Neutral Citation Number: [2010] EWCA Crim 2383
Case No. 2010/02648/A1

IN THE COURT OF APPEAL
CRIMINAL  DIVISION

Royal Courts of Justice
The Strand
London
WC2A 2LL

Date: Tuesday  5  October  2010

B e f o r e:

LORD  JUSTICE  AIKENS

MR  JUSTICE  SWEENEY

and

THE  RECORDER  OF  NORWICH
(His Honour Judge Peter Jacobs QC)
(Sitting as a Judge of the Court of Appeal Criminal Division)
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R E G I N A

- v -

Mohamed  Azrad  Hossein  Nuthoo
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Miss S Samuel appeared on behalf of the Appellant

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J U D G M E N T

LORD JUSTICE AIKENS:  I shall ask Mr Justice Sweeney to give the judgment of the court.

MR JUSTICE SWEENEY:
1.  On 8 March 2010, in the Crown Court at Wood Green, the appellant (now aged 44) pleaded guilty on re-arraignment to count 1, dishonestly making a false statement or representation in connection with housing benefit, and to count 5, failure to notify a change in circumstances in relation to housing benefit.  On 29 March 2010 he was sentenced by Mr Recorder Jay QC as follows: on count 1, a suspended sentence order comprising twelve months' imprisonment suspended for twelve months with a requirement of a curfew from 7pm to 7am, supplemented by electronic tagging, for six months.  No separate penalty was imposed on count 5.  In addition, an order was made that the appellant pay the sum of £5,508 in prosecution costs to the prosecuting authority (the London Borough of Enfield) under the provisions of section 18(1) of the Prosecution of Offences Act 1985.  He now appeals against sentence by leave of the single judge, limited to the costs order.

2.  The facts, in short, are these.  On 17 January 2005 the appellant submitted an application for housing benefit but he failed to notify the Council that he had £25,000 in a bank account.  That money came from a loan that he had taken out to pay off a car debt.  Thus between 24 January 2005 and 23 November 2008 the appellant was paid a total of £15,298.94 housing benefit to which he was not entitled (count 1).

3.  In 2008 the appellant opened a fresh bank account and failed to disclose it and the money that was in it (count 5).

4.  He was arrested on 17 November 2008.  When interviewed, he admitted making false statements and representations on his various claims for housing benefit.  He added that he could not make the repayments on the loan and that subsequently the loan had been transferred to his brother.

5.  The appellant put forward a basis of plea in which he accepted that he had taken out a loan of £25,000 from Barclays Bank, but asserted that he had benefited only to the extent of £5,000 of that money because he could not afford the repayments.  He asserted that he had discussed matters with his brother who had decided to take over the loan for his (the brother's) business and for the brother to make the repayments.  In December 2005 the appellant had made a transfer to the brother's business account.  The basis of plea continued that the £5,000 went towards paying a car debt and pointed out that the appellant had made full admissions in interview, where he had also mentioned the car debt with the Bank of Scotland.  The basis of plea was not disputed.   
6.  The appellant is a man of previous good character.  A pre-sentence report categorised the offences as being sophisticated, calculated and well-planned, but recognised that the appellant was sorry and appeared genuinely motivated to change his behaviour.

7.  It is of significance to note that, by virtue of section 17(2) and (6)(c) of the Prosecution of Offences Act 1985, the London Borough of Enfield was not entitled to seek its prosecution costs from central funds.  During the course of his opening, prosecuting counsel informed the learned Recorder, amongst other things, that: 

	(1) under an arrangement with the Department of Work and Pensions the appellant was repaying the £15,298.94 owed to the London Borough of Enfield at the rate of £128.44 per month, deducted at source from his sickness benefit, which the pre-sentence report recorded as otherwise being approximately £388 per month; and that

	(2) if a costs order in the sum sought of £5,508 was made against the appellant, it would simply be added to the amount of his dishonest benefit to be repaid and the Department of Work and Pensions would carry out another means assessment to see if the appellant could add to the sum already being deducted from his benefit.

8.  In passing sentence the learned Recorder imposed the suspended sentence order to which we have already made reference, and then imposed the costs order.  He said that the circumstances in which the appellant would be required to pay the costs would not be determined by the court -- a clear reference to the assertions made by prosecuting counsel and the learned Recorder's anticipation that a means test would be carried out by the Department of Work and Pensions.

9.  The grounds of appeal are: first, that the order to repay the costs was not just or reasonable since orders for costs should not be made which were beyond the means of the appellant; and second, that the order was disproportionate to the principles of means testing and that any application of discretion should have considered the basis of plea, the appellant's level of culpability, his loss of good character and his medical background.

10.  In support of the grounds of appeal Miss Samuel on the appellant's behalf draws our attention in particular: (1) to the principle that orders for costs should not be made which are beyond the means of the defendant (see R v Mountain (1979) 68 Cr App R 41, R v Maher (1983) 5 Cr App R(S) 39, and R v Nottingham Justices, ex parte Fohmann (1987) 84 Cr App R 316; and (2) to the principle that orders should enable the defendant to pay the relevant sum within a reasonable period (see, for example, R v Olliver and Olliver (1989) 11 Cr App R(S) 10).

11.  The court has also considered a letter from the London Borough of Enfield which underlines the fact that, absent a costs order against the appellant in its favour, the burden of the costs of the prosecution will fall on local council tax payers.  It also draws our attention to how the appellant's actions caused the costs to reach the figure that they did.  The letter asserts that it was open to the learned Recorder to infer that the appellant had assets in addition to his sickness benefit income.

12.  In our view the position is this:

	(1)  By virtue of section 18(1) of the Prosecution of Offences Act 1985, to which we have already made reference, the learned Recorder undoubtedly had the power to make a costs order in favour of the London Borough of Enfield.

	(2)  The question for us is whether the order that he made is wrong in principle or whether there is anything manifestly excessive about it: see R v Macatonia [2010] 2 Costs LJ 262.

	(3)  On the material before us it appears that the learned Recorder made the order in the expectation that it would be enforced as a civil debt; that the appellant's means were limited to his net sickness benefit; that his means to pay would be judged in due course by the Department of Work and Pensions, as the prosecution had suggested; and that it would be many years before the costs order was met.

	(4)  In contrast, the correct position in law is that such a costs order is to be enforced as if it had been adjudged to be paid on conviction in the magistrates' court (see section 41 of the Administration of Justice Act 1970); that it is the duty of the court to consider the defendant's means (see, for example Mountain (above)); that it is the court that has the power to allow an individual to pay by instalments (see section 141 of the Powers of Criminal Courts (Sentencing) Act 2000); that in default of payment, imprisonment will be imposed, in this case up to a maximum of six months (see Schedule 4 to the Magistrates' Courts Act 1980); and that therefore, in order to avoid sending an offender to prison by the back door, and to ensure that the length of time over which the order would be paid is not oppressive, the amount and length of time for payment must be just, albeit that a period of up to three years for payment in an appropriate case is not necessarily too long (see Olliver and Olliver (above)).

	(5)  Notwithstanding the written submissions made by the London Borough of Enfield, the only evidence of means before the learned Recorder was the appellant's sickness benefit which, after deduction of the ongoing repayment of the housing benefit unlawfully obtained, amounted to only about £260 per month.

Taking all these matters into account, we have concluded that the order that was made was both wrong in principle and manifestly excessive in both amount and length of time required for payment.  Accordingly, we quash the order.  To that extent this appeal is allowed.

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