Jules Whiteway Wilkinson & Ors v The Commissioners for HMRC

This is an application on behalf of the Defendant (“HMRC”) for summary judgment, alternatively a strike out of the claim, on the basis that it has no real prospect of success and/or the claim does not disclose reasonable grounds. The nature of the claim is that there was a prosecution brought by the Crown Prosecution Service (“the CPS”) against the First Claimant, Julian Whiteway Wilkinson (“C1”) and against the Second Claimant, Rosie Whiteway Wilkinson (“C2”). The prosecution was unsuccessful because it was dismissed at half time against C2 on the basis of no case to answer in view of her lesser role than that of C1 and the jury acquitted C1 after deliberation at the end of the case. C1 and C2 submit that the prosecution should not have been brought against them, nor should there have been an application for a search warrant. They also submit that the prosecution, albeit that of the CPS, was brought in effect by HMRC by itself overbearing the will of the CPS or in effect jointly by HMRC and the CPS.

They submit that the prosecution and the search warrant were brought without reasonable and probable cause (“RPC”) and with malice. It is also a part of the Claimants’ case that the public officials of HMRC were guilty of misfeasance in public office in connection with their various actions relating to the business of the brewery businesses referred to below as a result of which the businesses were destroyed and the Claimants suffered loss and damage. In the alternative, it is submitted that HMRC owed a duty of care to the Claimants and/or to the brewery businesses whether on the basis of negligent misstatements or assumptions of responsibility giving rise to loss and damage.

HMRC seek summary judgment in respect of the entirety of the claims, alternatively that the claims should be struck out. The hearing lasted 3 days. The pleadings were voluminous. In addition to substantial skeleton arguments, there were long speaking notes and a lot of documents were presented before the Court as well as numerous authorities. It will be necessary to consider first the facts and then the principles about such applications. In respect of each cause of action, there will be considered the pleaded cases and rival submissions, the relevant law and the application of the law to the facts.

The following summary of the facts is based primarily on the pleadings and the various witness statements in connection with the strike out /summary judgment application of HMRC

From July 2011, C2 was a partner in a brewery partnership with Mr Ian Burgess operating at 374 Helmsley Place, Hackney, London E8 3SB. C1 was not officially connected with the partnership due to his criminal history. In 2004, he was convicted for conspiracy to supply Class A drugs and a confiscation order amounting to £2,137,500 was made.

Following a disagreement, Mr Burgess retired as a partner. The brewery moved to 365-366 Warburton Street (“the Premises”). In 2012, C1 entered into partnership with C2, trading as London Fields Brewery (“LFB”). Thereafter, the brewing business was operated through an incorporated company, London Fields Craft Products Limited (“LFCP”) which employed and was responsible for the payroll of staff.

On 9 March 2012, provoked by Mr Burgess, there was an unannounced visit at the Premises. He saw C1 who informed him that brewing operations had not yet commenced. Mr Ansah, an HMRC Higher Assurance Officer in the Customs, International Trade and Excise Department, saw C1, who told Mr Ansah that brewing operations had not yet commenced. Mr Ansah told him that he could not brew beer without being registered as a producer at the Premises.

On about 15 March 2012, C2 contacted the National Registration Unit (“the NRU”) of the Defendant, requesting that the licence granted to produce at Helmsley Place be amended to permit brewing to take place at the Premises, and in the alternative requesting a brewing licence in her own right. In a response by Fiona McKirdy, who worked at the NRU, C2 was informed that (i) brewing could not take place at an unregistered address, (ii) the old licence would need to be cancelled before she could apply for a licence in her own name, (iii) Beer Duty could no longer be paid as the registration number for the partnership could not be used, and (iv) the partners’ permission was required in order to cancel the registration of the partnership.

The Claimants claim that in about April 2012, another employee of the Defendant within the NRU, Fiona Renton, informed C1 and C2 that they had oral permission to re-commence brewing pending the re-consideration of a further brewing licence. They claim that this was repeated by Mr Ansah in April 2013 and by Mr Snazel during a visit which took place on 6 August 2013: see Re-Re-Amended Particulars of Claim (“RRAmPoC) para. 18. These communications are denied: see Re-Re-Amended Defence (RRAmD) para. 41. There is no written record of these communications.

On 15 May 2012, an application was made for registration as beer producer at the Premises by LFCP, but referred to it as a partnership rather than as a limited company. C1 and C2 were said to be partners. The intended date for production was given as 1 June 2012 and the VAT number was said to be pending.

On 7 June 2012, Ms Renton sought clarification as to whether the information on the form was correct, and, if the applicant was a limited company and asking for the names of the directors. She also asked if a VAT registration number was now available.

The Claimants say that on 27 July 2012, C1 replied providing the VAT number and confirming that LFCP was a limited company. This response did not register with HMRC and a telephone call was made by an NRU officer on 24 August 2012 to the brewery. It became apparent from that call that the brewery was operating or trading. The NRU officer stated that the brewery was not registered and not submitting Beer Duty returns.

On 17 October 2012, Mr Ansah carried out a further visit to the premises. He there met C1 who confirmed that commercial brewing had begun at the premises in April/May 2012. There was a call between C1 and Ms McKirdy, who worked with Mr Ansah. She said that a problem arose from the fact that the first application referred to the applicant as a partnership as opposed to a limited company. C1 said that he had been given verbal consent to brew while waiting for registration to be completed. Ms McKirdy denied that that was the case. Mr Ansah instructed C1 to stop brewing while inquiries were made. On the same day, C1 emailed to confirm that he was director of LFCP, a limited company trading as London Fields Brewery, and that that company, not a partnership, was seeking registration.

On 19 October 2012, having spoken with the policy department, Mr Ansah called C1 to let him know that beer production at the premises could be resumed whilst the application was progressed, but that a further meeting was required in relation to the non-submission of Beer Duty returns.

Thereafter, there were steps to obtain further information to enable the NRU to assess the application. In particular:

In July 2014, Mr Parkinson, an Alcohol Approval Officer in the HMRC Customs International Trade and Excise (‘CITEX’) team, received a referral from another CITEX officer who, when reviewing another trader, noted that the trader received supplies from LFB. Mr Parkinson’s desktop checks confirmed that LFB was not registered as a beer producer and that no Income Tax, Pay As You Earn (‘PAYE’) or National Insurance Contributions (‘NICs’) had been paid since August 2012.

This resulted in a further visit to the Premises, on 6 August 2014, by Mr Parkinson, accompanied by Mr Ansah, Mr Snazel and other officers, to establish whether beer was being brewed and, if so, how excise duty was being accounted for. It is common ground that no duty relating to the brewing had been paid since brewing operations started at the Premises in early – mid 2012.

During this visit, when asked to explain the position C1 attributed: - (i) his non-compliance with PAYE, VAT and company accounts duties to failures by his accountants, and (ii) his failure to provide the requested beer production records to the malfunctioning brewery management system. Following discussions with the officers C1 and C2 indicated that they would submit a further application for Registration.

It is the Claimants’ case that C1 informed the officers that he was willing to pay the excise duty but had been unable to do so due to not being registered. There is no record of any attempt being made to actually make any payments of excise duty nor is there any evidence or suggestion that any attempt was ever made to make any payments of PAYE or VAT (apart from minimal amounts assessed by the Defendant referred to below), nor any evidence that they were in a position to do so.

There was a discussion about HMRC seizing the beer, but they did not do so in light of the error in the First Application and a concern as to the ownership of the beer. There was concern that a seizure would be susceptible to a successful court challenge. Mr Parkinson suggested that C1 ought to submit a fresh application.

By letter dated 11 August 2014, in anticipation of a further application being submitted, and in the context of significant outstanding duty/tax/VAT liabilities, Mr Parkinson requested information and business records (including information relevant to the applicant’s ‘due diligence’ activities). The Claimants claim that the letter went beyond the information required under the Regulations and that a longer time ought to have been allowed for a response than a week from 15 August 2014. HMRC’s case is that in circumstances of non-compliance with VAT/PAYE/NIC requirements and confusion about the identity of the applicant, it was legitimate to seek information beyond that provided in the Regulations.

The Claimants’ case is that Mr Parkinson had no intention of granting the application for a licence and his attitude towards the registration process and the time given to comply was deliberately negative in the hope that the information would not be available in his chosen timescale. HMRC denies that a final decision had been made to reject the second application or that Mr Parkinson adopted a negative malicious or otherwise improper approach to considering it.

On 12 August 2014 a registration application on behalf of LFB (again identifying the applicant status as a partnership) was sent by C2 to Mr Parkinson by e-mail (“the Second Application”).

On 27 August 2014, Mr Parkinson (responding to an e-mail from C1 to the NRU of 22 August 2014):-

On 28 August 2014, C1 confirmed that LFCP, as opposed to a partnership was the applicant. He repeated his request for assistance in paying the outstanding Beer Duty and referred to the fact that NRU and Mr Ansah had advised that it was not possible without registration: see RRAmPoC para. 44. The case of HMRC is that C1 was responsible for the outstanding Beer Duty by reason of his failure (i) to submit accurate monthly Beer Duty returns as required by the Beer, and/or (ii) to provide beer production data requested by HMRC since 2012 to enable an excise assessment to take place.

By e-mail correspondence on 30 September 2014, C1 confirmed that the applicant for the brewing licence was LFCP. On 3 October 2014, in light of this, Mr Parkinson requested a fresh application with the correct applicant and VAT number for LFCP (not LFB). He also asked for the provision of corporation tax accounts and any management accounts covering 2012 - 2014.

In September 2014, the brewery business was referred to Mr Ian Muldoon (of the Defendant’s criminal investigation team). This referral was made in the context of, amongst other matters, the Claimants’ accepted failure since commencing production at the Premises to (i) submit accurate monthly Beer Duty returns as required by the Beer Regulations (a duty applicable with or without registration), and/or (ii) to provide beer production data requested by the Defendant since 2012 to enable an excise assessment to take place.

At or about the time the brewery was referred to Mr Muldoon: -

On 6 October 2014 a meeting took place between Ms. Denise Laker (in the Defendant’s civil VAT department), Mr Thomas (Civil Income and Corporation Tax department), C1 and the latter’s then-accountant Mr Matthews. This meeting was undertaken in the course of civil steps being taken to recover/facilitate the payment of outstanding/future VAT.

On 8 October 2014, Ms. Laker e-mailed Mr Parkinson and Mr Muldoon confirmed that, in the context of the civil recovery steps being taken she had agreed with C1, to give the business more time “to get everything in order”.

On 31 October 2014, C1 sent the Defendant a further registration application, made on behalf of LFCP (‘the Third Application’). By a letter dated 4 November 2014 Mr Parkinson, informed C1 that the Third Application contained an incorrect VAT number (which was accepted) and asked that a further amended application form with LFCP’s correct information be submitted.

On 5 November 2014 a further application for registration made on behalf of LFCP was sent to Mr Parkinson with the correct VAT number (‘the Fourth Application’).

On 28 November 2014, an ex parte application for a search warrant was made to Croydon Magistrates’ Court in relation to multiple premises/vehicles associated with the brewery and C1 (‘the Warrant application’). The Warrant application was drafted by Mr Muldoon. It followed an internal assurance process and was ultimately authorised by his line manager Ms Alison Chipperton. The application was signed by Mr Muldoon. The application recorded amongst other matters:

On 2 December 2014, officers involved in the criminal investigation: - (i) executed the Warrant in relation to the Premises, (ii) arrested C1 on suspicion of cheating the public revenue contrary to common law (with reference to VAT and other revenue/PAYE obligations), and (iii) interviewed C1 during which he gave a largely no comment interview. C2 was not arrested. Mr Muldoon stated in the application for the warrant that whilst she was partner of the business, he did not believe at that time that she was involved in the fraud being investigated. She said that her role had been in relation to HR and that she had only recently returned to work after a period of maternity. In the light of her personal circumstances, she was interviewed via voluntary attendance on 26 February 2015 when she gave a ‘no comment’ interview.

On the same day, 2 December 2014, Officers involved in the civil investigation entered the Premises pursuant to s.112 Customs and Excise Management Act 1979 (“CEMA”) (as opposed to under the Warrant): - (i) served C1 with the refusal of the application to register LCFP dated 2 December 2014 (the “Refusal”), (ii) exercised their powers under s.139 of CEMA to seize packaged beer which according to C1 had a value of £67,505.98 and 45,079.20 litres of beer in bulk storage. (This was restored to the Claimants following payment on the same day of £39,162.15 duty in accordance with s.152(b) of CEMA), and (iii) issued a Notice 12A to Ms Titus (the lawyer representing C1/the brewery) which set out the right to appeal against the seizure.

The Refusal explained that having considered all available information in respect of LFCP and the Claimants, it had been decided that there had been non-compliance across numerous heads of duty and failures to meet various statutory requirements which rendered the brewery unsuitable (or not fit for purpose) for Registration.

By letters dated 22 December 2014 and 16 January 2015 the Claimants sought a review of the Refusal. The review was carried out by Allan Donnachie (Appeals and Reviews Officer) who had had no involvement in dealing with the Applications. Mr Donnachie refused the review (the “Review”).

LFCP submitted an appeal to the First-Tier Tribunal on 27 March 2015 (TC/2015/02542). The Defendant provided a response on 16 June 2015 inviting the Tribunal to dismiss the appeal. Thereafter, LFCP discontinued its appeal.

In or about March 2016, the CPS, who say that they applied the Full Code Test for Crown Prosecutors, authorised multiple charges of cheating the Public Revenue in respect of C1 and C2 relating to evasion of VAT as well as PAYE/National Insurance Contributions and student loan repayments which had been deducted from the Claimants’ employees’ salaries (the “Charges”). The total amount allegedly evaded was £727,203.

C1 and C2 pleaded not guilty. In January 2017 C1 and C2’s first trial commenced. As a result of issues relating to the jury and the ill-health of defence counsel the trial was discontinued.

On 10 July 2017 a second trial commenced. An application was made by the Defence to stay the criminal proceedings as an abuse of process on the grounds that HMRC: (i) misled Croydon Magistrates Court when applying for the Warrants, (ii) misled C1 to believe that it would assist him in regularising his tax affairs/allowing him sufficient time to pay all arrears (Ms Laker’s comments), (iii) acted with the improper intention to close down the brewery business, (iv) improperly manipulated the Applications to prevent registration, and (v) was responsible for “serious executive misconduct” by its officers. The Crown Court Judge dismissed this application.

At the end of the prosecution case an application was made on behalf of C1 and C2 of ‘no case to answer’; C1’s application was rejected. C2’s application was granted. As regards C1, the Judge said as follows:

“It is a simple issue to be tried here and that is why it was that the defendant did not pay PAYE, VAT and National Insurance and student loan deductions; a very simple issue for the jury to determine.

On the question of a case to answer; could a jury, properly directed, convict these defendants? I shall take them one at a time; the first defendant. He is the brains behind the brewery. I do not mean that in any discourteous to the second defendant but it is his brainchild; the means by which he thought, he says, his confiscation order could be paid. He was in day-to-day control of the operation and involved in engaging and trying to engage accountancy help in 2012, the autumn of 2014 and on the day before his arrest. No VAT to speak of was paid, nor any PAYE, National Insurance or student loan deductions were paid during the indictment period. This amounts, we now know, to [be] about £700,000 unpaid.

Even if the VAT position was not easily quantifiable in 2013 and 2014, the defendant must have known that he was not entitled to retain the other deductions. He must also have known that, overall, there was a VAT liability. It is open to a jury that that retention of those sums was deliberate with the dishonest intention to not pay the Revenue such that it calls for an explanation from the defendant, should he choose to give evidence.”

Thereafter:

Following the Refusal, the Claimants paid third parties to brew the beer previously brewed at the Premises, which was then sold by the brewing business (it is unclear whether it was sold by the Claimants/LCFP/LFB or another third party to whom LFCP’s assets were sold). In addition, the other aspects of the business (for example tours of the Premises) continued to be operated.

Based on information provided, in response to the Defendant’s request of 14 March 2022, by the Claimants on 23 May 2022:

On 5 April 2016, LFCP went into administration with all of LFCP’s tangible assets having been sold to connected party purchasers on 1 February 2016 (understood to be controlled by C1’s father). In 2017, the Defendant has stated that it is understood that the brewery business was sold to Carlsberg for around £4 million with initial consideration of about £1.4 million. It is not apparent why there was such a large difference between the amount paid by the connected party to the liquidator and the amount paid to the connected party shortly thereafter. The Claimants have been asked to confirm the position, but it is not known whether they have done so.

On October 2017 LFCP entered into liquidation. HMRC was its largest creditor. The liquidator recovered £157,927.26 plus £31,585.45 VAT (£189,512.71 total) in respect of the business/goodwill (in addition to the £120,260 which were outstanding in respect of the assets transferred in February 2016) following the compromise of a dispute in June 2017. The Defendant’s record indicates that it received £59,355.37 at a rate of 4.17p in the pound, against a claim of approximately £1.3million.

The relevant rules in the CPR are as follows:

In EasyAir Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) (approved by the Court of Appeal in AC Ward & Sons Ltd v Catlin (Five) Ltd [2009] EWCA Civ 1098 at para. 24), Lewison J said the following about summary judgment applications, but the same applies also to strike out applications:

"The correct approach on applications by defendants is, in my judgment, as follows:

“i)

The court must consider whether the claimant has a "realistic" as opposed to a "fanciful" prospect of success: Swain v Hillman [2001] 2 All ER 91 ;

ii)

A "realistic" claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8]

iii)

In reaching its conclusion the court must not conduct a "mini-trial": Swain v Hillman

iv)

This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10]

v)

However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550;

vi)

Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63 ;

vii)

On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725 ."

Guidance as to what is meant in Swain v Hillman by the inappropriateness of conducting a “mini-trial” was provided by the decision of the Supreme Court in Okpabi v Royal Dutch Shell [2021] UKSC 3; [2021] Bus. L.R. 332. Specifically, at [127]–[128] Lord Hamblen JSC stated that the correct approach, when asking whether the position might change from how it appears at the summary judgment stage, was not to ask whether there was a clear prospect that new material will become available before the trial which is likely to give the claimants a real prospect of success, but to ask whether there are reasonable grounds for believing that disclosure may materially add to or alter the evidence relevant to whether the claim has a real prospect of success.

It is not appropriate to strike out a claim in an area of developing jurisprudence, since, in such areas, decisions as to novel points of law should be based on actual findings of fact, Husson v Secretary of State for the Home Department [2020] EWCA Civ 329, per Simler LJ at [63]; Poole Borough Council v GN [2019] UKSC 25 per Lord Reed at [89-90].

Where a statement of case is found to be defective, the court should consider whether the defect can be cured by amendment. If so, the court should refrain from striking out without first giving the party concerned an opportunity to amend, SooKim v Young [2011] EWHC 1781 (QB); Northumbria Healthcare NHS Foundation Trust v Lendlease Construction (Europe) Ltd [2022] EWHC 1266 (TCC) per O'Farrell J [para.14; paras.53-58].

In King v Stiefel [2021] EWHC 1045 (Comm), Cockerill J stated that the Court is not barred from evaluating the evidence, albeit that the Court will be cautious in doing so:

“21.

The authorities therefore make clear that in the context of summary judgment the court is by no means barred from evaluating the evidence and concluding that on the evidence there is no real (as opposed to fanciful) prospect of success. It will of course be cautious in doing so. It will bear in mind the clarity of the evidence available and the potential for other evidence to be available at trial which is likely to bear on the issues. It will avoid conducting a mini-trial. But there will be cases where the Court will be entitled to draw a line and say that -even bearing well in mind all of those points - it would be contrary to principle for a case to proceed to trial.

22.

So, when faced with a summary judgment application it is not enough to say, with Mr Micawber, that something may turn up. Mr Lightman QC referred me to the recent cases of Riley v Sivier [2021] EWHC 79 (QB), at [14] , and Hunt v Times Newspapers [2012] EWHC 110 (QB), at [28]-[29] . Both of those echo long-established authority both pre and post CPR such as the well-known dictum of Megarry V-C in Lady Anne Tennant v. Associated Newspapers Group Ltd [1979] FSR 298 . These are encapsulated in the Court of Appeal's decision in ICI which is itself summarised in Easyair .”

