court has jurisdiction to review the Council’s decision to prosecute. However, that is an exercise to be carried out sparingly and within the parameters of the very broad discretion granted to the Council under s.222. There is, however, a high hurdle to be overcome before the court will interfere with a local authority’s exercise of discretion under s.222.”
“49. The power under s.222 arises by reference to a consideration of expediency; the expediency must be for the promotion or protection of interests. The interests are those of the inhabitants of the local authority’s area. If those elements are satisfied, then the local authority may prosecute.
- Relevant considerations are not limited strictly by geography. …
- It is in our view, permissible to take broad policy considerations into account. …
- Each case will turn on its own facts, but, as we have said the court should be slow to interfere, given the very broad power given to a local authority under s.222.
- In our judgment the Council’s decision to prosecute fell outside the ambit of its broad powers under s.222. There were no proper grounds for it to consider that that it was expedient for the promotion or protection of the interests of the inhabitants of Thurrock to prosecute the Appellants (and not to refer this very serious matter to the DPP for prosecution). The Council could not reasonably have thought that there were.
- As for the suggestion that it could be considered in the interests of the inhabitants of Thurrock that the legal aid system, from which all may benefit, should not be defrauded, the alleged criminality to be prosecuted must have an actual or potential impact on the inhabitants of Thurrock as inhabitants of Thurrock, not just as UK taxpayers more generally. For the requirements of s.222 to be met, the interests of the inhabitants of Thurrock must be engaged over and above their interests merely as ordinary citizens of the nation. The clear policy of the LGA, as reflected in the wording of s.222, was that the power in question was being conferred for the benefit of the inhabitants of Thurrock as such.
- … The Council was in effect setting up a prosecution service for which it was being paid by the LAA. …
- In our judgment, however, this type of general financial justification does not come close to meeting the requirements of s.222. Otherwise, s.222 would empower any local authority to offer a prosecution service (or indeed a defence service) to any individual or organisation prepared to pay for it. This cannot have been Parliament’s intention. We do not accept the submission that local authorities are now encouraged to be profit-making or that initiatives such as, for example, the Localism Act 2011, assist the Council. S.222 empowers a local authority only to prosecute in the specific interests of its own inhabitants, even if broad policy considerations can be taken into account. …
- For these reasons, and subject to consideration of the Council’s case that it had an unfettered common law right to prosecute, we conclude that the prosecution proceedings were commenced unlawfully.
- … the Council’s case was that in any event s.222 is merely declaratory of a local authority’s common law right to prosecute (or as it was also suggested by the Council only “exhortatory”). The Council is a species of private prosecutor. The proceedings are thus lawful without more and without reference to s.222.”
“75. In our judgment, and despite the industrious research of the legislative history, the Council’s suggested approach is misconceived. Local authorities are entirely a statutory creation, and may only engage in activities which they are permitted to by the LGA and related Acts.”
“91. As was apparent during the course of the hearing, we raised significant concerns as to the events giving rise to the prosecution by the Council of such a significant case that was in no way related to Thurrock and contrary to generally accepted national prosecution policy. As we have explained, the allegations of the prosecution relate to an alleged very large scale fraud involving grave allegations and of considerable public and state interest. Alleged abuse of the legal aid system is always serious; it assumes a particular importance in the field of immigration where there is a very significant drain on legal aid resources. It is precisely the sort of prosecution that should be pursued by the national prosecuting authority.”
“93. The unhappy facts of this case demonstrate well the dangers inherent in a system where agencies try to act as substitutes for prosecutions by the CPS in respect of national issues. …
- As we have set out at paragraphs 49 and following, the purpose of s.222 was to give local authorities powers to take action in the interests of their inhabitants. The claimed interest by the Council is an indirect one, namely that it is in the inhabitants’ interest to operate the FID, because it would attract income. The purpose of the scheme set up by Mr Kleinberg was and is avowedly to provide an investigations and prosecution agency which can take on the investigation and prosecution of fraud. His evidence describes it as being able to conduct such work on behalf of public bodies, including those which are national. The prosecution of such frauds is in no sense dependent on any link to the Borough or its inhabitants. It is patently a purely commercial enterprise, the link with the interests of the Council’s inhabitants being illusory at best. …”
“98. It is in the public interest that major prosecutions such as this are handled by the single prosecuting agency established by statute to conduct them. It is noteworthy that the Council does not seek to prosecute kinds of crime other than fraud. That has one simple reason – there would be no income stream derived from it. It is only because the Council considers that it can so manage the prosecution, its terms of agreement with the bodies it seeks to represent, and the receipt of confiscation monies, that it is seeking to pursue this arrangement. … The issue of the legality of the FID was not explored before us, and we decline to express any view. But insofar as the Council seeks to use the FID, via prosecutions, to provide a national prosecutions unit, we consider not only that it falls well outside the scope of s.222, but that it would be harmful to the public interest to have such a unit established as an alternative to the CPS. The CPS is a statutory body, whose powers are given by statute; it performs a vital public function and ensures consistency in decision making. A local authority prosecution unit would have no statutory basis whatever; it would also be inimical to the public interest to have a parallel prosecution service for cases such as this.”