Southwark Crown Court has thrown out a land banking fraud case brought by the FCA after the five defendants failed to get legal representation in a test case of the impact of cuts to legal aid.
In April 2013 the FCA charged eight men with land banking fraud and carrying out a regulated activity without authorisation.
A judge has now thrown out the case against five of the individuals on the basis that they would not be given a fair trial as they could not get proper legal representation. It is the first time a case has been thrown out as a result of the cuts to legal aid.
The case was due to be heard against Scott Crawley, Dale Walker, Daniel Forsyth, Aaron Petrou and Brendon Daley.
It is classified as a ‘very high cost case’, meaning the trial is expected to last over 60 days.
The Government has introduced a 30 per cent cut to fees paid to solicitors and barristers for VHCCs as part of plans to cut £220m from the £2bn annual legal aid budget. The changes affect any case heard from the end of April.
In January, Money Marketing revealed lawyers had raised concerns the cuts would cause delays and miscarriages of justice in FCA court cases.
The FCA has until tomorrow to appeal the ruling, and says it is currently considering whether to appeal.
In the ruling, Judge Leonard says: “In a case of this complexity the defendants could not receive a fair trial without advocates to represent them.”
The judge says 70 sets of chambers with barristers competent to undertake this type of work were contacted to represent the defendants.
Only one put himself forward as willing to accept instructions, but subsequently withdrew.
Alex Cameron QC – the prime minister’s brother, working free of charge on the bid to halt the case – said the defendants would not get a fair trial.
The offences relate to the period between August 2008 and November 2011 and arise out of Operation Cotton, an FCA investigation into land banking firms.
The three companies involved in Operation Cotton are Plott UK, European Property Investments and Stirling Alexander. The FCA says these companies are believed to have taken over £5m from UK investors between 2008 and 2011.
Plott UK and EPI faced compulsory winding up orders in June 2011 and December 2012 respectively after the FSA pursued civil action.
Land banking companies divide land into smaller plots to sell it to investors on the basis that once it is available for development it will soar in value. But the land is often in areas of natural beauty or historical interest, with little chance of it being built on.