At paras. 23 and following, Cockerill J went on to consider summary judgment in respect of claims in fraud as follows:

“23.

I should deal specifically with the law on summary judgment and claims in fraud, not least because it was at least implicit in the submissions for the Kings that such serious allegations were not suitable for summary determination.

24.

The reality is that while the court will be very cautious about granting summary judgment in fraud cases, it will do so in suitable circumstances, and there are numerous cases of the court doing so. This is particularly the case where there is a point of law; but summary judgment may be granted in a fraud case even on the facts. I have done so in a case heard very close in time to this application: Foglia v The Family Officer and others [2021] EWHC 650 (Comm) , where at [14] I gave some examples of other cases in which this course was also followed. In other cases, such as AAI Consulting Ltd v FCA [2016] EWHC 2812 (Comm) and Cunningham v Ellis [2018] EWHC 3188 (Comm) fraud claims were struck out on the basis that the particulars of claim were inadequate in themselves to support the claims being made.

25.

In terms of the approach to summary judgment in fraud claims Primekings commended to my attention the judgment of Stuart Smith J in Portland Stone Firms Ltd v Barclays Bank plc [2018] EWHC 2341 (QB) at [25] – [29] , in the context of the approach to be taken when faced with an application to strike out a claim in fraud. In summary:

i)

The Court should bear in mind that cogent evidence is required to justify a finding of fraud or other discreditable conduct, reflecting the court's conventional perception that it is generally not likely that people will engage in such conduct.

ii)

Pleadings of fraud should be subjected to close scrutiny and it is not possible to infer dishonesty from facts that are equally consistent with honesty.

iii)

However, in view of the common feature of fraud claims that the Defendant will, if the underlying allegation is true, have tried to shroud his conduct in secrecy, the Court should adopt a "generous" approach to pleadings.”

These features have led to an exacting standard applied to a case of fraud or dishonesty even at the pleading stage. In Hersi v Lord Chancellor [2018] EWHC 946 (QB) at paras. 135-136, it was stated as follows:

“135.

Supperstone J said in Baxendale-Walker, supra, para 70, that where the court is being asked by the Claimant to allow allegations of serious wrongdoing against reputable professionals to go to trial, the Claimant has the burden at trial of persuading the court to the standard of proof required to prove the most serious of allegations (see Secretaryof State for the Home Department v Rehman [2003] 1 AC 153 at para 55). That is why an allegation of fraud must be supported by cogent evidence and why the court usually begins with the assumption that an innocent explanation will be preferred (ibid. at paras 54-55; and Jafari-Fini v Skillglass Ltd [2007] EWCA Civ 261 at para 49).

136.

I agree with the Lord Chancellor’s submission that the Appellants have done little more than make bare assertions of dishonesty by the LAA’s employees. They have provided no particulars of any malice or dishonesty, and no explanation whatsoever as to why the conduct complained of is only consistent with dishonesty and not with any innocent explanation. This is not conduct which intrinsically suggests fraud or deceit in any way. As such, they have failed to plead properly essential particulars of his claim” (emphasis added).

There is one potential distinction between the position in relation to an application for summary judgment under CPR r. 24.2 and an application to strike out under CPR r. 3.4(2)(a) . As just noted, under CPR 24 evidence is admissible to show that the pleaded allegations are fanciful – albeit that the court will be very cautious about rejecting a claimant's factual case at the summary judgment stage.

When considering an application to strike out however the facts pleaded must be assumed to be true and evidence regarding the claims advanced in the statement of case is inadmissible. This is noted in Terry Allsop v Banner Jones Limited [2021] EWCA Civ 7 by Marcus Smith J (giving the judgment of the Court of Appeal) at [7], citing the judgment of Arnold LJ in Libyan Investment Authority v King [2020] EWCA Civ 1690, at [96]:

"In contrast with the applications under CPR 3.4(2)(b) , the applications under CPR 3.4(2)(a) and CPR 24.2 are concerned with the merits of the claim, specifically whether the claim meets the (low) threshold of what I shall call "reasonable arguability". Although it can be said that there is no material difference between the test applied by these two provisions, there is an important distinction between CPR 3.4(2)(a) and CPR 24.2 , in that an application under CPR 24.2 can be supported by evidence, whereas an application under CPR 3.4(2)(a) should not involve evidence regarding the claims advanced in the statement of case."

In JSC Bank of Moscow v Kekhman [2015] EWHC 3073 (Comm) at [15]-[22] referring to Three Rivers at [186] per Lord Millett, Flaux J (as he then was) said:

“17.

The fullest statement of the relevant principles upon which Mr Swainston QC relied is that of Lord Millett from [184] onwards:

“184.

It is well established that fraud or dishonesty (and the same must go for the present tort) must be distinctly alleged and as distinctly proved; that it must be sufficiently particularised; and that it is not sufficiently particularised if the facts pleaded are consistent with innocence: see Kerr on Fraud and Mistake 7th ed (1952), p 644; Davy v Garrett (1878) 7 Ch D 473 , 489; Bullivant v Attorney Genera; for Victoria [1901] AC 196 ; Armitage v Nurse [1998] Ch 241 , 256. This means that a plaintiff who alleges dishonesty must plead the facts, matters and circumstances relied on to show that the defendant was dishonest and not merely negligent, and that facts, matters and circumstances which are consistent with negligence do not do so.

185.

It is important to appreciate that there are two principles in play. The first is a matter of pleading. The function of pleadings is to give the party opposite sufficient notice of the case which is being made against him. If the pleader means “dishonestly” or “fraudulently”, it may not be enough to say “wilfully” or “recklessly”. Such language is equivocal. A similar requirement applies, in my opinion, in a case like the present, but the requirement is satisfied by the present pleadings. It is perfectly clear that the depositors are alleging an intentional tort.

186.

The second principle, which is quite distinct, is that an allegation of fraud or dishonesty must be sufficiently particularised, and that particulars of facts which are consistent with honesty are not sufficient. This is only partly a matter of pleading. It is also a matter of substance. As I have said, the defendant is entitled to know the case he has to meet. But since dishonesty is usually a matter of inference from primary facts, this involves knowing not only that he is alleged to have acted dishonestly, but also the primary facts which will be relied upon at trial to justify the inference. At trial the court will not normally allow proof of primary facts which have not been pleaded and will not do so in a case of fraud. It is not open to the court to infer dishonesty from facts which have not been pleaded, or from facts which have been pleaded but are consistent with honesty. There must be some fact which tilts the balance and justifies an inference of dishonesty, and this fact must be both pleaded and proved.”

18.

His Lordship then analysed the judgment of Thesiger LJ in Davy v Garrett and the judgments of the Court of Appeal in Armitage v Nurse and continued at [189]:

“189.

It is not, therefore, correct to say that if there is no specific allegation of dishonesty it is not open to the court to make a finding of dishonesty if the facts pleaded are consistent with honesty. If the particulars of dishonesty are insufficient, the defect cannot be cured by an unequivocal allegation of dishonesty. Such an allegation is effectively an unparticularised allegation of fraud. If the observations of Buxton LJ in Taylor v Midland Bank Trust Co Ltd (unreported) 21 July 1999 are to the contrary, I am unable to accept them.”

19.

In his reply submissions, Mr Swainston QC put the test which he submitted was to be derived from Lord Millett's speech in these terms:

“…the primary facts must necessarily lead to the inference that Mr Kekhman is guilty of fraud because otherwise and ex hypothesi the primary facts can be consistent with innocence…You don't get to arguability until you've established that there is a proper fraud plea. You don't establish that there is a proper fraud plea before particulars are pleaded which are only consistent with Mr Kekhman being dishonest and which cannot be consistent with Mr Kekhman being honest.”

20.

I agree with Mr Gourgey QC that this overstates what is required for a valid plea of fraud. The claimant does not have to plead primary facts which are only consistent with dishonesty. The correct test is whether or not, on the basis of the primary facts pleaded, an inference of dishonesty is more likely than one of innocence or negligence. As Lord Millett put it, there must be some fact “which tilts the balance and justifies an inference of dishonesty”. At the interlocutory stage, when the court is considering whether the plea of fraud is a proper one or whether to strike it out, the court is not concerned with whether the evidence at trial will or will not establish fraud but only with whether facts are pleaded which would justify the plea of fraud. If the plea is justified, then the case must go forward to trial and assessment of whether the evidence justifies the inference is a matter for the trial judge. This is made absolutely clear in the passage from Lord Hope's speech at [55]-[56] which I quoted above.”

For the purpose of completeness, I shall also quote from Lord Hope’s speech in Three Rivers at [55-56] as follows. At [55]-[56], Lord Hope of Craighead stated the principles as follows:

“55.

As the Earl of Halsbury LC said in Bullivant v Attorney General for Victoria [1901] AC 196 , 202, where it is intended that there be an allegation that a fraud has been committed, you must allege it and you must prove it. We are concerned at this stage with what must be alleged. A party is not entitled to a finding of fraud if the pleader does not allege fraud directly and the facts on which he relies are equivocal. So too with dishonesty. If there is no specific allegation of dishonesty, it is not open to the court to make a finding to that effect if the facts pleaded are consistent with conduct which is not dishonest such as negligence. As Millett LJ said in Armitage v Nurse [1998] Ch 241 , 256G, it is not necessary to use the word “fraud” or “dishonesty” if the facts which make the conduct fraudulent are pleaded. But this will not do if language used is equivocal: Belmont Finance Corporation Ltd v Williams Furniture Ltd [1979] Ch 250 , 268 per Buckley LJ. In that case it was unclear from the pleadings whether dishonesty was being alleged. As the facts referred to might have inferred dishonesty but were consistent with innocence, it was not to be presumed that the defendant had been dishonest. Of course, the allegation of fraud, dishonesty or bad faith must be supported by particulars. The other party is entitled to notice of the particulars on which the allegation is based. If they are not capable of supporting the allegation, the allegation itself may be struck out. But it is not a proper ground for striking out the allegation that the particulars may be found, after trial, to amount not to fraud, dishonesty or bad faith but to negligence.

56.

In this case it is clear beyond a peradventure that misfeasance in public office is being alleged. There is an unequivocal plea that the Bank was acting throughout in bad faith. The Bank says that the facts relied on are, at best for the claimants, equally consistent with negligence. But the substance of that argument is directed not to the pleadings as such, which leave no doubt as to the case that is being alleged, and the basis for it in the particulars, but to the state of the evidence. The question whether the evidence points to negligence rather than to misfeasance in public office is a matter which must be judged in this case not on the pleadings but on the evidence. This is a matter for decision by the judge at trial.”

It is now necessary to consider the law in respect of the torts of malicious prosecution and misfeasance in public office. The Court has been assisted by the respective detailed submissions from the parties on the ingredients of the torts. It is necessary to set out the law before seeking to apply the law to the facts of the case.

The elements of the tort of malicious prosecution are that the Claimants (a) were prosecuted by the Defendant (b) that the prosecution was determined in their favour, (c) the prosecution was without reasonable and probable cause, and (d) the prosecution was malicious: see Lord Keith of Kinkel in Martin v Watson [1996] 1 AC 74 at 80C (citing the then edition of Clerk & Lindsell on Torts).

There is no difficulty in this case in establishing that the individual claimants were acquitted. The issue as to whether HMRC was the prosecutor has been referred to above. The issues to consider are whether the prosecution was without reasonable and probable cause and whether the prosecution was malicious.

The case of the Claimants is that the decision to prosecute was made by HMRC and not by the CPS. In the alternative, if the decision was made by the CPS, they say that the CPS was not able to exercise an independent judgment to prosecute C1 and C2 since the decision whether to prosecute was based wholly or materially upon the evidence provided to the CPS by HMRC. They say that the decision of the CPS to prosecute the claimants was overborne and/or perverted and/or manipulated by HMRC who deliberately did not provide material evidence or documentation to the CPS: see RRAmPoC para. 97.

It is alleged by the Claimants that HMRC did so by deliberately not providing material evidence/documentation to the CPS, which directly addressed and undermined any credible case against C1 and/or C2. Specifically, it was about whether C1 and/or C2 possessed the required mens rea which were essential elements of the criminal offences with which C1 and C2 were charged and subsequently indicted. These were the various counts of fraudulent evasion of tax (count 1-3: cheating the public revenue contrary to common law in relation to the fraudulent evasion of VAT due to LFB / LFCB, employees' PAYE, National Insurance and student loan contributions; and counts 4 and 5: the knowing and fraudulent evasion of income tax by C1 and/or C2 contrary to s106A TMA 1970). It is not alleged that this was the case of malicious prosecution on the part of the CPS either by itself or with HMRC.

HMRC's case is that the CPS and not HMRC was the prosecutor and/or the will of the CPS was not overborne or perverted or manipulated as alleged or at all. The CPS took the prosecution to trial and was aware of all the material relevant to the prosecution. With this knowledge, the CPS has confirmed that it was the prosecutor and its decision to charge and maintain the prosecution was not perverted or overborne by any action of HMRC.

In the ordinary course of events the CPS, in discharging its statutory functions under s.3 of the Prosecution of Offences Act 1985, is the prosecutor. Section 3(2) provides that it is the duty of the DPP: (i) “where it appears to him appropriate to do so, to institute and have the conduct of any criminal proceedings…relating to a criminal investigation by” [HMRC] (s.3(2)(bb)), and (ii) “give, to such extent as he considers appropriate, and to such persons as he considers appropriate, advice on matters relating to: - (i) a criminal investigation by [HMRC]; or (ii) criminal proceedings …relating to a criminal investigation by[HMRC (s.3(2)(ee)).

In exceptional cases, an individual or individuals other than the CPS may be treated as the prosecutor where Brooke LJ in Mahon v Rahn [2000] EWCA Civ 185 at [269] stated that:

In H v B [2009] EWCA Civ 1092, in deciding that an alleged victim of rape was not the prosecutor, Sedley LJ stated at ([47] emphasis added): “Even if she had gone directly to the authorities, the professional responsibility for the case assumed first by the police and then by the CPS would prima facie have made the latter for all legal purposes the prosecutor. It would have been necessary to establish that she had deliberately manipulated them into taking a course which they wouldnot otherwise had taken if, pursuant to Martin v Watson, she was to be regarded in law as the prosecutor.”

In agreeing with Sedley LJ, Moore-Bick LJ stated that “this was not a case in which the prosecutingauthorities were deprived of the ability to exercise independent judgment” […], and Wall LJ said [59]:
“In my judgment, provided the CPS makes an independent decision to prosecute, and its process is not overborne or perverted in some way by the complainant, the complainant is protected.”

In addition, Moore-Bick LJ emphasized that: “…the Court should be very cautious before reaching the conclusion that the authorities were unable (or even, as Mr Warby emphasized, virtually unable) to exercise independent judgment.”

In Rees and others v. Commissioner of Police for the Metropolis [2018] EWCA 1587, a case concerning the deliberate provision of tainted evidence to the CPS by the Senior Investigating Officer, McCombe LJ stated at ([59] emphasis added):

“This is not to say, as Mr Johnson submitted it was, that the mere provision of false information to a prosecuting authority leading to a prosecution makes the provider a prosecutor. I accept that the test is, as he argued, “drawn more restrictively”. However, the cases are fact specific: see in this respect the very different results reached in not entirely dissimilar cases in Martin v Watson and in AH(unt) v AB. This present case was one in which DCS Cook took it upon himself to present to the independent prosecutor for a prosecution decision a case which he knew included an important feature procured by his own criminality. There is nothing morelikely to have “overborne or perverted” the decision to prosecute. The CPS were deprived of theirability to exercise independent judgment.” (emphasis added)

In Rees the parties accepted that there could in principle be more than one prosecutor in an individual case [40]. However, in Rees the Court of Appeal held that the officer in the case was the prosecutor (his malicious acts having “overborne and perverted” the CPS decision to prosecute [58]).

In a case where the claim was struck out in Hughes v Revenue and Customs Commissioners [2024] EWHC 1765 (KB), the claim had been predicated amongst other matters on an allegation that, due to non-disclosure at the charging stage, HMRC had become the prosecutor, Mr Justice Jay emphasised that a focused approach should be taken in identifying the prosecutor (emphasis added):

“87.

In Commissioner of Police for the Metropolis v Copeland [2014] EWCA Civ 1014, the Court of Appeal, Moses LJ giving the sole reasoned judgment, held that the "simple quest" is to identify the person who is responsible for the prosecution (para 27). In my opinion, that formulation does not permit the kind of wide-ranging and unprincipled inquiry urged on me by Mr Bowers. What Moses LJ said was in the context of applying Lord Keith's reasoning and conclusion. Further, it is implicit in Moses LJ's judgment that there could be only one prosecutor.

…

90.

In the instant case, there is no evidence of any deliberate manipulation of the CPS by HMRC, or that the former's decision to prosecute was overborne and perverted by the latter. As I have already said, in early 2015 the CPS was fully aware of the state of the investigation vis-à-vis HSBC and the progress, or lack of it, in relation to disclosure. In any event, it is extremely difficult to see how omissions in these respects could possibly amount to deliberate manipulation…”

It is also useful to refer to Jay J at para. 107 who said that a premature decision to charge did not have the hallmarks of an improper motive. Further, not being to satisfy the Full Code test did not mean that there could not be a belief that there was a case that was fit to be tried, still less that there was a case to answer in malice. Jay J said as follows:

“Given my conclusion that the Claimant has no real prospect of establishing that the prosecutor did not have reasonable and probable cause for beginning and then maintaining these proceedings, the issue of malice does not arise. Even so, I consider that I should comment on just two matters. First, there is force in the Claimant’s case that a charging decision was made prematurely in December 2015 because the CPS believed that the undertaking given in the related judicial review proceedings applied to them. However, although relevant to the fulfilment or otherwise of the Full Code Test, this factor is not relevant to the issue of malice. A rushed decision does not have the hallmarks of a decision taken with an improper motive. Secondly, although there is some indication that the reluctance to pursue lines of inquiry against HSBC was generated by a perception in the CPS, at least at one stage, that to do so would be a “political hot potato”, I do not believe that the Claimant has a real prospect of showing an improper motive. Not merely did the reasoning and motives of the CPS (and, indeed, HMRC) fluctuate on this issue, proof of an improper motive would require showing that relevant officers believed that an investigation of HSBC would be likely to help the Claimant and for that reason was not pursued. That is not the state of the evidence.”

In further amplification that the “fit to be tried test” is not the same as the Full Code test, Jay J at para. 96 said the following with reference to Lord Devlin in Glinski:

“The …fit case to be tried” is capable of being misunderstood. Lord Devlin was not of course referring to the Full Code Test which did not exist in the early 1960s. The test was, and is, sufficiency of evidence; and “fit case to be tried” is another way of making the same point.”

It follows that a knowing failure to comply with the Full Code Test does not prove malice in pursuing the prosecution. The only caveat to this is in respect of the tort of misfeasance in public office in that “the claim in the tort of misfeasance in public office cannot succeed forthese present purposes unless, in relation to the case against the person underconsideration (whether it be Mr Lewis, Mr Millington or whomever), that individualknew that the criminal prosecution failed the Full Code Test when it began and thatthere was a real risk that it never would or could meet that test, and was at the very leastrecklessly indifferent as to that state of affairs” per Jay J at para. 120.

The Claimants say in the RRAmPoC para. 97 that various documents were withheld by HMRC from the CPS which were relevant to the mens rea of the criminal offences including cheating the public revenue and fraudulent evasion of income tax. They comprised the following documents, namely:

The view of the CPS is relevant, though not conclusive. CPS confirmed both in the course of the prosecution and in this litigation that they and not HMRC were the prosecutor. In answer to an application for costs in the prosecution, CPS said that “…the decision to prosecute was made by an independent body - the CPS, and not HMRC.” In this litigation, by a letter dated 24 February 2023, the CPS stated that it had “independently applied” the charging test. The CPS had “conducted the prosecution and disclosure process, and throughout the process remained of the view that there was sufficient evidence to provide a realistic prospect of conviction and the public interest stage of the code was satisfied.” It said also that “having completed the disclosure process during the prosecution, the CPS is satisfied that it was able to properly exercise its discretion...”

