Judicial review quashes private prosecution against former CFO

Background

The High Court has quashed a summons issued against Antony Bates, the former Chief Financial Officer of Hibu PLC, in a private prosecution brought by James Westhead, a shareholder and director of Hibu Shareholders Grouping Limited (HSG). The prosecution was based on allegations of fraud and embezzlement during Bates' tenure, which were found to be unfounded and unsupported by evidence.

The Application for Summons

Westhead, representing HSG, applied for a summons in May 2023, alleging ten charges of dishonesty against Bates. The application was delayed and not processed until May 2024. Despite the lack of substantive evidence, District Judge Brennan issued the summons, which led to Bates being sent to the Crown Court for trial.

Issues with the Application

The application was heavily criticised for its lack of evidential support. Westhead's claims were based on publicly available financial reports, which he misinterpreted as evidence of a £1 billion fraud. His allegations were further undermined by the absence of any corroborative evidence from Hibu's auditors or administrators.

Judicial Review Proceedings

In September 2024, Bates sought judicial review of the decision to issue the summons. The High Court granted interim relief, staying the criminal proceedings. The review highlighted significant procedural failings and a lack of credible evidence to support the charges against Bates.

High Court Judgment

Mrs Justice Yip concluded that the summons was issued unlawfully, noting the failure of Westhead to comply with the duty of candour and the procedural requirements for a private prosecution. The judgment emphasised the absence of any substantive evidence to support the allegations and characterised the prosecution as vexatious and an abuse of process.

Implications and Future Actions

Westhead indicated his intention to reapply for a summons against Bates and other former Hibu directors, despite the court's findings. However, the judgment serves as a clear warning about the responsibilities and evidential standards required in private prosecutions.

Costs and Consequences

The court's decision also opens the door for Bates to seek costs against Westhead, although these applications were deferred for further consideration. The judgment underscores the potential financial and reputational risks of pursuing unfounded legal actions.

Conclusion

This case highlights the critical importance of evidence and procedural compliance in private prosecutions. The High Court's ruling serves as a reminder of the safeguards in place to prevent abuse of the legal process.

Learn More

For more information on shareholder law, see BeCivil's guide to Shareholder Law.