Attempts by the Financial Conduct Authority to pursue alleged fraudsters through the courts in complex cases look set to run aground due to judicial concern that cuts to the legal aid budget risk ‘unsafe’ convictions.
A judge has today (1 May) ruled a stay of proceedings for five defendants allegedly involved in a land banking fraud, as they could not afford proper representation due to cuts enforced in December designed to save £220m from the legal aid budget.
Judge Leonard ruled Scott Crawley, Dale Walker, Daniel Forsyth, Brendan Daley and Aaron Petrou would not be able to get a fair trial as there are insufficient resources to try the five together as a result of a 30 per cent cut to legal aid fees for lawyers.
Under the new rules, the fees payable to lawyers have been cut by 30 per cent and the maximum household income to qualify for legal aid has been lowered to £37,500 a year.
The case was originally scheduled to be heard in April 2014, but the defence could not find representation despite contacting 70 sets of chambers as barristers refuse to undertake large and complex cases following the rule changes.
Lawyers have warned that other similar cases which as classified as ‘very high cost cases’ - a term reserved for those likely to take more than 60 days - are likely to suffer a similar fate.
A major insider trading case brought by the regulator was thought to be in the balance and hinging on today’s decision. Yesterday another case brought by the Serious Fraud Office was similarly stayed due to a lack of representation raising the threat of an ‘unsafe’ conviction.
According to the judgement in the land banking case, the evidence is “complex and substantial” with the volume of paper amounting to over 46,000 pages.
Judge Leornard added that while he could allow an adjournment to January 2015, the knock-on effect would be that cases would be delayed and there remained doubt as to whether there is a realistic prospect of a fair trail following such a delay.
The decision followed an intervention by the prime minister’s brother, Alex Cameron QC, who had acted on behalf of the defendants for free.
The Financial Conduct Authority is considering an appeal and said it cannot comment further.
Richard Peat, a barrister for law firm Thirteen Old Square Chambers, told FTAdviser that the decision was likely to affect other criminal prosecutions brought by the FCA, but would not prevent it pursuing other forms of disciplinary action.
He said: “Those cases that go through disciplinary proceedings at the FCA via the RDC and then a tribunal will not be affected as legal aid is is not available. The FCA does bring prosecutions from time to time and those can be affected [by the legal aid cuts].”
The five defendants handed a reprieve today are accused of operating a land banking scheme between 2008 and 2011 that used three limited companies and in which sub-plots of land were “aggressively marketed” to members of the public.
Some purchasers were allegedly given good title, some were not and some sub-plots were sold more than once. The judgement said various interventions by the regulator to stop the practices “were subverted by transferring the fraudulent scheme to a new company”.
The judgement said: “It would be unconscionable to put this trial off to September 2015 with the second trial being heard in 2016.
“On what I now know, there is no basis on which I could find that the availability of advocates would be any different then than it will be in January 2015.
“In addition it is likely to lead to a violation of the reasonable time requirement.”