The CPS, with the assistance of Counsel throughout the prosecution process, remained of the view that the Full Code Test was met throughout the prosecution and the two trials both before and after disclosure of the material listed in paragraph 97 of the RRAmPoC. The Claimants submitted that there must be positive evidence that the CPS would have prosecuted if they had such documents as were missing at the charge stage: see the Claimants’ skeleton argument at para. 53. This is answered by the willingness of the CPS to continue the prosecution even when all of these documents were available to them.

At least some of the emails listed above were in form or in substance before the CPS at the time of the charging decision. Documents (d) and (e) had been listed in exhibits to witness statements provided to the CPS. Further, prior to the charging decision, a document of Ms Laker to C1 dated 20 October 2014 was provided to the CPS which contained comments by Ms Laker to C1 containing a comment (“I am sure with us all working together we will get there”). There was therefore evidence suggesting that HMRC was working with C1 to seek to obtain payment of the outstanding taxes. As such, the CPS decision was taken in the knowledge of such information.

In any event, to concentrate on documents unavailable at the charging stage, as if that was unusual or irregular, is to ignore the nature of the process. As summarised by Lambert J in Rudall v Crown Prosecution Service [2018] EWHC 1587 QB, it suffices if there is prima facie evidence of each element of the offence which it is intended to charge the defendant. It is not expected that a prosecutor will have completed the disclosure exercise at this preliminary stage.

Even on the Claimants’ case, the material had been disclosed to C1 and C2 by July 2017. On any view, the prosecution thereafter was conducted in the full knowledge of the material.

It follows from this that this material does not have the impact suggested by the Claimants. There is no reason to conclude that these documents made or may have made the difference between the decision to prosecute and a decision not to prosecute. There is no objective material to support the contention that this material would have demonstrated to the CPS that “there was no credible evidence of knowing or fraudulent evasion was misconceived.”

It is also to be borne in mind that the CPS checked its disclosure, as the Judge in the Crown Court was satisfied at the start of the trial, by prosecuting counsel personally reviewing all of the material. Despite the matter having been reviewed including the documents said to have been missing at the charging stage, the CPS continued with the prosecution. In the case of C1, the prosecution went beyond half time, and the acquittal was only following a retirement of six hours and the conviction was only by a majority of the jury following a majority direction.

Further, as was pointed out on behalf of the CPS in the course of a disclosure application before Master Gidden in this action, which was heard on 2 October 2023, there was nothing in the material passed to it or in the actions that it took that impacted upon it acting as an independent prosecutor.

It is theoretically possible that a third party could be liable for dishonestly aiding and abetting a malicious prosecution by a prosecutor. In that event, the prosecutor and the third party might be liable jointly for the tort. No such case is alleged here because it has not been suggested that the CPS undertook the prosecution maliciously, such as to make the alleged liability of HMRC that of a person aiding and abetting such a prosecutor.

In any event, this case is very far removed from the cases where exceptionally, the Court has found that someone other than CPS is to be treated as the prosecutor. As noted above, even where deliberately false information is provided by a third party to a prosecutor, that by itself will not necessarily mean that the third person is acting as a prosecutor. It is a high bar to make a third party a prosecutor. In the instant case, there is no real prospect that at a trial of this action that that high bar could be surmounted.

Reasonable and probable cause has a subjective element and an objective element. As Lord Devlin explained in Glinski at p.768, “the question is a double one: did the prosecutor actually believe and did he reasonably believe that he had cause for prosecution?”

There is a useful summary of the legal principles of when there is a reasonable and probable cause in the judgment of Lambert J in Rudall v Crown Prosecution Service [2018] EWHC 1587 at [76] as follows:

“a.

the question of whether there was an absence of reasonable and probable cause has two strands; the objective and the subjective: it involves considering whether the prosecutor had an honest belief in the charge and whether, viewed objectively, there was a reasonable basis for that belief.

b.

An absence of honest belief in the charge by the prosecutor is conclusive of the absence of reasonable and probable cause, even if a reasonable man could have believed in the charge on the basis of the facts known to the prosecutor. See: Haddrick v Heslop [1848]12 QB 268 at 274 -5 "It would be quite outrageous if, where a party is proved to believe that a charge is unfounded, it were to be held that he could have reasonable and probable cause" per Lord Denman CJ.

c.

It is not necessary for the prosecutor to believe in the guilt of the person accused, he has only to be satisfied that there is a proper case to lay before the court: see Thacker v Crown Prosecution Service [1997] EWCA Civ 3000 where Kennedy LJ observed "Guilt or innocence is for the Tribunal and not for him" and Coudrat v Commissioners of Her Majesty's Revenue and Customs [2005] EWCA Civ 616 where Smith LJ stated "an officer is entitled to lay a charge if he is satisfied that there is a case fit to be tried. He does not have to believe in the probability of conviction."

d.

The Court arrives at the answer to the question of whether there was reasonable cause by examining the facts as they were known to, or appeared to, the prosecutor at the time of charge, "the facts upon which the prosecutor acted should be ascertained.. when the judge knows the facts operating on the prosecutor's mind, he must then decide whether they afford reasonable and probable cause for prosecuting the accused": see Herniman v Smith [1938] AC 505 at 316 per Lord Atkin.

e.

The absence or otherwise of reasonable and probable cause involves an analysis of the sufficiency of the evidence. As Sharp J expressed the position in Besnik Qema v News Group Newspapers Limited [2012] EWHC 1146 (QB) "whether one considers the objective or subjective element of reasonable and probable cause, the focus is always on the sufficiency of evidence to support the prosecution of the offence in question, and the defendant's knowledge of and honest belief in that."

f.

In Coudrat, Smith LJ framed the assessment of evidential sufficiency as follows: "when considering whether to charge a suspect, consideration must be given to the elements of the offence with which it is intended to charge him. There must be prima facie admissible evidence of each element of the offence. Although anything plainly inadmissible should be left out of account, we do not think that, at the stage of charging it is necessary or appropriate to consider the possibility that evidence might be excluded at the trial after full legal argument or in the exercise of the judge's discretion. Nor is it necessary to test the full strength of the defence. An officer cannot be expected to investigate the truth of every assertion made by the suspect in interview." (my emphasis).

g.

Absence of reasonable and probable cause must be established, like each of the elements of malicious prosecution, separately. Want of reasonable and probable cause can never be inferred from malice:

i.

"From the most express malice, the want of probable cause cannot be implied. A man from malicious motives may take up a prosecution for real guilt, or he may, from circumstances which he really believes, proceed upon apparent guilt and in neither case is he liable to this kind of action": Johnstone v Sutton (1786) 1 Term Reports 510, 545

ii.

"The importance of observing this rule cannot be exaggerated… It behoves the judge to be doubly careful not to leave the question of honest belief to the jury unless there is affirmative evidence of the want of it" Glinski v McIver [1962] AC 726 per Viscount Simonds.

h.

The preparedness of counsel to act for the crown is relevant to (and potentially determinative of) the question of reasonable and probable cause. However, each case must be considered on its own facts: see Abbott v Refuge Assurance Co [1962] 1 QB 432 "the variations in the circumstances of cases are almost infinite. Clearly the view of counsel, who was not experienced in work of this kind, would not be of any great value to persons seeking his advice; neither would that advice be of any great value however experienced the counsel, if the whole of the facts were not put before him."

The last of these points at (h) above can be amplified by reference to the case of Glinski. A person laying a charge is entitled to act on the advice of counsel to the effect that there is reasonable and probable cause to prosecute, see e.g. Glinski, per Viscount Simonds at 744-745 (and also Lord Denning at 759 and Lord Reid (who agreed with Viscount Simonds) at 753):

“Can he rely on the legal advice given to him? He believes the facts and is advised that they constitute an offence. He prosecutes accordingly, but the accused is acquitted either because the advice is wrong or because the information proves to be wrong or incomplete, or because some unexpected defence is revealed. ... It appears to me that, just as the prosecutor is justified in acting on information about facts given him by reliable witnesses, so he may accept advice upon the law given him by a competent lawyer. That is the course that a reasonable man would take and, if so, the so-called objective test is satisfied. Applying this principle to the case of a police officer who lays an information and prefers a charge, and at every step acts upon competent advice, particularly perhaps if it is the advice of the legal department of Scotland Yard, I should find it difficult to say that that officer acted without reasonable and probable cause. I assume throughout that he has put all the relevant facts known to him before his advisers.”

An issue arose in Rudall as to whether the test in Coudrat in the last sentence of sub-para. c of the quotation, namely that it was sufficient for the officer to lay a charge if there was a case which was fit to be tried, such that it was not necessary for the officer to believe that the defendant was probably guilty. In her analysis at para. 80, Lambert J stated that she did not accept that the evidential Code for Prosecutors was the correct test for the purpose of examining whether there is reasonable and probable cause. She said: “The exercise undertaken by the prosecutor in that context is to identify whether there is a realistic prospect of conviction which is a different, and higher, threshold than that which I must apply when considering whether there is a case fit to be tried or a proper case to lay before the court. The intensiveness of the scrutiny to be applied to the evidence is correspondingly different and greater than that relevant to the consideration of reasonable and probable cause.”

This view of the law has been confirmed by the clarification on this point by the Privy Council, obiter but intended expressly to clarify the law, in the Privy Council case of Stuart v A-G for Trinidad and Tobago [2022] UKPC 53 at [26] per Lord Burrows with whose judgment the other Justices agreed:

“26.

Nevertheless, and although nothing turns on it in this case, there is one point on the law which it is helpful to clarify. This concerns the question as to what the police officer’s honest (and reasonably held) belief must be about in the context of deciding whether there is a lack of reasonable and probable cause. It has commonly been stated that the honest belief must be as to the accused’s guilt in respect of the offence charged: see Hicks v Faulkner (1878) 8 QBD 167, 171, per Hawkins J, which was approved by the House of Lords in Herniman v Smith [1938] AC 305. But in the Board’s view, the principled and correct approach was articulated by Lord Denning in the House of Lords in Glinski v McIver [1962] AC 726. He said at pp 758-759:

“[T]he word 'guilty' is apt to be misleading. It suggests that in order to have reasonable and probable cause, a man who brings a prosecution, be he a police officer or a private individual, must, at his peril, believe in the guilt of the accused. That he must be sure of it, as a jury must, before they convict. Whereas in truth he has only to be satisfied that there is a proper case to lay before the court. … After all, he cannot judge whether the witnesses are telling the truth. He cannot know what defences the accused may set up. Guilt or innocence is for the tribunal and not for him ... So also with a police officer. He is concerned to bring to trial every man who should be put on trial, but he is not concerned to convict him. ...No, the truth is that a police officer is only concerned to see that there is a case proper to be laid before the court." (Apart from second sentence, emphasis added)

It therefore follows that insofar as a higher standard is expected of Crown Prosecutors in the current guidance of whether or not to prosecute, that does not provide a definition of whether or not it is proper for a case to be laid before the Court. This is different from the higher realistic prospect of success test under the Code for Crown Prosecutors which involves determination of whether a fair-minded tribunal properly applying the law would be more likely than not to convict, and if it is in the public interest to proceed. The Court will therefore accept the law as articulated to this effect by Lambert J in Rudall v CPS at [76] and by Lord Burrows in Stuart at [26].

A prosecutor may not pick and choose so as to rely only on portions of the evidence that support prosecution. However, the prosecutor is not bound to assume that a theory put forward by the defence is sound, but in certain cases “on the explanation given... the reasonable and probable cause cease[s]”: Musgrove v Newell (1836) 150 ER 567 at p.568. Similarly, in Herniman v Smith [1938] AC 305, Lord Atkin said at p.319: “It is not required of any prosecutor that he must have tested every possible relevant fact before he takes action. His duty is not to ascertain whether there is a defence, but whether there is reasonable and probable cause for a prosecution”. Herniman was approved by Viscount Simonds in Glinksi at p.745.

More recently, in Hughes, Jay J cited Glinski, Coudrat and Rudall and held (judge’s emphasis): “The authorities which I have cited demonstrate that the CPS’s failure to undertake a line of inquiry which might just have been relevant to the Claimant’s defence does not negative the existence of reasonable and probable cause” [105].

Similarly, Jay J held that the fact that almost no work had been done on disclosure prior to charge (i.e. there were no disclosure schedules, and a review of unused digital material had not even been commenced - see [28]) did not have a bearing on reasonable and probable cause: “even taking the matter at its very highest I do not think that full disclosure was capable of more than indicating possible lines of defence for the Claimant. That is not relevant to the existence or otherwise of reasonable and probable cause” ([106]).

The Court of Appeal in the case of Hughes v HMRC [2025] EWCA Civ 113 provided guidance in respect of the application of the reasonable and probable cause test at the stage of the charging decision, which is only the first step in a multistage process. Although the decision of the Court of Appeal was to refuse permission to appeal and is therefore not generally reported, this decision in Hughes appears on Bailii and it contains a clear statement of general principle of broader application. At para. 18, the Court (William Davies and Jeremy Baker LJJ) said:

“We reject the proposition that the requirement of "a fit case to be tried" means that, were the case not ready to be placed before a jury the day after the charges were laid, it would not meet that test. This is not what evidential sufficiency to support the charges means. The argument betrays a profound misunderstanding of the criminal justice system. The laying of a criminal charge is the first step in a multi-stage process. For any number of reasons the prosecution case as put at the outset will evolve. It may be that, whether in response to matters raised by the defence or otherwise, the nature and focus of the prosecution case will change completely. That does not mean that the original decision to prosecute lacked reasonable and proper cause.”

If it is established that there is relevant material that was not placed before the prosecutor the Court will assess what difference it would have made to the charging decision. In Alford v Chief Constable of Cambridgeshire Police [2009] EWCA Civ 100 the Court of Appeal agreed with the first instance judge’s view that a report, which clearly should have been placed before the CPS and the prosecutor, would have weakened the strength of the evidence but the “advice and the decision would probably have been the same” [46].

A malicious prosecution claim may be based on a wrongful decision to initiate criminal proceedings and/or the wrongful continuation of criminal proceedings. It was said at first instance in Tims v John Lewis & Co Ltd [1951] 2 KB 459, at p.472, that a prosecutor who continues with the prosecution after “something comes to light which shows the prosecution to be in fact groundless” will “possibly have no reasonable or probable cause for continuing the prosecution and at any rate will be guilty of malice” if he does not inform the Court of the facts that he has since discovered. The decision was reversed on another point by the House of Lords, but not on this point: see [1952] A.C. 676 (HL).

Having started the analysis with the conclusion that HMRC was not a prosecutor, there is an artificiality in considering the next stage of reasonable and probable cause.The case that there was no reasonable ground on the part of HMRC for the prosecution is wholly or in part based on a case that HMRC deliberately withheld the above-mentioned emails so as to conceal a fundamental part of the defence of C1 and C2. There are several fallacies in this case. The suggestion that every aspect of the facts including full disclosure should have taken place at the charging stage is incorrect and ignores the law as summarised by Lambert J in Rudell as set out above. The fact that HMRC may not have produced all of its disclosure to the CPS by the time of the decision to charge does not indicate that documents had been withheld deliberately or by accident. This was a case there was prima facie evidence of each element of the offences in respect of which it was intended to charge C1 and C2.

The Claimants submitted that there must be positive evidence that the CPS would have prosecuted if they had such documents as were missing at the charge stage: see the Claimants’ skeleton argument at [53]. This overstates the burden on the prosecutor, and fails to give adequate weight to the incidence of the burden of proof in a malicious prosecution case.

In any event, even if the submission were a good one, it is answered in this case by the willingness of the CPS to continue the prosecution even when all of these documents were available to them. Even on the Claimants’ case, the material had been disclosed to C1 and C2 by January 2017. It follows from this that there is no reason to conclude that these documents made or may have made the difference between the decision to prosecute and a decision not to prosecute. There is no objective material to support the contention that this material would have demonstrated to the CPS that “there was no credible evidence of knowing or fraudulent evasion.”

As the Judge in the Crown Court was satisfied at the start of the trial, the CPS checked its disclosure by prosecuting counsel personally reviewing all of the material. Despite the matter having been reviewed including the documents said to have been missing at the charging stage, the CPS continued with the prosecution.

A point in respect of reasonable and probable cause is whether the material has satisfied independent and reasonably experienced counsel. That has occurred in this case. The prosecutions proceeded to trial on two occasions and involved two different highly experienced counsel instructed by the CPS.

In responding to the costs application in the criminal proceedings, the prosecution confirmed that “The case was reviewed by a reviewing lawyer, passed onto a grade 4 counsel of a number of years experience to prosecute the initial trial and then grade 3 counsel to prosecute... this full some way short of an exceptional case, one in which it can be said that “no reasonable CPS reviewing lawyer” would have made the same decision to prosecute and/or continue to prosecute”.

The CPS, with the assistance of Counsel throughout the prosecution process, remained of the view that the Full Code Test was met throughout the prosecution and the two trials both before and after disclosure of the material listed in paragraph 97 of the RRAmPoC. As noted above, it was not necessary to prove that the Full Code Test was met at all because this went beyond the reasonable and probable cause test. However, the belief that it had been met is evidence to the effect that the lower reasonable and probable cause test had been met.

The Claimants were not prosecuted for the failure of LFCP to pay beer excise duty. They were prosecuted for the failure to pay other taxes, namely PAYE, National Insurance, VAT, Student Loans Company deductions and income tax liabilities relating to C1 and C2. The amount was considerable comprising about £727,203 over a period of three years from December 2011 to December 2014. During the period of 2013 and 2014, there were ongoing confiscation proceedings. Neither C1 nor C2 provided any meaningful response or explanation at interview for the non-payment of these taxes. In applying the reasonable and probable cause, that must be by reference to the subject of the prosecution and not to any issue relating to the non-payment of Beer Duty.

In considering the matter objectively and not simply subjectively, other objective indicators as to why a prosecution was objectively justified are as follows:

The failure to pay over years the taxes identified above other than the Beer Duty amounted to over £727,000. There were considerations about the public interest in a prosecution in respect of such a large amount of tax arising out of a business with such a large turnover over a period of years. As noted in the factual summary above, this was a brewery which had employed many tens of staff, had brewed 100 barrels a week, had an annual turnover of about £2 million equating to VAT in the region of £800,000 in two years of operation. The relevant businesses, LFCP and LFB had either failed to submit returns or submitted nil returns leading to nil payments or payments for negligible sums. Following various assessments or negligible payments, payments were made in respect of the period between January 2012 and October 2014 of about £25,000, being a tiny fraction of the sum which would have been payable if proper returns had been completed.

There is evidence from C1 in which it would have been expected that there would have been an explanation as to the circumstances in which there was virtually non-payment of VAT and other taxes. The evidence instead is about how enormously successful the business was such that at the time of seizure, the business was worth several millions of pounds. Its media features are referred to, and then followed by the loss of clients, staff and business said to the impact of seizure. In a witness statement dated 28 September 2023, C1 related how wealthy his parents were and how they were willing to support the business. Despite this, the evidence adduced by the Claimants fails to address how they allowed these vast debts to accumulate, how they never sorted out the alleged accountancy and business management systems and why they did not even on the arrests sort out the arrears by making unconditional payments. Despite voluminous evidence, these core issues raised in the evidence remain without satisfactory responses from the Claimants. This has fed the belief of HMRC that the businesses were at the material time fraudulently evading tax.

There was correspondence in January 2017 relating to a proposed adjournment of the trial to enable unpaid tax to be paid from the proceeds of the sale of the business. The company which owned the business had been placed into administration on 9 March 2016 but LFB Trading Limited was set up by C1's father in order to prevent the business collapsing. The father had entered into negotiations to sell that company and an exchange of contracts was imminent in which the proposed purchase price was around £4 million with initial consideration of about £1.4 million. The father was willing to undertake in writing to pay from the net proceeds of sale a sum to discharge the tax liabilities.

This led to a response dated 6 August 2017 from Mr Temkin, specialist fraud prosecutor, to the following effect:

“Having considered the public interest factors yet again I am in no doubt that it remains in the public interest to carry on with the current prosecution. It is the Crown's contention - supported by current evidence - that your client evaded his fiscal obligations over a prolonged period and not only robbed the public exchequer of a great deal of vital tax revenue (nearly three quarters of a million pounds). But even cheated members of staff in relation to PAYE & NI monies which were deducted from their salaries but not accounted for to the tax authorities thereby jeopardising their rights to pension and other benefits. Moreover, your client also cheated former students out of their loan repayments thereby leaving them with the burden of discharging those loans themselves while incurring interest on the unpaid amounts. There cannot be any doubt that it is in the public interest to prosecute such behaviour.

The belated offer made on behalf of your client to pay the taxes which he has thus far singularly failed to pay is noted and he is, and should be, encouraged to pay the entirety of the taxes while they remain outstanding because he remains liable to pay them. This he should do as a matter of urgency. It is noted that the offer that has been made is in any event not an unconditional offer of immediate payment but is conditional on the sale of your client’s father's business which may or may not be completed and may or may not produce sufficient net sale proceeds to discharge your client’s fiscal obligations. However, the real point is that your client has chosen to evade his tax obligations in a way that has been deliberate, long running and very costly both to the state and to the individuals employed by his business there cannot be any doubt that it is in the public interest to prosecute those who commit such anti-social actions.”

The above showed not only that there was objectively a reasonable and probable cause, but also that the subjective intention was satisfied, namely a belief by the prosecutor CPS in the guilt of C1 and C2. There is no reason to believe that HMRC, although not a prosecutor, did not associate itself with that approach, namely a subjective view that HMRC had been cheated and that the public interest was to bring and to pursue the prosecution.

This suffices to deal with the issue of reasonable and probable cause. It is not necessary to consider separately the issue of the strength or otherwise of the case as regards the Beer Duty since the fraudulent evasion was not about Beer Duty. Even in respect of Beer Duty, the case of the Claimants that there was an oral agreement to brew as an unregistered entity is not straightforward because of the absence of written evidence of permission. If permission had been granted orally, it would be expected to be followed by C1 and C2 expeditiously progressing any registration application and paying any taxes arising from the brewing of beer at the Premises. In fact, the delay was one of years as is apparent from the summary of the facts set out above.

Such documents as there are indicate a position contrary to such a case. In a record of a visit of 17 October 2012, it was written by Mr Ansah on behalf of HMRC that C1 had said that he was told that he could continue whilst he waited for approval, but Mr Ansah said that he could not rely on verbal permission. He needed to get authorisation in writing. He told C1 that he needed to stop brewing for the next few days whilst expert advice was sought. Mr Ansah asked C1 if he was selling stock and the response was that he was. C1 said that there were about 7,500 bottles in 10 pallets and 80 - 100 beer kegs. Mr Ansah mentioned that although LFCP was registered for VAT, only nil returns had thus far been submitted. C1 said that he would need to prepare profit and loss accounts. He said that his accountant was no good but that he would contact a new accountant when he had prepared his accounts.

In a letter dated 14 March 2022 from Mr Eddison-Cook of HMRC, it was stated that C1 failed to employ an accountant for two years (prior to the 6 August 2014 visit) during which he did not return tax returns. His former accountant of whom he was so critical said that he had put in place a system to allow returns to be made by C1 and his company, but that had not been used. No return was received until 4 September 2015, from which the Crown case was that there was an inference that there was no intention to discharge any of the tax liabilities and that the actions were dishonest.

Mr Ansah said that technically C1 was operating illegally. He asked C1 to send an e-mail stating why he felt justified in operating even although he did not have approval. The interview ended because C1 appeared to be in distress. Subsequently, Mr Ansah concluded internally that C1 should be allowed to continue production of beer because the long delay in dealing with the trader's brewery registration application was not their fault.

There is also a note of an interview dated 7 December 2012 by Mr Ansah and Ms Ahmed of C1. Mr Ansah went through a list of information required including current bank details, his accountant details, the end of financial year, the VAT number, current turnover, how much was being paid for the current trading premises, how many years on the lease, summary of suppliers used and what was purchased from them, purchase invoices to support this, payment details, types of beer produced and the alcohol content and other information besides. Mr Ansah asked for complete records regarding beer that had been produced. He informed C1 that he would issue an assessment for the Beer Duty outstanding prior to the company being officially registered as a brewery. C1 stated that the business was doing well and would generate profit that year.

In the record of the 6 August 2014 visit, C1 said that the Beer Duty had not been paid. When asked how much that was, he said that he was unsure but that it might be about £200,000. He said he was unsure because the computerised brewing management system was corrupted and it was producing inaccurate and changing records. He said that he had been trying to correct the computer system without success for some time. C1 was advised about the possibility that the goods on the premises may be forfeited. C1 said that that would be unfair because he had been trying to approve obtain approval and the advice which he had received from HMRC had been wrong.

In an e-mail dated 23 August 2014, C1 stated that there had been issues with the software and that he had discovered a serious error in the way in which the brewery management system had calculated the duty return. He said that although it could be fixed, there were about 4000 transactions to check and it was expected that this could be done “pretty much immediately”, although it may take “at least all next week to do it.”

The conduct in respect of the Beer Duty raised very serious issues of concern about the conduct of the Claimants. Even if there had been any oral assurance, it did not explain the conduct of the businesses over years without compliant applications, proper accounts and management systems and payment of Beer Duty. To blame HMRC for the years that passed without attending to the requests of HMRC was inadequate. To blame the accountant and the management systems might explain a very short period of time, but did not begin to explain the passage of approaching two years.

The position was much worse for the Claimants because the case against them was not about Beer Duty. It was about the VAT and other taxes. In the circumstances set out above, both the subjective and the objective tests are satisfied. The CPS and HMRC respectively believed that there had been large scale tax evasion, and that the public interest required the prosecution. Having regard to the amount at stake, to the period over which it accumulated and to the repeated attempts of HMRC to address the position which went unheeded, the objective test was satisfied. There was a plethora of reasons supporting the decision to bring and continue the prosecution. So strong is the case that there is no real prospect of the Claimants establishing that there no RPC nor is there any other compelling reason not to grant summary judgment and/or there is no reason not to strike out the case in malicious prosecution.

The above suffices for the purpose of summary judgment and/or strike out. Nevertheless, the judgment goes on to consider whether there is a case with a real prospect of success that the prosecution was malicious. First, the necessary legal test will be considered. It has been said that malice means “some other motive then a desire to bring to justice a person whom [the accuser] honestly believes to be guilty.”: see Brown v Hawkes [1891] 2 QB 718, 732 per Cave J.

In Glinski, Lord Devlin said at 766: "Malice, it is agreed, covers not only spite and ill-will but also any motive other than a desire to bring a criminal to justice." Or "any motive other than that of simply instituting a prosecution for the purpose of bringing a person to justice, is a malicious motive on the part of the person who acts in that way."

Malice can be inferred from the absence of reasonable and probable cause but not from a finding of lack of reasonable and probable cause where there is an honest but unreasonable belief: see Thacker v Crown Prosecution Service [1997] EWCA Civ 3000.

In Rees at paras. 88 - 89, McCombe LJ said the following:

“88.

Mr Simblet relied upon the case of Gibbs v Rea [1998] AC 786, a case in which the majority of the Privy Council found that malice could be inferred from the absence of evidence from the police officer who had sought the search warrant in issue. I refer to that case only for a citation in the majority opinion of the Board (given by Gault J) from the judgment of Lord Tenterden CJ in Taylor v Williams (1831) 2 B & Ad 845, 857 in which the Chief Justice had said,

“Why might not the forbearance of Taylor to give evidence at the trial... raise an inference that his motive was a consciousness that he had no probable cause for instituting the prosecution.” (emphasis added)

The italicised words serve to indicate that a prosecutor is guilty of malice if he is conscious that the case that he presents is not fit to go before the court.

89.

Mr Simblet rounded off this submission and the reference to Gibbs v Rea thus:

"…the dishonest pursuit of a case even in a "noble cause" is always malicious prosecution. It is an improper motive to act knowingly unlawfully. Pursuit of the ends of justice must mean pursuit by honest and lawful means, not just the conviction of the guilty at any cost. It is approaching perverse not to infer malice from the absence of reasonable and probable cause, particularly where Cook has failed to give any evidence as to why he had done what he did."

Mere incompetence or gross negligence falling short of reckless indifference will not suffice to prove malice. “A failure to take steps which it would be elementary for any reasonable person to take before instituting proceedings might in some circumstances serve evidentially as a pointer towards deliberate misuse of the courts process, but sloppiness of itself is very different from malice.” per Lord Toulson in Juman v A-G of Trinidad and Tobago [2017] UKPC 3 at [19].

Some definitions of malice have focused on the motive of the defendant in that it has been said that “an improper and wrongful motive lies at the heart of the tort”: see Williamson v A-G of Trinidad and Tobago [2014] UKPC 29 at [12] per Lord Kerr. Lord Kerr went on to say as follows at [12]:

“It must be the driving force behind the prosecution. In other words, it has to be shown that the prosecutor's motives is for a purpose other than bringing a person to justice: Stevens v Midland Counties Railway Company (1854) 10 Exch 352, 356 per Alderson B and Gibbs v Rea [1998] AC 786, 797D. The wrongful motive involves an intention to manipulate or abuse the legal system Crawford Adjusters Ltd (Cayman) v Sagicor General Insurance (Cayman) Ltd [2013] UKPC 17, [2014] AC 366 at para 101, Gregory v Portsmouth City Council [2000] 1 AC; 426C; Proulx v Quebec [2001] 3 SCR 9. Proving malice is a "high hurdle" for the claimant to pass: Crawford Adjusters para 72a per Lord Wilson.”

There are difficulties where a claimant has mixed purposes. It may be that it is necessary to show the predominant purpose is improper or that there is an improper purpose which negates a proper purpose. An example of an improper motive case where a re-trial was ordered is Paul v Chief Constable of Humberside [2004] EWCA Civ 308 where the improper motive considered was (paragraph 26), “that the police had been activated in their dealings with his client by an improper motive, namely that they wished to distract public attention from the fact that a young black man had died while lying on the floor in a police custody suite with his hands handcuffed behind his back. The fact that the conduct of the police was in question in relation to the events surrounding Mr Alder's death had induced them to take decisions they would not have taken in the way they did if there had not been this background, and these decisions had rebounded to Mr Paul's manifest disadvantage.”

To similar effect is a dictum of Lord Richards in Maharaj v A-G of Trinidad and Tobago [2024] UKPC 1 at 11:

“The element of malice requires the claimant to prove that the proceedings initiated by the defendant were not a bona fide use of the court's process. While proceedings brought in the knowledge that they were without foundation may be the most obvious case, it will be sufficient if, for example, the defendant was indifferent whether the charge was supportable and brought the proceedings for an illegitimate collateral purpose: see Willers v Joyce at para 55 per Lord Toulson.”

Para. 55 of Willers v Joyce involved consideration of the related tort of malicious abuse of process which was found to exist. Lord Toulson said the following in respect of malice:

“Malice is an additional requirement. In the early cases, such as Savile v Roberts, the courts used the expression “falso et malitiose”. In the 19th century “malitiose” was replaced by the word “malicious”, which came to be used frequently both in statutes and in common law cases. In Bromage v Prosser (1825) 4 B & C 247, 255, Bayley J said that “Malice, in common acceptation, means ill-will against a person, but in its legal sense it means a wrongful act, done intentionally, without just cause or excuse.” His statement was cited with approval by Lord Davey in Allen v Flood [1898] AC 1, 171. (For a recent discussion of the nineteenth century understanding of the meaning of “malicious” in the law of tort, see O (A Child) v Rhodes [2016] AC 219, paras 37 to 41.) As applied to malicious prosecution, it requires the claimant to prove that the defendant deliberately misused the process of the court. The most obvious case is where the claimant can prove that the defendant brought the proceedings in the knowledge that they were without foundation (as in Hobart CJ’s formulation.) But the authorities show that there may be other instances of abuse. A person, for example, may be indifferent whether the allegation is supportable and may bring the proceedings, not for the bona fide purpose of trying that issue, but to secure some extraneous benefit to which he has no colour of a right.The critical feature which has to be proved is that the proceedings instituted by the defendant were not a bona fide use of the court’s process. In the Crawford case Mr Delessio knew that there was no proper basis for making allegations of fraud against Mr Paterson, but he did so in order to destroy Mr Paterson’s business and reputation.” (emphasis added)

Winfield & Jolowicz on Tort 20th Edition at [20-016] refers to cases where motives are mixed and says “... We suggest that malice exists where the predominant purpose of the accuser is something other than the vindication of law.”

In the case of Rees v Commissioner for the Metropolitan Police [2018] EWCA Civ 1587, the Court found that malice could be established notwithstanding that a prosecutor believed in the guilt of the accused. The reason for this was that it was found that the prosecution was heavily reliant on the evidence of a witness which the prosecutor procured by subornation amounting to a criminal intention to pervert justice. In that case, McCombe LJ held at [81] that “that bringing a prosecution in that manner is not "bringing a criminal to justice" at all.” McCombe LJ said at [90] that it was difficult to better what Mr Simblet (as he then was) counsel for an appellant in that case had submitted, namely that “…the dishonest pursuit of a case even in a "noble cause" is always malicious prosecution”. At para. 91, McCombe LJ said: “…I consider that DCS Cook's belief (as found by the judge) that the appellants were guilty of the murder cannot prevent the prosecution having been malicious. He knowingly put before the decision-maker a case which he knew was significantly tainted by his own wrongdoing and which he knew could not be properly presented in that form to a court. To find that the element of malice was not satisfied in this case, to my mind, would be, quite simply, a negation of the rule of law.”

In the same case, it was held that there was an inability for the prosecutor to show that there was a reasonable and probable cause because the subjective element could not be shown. The consequence of the finding of malice was that the prosecutor did not have a subjective reasonable and probable cause for a prosecution if they present a case heavily reliant upon evidence which, because of his own misconduct, they know is "certain or at least highly likely" to be ruled inadmissible by any trial judge.

A question which arises is whether Rees was a case with a mixed motive such that an object of bringing the accused to justice is not an answer to a malicious prosecution case even where the improper motive is not a predominant one. Properly analysed, Rees is a case where the motive to bring a person to justice is negatived by the criminal conduct of the prosecutor by suborning a witness. In such a case, there is no longer a mixed motive: the effect of the criminal conduct has been to negative any motive of bringing a criminal to justice.

The above cases provide sufficient support for the conclusion that where there is a mixed purpose or motive in the tort of malicious prosecution, a predominant improper purpose or motive needs to be established for malice to be established.

Even if HMRC was to be considered a prosecutor, contrary to that which has been found above, this is not a case where there is any real prospect that malice could be established. This is for the same reasons substantially as those set out in the section about reasonable and probable cause. First, there were objective reasons to support a belief that there was prima facie evidence of each element of the offence which it is intended to charge the Claimants.

Second, to the extent that the various identified emails had not been handed over at the charging stage, that did not found a case with a real prospect of success to the effect that the decision of the CPS to prosecute the claimants was overborne and/or perverted and/or manipulated by HMRC who deliberately did not provide material evidence or documentation to the CPS. It is based on a premise that the production of these documents was required at the pre-charging stage, when for the reasons set out above, that was not the case.

Further, it is based on the premise that had these documents been produced, it would have indicated to a prosecutor that there was no reasonable basis for the prosecution. When the documents were produced, they had no such effect. Further still, the Claimants’ case by reference to these documents misses the object of the prosecution, namely not about fraudulent evasion of Beer Duty but fraudulent evasion of the other taxes and especially VAT. Whether or not there was an oral agreement to permit trading before registration had taken place, that was irrelevant to the obligation to make full returns in respect of VAT and the taxes other than Beer Duty. The prosecution was about those taxes and not about Beer Duty.

Third, there are exceptional cases where there is a genuine desire to prosecute but some collateral purpose or mixed motive. In Wilson v Department of Transport [2025] EWHC 1387 (KB), the allegation (which failed at a trial) was that there was a desire to avoid a judicial review which would have shown up a government department’s lack of a proper prosecution policy. In Rees v MPC above, the allegation was that there was evidence amounting to perverting the course of justice by subornation of a witness. The instant case amounted to nothing of the sort. The documents in question were not suppressed: when produced they made no difference to the continuation of the prosecution: they related to a different tax from the taxes which were the subject of the various counts in the indictment.

Whilst the court has to be careful at an interim stage in rejecting a case of fraud where it might be said that cross-examination might elicit malice, this does not apply in the instant case. Even adopting a generous attitude to pleadings at an interim stage, in the instant case it is not possible to infer dishonesty of the kind alleged from the non-production of the various documents in this case at the charging stage. To allege that is a case of subornation or concealment or manipulation has no real prospect of success at trial. This is especially because the documents are not about the subject matter of the indictment and/or because it is based on a failure to take into account how the process works to the effect that disclosure is not completed at the charging stage. The fact that these documents, when produced, did not affect the continuation of the prosecution is further support as to the absence of the improper motive alleged. On proper analysis, there is no case to go to trial which has any real prospect of proving the alleged malice.

For all these reasons, there is no real prospect that the case of malicious prosecution will succeed at trial nor is there any other compelling reason why the case should go to trial.

A further tort relied upon is malicious procurement of a search warrant. Reference is made to the summary of the application for the warrant set out above. That was applied for by Mr Muldoon as the applicant, being an officer of HMRC. The authorising officer was his manager Ms Chipperton, a senior investigation officer. The search warrant application was in respect of offences relating to non-payment of VAT of about £727,000.

The relevant principles in relation to full and frank disclosure when applying for a search warrant are as follows:

The necessary elements for the tort of malicious procurement of a search warrant are as follows:

By way of introduction to the tort in the case of Gibbs v Rea [1998] AC 786 at 797, Gault J giving the majority judgment of the Board said:

“That it is an actionable wrong to procure the issue of a search warrant without reasonable cause and with malice has long been recognised though seldom successfully prosecuted: Elsee v. Smith (1822) 2 Chit. 304 , Hope v. Evered (1886) 17 Q.B.D. 338 , 340, Everett v. Ribbands [1952] 2 Q.B. 198 , 205, Reynolds v. Commissioner of Police of the Metropolis [1985] Q.B. 881 , 886. Generally any damage will arise from execution rather than issue of a warrant but there may be special circumstances in which it can be shown that the issue of the warrant will itself cause harm. It is the essential element of malice that distinguishes the cause of action from that of trespass where entry is made without authority or on the authority of a warrant invalid on its face. It is akin to malicious prosecution which is a well-established tort and to the less common tort of maliciously procuring an arrest: Roy v. Prior [1971] A.C. 470 . The true foundation of each is intentional abuse of the processes of the court. Malice in this context has the special meaning common to other torts and covers not only spite and ill-will but also improper motive. In the present context the requirement of improper motive would be satisfied by proof of intent to use the process of the court for granting a warrant for a purpose other than to search in the permitted circumstances.”

An issue has arisen in this case as regards whether a pleading of malice will suffice where the failing is attributable to neglect or inadvertence or bad judgment without necessarily involving bad faith in knowing misuse of a public power. The case of HMRC is to rely on the closing words of Chadwick LJ in Thacker v Crown Prosecution Service CA 16 December 1997 (unrep.):

“It is important to keep in mind that that was a finding of lack of reasonable and probable cause based on assumed negligence or incompetence. It was not a finding that any individual crown prosecutor decided to continue the prosecution in the absence of an honest belief that there was a proper cause to do so. The finding is consistent with the existence of an honest but unreasonable belief. That is a likely conclusion in most cases where the only evidence as to the prosecutor's state of mind is the fact that he or she decided to prosecute on the basis of the facts as known; so that there is no direct evidence on that question which can be put before the jury.

The fact that someone in the Crown Prosecution Service may have been negligent or incompetent in the course of reaching a decision to commence or to continue the prosecution - whether by failing to evaluate the evidence correctly at the outset, or in failing to review the evidence after committal or in the light of new material - cannot, in itself justify an inference of malice. If that is all the evidence that there is, the question of malice cannot be left to the jury. It is because, in many of these cases, that will be all the evidence there is, an attempt to dress up a claim in respect of negligence or incompetence in the guise of malicious prosecution must fail.” (emphasis added)

The Claimants drew the attention of the Court to parts of the judgments in that case of Kennedy and Judge LJJ. Kennedy LJ said:

“… There is no evidence that any member of the CPS ever had any other motive, and although malice is for the jury rather than the judge, it is only to be left to the jury if there is some evidence of it (per Lord Devlin at 779). Mr Denyer submitted that the issue should have been left to the jury because in some cases malice can be inferred when a prosecution is launched or continued without reasonable and probable cause. That, as it seems to me, evolves (sic) some positive evidence of mala fides on the part of the prosecutor, which is wholly absent in this case, and in any event, the reasons I have already given, Mr Denyer’s submission cannot succeed.”

Judge LJ said:

“Before malice can be left to the jury there must be some evidence from which a jury properly applying its mind to the evidence would be entitled to infer it. If there is, the decision is for the jury. Evidence that the defendant lacked any reasonable and probable cause for continuing with the prosecution may of itself provide the necessary basis to enable the jury to consider malice, but this conclusion does not always follow, and it would be strange if it did. The question has to be decided in the light of the evidence in the individual case. In the present case the basis of the judge’s finding that the defendant lacked reasonable and probable cause for continuing with the prosecution suggested not malice by anyone for whom the Crown Prosecution Service could be held responsible, but an intended fault of omission. The judge concluded that there was no evidence of malice and I agree with him.”

The submission of the Claimants was that where it was not apparent whether the public official had been negligent or incompetent, or whether they had been dishonest, that was a matter to be left by a judge to a jury. In an inferential case, it would be for a jury on the facts of the particular case to assess whether the influence should be one of negligence or dishonesty. They relied on the case of Paul v Chief Constable of Humberside [2004] EWCA Civ 308 at para. 44 per Brooke LJ:

“In Gibbs v Rea [1998] AC 786 it was common ground between the majority and the minority of the members of the Judicial Committee of the Privy Council that a claimant may rely on circumstantial evidence in support of his case on malice and the absence of reasonable and probable cause. Where they differed was on the application of this principle to the facts of that case. For the majority, who included Lord Steyn and Lord Hutton, Gault J cited a passage from the judgment of Lord Tenterden CJ in Taylor v Willans 2 B & Ad 845, 847:

The motives of parties can only be ascertained by inference drawn from facts. The want of probable cause is, in some degree, a negative, and the plaintiff can only be called upon to give some …slight evidence of such want…"

Gibbs v Rea turned on the significance of the decision by the defence to call no evidence at the trial, but it is a useful reminder of the fact that a claimant cannot ordinarily be expected to produce direct evidence on these matters.”

The submission of HMRC was that if there was no positive evidence of malice, there was no issue of fact which needed to be determined and there was no reason for the claim to proceed to a hearing. In Young v Chief Constable of Warwickshire [2022] EWHC 447, Martin Spencer J said that bad faith or reckless indifference must be specifically pleaded and particularised. He said: “It may be possible to infer malice. But if what is pleaded as giving rise to an inference is equally consistent with mistake or negligence, then such a pleading will be insufficient and will be liable to be struck out.” It was submitted that an allegation of malice will not be made out simply because an officer failed to notice an even obvious defect in the investigation, referring to Carter v Chief Constable of Cumbria [2008] EWHC 1072 at para. 69 per Tugendhat J: “To say that the alleged defect in the presenting sides case was so obvious that the officer in question must have recognised it is not in my judgement a sufficient particular in the circumstance of this case.” In McHarg v Chief Constable of Thames Valley Police [2004] EWHC 5 (KB), the same judge at [22] quoted Lloyd LJ (as he then was) who said that “If there are no pieces of evidence that are more consistent with malice than the absence of malice, there is no evidence of malice to go to the jury”: see Telnikoff v Matusevich [1991] 1 QB at 102A.

The submission on behalf of the Claimants was that first instance authority to the effect that it was not a matter for the jury if the evidence was no more consistent with negligence or incompetence than with malice that there was no evidence of malice to be put before the jury should not be followed. It was said that since malice is very frequently based on inference, it is for the jury to weigh the evidence for itself and to decide whether the evidence points to negligence or malice.

On analysis, there was no difference between the first instance authorities and the cases from the appellate courts. There was a consistent thread in the cases to the following effect, namely:

It is also to be borne in mind that the context of the older cases was about the province of judge and jury and of what could be left to the jury. The context in which this Court is deciding the issues is a summary judgment/strike out application where there are wider issues of bringing to an end a case where the full evidence is either not yet before the court or where the court is less able to see the full thrust of the parties’ cases with the same vista as will be available at a trial. Nonetheless, at any stage of the action, it is sufficient to say that mere evidence by itself of errors or omissions does not necessarily found a basis for finding malice whether in the tort of misfeasance of public office or malicious prosecution or malicious procurement of a search warrant.

On the other hand, the Claimants submitted that there will be cases which should be allowed to proceed to trial where there is a real prospect that at trial it will be found to be more likely that it was malice. It is to be borne in mind in a case based on malice that cases are frequently inferential and not proven by direct evidence of which one party can give direct evidence. This adds to the sense of caution about rushing to judgment at the strike out stage. This is a theme in the judgment in Paul v Chief Constable of Humberside [2004] EWCA Civ 308 per Brooke LJ at para. 44 as follows:

“In Gibbs v Rea [1998] AC 786 it was common ground between the majority and the minority of the members of the Judicial Committee of the Privy Council that a claimant may rely on circumstantial evidence in support of his case on malice and the absence of reasonable and probable cause. Where they differed was on the application of this principle to the facts of that case. For the majority, who included Lord Steyn and Lord Hutton, Gault J cited a passage from the judgment of Lord Tenterden CJ in Taylor v Willans 2 B & Ad 845, 847:

“The motives of parties can only be ascertained by inference drawn from facts. want of probable cause is, in some degree, a negative, and the plaintiff can only be called upon to give some … slight evidence of such want …”

Gibbs v Rea turned on the significance of the decision by the defence to call no evidence at the trial, but it is a useful reminder of the fact that a claimant cannot ordinarily be expected to produce direct evidence on these matters.

It is necessary to refer to the RRAmPoC in order to understand how the claim is made. It refers to the successful procurement of a search warrant before District Judge Inyundo at Croydon Magistrates Court on 28 November 2014 (para. 66). An absence of a subjective and/or objective RPC to pursue the search warrant application since (para. 67):

“a.

Mr Muldoon and/or Ms Chipperton did not honestly believe that there was RPC to pursue the application for a search warrant.

b.

The evidence available to the defendant, and specifically Mr Muldoon and/or Ms Chipperton, did not provide the defendant with reasonable grounds for any belief that there was RPC to pursue the search warrant application.”

The statutory framework was referred to in that the District Judge had to be satisfied (para. 68) that either:

In satisfaction of the statutory criteria, the search warrant application contended that if C1 or one of his associates or employees was able to deny immediate access to such material, then it would afford the opportunity either to remove or destroy evidence. It was said that the use of a search warrant would allow officers to secure that evidence before that could take place (para. 72).

The application for the search warrant stated that C1 had continually made excuses to the court in relation to non-payment of the VAT and non-completion of business records, blaming bad financial advice and regular changes of accountant and business advisors. He had repeated those reasons for not paying his current liabilities to HMRC in relation to his tax affairs at later meetings with HMRC officers.

It was also stated that London Fields Brewery does not hold a licence to brew beer on its premises nor had it since it began to produce beer in January 2012. It was discovered that sales of beer were being made. In July 2014 C1 confirmed that he was aware that Beer Duty was payable on the beer being produced and that he had not paid it to HMRC. Subsequent applications to register had been submitted but on each occasion they had been refused by HMRC (para. 73).

The application mentioned the conviction of C1 in respect of drugs offences and the confiscation order, but this was only “incidental to this current application [for the warrant]”. There was also reference to excise duty and the production of beer without a licence and to a possible debt of £500,000 in respect of Beer Duty. It was said that it was intended to deal with this matter by way of a civil action, and that the premises would be visited the same day after the execution of the search warrant to address the non-compliant beer production. It was said that that civil action would be dealt with concurrently with the criminal intervention, and that officers would attend the brewery remove the undiluted beer and would seal the brewery to prevent its access and use.

The District Judge made an observation that he needed to be satisfied that this was deliberate cheating and not cash flow difficulties, to which the response of Mr Muldoon was that it was believed to be deliberate because the business was believed to be profitable (para.74).

The application was made ex parte: there was an obligation to make full and frank disclosure and it was alleged that HMRC was in breach of that obligation (para. 75). This included in failing in the following respects, namely:

It was therefore pleaded that Mr Muldoon and/or Ms Chipperton did not honestly believe that there was RPC because “had [they] believed that there was RPC, [they] would not have relied upon materially inaccurate and/or incomplete evidence to support that application” and that, for the same reasons their actions were malicious: see RRAmPoC paras. 77, 79.

In the light of this, there were no reasonable grounds for considering that access to the premises would not be granted without a warrant and/or that entry to the premises might be frustrated or seriously prejudiced unless immediate entry to the premises could be secured (para. 78).

There was malice in the pursuit of the search warrant in that there is no other credible explanation for the breaches of the duty of full and frank disclosure. There were three pages of pleaded particulars of malice which can be summarised as follows:

The case of the Claimants in connection with the tort of misfeasance in public office is that HMRC (i) had no reasonable grounds for believing that there was RPC to pursue the warrant application, (ii) lacked an honest belief that there was RPC, and (iii) acted with malice: see RRAmPoC paras. 82-84. The Claimants rely on an alleged failure by Mr Muldoon to provide the Magistrate determining the warrant application with the information set out in the RRAmPoC paras. 73-75, of which it is said that Ms Chipperton was aware. It is pleaded that the damage resulting from the execution of the warrant was the destruction of the business: see RRAmPoC para. 113.

HMRC say that (i) immunity attaches to matters raised in the course of the application before the Magistrate, and (ii) that any challenge must be by public law and not private law proceedings. It is not necessary to make a ruling on these points, because, even if HMRC is wrong, the claim can be dealt with on its merits.

HMRC submits that it does not follow that if there were any material inaccuracies or omissions on the part of Mr Muldoon and Ms Chipperton that there would be no RPC in the warrant application or that they were malicious. They were concerned only with the criminal investigation into the fraudulent evasion of VAT. Whilst background information was provided about Beer Duty and about the confiscation order, there was no reason to believe that they had knowledge that it was false or incomplete (if that was the case).

The criminal investigation into fraudulent evasion of VAT only began in August 2014 and there was nothing to suggest that Mr Muldoon and/or Ms Chipperton had knowledge themselves about the matters relating to Beer Duty or to the confiscation order. These matters were in the domain of others and were ongoing over a period of about two years prior to their involvement.

The pointing to a number of errors in the context an otherwise detailed warrant application does not provide a basis for considering that Mr Muldoon or Ms Chipperton were motivated by malice in preparing the application. The mere reference to errors and omissions, even if established, did not provide any grounds for inferring that they were deliberate and with a view to causing harm to the claimants.

It is apparent from the warrant application that the criminal offences being considered comprised cheating the public revenue contrary to common law by evading VAT contrary to s. 72 (1) of the Value Added Tax Act 1994 and that C1 was the primary suspect. This was not an investigation about beer tax or about trading in beer without a beer licence. Nor was it connected with the confiscation order and the amounts not paid in connection therewith.

It sufficed in order to apply for a warrant that there are grounds for reasonable belief that (i) C1/C2 had committed a criminal offence, (ii) there was material on the premises in respect of which the warrant was sought which was likely to be of substantial value to any criminal investigation. It is to be borne in mind that LFCP had not accounted for a vast sum of VAT for nearly two years comprising about £727,000 and had only made very small payments of VAT which could not reasonably have reflected the VAT owed. Further, there were protracted periods of time during which there had been a failure to provide information requested on many occasions.

Irrespective of whether beer tax should have been paid, the VAT had been generated on a turnover of millions of pounds with minimal VAT having been paid. Such was the size and period of the non-payments that there were reasonable grounds for believing that this was a deliberate cheating of HMRC. Likewise, it gave rise to reason to believe that access to the premises would not be granted without a warrant and/or that entry to the premises might be frustrated and/or that immediate access was required.

A factor to be considered in these allegations particularly against Mr Muldoon is that in the warrant application, he specifically stated that he did not consider at the time that C2 was involved in the fraud. That by itself has a different perspective from someone who had suspended honesty and objectivity in order to bring down the Claimants.

The summary of background information regarding the confiscation order and the Beer Duty were not the foundation of the application. That they were background is apparent from a reading of the warrant application which defined the offences which were being investigated. They did not include the non-payment of Beer Duty or matters relating to the confiscation order. It is therefore plain that if there had been inaccuracies and omissions in the matters set out in paragraph 79ii about the confiscation order and in paragraph 79iii of the RRAmPoC about the brewing licence as alleged, this does not establish or lead to an inference of a lack of RPC in respect of the fraudulent evasion of VAT or that the belief in the RPC on the part of Mr Muldoon and Ms Chipperton was not honestly held. It follows that these matters do not support a case of absence of objective or subjective RPC in respect of the fraudulent evasion of VAT. Likewise, the pleaded particulars do not lead to inferences from which malice in respect of the case relating to non-payment of VAT and corporate tax can be inferred.

Further, the state of mind of Mr Muldoon and Ms Chipperton was dependent on their knowledge and not the collective knowledge of HMRC employees. Their remit was in respect of a criminal prosecution. They were not involved in civil recovery of outstanding taxes, which was the remit of Ms Laker and Mr Thomas. Whereas they may have been looking at the prospect of making a civil recovery, Mr Muldoon and Ms Chipperton were considering the matter from a criminal perspective and not civil recovery. If Ms Laker in particular was more benevolent than Mr Muldoon in particular, contrary to the Claimants’ case, that does not take the case very far because of Mr Muldoon’s different role and perspective. The analysis of the Claimants that it was in any way improper for Mr Muldoon and Ms Chipperton to be considering criminal prosecution for such a sustained failure to pay a large amount of tax has no basis whatever the approach of Ms Laker. Further, Mr Muldoon and Ms Chipperton were not involved in brewing licence applications and registration which was the remit of Mr Ansah and Mr Parkinson. The fact that they might have had a lot to add to background matters within their remit does not mean that Mr Muldoon or Ms Chipperton would have appreciated that there was more to add, if that was the case. If there were errors or omissions on the part of Mr Muldoon or Ms Chipperton in the section about the background information or more generally, this does not form a basis on which to infer malice in connection with the procurement of the warrant. The Judge in the criminal trial, HH Judge Morrison, was critical in his summing up about aspects of HMRC’s approach including a lack of a joined-up approach and thinking between the various people involved, about the inexperience in the relevant fields of Mr Ansah and Mr Parkinson, about the refusal to accept Beer Duty before registration and other aspects of the registration process. To the extent that these criticisms were justified, they may be evidence of errors, but not of malice. When making these criticisms in the early part of his summing up on 25 July 2017, the Judge did not suggest bad faith on the part of HMRC.

The inferences sought to be derived in respect of Mr Muldoon and/or Ms Chipperton in respect of the warrant application are in my judgment without a real prospect of being established. As Cockerill J emphasised in the case of King v Stiefel at [23 - 25], cogent evidence is required to justify a finding of fraud or other discreditable conduct, reflecting the court's conventional perception that it is generally not likely that people will engage in such conduct. So it is that in reviewing whether a party has got to the foothill of the mountain to climb in a case of fraud or other disreputable conduct, the Court is entitled to subject the case to a degree of scrutiny to see if there is a real rather than a fanciful prospect of establishing the case. The Court is not bound to take at face value and without analysis everything that a claimant says in his statements before the court, particularly in a case such as the one which is based on inferences in respect of the knowledge and intention of Mr. Muldoon and/or Ms Chipperton.

Further, the Claimants are unable to prove a damages claim for malicious procurement of a warrant. Even if the warrant application had failed, C1 would have still been arrested lawfully on suspicion of cheating the public revenue contrary to common law (with reference to VAT and other revenue/PAYE obligations). Further, in the light of the Refusal of 2 December 2014, LFCP would have been unable to brew beer. C1’s reputation was already tainted due to C1’s criminal record for drugs and would have been further damaged due to the prosecution for fraudulent tax evasion. In any event, LFCP continued to operate for more than a year until it went into administration on 5 April 2016 due to its inability to settle Crown debts. It went into liquidation on 23 October 2017: see RRAmPoC para. 8. In any event, HMRC's officers involved in the civil investigation would still have attended the premises and on the Claimants’ case would have been granted access.

Looking at the case as a whole and applying caution bearing in mind the strictures not to rush to judgment at an interim stage without further disclosure and a trial and cross-examination, this a case where there has not been established a real prospect of success that there is a subjective or objective case on RPC or that Mr Muldoon and/or Ms Chipperton will be shown to have had malice as alleged or at all. Nor is there any other compelling reason for the case to go on to trial. For all these reasons, the case about malicious procurement of a search warrant should be struck out: alternatively, there should be summary judgment in respect of the same.

The Claimants advance claims in misfeasance on two bases, namely:

This common law tort imposes liability for “an abuse of power accompanied by subjective bad faith” (per Lord Steyn in Three Rivers DC v Bank of England (No.3) [2001] UKHL 16; [2003] 2 AC 1 at p.191). The tort of misfeasance is an intentional tort, that is to say negligence or gross negligence falling short of reckless indifference will not suffice. The leading authority in respect of misfeasance in public office remains the case of Three Rivers DC v Bank of England (No 3) [2003] 2 AC 1 ("Three Rivers"). As explained in the speech of Lord Steyn, the constituent elements of the tort (set out at 191-196) are that:

Malice is an essential ingredient of this tort. Lord Steyn said that there were not two separate torts, but that there was one tort with two forms, namely misfeasance in public office with targeted malice and with untargeted malice. Lord Steyn explained in Three Rivers (No.3), at p.191:

“First there is the case of targeted malice by a public officer, ie conduct specifically intended to injure a person or persons. This type of case involves bad faith in the sense of the exercise of public power for an improper or ulterior motive. The second form is where a public officer acts knowing that he has no power to do the act complained of and that the act will probably injure the plaintiff. It involves bad faith in as much as the public officer does not have an honest belief that his act is lawful.”

He said at p.192A-B that although there were differences between the two different forms, "…there are unifying features, namely the special nature of the tort, as directed against the conduct of public officers only, and the element of an abuse of public power in bad faith." In other words, the unlawful element had to be established in both forms. The official concerned must be shown not to have had an honest belief that they were acting lawfully.

In further amplification of "untargeted malice", this was referred to by Lord Hobhouse in Three Rivers at p. 230H as follows:

“…the official does the act intentionally being aware that it will in the ordinary course directly cause loss to the plaintiff or an identifiable class to which the plaintiff belongs. The element of knowledge …is the awareness that a certain consequence will follow as a result of the act unless something out of the ordinary intervenes. The act is not done with the intention or purpose of causing such a loss but is an unlawful act which is intentionally done for a different purpose notwithstanding that the official is aware that such injury will, in the ordinary course, be one of the consequences: Garrett v Attorney General [1977] 2 NZLR 332, 349-350.

“…there is reckless untargeted malice. The official does the act intentionally being aware that it risks directly causing loss to the plaintiff or an identifiable class to which the plaintiff belongs and the official wilfully disregards that risk. What the official is here aware of is that there is a risk of loss involved in the intended act. His recklessness arises because he chooses wilfully to disregard that risk.”

Malice covers not only “spite and ill-will” but “reckless indifference to the consequences of an unlawful act” Hughes v Revenue and Customs Commissioners [2025] EWCA 113 at [22]. In Hughes (at first instance, [2024] EWHC 1765 (KB)), Jay J analysed the ‘reckless indifference’ concept and the application of misfeasance:

“116.

I pressed counsel on the meaning of "reckless indifference". At first blush, this concept appears to weaken or relax the mental element of the tort, and is more generous to claimants than malice simpliciter in the context of the tort of malicious prosecution where reckless indifference is not available. In my judgment, the test is undeniably a subjective one. At para 18 of his judgment in Keegan v Chief Constableof Merseyside [2003] EWCA Civ 936; [2003] 1 WLR 2187 , Kennedy LJ explained that an essential ingredient of the tort is the presence of an improper motive, and– in appearing to endorse a submission of counsel – the claimant may prove a state of mind "of reckless indifference to the illegality of his act". That formulation was drawn from Lord Steyn's Opinion in Three Rivers (No 3) , at 192C-D. Lord Steyn also emphasised "the meaningful requirement of bad faith in the exercise of public powers which is the raison d'être of the tort".

It has been found above in connection with the malicious procurement of the search warrant that there was no real prospect of being able to show from any errors or omissions in the application for a search warrant any basis for a case of malice against Mr Muldoon or Ms Chipperton. There was no evidence on which a court could infer malice or which could be placed before a jury to consider malice. Likewise, even allowing for the appropriate adjustments that the case is only at the summary judgment/strike out stage, there is no real prospect that the case will improve such that there might be a case to answer in respect of malice by reference to the actions or omissions of Mr Muldoon and/or Ms Chipperton in respect of the procurement of the warrant. This applies both in respect of a case of targeted or untargeted malice.

There is no evidence on which to conclude that there is a real prospect that at trial it might appear that they or either of them were actuated by malice. There is no evidence to the effect that they were acting out of spite or ill will to the Claimants or out of a desire to cause them or any of them damage. Nor is there evidence that they or either of them did not have an honest belief that the warrant was not justified or that they had no power to make the application for a search warrant or that they were acting in some way unlawfully. Whichever way the case is framed, there is no basis for an allegation of malice required for the tort of misfeasance in public office or any other tort in respect of which malice was an essential ingredient.

It is claimed that there was misfeasance in public office by Mr Ansah and Mr Parkinson respectively in connection with the brewery licence applications. Mr Ansah’s role was a HMRC Higher Assurance Officer in the Customs, International Trade and Excise Department. He was not in the NRU which processed registration applications. He attended on 7 December 2012 at the request of the NRU, and this was the first time that he attended an application for a brewery licence. It was not personally his case.

The claim against him is that he acted unlawfully and maliciously: (i) in making requests for information (in the context of LFCP’s application) on 7 June, 27 July, 18 October and 2 December 2012, knowing that they were unlawfully excessive: see RRAmPoC para. 87f, and (ii) in refusing to progress the first application made by LFCP in May 2012 until outstanding VAT was paid: see RRAmPoC para. 87ff.

As regards the requests for information, there is no identified reason why an excessive request is alleged to be unlawful. Regulation 5(3) of Beer Regulations 1993 No.1228 provides:

“Save as the Commissioners may otherwise allow, each application shall contain the particulars specified in Schedule 1 and shall be in such form and manner as the Commissioners may prescribe in any notice published by them in pursuance of these Regulations and not withdrawn by a further notice.”

Schedule 1 para. 1 referred in particular to the name and status of the applicant, to the address of the premises to be registered, a plan of the premises, the date when the applicant began to produce beer, the bank details and the estimate of the quantity of beer to be produced each year. The requests for information of Mr Ansah and Mr Parkinson went beyond this. The request of Mr Ansah of 7 December 2012 included the outstanding duty on beer that had been produced, details of the account of the business, end of financial year accounts, a VAT number, current turnover, details about any lease and amounts paid, details about suppliers, the types of beer produced, details about staff, how the goods were transported, the cost of converting part of the premises into a bar, details of current stock, information relating to the beer and current stock and information relating to customers and the credit line advanced to them.

It has been pleaded in respect of Mr Ansah and that he knew that the requests for information were excessive, but there is no pleaded or any other basis for this assumption. The Claimants have submitted that the cross-examination in the criminal trial (identified at pp.457-459 of the application bundle) supports the existence of such knowledge. All that happened is that C1 was pressed and pressed on the inappropriateness of the questioning. That led to Mr Ansah saying that he was concerned to find out that the trader was compliant and he was intending to be very thorough in how he handled the case. In any event, the main issue was the VAT duty. Having been asked the same question a number of times, he said to Counsel that he might argue that it was over the top. That was not a recognition that he had done wrong, let alone a recognition that his questions were unlawful or that he knew that at the time.

It has also been pleaded that he was malicious in refusing to progress the first application made by LFCP in May 2012 until outstanding VAT was paid. It is stated at para. 87ff of the RRAmPoC that Mr Ansah admitted informing C1 of the same during the course of the 7 December visit, such that it is inferred that Mr Ansah in his role for the Defendant would have been aware of the framework and thus would have known that he was acting unlawfully. If it is the case that Mr Ansah acted unlawfully in requesting the payment of VAT, there is no pleaded basis for Mr Ansah knowing that he was acting unlawfully. There is nothing to indicate that knowledge that he was behaving unlawfully is more or even equally likely as ignorance or negligence.

In the circumstances, there is no case with a real prospect of success to the effect that Mr Ansah was acting with malice as alleged or at all. Further, the pleaded case is liable to be struck out in respect of the claim of malice because it discloses no reasonable cause of action based on malice.

Mr Parkinson’s role was, as noted above as an Alcohol Approval Officer in CITEX responsible for the grant of a licence to become a registered brewer of beer. This was his first case dealing with Beer Duty. The documents which he sought were standard documents for which he has asked in 27 years of compliance work. He said that he believed that he could refuse an application on the ground that the applicant was not a “fit and proper person.” He discussed with his manager, Genevieve Campbell, that he had the power to refuse an application for beer registration. He followed guidance from the criminal investigation team once that investigation commenced and was told in writing by his line manager to do so. He stated in his letter of 3 October 2014 that he was requesting information not only in respect of Beer Duty but also in respect underpaid VAT and PAYE and NIC.

The pleaded case of the Claimants was that Mr Parkinson had actual knowledge that the “fit and proper person” test was not applicable for a brewing licence that he had no power to refuse the Claimants’ beer licence application and yet refused it in any event. He was told about this by Ms McKirdy on 13 August 2014: see RRAmPoC para. 41 and RRAmD para.78. The case of HMRC is that whilst it is admitted that that formal test did not apply, Mr Parkinson was entitled to consider the Claimant’s suitability for registration, particularly in the context of the Beer/Excise Notice 226 (as amended from 31 October 2014 and applicable as at the date of the 2 December 2014 refusal) which, at para. 3.6, required the decision-maker to be satisfied that the business was suitable for registration. Further, reference was made to the apparently discretionary power to register an applicant under Regulation 6 of the Regulations which read “the Commissioners may register the applicant in respect of each of the premises in respect of which application is made…” (emphasis added). The reference to ‘fit and proper person’ reflects the suitability test, and non-compliance with revenue duties such as payment of VAT and PAYE was a reasonable basis for rejection on suitability grounds: see RRAmD para. 137. In referring to ‘fit and proper purpose’, it was to that suitability consideration. This made it appropriate to consider a wider assessment of the merits of the application including considerations of suitability of the controlling minds of the brewery: see RRAmD para.137h.

Mr Parkinson believed that the non-compliance with revenue duties such as VAT and PAYE provided reasonable grounds for refusing the application on suitability or fit and proper person grounds. It was denied in any event that Mr Parkinson knew or ought to have known that there was no power to refuse the Fourth Application on fit and proper person grounds or that he acted maliciously with a view to harming the Claimants.

The requests of Mr Parkinson 11 August 2014 included information as to the private addresses of the partners and other entities in which they were involved, the source of funds to start up the business, a business plan, the banking facilities, details about the storage of beers, their content, the bottling of the beers, other goods produced that may be subject to Excise duty, the relationship between LFCP and the partnership, the details as to ownership of all premises and leases, the assets of LFCP and the partnership and any other assets used in the business, information relating to production of business records, the names of accountants and solicitors, the number of employees and self-employed persons engaged and how they were paid, what checks were taken on in respect of new customers and what commercial insurance arrangements were in place.

There was further information sought by Mr Parkinson in a letter dated 19 November 2014 which was mainly about the same subjects but in some instances more specific information.

It is said that there was no power to ask for further information beyond Schedule 1 para. 1, but there is no reason given as to why there was no power. It is suggested that there was an inference that they or their managers wanted to prevent the Claimants from obtaining a registration.

There is no reason to find that it was unlawful to ask questions beyond those set out in the Schedule to the Beer Regulations. Even if it were excessive, that does not make the request unlawful. In any event, there is no basis to infer malice from a request to provide more information than was necessary to determine the application or from any unlawfulness or excess in the requests. There is no reason why any excess in the questions was not due to inadvertence or error, contrary to the bald assertion to opposite effect at para. 96A of the RRAmPoC. This being the first beer registration application that he had dealt with, there is no reason to infer that he had experience or knowledge of such applications and of any limitation in the questions which could be asked.

It is said also that there is a basis to infer malice from the fact that Mr Parkinson failed to decide the first three applications dated 15 May 2012, 11 August 2014 and 28 October 2014, which, it is said, were never formally withdrawn: see RRAmPoC paras. 87g-h and 90. There was no reason not to determine the matter by reference to the most recent application. Having refused the most recent application, there was no reason to consider the earlier applications. Even if the contrary were arguable, there is no reason to treat the failure so to do as anything higher than an administrative error. The same applies to the requirement of re-submission of applications when it was noted that there were apparent errors in the applications and also to any consequent delay in dealing with the applications. There was no reason any of this was unlawful or as giving rise to an inference of malice. Further, if and insofar as these officers delayed determination in order to coordinate with a criminal investigation, there is nothing to show that that was unlawful or a basis for inferring malice.

Further still, the Beer Notice was amended from 1 November 2014 so as to reflect the change in the Beer Regulations which required satisfaction of the due diligence condition, being “defined in section 35.1 of the notice as due diligence is the appropriate reasonable care a company exercises when entering into business relations or contracts with other companies, and how it responds in a deliberate reflexive manner to trading risks identified.” One of those risks identified at para 33e of the RRAmD was the risk of alcohol duty fraud. There is no sensible basis on which to infer that Mr Parkinson knew about this in advance or to infer that this was the reason for his refusals of the first three applications or consequent delay. Likewise, there is no sensible basis to infer that he knew that such delay was unlawful delay was wrong or unlawful. It follows that the mere fact that assertions are made to this effect does not justify a case going forward to that effect if there is no reasonable or legitimate basis for the assertions. It is usual in a claim in malice to identify a motive for a person acting in bad faith or for a collateral purpose, but to the extent that any has been claimed in this action, there is nothing which appears to have any real prospect of success or to indicate that if and insofar as there were errors, that they were actuated by malice.

The pleaded case is that on 19 November 2014, Mr Parkinson made a request to LFCP for further information which was said to be excessive. The Claimants’ case is that he ought to have known that he had no power to refuse the application (RRAmPoC para. 91) and that the amended notice did not confer any lawful basis upon which the application could be refused (RRAmPoC para. 93). It is also said that Mr Parkinson made factual errors (RRAmPoC para. 94-95), that he was motivated to close down the business instead of determining the application (RRAmPoC para. 96), in short that he was actuated by malice rather than that his conduct could be explained by error or negligence.

There is no real prospect of success in these allegations. The Claimants have no real prospect of being able to establish that the requests for information were unlawful. The information was arguably relevant to considering whether to raise a penalty and to LFCP’s suitability to be registered. Further, there is no real prospect in proving that Mr Parkinson knew that the refusal was unlawful. The refusal was upheld on review, as above stated, and there is no criticism of that review in the RRAmPoC. Even if, contrary to the foregoing, the requests were excessive, that did not make them unlawful.

As for malice, in addition to the foregoing, there were objectively based concerns about how LFCP was being run and about its poor compliance record with HMRC. There is no reasonable basis for inferring malice from requests for information relating to these concerns or gaps in information. The suggestion that the requests and concerns were based on malice is untenable in the context of withholding tax of over £727,000 for the non-Beer Duty taxes and about £1 million including the Beer Duty.

There is also no real prospect of being able to show that (i) there was no power to refuse the Fourth Application, or (ii) the Beer Notice was unlawful, let alone that Mr Parkinson was aware that there was no power or of the unlawfulness of the Beer Notice, or that he was not reasonably entitled to rely on the Beer Notice. As regards the allegation that the refusal was unlawful, as noted above, the refusal was upheld on review and an appeal to the First Tier Tribunal was withdrawn before the appeal was heard. The inability to prove the unlawfulness of the refusal is an insuperable barrier to the claim in misfeasance.

The analysis then moves on to malice, that is to say not just unlawfulness, but knowledge of the same. The fact that malice is pleaded does not mean that there must be a reasonable basis for it. There is so much to prove and nothing to go on other than supposition. There have been attempts particularly through the evidence of Mr Grover, exhibiting hundreds of pages of transcripts to show the way in the prosecution witnesses were challenged in the criminal trial. The intention has been to show that they were or might have been acting maliciously with intent to destroy the brewery business whether by procuring a search warrant or an arrest or a prosecution when they knew that it was wrong or unreasonable to do so or by unlawful and improper means. This forensic process, especially of considering a selective extracts from a long criminal trial, does not give rise to a reason to believe that there is a real prospect that malice, whether deliberate or reckless, will be established at trial. If there is anything in any of the criticisms of HMRC employees, it does not give rise to a basis to infer knowledge of unlawfulness or malice, but at highest errors which do not provide grounds for inferring malice.

For all these reasons, the claim in misfeasance discloses no reasonable cause of action and/or has no real prospect of success.

Further or in the alternative to the causes of action requiring proof of malice, there is a claim in negligence. A claim in negligence cannot be used as a way to evade the onerous requirement of malice. It is right to subject to it to some amount of scrutiny to ensure that it is not a plea to avoid the difficulty of proving malice and that it works as an independent cause of action.

The Claimants submit on their first route that their case gives rise to a duty of care on established principles and not amounting to anything novel. Their second route is that, if it is novel, they seek to adopt the incremental approach, being analogous to existing case law for the court to find that the duties pleaded are arguable.

The first route, not said to be based on a novel approach, is what is said to be a standard Hedley Byrne approach based on an alleged negligent misstatement. Its origin is based on alleged oral statements to the effect that the brewery could trade without a licence. It is said that each statement was made to an identifiable person, for a specific purpose, that the Claimants relied on the statements, that the representor must have appreciated foreseeable consequences of the same and that the Claimants have suffered economic loss: see RRAmPoC paras. 103 – 105. It is said that this was not based on any statutory duty, but applies because of conduct outwith the statutory duties. The statutory framework should not be treated as a barrier to the private law duty which would apply to a person existing outside such as framework because of advice given in circumstances giving rise to a Hedley Byrne type duty.

The Claimants say that oral permission was granted to brew beer whilst applications for registration were outstanding. This is said to have occurred as follows:

It is said that the Claimants relied on such permission and that the HMRC assumed responsibility for the accuracy of such advice and that the absence of a written licence could not be relied upon:

The second route is that if it is a novel cause of action, it is said that HMRC created a “sufficiently special relationship between the Claimants and the Defendant to impose a common law duty of care": see RRAmPoC para. 105 pursuant to which HMRC was required (RRAmPoC para. 106). By reference to RRAmPoC paras. 105 – 106, it is said that this gave rise to an assumption of responsibility and a duty of care as follows:

The Claimants say that the original oral permission to brew and its subsequent re-confirmation and the subsequent excessive requests for information and delays in the four applications to brew were positive actions which created a danger that would not otherwise have existed and made matters worse. It is said that applying existing case law incrementally, there is sufficient evidence to give rise to an arguable duty of care for the purpose of resisting a strike out application. It is said that it would be fair, just and reasonable to impose such a duty because the advice given should not be without consequences, and in any event, it would be at a trial that the Court would be best able to appraise questions of fairness, justice and reasonableness.

The Claimants submit that in breach of this duty, HMRC has:

The Claimants say that it cannot be said that non-compliance of the applications or failure to pay Beer Duty caused the subsequent enforcement steps because HMRC ought to have accepted the applications and/or allowed any very minor corrections. For example, Mr Parkinson ought not to have refused an application because an error in the VAT number: see RRAmPoC para.38. Likewise, the claim is that HMRC ought to have accepted the offered Beer Duty having orally permitted trading: see RRAmPoC para. 108.

They also claim that HMRC worsened the Claimants and LFCP's position as regards their compliance with the licensing and taxation regimes by giving an allegedly false assurance about their ability to commence brewing without having a registration: see RRAmPoC para. 108A. This was especially because they would not then be able to pay Beer Duty without a beer licence, and non-payment of Beer Duty would be used as a reason for refusal of a brewing licence and for seizure of beer.

Further, the Claimants submit that the duties of care extended to VAT. This is important because the search warrant, the arrest and the prosecution were in connection with the non-payment of VAT.

The Claimants submit that by reason of emails from Ms Laker dated 8-20 October 2014 that the VAT Unit would “…do everything…to help you and Paul” and that “I’m sure with Us all working together we will get there...”, HMRC assumed a duty of care to provide the Claimants with assistance and/or forbearance which it breached by offering insufficient assistance and/or “aggressively commencing enforcement action in criminal law”: see RRAmPoC para. 110.

In N v Poole Borough Council (AIRE Centre and others intervening) [2019] UKSC 25; [2020] AC 780, Lord Reed (who delivered the leading judgments) explained at para. 64 that:

"Robinson did not lay down any new principle of law, but three matters in particular were clarified. First, the decision explained, as Michael had previously done, that Caparo did not impose a universal tripartite test for the existence of a duty of care, but recommended an incremental approach to novel situations, based on the use of established categories of liability as guides, by analogy, to the existence and scope of a duty of care in cases which fall outside them. The question whether the imposition of a duty of care would be fair, just and reasonable forms part of the assessment of whether such an incremental step ought to be taken. It follows that, in the ordinary run of cases, courts should apply established principles of law, rather than basing their decisions on their assessment of the requirements of public policy. Secondly, the decision re-affirmed the significance of the distinction between harming the claimant and failing to protect the claimant from harm (including harm caused by third parties), which was also emphasised in Mitchell and Michael. Thirdly, the decision confirmed, following Michael and numerous older authorities, that public authorities are generally subject to the same general principles of the law of negligence as private individuals and bodies, except to the extent that legislation requires a departure from those principles. That is the basic premise of the consequent framework for determining the existence or non-existence of a duty of care on the part of a public authority." (emphasis added)

Lord Reed then identified the current principles in relation to a duty of care at para 65 as follows:

“It follows (1) that public authorities may owe a duty of care in circumstances where the principles applicable to private individuals would impose such a duty, unless such a duty would be inconsistent with, and is therefore excluded by, the legislation from which their powers or duties are derived; (2) that public authorities do not owe a duty of care at common law merely because they have statutory powers or duties, even if, by exercising their statutory functions, they could prevent a person from suffering harm; and (3) that public authorities can come under a common law duty to protect from harm in circumstances where the principles applicable to private individuals or bodies would impose such a duty, as for example where the authority has created the source of danger or has assumed a responsibility to protect the claimant from harm, unless the imposition of such a duty would be inconsistent with the relevant legislation.”

It is not an answer in respect of the creation of a source of danger that a more sophisticated person would have appreciated the true position if the claimant cannot be expected to have realised the same. As was said in Kevin So v HSBC Bank plc [2009] EWCA Civ 296 per Etherton LJ (as he then was) at para. 51:

“….Looking at the matter objectively, it was likely that Mr So and Mrs Lu would be concerned to know, and would rely upon, HSBC's representation that HSBC intended to adhere to the instructions in the LoI and had accepted those instructions. HSBC did not know whether or not they were sophisticated investors. Even if it be correct that a reasonably prudent investor would have sought advice on how the arrangements in the LoI would work in practice, there was no reason for an investor to seek advice on the truthfulness and reliability of HSBC's own representation that it had accepted the LoI and intended to comply with its terms…. the truth of the representations in the present case, being representations about HSBC's own intentions and beliefs, were uniquely within the knowledge of, and could only be verified by, HSBC itself. They were not verifiable by some independent expert….” (emphasis added)

In HXA v Surrey County Council [2024] 1 WLR 335, 358 at para. 87. Lord Burrows and Lord Stephens JJSC stated:

“It is clear that a local authority has relevant statutory duties and powers under, for example, the 1989 Act (see paras 22-33 above). It is also established law (see para 21 above), as laid down in X (Minors) v Bedfordshire CC, that, in respect of such duties and powers, there is no cause of action for the tort of breach of statutory duty even if the breach of statutory duty is a negligent breach. That does not mean that the common law tort of negligence has been excluded by statute. The statute is, in that respect, neutral. But what it does mean, as emphasised in N v Poole (see para 49 above), is that the courts must decide whether there is a duty of care at common law by applying to the public authority the same principles that would be applied if the public authority had been a private individual. See also, generally, the illuminating articles by MJ Bowman and SH Bailey, "Negligence in the Realms of Public Law - A Positive Obligation to Rescue" [1984] PL 277; SH Bailey and MJ Bowman, "Public Authority Negligence Revisited" (2000) 59 CLJ 85. It further means that one has to be very careful not to slide back to resting the duty of care, and breach, at common law on the mere fact that the public authority had statutory duties towards, and powers in respect of, the claimant. In our view, some of the submissions made by Ms Gumbel KC on behalf of HXA and YXA fell into this trap. That is, she sometimes relied on there being a statutory duty on the local authority to safeguard children in need as the very reason why there must be a duty of care owed to such children.As we have just indicated, what is required (which the courts, perhaps unhelpfully, have sometimes referred to - see paras 61(iii), 70, 72, 74, 80, 83 above - as the "something more" or "something else") is that there would have been a duty of care owed - because, for example, there is an assumption of responsibility - had the public authority been a private individual.This is not to deny that, assuming that there would otherwise be a common law duty of care owed, a particular statute may expressly or impliedly exclude that duty of care (emphasis added).”

In this context, the assumption of responsibility was said to have been at p. 360, para. 91:

“It is very common for the language of “assumption of responsibility” to be used at a high level of generality. However, it helps to sharpen up the analysis always to ask, what is it alleged that the defendant has assumed responsibility, to use reasonable care, to do? Although Ms Gumbel framed the assumption of responsibility in several different ways, in essence she needs to satisfy the court that there was, arguably, an assumption of responsibility, to use reasonable care, to protect HXA and/or YXA from the abuse that the local authority was aware of or ought to have known about….(emphasis added).”

To like effect, in Tindall v Chief Constable of Thames Valley Police [2024] 3 WLR 822, in the judgment of Lord Leggatt and Lord Burrows JJSC, it was said at para. 75:

“While somewhat elusive—and possibly having different requirements in different contexts (e g pure economic loss and misrepresentations)—for present purposes an assumption of responsibility involves the idea that a person may, by words or conduct, expressly or impliedly promise (or undertake or give an assurance) to take care to protect another person from harm.”

In Tindall v Chief Constable of Thames Valley Police [2024] 3 WLR 822, in the judgment of Lord Leggatt and Lord Burrows JJSC, it was stated: (with reference to the case of Michael v Chief Constable of South Wales Police [2015] UKSC 2)

“38.

Lord Toulson, who gave the majority judgment, affirmed the general rule that there is no duty of care to prevent harm caused by others. He said, at para 97:

"The fundamental reason ... is that the common law does not generally impose liability for pure omissions. It is one thing to require a person who embarks on action which may harm others to exercise care. It is another matter to hold a person liable in damages for failing to prevent harm caused by someone else."

He went on to clarify that the rule is not absolute and referred, at paras 98-100, to what he described as two well recognised exceptions. The first, as exemplified by Dorset Yacht (see para 19(iii) above and para 79 below), is a situation where the defendant is in a position of control over the third party who has directly caused the damage…”

…

“44.

Having examined some of the main cases, we can summarise the central principles to be derived from them as follows:

(i)

There is a fundamental distinction, drawn in all the above cases, between making matters worse, where the finding of a duty of care is commonplace and straightforward, and failing to confer a benefit (including failing to protect a person from harm), where there is generally no duty of care owed.

(ii)

An example of the former (making matters worse), where there was held to be a duty of care owed by the police, is Robinson. As regards other emergency services, a more difficult example is the Hampshire case in Capital & Counties (turning off the sprinkler system). All the other cases mentioned fell on the other side of the line.

(iii)

A difficulty in drawing the distinction (between making matters worse and failing to protect from harm) is how to identify the baseline relative to which one judges whether the defendant has made matters worse: see Sandy Steel, "Rationalising omissions liability in negligence" (2019) 135 LQR 484, 487. The cases show that the relevant comparison is with what would have happened if the defendant had done nothing at all and had never embarked on the activity which has given rise to the claim. The starting point is that the defendant generally owes no common law duty of care to undertake an activity which may result in benefit to another person. So it is only if carrying out the activity makes another person worse off than if the activity had not been undertaken that liability can arise.

(iv)

Another way of stating the general rule is to say that a person owes a duty to take care not to expose others to unreasonable and reasonably foreseeable risks of physical harm created by that person's own conduct. By contrast, no duty of care is in general owed to protect others from risks of physical harm which arise independently of the defendant's conduct - whether from natural causes (as in East Suffolk) or third parties (as in Michael and Ancell).

(v)

Although not made out in any of the above six cases, there are exceptions to the general rule that there is no duty of care to protect a person from harm, for example, where the defendant has assumed a responsibility to do so or has control of a third party.” (emphasis added)

…

“58.

We also agree with the claimant that the detailed formulation of the interference principle by McBride and Bagshaw is correct. In particular, it is not enough to show that the defendant has acted in a way which had the effect of putting off or preventing someone else from helping the claimant. Rather, in line with the well-established approach to establishing any duty of care, for a duty of care to arise it is necessary to show that the defendant knew or ought to have known (ie that it was reasonably foreseeable) that its conduct would have this effect.”

In Desmond v Chief Constable of Nottinghamshire Police [2011] PTSR 1369, Sir Anthony May P. said at paras. 38-40:

“38.

A statutory power cannot of itself generate a common law duty of care: see East Suffolk Rivers Catchment Board v Kent [1941] AC 74 and the Gorringe case [2004]1 WLR 1057, para 41. Whether a statutory duty gives rise to a private common law cause of action is a question of construction of the statute. It requires an examination of the policy of the statute to decide whether it was intended to confer a right to compensation for its breach. If the statute does not create a private right of action, it would be unusual, to say the least, if the mere existence of the statutory duty could generate a common law duty of care. The existence of a broad public law duty alone can scarcely give rise to a common law duty of care owed to an individual.

39.

The common law should not impose a concurrent duty which is inconsistent, or may be in conflict with, the statutory framework. If the policy of the statute is not to create a statutory liability to pay compensation, the same policy should also ordinarily exclude the existence of a common law duty of care. Lord Scott put the essential principle for statutory duties as follows in the Gorringe case, at para 71:

“if a statutory duty does not give rise to a private right to sue for breach, the duty cannot create a duty of care that would not have been owed at common law if the statute were not there. If the policy of the statute is not consistent with the creation of a statutory liability to pay compensation for damage caused by a breach of the statutory duty, the same policy would, in my opinion, exclude the use of the statutory duty in order to create a common law duty of care that would be broken by a failure to perform the statutory duty.”

40.

There may be special circumstances in which a public authority has assumed an obligation to a claimant to act in a particular way. But if Parliament stops short of imposing a private law duty in favour of individuals, sufficiently compelling special circumstances are required, beyond the mere existence of the duty or power, to make it fair and reasonable to impose a duty to an individual of a scope to be derived from the special circumstances. There may be particular cases in which public authorities have actually done acts or entered into relationships or undertaken responsibilities such that they are taken to have assumed responsibility to a claimant so as to give rise to a common law duty of care.” (emphasis added)

41.

Factors to be taken into account include the subject matter of the statute and the intended purpose of the statutory duty or power; whether a concurrent private law duty might inhibit the proper and expeditious discharge of the statutory functions; whether such a duty would expose the authority's budgetary and other discretionary decisions to judicial inquiry; the ability of the claimant to protect himself; and the presence or absence of a particular reason why the claimant was relying or dependent on the authority. If there is reliance, it may easily lead to the conclusion that the authority can fairly be taken to have assumed responsibility to act in a particular way. But reliance alone is usually not enough. Some statutory duties or powers are less susceptible to a concurrent common law duty than others. The law does not favour blanket immunity. See for these propositions Lord Nicholls (who dissented in the result) in Stovin v Wise [1996] AC 923 , 937 c -938 e . In the present case, we consider that the modified core principle to be derived from the Hill case [1989] AC 53 (see above) is relevant, but arguably not of itself determinative.

Of further assistance is the analysis of the Supreme Court is SXH v Crown Prosecution Service [2017] 1 WLR 1401 per Lord Toulson at para. 38:

“The duty of the CPS is to the public, not to the victim or to the suspect, who have separate interests. To recognise a duty of care towards victims or suspects or both, would put the CPS in positions of potential conflict, and would also open the door to collateral interlocutory civil proceedings and trials, which would not be conducive to the best operation of the criminal justice system. Similar considerations are relevant when considering the applicability of article 8 in the context of a decision to prosecute. A decision to prosecute does not of itself involve a lack of respect for the autonomy of the defendant but places the question of determining his or her guilt before the court, which will itself be responsible for deciding ancillary questions of bail or remand in custody and the like.”

In the case of Suresh v General Medical Council [2025] EWHC 804 KB, a question arose as to whether there was a duty of care as regards the communication to a doctor in connection with an investigation against the doctor. The Court (Mr Marcus Pilgerstorfer KC) said at para. 170:

“The recognition of a duty of care to those who are subject to investigation would in my view risk giving rise to clear conflicts where the interests of those subject to the investigation would point in One Direction, whereas the duty to investigate in accordance with the overarching objective would point in the other...”

At para. 217, the Deputy Judge stated as follows:

“i)

Applying general principles in accordance with the framework identified in Robinson , in my judgment it would be inconsistent with the statutory scheme established under the Act and the Rules to hold that the GMC owes a duty of care to a doctor subject to investigation in relation to the timing, manner and content of the communication to him of that fact. The statutory powers and duties of the GMC restrict the scope of its liability in negligence as explained in the cases of D v East Berkshire, Jain, SXH , Robinson and Poole.

…

iii)

The pre- Robinson caselaw falls to be read in light of the developments explained in that and subsequent cases. I have examined and applied the general principles governing liability in negligence without needing to consider separately whether the existence of a duty is fair, just and reasonable, and within that context having recourse to policy considerations of the kind referred to in the older authorities….

iv)

Had it been necessary to give effect to policy considerations (as described by Lord Reed, or by affording such considerations a more centrally dominant role as Lord Hughes did in Robinson at [118]), I would have attached significant weight to those identified in cases such as Elguzouli-Daf and Brooks. Those considerations seem to me to apply just as much to a regulator in the position of the GMC as they do to the police and the CPS. Imposing a duty of care would in my judgment have a similarly chilling and diverting effect on the GMC's task of investigating fitness to practise in order to protect the public….As Lord Hughes observed in Robinson at [112] the Court can give effect to policy considerations where the consequences of defensive behaviour can scarcely be doubted; that in my view is the position here….”

The reference to Jain is to Jain v Trent SHA [2009] UKHL 4, An unsuccessful negligence claim for financial losses by the owners of a care home against a regulator in which Lord Scott held at para 28:

“… this line of authority demonstrates, in my opinion, that where action is taken by a state authority under statutory powers designed for the benefit or protection of particular class of persons, a tortious duty of care will not be held to be owed by the state authority to others whose interests may be adversely affected by an exercise of the statutory power. The reason is that the imposition of such duty would or might inhibit the exercise of the statutory powers and be potentially adverse to the interests of the class of persons the powers were designed to benefit or protect, thereby putting at risk the achievement of the statutory purpose.”

Where there are alternative remedies such as an appeal process and judicial review, this might be inconsistent with the finding of a duty of care at common law. This was the approach of the court in Neil Martin Ltd v Revenue and Customs Commissioners [2007] EWCA Civ 1041 at paras. 67-69 per Chadwick LJ:

“67.

The effect, in this Court, is that we must approach this appeal on the basis that Mr Harrison was wrong to tell Mr Martin, in June 1999, that the company's application for a tax certificate could not be accepted unless supported by the company's own accounts. The question which we have to consider is whether Mr Harrison assumed a responsibility to give Mr Martin, on behalf of the company, information which was correct. In my view the judge was right to hold that Mr Harrison did not assume a responsibility in that respect. It must be kept in mind that it was for the company to decide the basis upon which it would make an application under section 561(2) ICTA; and it was for the company to make that application in the manner (and in the form) prescribed by the Regulations. It was not for individual officers of the Revenue to tell applicants what had to be done: and there is nothing in the facts found by the judge to suggest that Mr Martin (or the company) thought that it was. They had consulted their own accountant; and, on the basis of his advice, they did not accept that the information which Mr Harrison had given was correct.

68.

The real complaint, in this context, is that in June 1999 Mr Harrison refused to accept an application which was not supported by the company's own accounts. But the remedy in respect of that refusal lay in the company's hands. It could have sought an order (in judicial review proceedings) requiring the Revenue to accept its application. Or it might have sought to treat the refusal to accept the application as a refusal to issue a certificate; and appealed from that refusal under section 561(9) ICTA.

69.

As I have said, it was for the company to make its application for a tax certificate in the manner (and in the form) prescribed by the Regulations. That, as it seems to me, provides the answer to the question whether it would be fair, just and reasonable to impose a duty of care on Mr Harrison in relation to the lack of a signature on the July forms at the time when those forms were left with him on 20 July 1999. We have copies of those forms in the documents supplied to us. The CIS3 form (Company Application Form) contains (on its face) the printed instruction: "To apply for a Certificate, read CIS3 Booklets A and B and then complete all of this form". The form provides for a declaration by the company secretary that he or she is applying for the company to hold a CIS6 tax certificate; and there is a box for his or her signature. The CIS8 form (Application Form for a Director or Company Secretary) contains the printed instruction: "If you want to apply for a Subcontractors Tax Certificate, fill in the rest of this page, sign the declaration at 3 overleaf . . .". Again, there is a box for the applicant's signature. In those circumstances Mr Martin could have been in no doubt that the forms required his signature. If an application was to be made on behalf of the company, it was his responsibility to ensure that the forms were signed. Although it was plainly sensible for the Revenue's internal procedures to make provision for its officer to check, when the application forms were lodged, that they had been signed, there is no basis for the imposition of a duty of care. In my view the judge was correct to hold that no duty arose in relation to Mr Harrison's failure to notice, on 20 July 1999, that the forms were unsigned.”

Chadwick LJ went on at para.72 to find that there was no common law duty of care to process applications within a reasonable time or to take care to avoid delay. On the other hand, at para. 73, he went on to find that a common law duty of care was owed in respect of an employee who chose to complete a declaration in support of an application for a registration card without the authority of the applicant. That went beyond an administrative mistake because the employee “Was not processing an application which had been made: he was assuming an authority to make an application which had not been made.”

In Tindall, at para. 68, the Court said the following about liability for omissions where the damage is caused by a third party such as the Robinson case:

“…Mr Bowen cited the many judicial statements urging caution before striking out a claim in an area of law which is uncertain and developing, and emphasising the desirability that any further development of the law should be on the basis of actual and not hypothetical facts: see eg X (Minors) v Bedfordshire County Council [1995] 2 AC 633, 740-741; Barrett v Enfield London Borough Council [2001] 2 AC 550, 557; Waters v Comr of Police of the Metropolis [2000] 1 WLR 1607, 1613-1614. In the last of these passages Lord Slynn of Hadley described the law of negligence in relation to public authorities as such a developing area. That was a fair description when these cases were decided. But it is not true now. The law has since been settled by successive decisions of this court, particularly the seminal decisions in Michael and Robinson outlined earlier in this judgment. We agree with the Court of Appeal that the applicable law is clear and not in a state of flux. When it is clear, as it is here, that on the facts alleged taken at their highest no duty of care was owed, it would be unjust and a waste of resources to allow the claim to proceed to a trial.”

The Court was also referred to a decision of Carnwath J (as he then was) in R v Commissioners of Customs and Excise ex parte F & I Services [2000] STC 364 in which there were references to the fluid state of the law about negligence against public officials: see paras. 64 – 69. This has to be viewed in the light of the much more recent observations in the preceding paragraph from Tindall.

The Court was provided with a number of speaking notes which it has read. The Claimants submitted two notes of 35 pages and 10 pages respectively each dated 8 June 2025 in addition to a 10-page submission about the statutory scheme dated 5 June 2025. HMRC submitted a speaking note of 23 pages dated 6 June 2025. It is not intended to rehearse everything in these notes in this judgment. In particular the longer of the notes of the Claimants dated 8 June 2025 sets out in detail the facts and analysis in a number of cases including Banca Nazionale del Lavoro SPA v. Playboy Club London Limited [2018] UKSC 43; Welton v North Cornwall DC [1997] 1 WLR 570; 4U2 Ltd. v Glasgow [2025] SC GLA 10; Neil Martin Ltd v Revenue and Customs Commissioners [2007] EWCA Civ 1041. Account has been taken of these cases, and the summary of the law above suffices for the purpose of this judgment. Each case in this area is fact specific and the questions of assumption of responsibility and duty of care are very much fact dependent.

It is said that oral permission was given to commence brewing prior to obtaining a licence. The alleged oral permission was not confirmed in writing at the time and is challenged. Further, as recognised by the Claimants in a speaking note of 8 June 2025 at para. 25a, there was limited evidence about the exact circumstances of the original conversation leading to the alleged reassurance of Ms Renton, but it must be assumed for the purpose of a strike out application that there is a case which cannot be decided on this application that oral permission was granted pending the written application being considered There is evidence later in October 2012 of Mr Ansah that he permitted recommencement of operations, whilst disagreeing with the decision as the operation had no approval. The alleged assumption of responsibility and duties said to arise out of such oral permission stand to be scrutinised both by reference to case law and the unchallengeable facts of the instant case.

The starting point is that a public authority does not owe a duty at common law merely because they have statutory powers or duties. This is not a case where the duty relied upon is a statutory duty. In that regard, it is not said that there was a statutory duty of care in that there was nothing in the regulations and statutory powers which imposed the same. The duty is said to be a duty at common law based on an assumption of responsibility. It is the law that public authorities may owe a duty of care where principles applicable to private individuals would impose such a duty provided that there is nothing inconsistent with the duty by the legislation from which their powers and duties are derived. Likewise, there can be an assumption of responsibility unless the imposition of the duty would be inconsistent with the legislation: see especially the quotation above from N v Poole BC at [65].

The most important alleged oral permission was the first one in time in that that is alleged to have created the status quo of trading without a licence. That was the oral permission alleged to have been given by Ms Renton in April 2012, denied by her, but assumed to have been given for the purpose of a strike out application. The Claimants submitted by reference to the case of Kevin So at para. 51 that there would be no reason for them not to trust the advice that the trading could take place on the basis of oral permission. It is claimed that there was reliance on the representations and that this must have been appreciated by HMRC. It is therefore submitted that there was a direct relationship for the purpose of proximity, such that it was equivalent to a contract.

Even if it were correct that oral permission had been granted, the consequences said to flow from this do not stand up to scrutiny. It is said that the consequence of advice given by Ms Renton in April 2012 which she ought to have foreseen would be that any attempts to pay Beer Duty would then be refused, which in turn would have consequences leading to seizure of assets or refusal of registration or prosecution. This is not a sensible analysis. If the advice were inaccurate, then such a short term of continuing without a licence would be expected to be sorted shortly by the provision of a licence. If there was a problem such as not accepting Beer Duty or some other problem, then the brewery would be expected to make an informed decision as to what to do and whether to continue trading. The concept that trading on for years without a licence and without paying Beer Tax in the face of numerous communications from HMRC seeking information, the production of accounts and the regularisation of the position cannot have been sensibly in the contemplation of the person giving such oral permission.

There was no reason for a junior employee like Ms Renton to have had any knowledge that any attempts to pay Beer Duty would then be refused, let alone the possibility of trading thereafter for a long period with no payment of Beer Duty or indeed hardly any taxes. It makes no sense that she would have been or ought to have been in a position to foresee any seizure or refusal of registration more than two years later. In those circumstances, there was no assumption of responsibility for consequences which could not sensibly have been within her contemplation at the time.

Further, it does not follow from an unauthorised permission to brew that the Claimants or LFCP would be granted a licence or registration as alleged or at all or that they would have a legitimate expectation of the same. The question of the grant of the licence or registration would still fall to be considered. The suggestion that this should be a part of the assumption of responsibility would be in conflict with the legislation and the statutory powers in respect of licensing and then collection of tax. It was submitted that this case was not an investigation or a prosecution type case: in fact it was a case in the context of public regulation of the beer industry and touched on licensing, enforcement and prosecution.

Further, and particularly stark in this case, the provision of oral permission to brew would not and could not exonerate LFCP or the Claimants from paying VAT and other taxes, leaving aside Beer Duty. It is not sensible that the person giving oral permission should contemplate or foresee that the trader may go on not only trading but not paying these taxes.

The statement that there was a consequence that the LFCP or the Claimants could not be prosecuted for illegal brewing as a result of the assurance does not arise for consideration because there was no prosecution for illegal brewing, but instead for fraudulent evasion of taxes other than Beer Duty. It therefore follows that the start of the case about Ms Renton’s oral permissions did not have and could not have any of the consequences alleged. It follows that the alleged assumption of responsibility attributed to Ms Renton has no real prospect of success.

As for the alleged repetition of the oral permission by Mr Ansah in March 2013 and by Mr Snazel during the visit of 6 August 2014, which permission is denied, it will be assumed for the purpose of a strike out application that the permissions were granted. Many of the above points apply. In particular, there was no reason to believe that the trading without a licence would continue for months. Further, it does not follow from this that the licence or the registration would be granted. Any oral permission to brew would not and could not exonerate LFCP or the Claimants from paying VAT and other taxes apart from Beer Duty. Here too, the question of prosecution for illegal brewing does not arise because there was no such prosecution. The notion that hardly any other taxes would be paid could not have been contemplated at least on the back of the putative oral permission to continue to trade.

In any event, there is a disconnect between the alleged oral permissions and the search warrant, arrest and prosecution not for illegal trading but for non-payment of VAT and taxes other than Beer Duty.

The case that HMRC created a “sufficiently special relationship between the Claimants and the Defendant to impose a common law duty of care” is not sustainable. The core problem is that there are not sufficiently compelling special circumstances (to use the language of Sir Anthony May P. in Desmond quoted above) such as to give rise to a common law duty of care or to give rise to an assumption of responsibility with that consequence. As was pointed out in HXA v Surrey County Council, there can be a high level of generality in referring to an assumption of responsibility. The problem which arises when seeking to define the particular respects in which it is alleged that the defendant has assumed responsibility. When the Claimants have sought to define the duty of care, the case it encounters insuperable problems of definition. When defined, the alleged duties either are an exorbitant consequence of the alleged conversations or give rise to conflicts with public law functions.

There was nothing in the relationship which was different from other relationships such as to create a duty to process the applications with reasonable care and expedition or to give “accurate not misleading advice”. This is contradicted by established case law. The case of Neil Martin Ltd v Revenue and Customs Commissioners is particularly apposite. In that case, there was no common law duty of care to process applications without a reasonable time or take care to avoid delay. There was no assumption of responsibility to provide correct information. There was a common law duty of care about something so far removed from administrative matters as to take the case into a different realm, namely where an application was processed by the employee without the authority of taxpayer such that public body was assuming an authority to make application which had not been made.

This is entirely consistent with that which was said in Jain about not imposing a duty which would or might inhibit the exercise of statutory powers and be potentially adverse to the interests of the public at large. Further, if there was a departure from what would be expected of the public body, then the starting point would be to consider alternative remedies such as an appeal process or judicial review. This too would be inconsistent with the finding of a duty of care at common law.

Likewise, the notion that there was an assumption of responsibility or a special relationship to impose a duty on the public authority to put in place sufficient administrative systems so as to enable the Beer Duty to be paid is far removed from a private law duty. The structure of the administrative systems and whether it ought to be able to collect the Beer Duty without registration was a matter for the public authority subject to judicial review or some other public method of complaint.

In short, the case about the special relationship or the assumption of responsibility has consequences which are at odds with established case law. They give rise to potential conflicts in respect of the licensing function, the investigative function and enforcement. If there is the need for redress, then in an appropriate case, this could be dealt with by judicial review or some statutory appeal method or complaint. There is no reason for this to be the subject of a common law duty of care.

It is said that HMRC has been in breach in failing to process compliant applications and/or in failing to grant a brewing licence to which LFCP was entitled as a matter of public law. The remedy is not in private law but through the statutory scheme and/or judicial review. Likewise, it is said that excessive information was sought which was unreasonable or irrational in a public law sense. There is no reason why such consequences cannot be addressed by public law challenges such as obviates the need for a private law duty.

Further, this is not a case which requires a trial in order to consider whether the suggested route 2 and the novel duty of care is something which is fair, just and reasonable. Before getting there, it is obvious for the reasons given above that the proposed duty is not justified and so no detailed investigation is required in order to assess the fairness, justice and reasonableness of the proposed duty.

It is said that by reason of emails from Ms Laker dated 8-20 October 2014 that the VAT Unit would “…do everything…to help you and Paul” and that “I’m sure with us all working together we will get there...”, HMRC assumed a duty of care to provide the Claimants with assistance and/or forbearance which it breached by offering insufficient assistance and/or “aggressively commencing enforcement action in criminal law”: see RRAmPoC paras. 109 - 110.

The Claimants allege that breaches of these duties led C1 and/or LFCP to “believe there was no immediate urgency to resolve the outstanding VAT and other tax matters”: see RRAmPoC para. 110A. They allege that but for such assurances, they would have acted with urgency such that they would have resolved these matters before 2 December 2014.

The Claimants say that:

“The liquidation of LFCP and the financial losses claimed herein were caused by the said malicious, misfeasant and negligent acts which brought about the destruction of a thriving and fast growing brewing business which, had it not been destroyed by the defendant’s acts and omissions would have continued to be profitable and been valued in today's market at a figure in the region of £50 million and or would have been subsequently taken over/sold by a large brewing business.”

None of this case raises a reasonable cause of action. First, whatever was said by Ms Laker who was involved in civil VAT collection could not have given rise to a fetter on a criminal investigation or how the registration process would be completed. No comments made by her in the context of VAT recovery could extend to wider taxation matters and in particular whether there were reasonable grounds for suspecting criminal conduct. These were matters outside the remit of those who collected VAT and could not give rise to the duties alleged by the Claimants. It is not pleaded that Ms Laker and Ms Thomas themselves did not provide assistance.

In any event, the suggestion that such unspecific language as used by Ms Laker would give rise to some assumption of responsibility has no real prospect of success. There was no specific commitment to give a particular time or to halt steps being taken by the VAT for collection of unpaid taxes or to any particular assistance. If there was an offer to assist, it was not intended to enable the Claimants to delay providing the required information to pay the outstanding VAT and other taxes. There was no representation about the brewery being registered or that a criminal investigation would not proceed.

The suggestion that there was a belief that there was no immediate urgency is unrealistic to a high degree in the light of the history of the accumulating indebtedness going back over a period of almost two years. It is important to note what this means as regards VAT, namely that the taxpayer was bound to account for the VAT received subject to any inputs, and yet each quarter it paid virtually nothing. In other words, it used the VAT for itself and did not account and pay to HMRC. It accumulated over £727,000 of taxes in this way irrespective of Beer Duty. It faced numerous communications from HMRC which would obviously connote urgency, but it met them by purported excuses about management systems and accountants not doing their job. In my judgment, it is unrealistic to suggest that such unspecific remarks against this background had the effect that there was no urgency about payment of these taxes.

A submission on behalf of the Claimants is that without inaccurate advice or reassurance, the brewing would not have re-started before a licence had been obtained. Then there would have been no outstanding Beer Duty and the business would not have been destroyed. This does not provide an answer to what occurred because it does not explain the failure to pay hundreds of thousands of pounds of VAT and taxes other than Beer Duty over a period of about two years. It was this and not alleged advice or reassurance that led to the search warrant and the prosecution. Further, it does not explain why after trading, the Claimants and the brewery businesses failed to respond adequately or at all to the numerous requests for accounts, for information and for explanations over such a vast period of time. The case that all of this occurred because of the alleged advice or reassurance does not stand to scrutiny. Likewise, the vague statements of Ms Laker and Mr Thomas did not amount to a promise not to take collection and enforcement action.

A related submission throughout in respect of the cases of misfeasance and negligence is that HMRC by their representations and by the failure to process the brewing licence lulled the Claimants into a false sense of security via the oral permission to brew. This case is not sustainable. HMRC had RPC to believe that there was no excuse for the non-payment of vast sums of VAT over about a two-year period. They had RPC that there was a fraudulent evasion of tax on the part of the businesses, and no genuine excuse for the numerous requests over the first half of the period of time going unheeded with inadequate excuses about accountants and business management systems.

Further, the assertion that the payments would have been made but for such statements or assurances is also devoid of reality. When a new accountant was said to have come on board in late November or early December, it was said that the new accountant would need until July 2015 to sort out matters. There is no rational basis for submitting that in these circumstances matters could have been sorted out earlier. When it was that there was negotiation much later for payment of arrears, this was only on a condition that a prosecution would be dropped. There is no evidence at any time over the period of almost two years of any urgency or engagement on the part of the LFCP or the Claimants or at any time thereafter to pay what was due. There is also no specific evidence of how LFCP or the Claimants were at that time in a position to make payments or, if they were in a position to pay, why they did not. If they were in a position to pay, there has been no particularisation of the resources from which payment would have been made and by when it is said that such payment would have been made, and why they chose not to resolve these matters.

There are other points to be made about VAT. Insofar as the Claimants have made out a case to the effect that there was an assumption of responsibility or a duty of care in respect of registration and Beer Duty, this is not an answer to the non-payment of vast sums of VAT and other taxes.

In the discussion of case law about summary judgment and strike out applications, it was stated that whilst the Court cannot weigh evidence and ought not to engage in a mini-trial, a court is not bound to accept at face value and without analysis everything that a claimant says in his statements before the court. In some cases, it may be clear that there is no real substance in factual assertions. These statements are of that nature. They do not found a case with a real prospect of going anywhere at a trial even allowing for anything which might develop between now and a trial. In the light of all of the above, the case that HMRC in some way made the position of the Claimants worse is not made out.

It follows from the above that it is not necessary to make findings in respect of limitation. It suffices to say the following. The claim for malicious prosecution and malicious procurement of a warrant are clearly in time. The claims for misfeasance in public office had an essential part of the tort malice on the part of the public official. They are subject to analysis under section 32 of the Limitation Act 1980 which provides that where has been concealment, the limitation period does not start to run until the concealment could with reasonable diligence have been discovered. There is an argument with a real prospect of success that the concealment here was of the malice which could not have been discovered with reasonable diligence prior to the execution of warrant or the arrest. There is therefore a case to go to trial that these claims were not statute barred.

In respect of the claims in negligence, the claim was brought on 28 November 2020. It follows that any cause of action in negligence which accrued before 28 November 2014 is statute barred on the basis of a six-year limitation period, namely that “An action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued”: see the Limitation Act 1980 section 2. It is said that the claim in negligence which depended upon damage did not accrue before 28 November 2014 on the basis that whilst there might have been a contingent liability prior to that arising out of continuing trading with assurances, until the contingency occurred of the search warrant, arrest and prosecution, there was no damage for the purpose of the accrual of the cause of action in negligence: see Clerk & Lindsell on Torts 34^th Edition paras. 30-13 – 30-15. This is a difficult question upon which it is not necessary to express a view having regard to the other conclusions in this judgment.

HMRC submits that the ambit of the assignment of LFCP’s claims does not cover the claims relating to negligent or misfeasant failure to process or grant the brewing licence applications to LFCP. It is correct that the deed of assignment is not drafted as broadly as one might have expected. Without deciding the point in a strike out application, it is sufficient to say that there is force in the response of the Claimants. That is that the assignment includes “any claim that the Company may have in connection with…(a) the seizure of beer/equipment of the Company.” The argument of the claimants is that the alleged misfeasance and/or negligence in failing to process and/or grant the brewing licence applications led to the seizure among other things of the beer. On that basis, the claims would be encompassed by the assignment since they were connected with those matters. The term “in connection with” is given a broad meaning.

There is an artificiality at the heart of every aspect of the case of the Claimants. It concentrates on the applications for registration and Beer Duty. It is largely about rejecting applications in circumstances where it is said that there were mere administrative errors which should have been waved through. It emphasises the number of questions that were asked of the applicant for registration and contends that they went beyond the statutory scheme and were in any event excessive. The thrust of the case is that HMRC had a closed mind and was intent on failing the applicant and in destroying the business. All of this is said to contradict oral assurances and/or representations that trading could commence prior to registration, and in the context of VAT collection that colloquially, they would get through this together.

This narrative ignores the most critical aspect of the history, namely the non-payment of VAT and taxes other than beer duty. Even if there were questions to answer as to whether oral permission was given or whether HMRC ought to have accepted payments on account of Beer Duty prior to registration or whether excessive questions were asked, none of this confronts the central feature.

The search warrant was not in respect of Beer Duty or trading without registration, even if that was inserted in the application by way of background. It was about non-payment of VAT and other non-Beer Duty taxes of a vast sum of money over a period of almost two years. The arrears of over £727,000 were very large relative to the £25,000 or so paid on account. Since most of it was in the nature of VAT, there was a contrast between millions of pounds of turnover and paltry sums paid.

This is not the end of the matter. In the first half of the two-year period of contact between HMRC and C1 seeking accounts and other information in order to receive payments, there were numerous assurances given that such information was about to be provided. The leitmotif of the excuses was of an incompetent accountant and poor management accounting systems. Even towards the end, it was said that it was going to take until July 2015 to resolve matters.

There was good reason for HMRC to be at best sceptical and in the end, there was an RPC for HMRC to believe that the non-payment was not about cash flow but about fraudulent evasion. The information that it was an incompetent accountant would have been more plausible if there were urgent steps taken to rectify matters. Contact between the former accountant and HMRC was to the effect that the problem was caused by C1 and not by the accountant. Further, there should not have been problems about managements systems, but if this was the case, then HMRC was entitled to expect that there would be speedy overhaul. A small to medium sized brewery was not such a complex business that such a problem, if real, could not be resolved speedily.

The factual summary at the start of this judgment refers in detail to the numerous communications seeking resolution from HMRC. The fact that in the second half of the two-year period, there was little communication from HMRC does not excuse the taxpayer. The relevant businesses were VAT registered, there was PAYE to pay in respect of staff and there were student loans to be deducted from salaries and accounted for to HMRC. HMRC had reasonable cause to suspect that the problem was one of fraudulent evasion.

Against this background, there is no real prospect of success of a case which operates in the realm of registration and Beer Duty and ignores the VAT and other taxes. It was the latter which formed the basis of the application for the search warrant and for the arrest of C1 and which gave rise to the criminal prosecution.

Even if it were possible for the applications for registration and payment of Beer Duty to be sorted absent arrears of other taxes, the matter was different as regards the hundreds of thousands of pounds owed in respect of VAT and other taxes. Upon the seizure of beer, there was an immediate payment of tens of thousands of pounds so that beer would be returned. There was no immediate payment of the vast arrears of VAT and other taxes.

There did come a point in time when there was an offer of a conditional nature, namely, to forestall a criminal prosecution. That was years later. It was also following a matter which is unexplained, namely that the liquidator appears to have sold the business to a connected party, apparently controlled by C1’s father for a relatively modest sum, and shortly thereafter the business was sold to a third party for millions of pounds to Carlsberg of which £1.4 million was paid up front. It was this payment or a part of it which would form the basis of the conditional offer.

None of this provides any sensible explanation as to why the VAT and other taxes were not accounted for at the time or why reserves were not kept from the trading revenue in order to meet these payments when good accountants and good management systems were in place. Further, there was no attempt to make these large payments unconditionally or at all upon or immediately following the search warrant and the arrest.

In view of the above, the complaints about the registration process, about oral permission having been granted pending registration, the non-acceptance of Beer Duty in the meantime and the ultimate refusal do not provide a basis for concluding that the search warrant and the prosecution were without RPC or actuated by malice. Further, the case in negligence is eclipsed by the non-payment of VAT and other taxes other than Beer Duty. The case in negligence largely ignores those non-payments.

Instead, there is an attempt to say that there were assurances and representations made as regards the VAT. Such statements as were made do not bear that analysis. They were far too general and unspecific to tie the hands of HMRC in taking civil or criminal steps to deal with such large-scale non-payment of money.

In the face of long pleadings and so much having been said, the Court has taken into account that summary judgment and strike out applications should generally be about crisp issues. Mini-trials are to be avoided. The Court must exercise a considerable degree of caution before finding that there is no real substance in factual assertions on an interim application without a trial. That said, there are cases where however bulky the paperwork, the Court will recognise the absence of a case to go to trial. By way of example, that occurred in the six-day application leading to the claim in the above-mentioned case of King v Stiefel being struck out by Cockerill J. In Crown House Engineering v Amec Projects [1990] 6 Construction Law Journal 141, Bingham LJ used language which resonates, albeit that this is not a case about cheating or dishonesty, but rather a case where the bulk of the outer garments does not reflect the complexity of the case. The case also was not about reverse summary judgment or strike out of a claim. He said the following at p. 154:

“The procedure is entirely inappropriate where the plaintiff's entitlement to recover any sum is the subject of any serious dispute, whether of law or fact. This is not to say in either case that a defendant with no or no more than a partial defence can cheat a plaintiff of his just deserts by producing hefty affidavits and voluminous exhibits to create an illusion of complexity where none exists. Where the point at issue is at heart a short one the court will recognise the fact and act accordingly no matter how bulky its outer garments. But it does mean that were there are substantial issues of genuine complexity the parties should prepare for trial (perhaps, as here, with trial of preliminary issues) rather than dissipate their energy and resources on deceptively attractive shortcuts.”

Account has also been taken about novel causes of action in a developing area of law. This has no application in the instant case. First, the primary way in which the case is put is by reference to the established case law, and it has been rejected that this provides assistance on the facts of the case. Second, there has been considerable case law at Supreme Court level from which the case law has become established even if that was once not the case. Third, the propositions that there was a cause of action are very fact dependent and come off the rails in this case because of the matters set out above. They fail to give any or any adequate emphasis to the fact that this case is about non-payment of VAT and taxes other than Beer Duty. Further, any attempt to erect a duty by reference to something said regarding VAT does not have the consequences alleged. It therefore follows that the attempts to erect duties whether through a conventional and established route or a new and incremental route must fail.

In strike out applications, the Court is reminded that in the event that a case can be saved by amendment, this should generally be adopted. I am satisfied that this case cannot be saved. It is a case where there have been adjournments and amendments in its tortuous history since the strike out application was first made. There have been large scale amendments, but they have not saved the case. I am satisfied that there is no prospect of saving the case if there were a yet further opportunity to amend.

This is a case in which reverse summary judgment should be given on the basis that the case has no real prospects of success and there is no other compelling reason for the case to go to trial. Alternatively, this is a case where the claim should be struck out since the statements of case disclose no reasonable grounds for bringing the claim.

It remains to acknowledge the great amount of assistance provided to the court by the written submissions of all Counsel and for the oral submissions, and noting with approval that submissions for the Claimants were shared by Leading and Junior Counsel. A draft order should be prepared to reflect this judgment and such consequential matters as can be agreed.