Hughes v HM Revenue & Customs & Anor (2025): Clarifying “Reasonable and Probable Cause” and Limits on Public Office Misfeasance

1. Introduction

The Judgment in Hughes v HM Revenue & Customs & Anor ([2025] EWCA Civ 113) arises from criminal charges brought in December 2015 against Richard Hughes (“the Claimant”) for alleged tax fraud. The principal defendants in this civil litigation are His Majesty’s Revenue and Customs (“HMRC”) and the Crown Prosecution Service (“CPS”). The Claimant contended that both entities maliciously prosecuted him and committed misfeasance in a public office after his charges were dismissed at the Crown Court in Birmingham in April 2017.

The case presented several key issues: (a) whether the CPS had “reasonable and probable cause” to prosecute the Claimant; (b) whether HMRC could be treated as a prosecutor at all; and (c) whether there was any bad faith or malice, cumulatively justifying claims for malicious prosecution and misfeasance in public office. In addition, the Claimant relied on assigned claims from two companies—ZCL and ZRL—raising issues as to whether those assignments were valid or contrary to public policy.

The England and Wales Court of Appeal (Civil Division) dismissed the application for permission to appeal, thereby upholding the lower court’s decision that the Claimant’s claims had no real prospect of success. This Judgment clarifies the scope of “reasonable and probable cause,” the burden for establishing malicious prosecution, and underscores that prosecutorial negligence or incompetence—even if apparently gross—does not necessarily rise to the level of malice or misfeasance.

2. Summary of the Judgment

The Court of Appeal thoroughly evaluated the Claimant’s allegations of malicious prosecution and misfeasance in public office. It held that:

• Malicious Prosecution (HMRC): HMRC was never truly acting as a “prosecutor,” so the claim against HMRC for malicious prosecution had no basis.
• Malicious Prosecution (CPS): The CPS did have reasonable and probable cause to lay charges. The fact that a prosecution was ultimately dismissed before trial does not, in itself, prove that it was initiated without evidential sufficiency or honest belief in the charges.
• Misfeasance in Public Office: The Court found that mere negligence, incompetence, or even poor management of the case did not constitute bad faith. There was no evidence that the CPS or HMRC acted with the requisite malice or unlawfulness to meet the standard for misfeasance.
• Assignment of Claims: Although the lower court declared the assignments to the Claimant of ZCL’s and ZRL’s rights void and unenforceable, the Court of Appeal did not need to address that issue substantively once it had determined the substantive claims were unsustainable.

Ultimately, the Court of Appeal refused permission to appeal, finding that none of the grounds advanced met the necessary threshold to challenge the lower court’s decision.

3. Analysis

3.1 Precedents Cited

The Court examined Abbott v Refuge Assurance Co Ltd [1961] 1 QB 432 and Glinski v McIver [1962] AC 711 as key authorities defining malicious prosecution. These cases set a two-fold requirement for malicious prosecution:

1. The prosecutor must have an honest belief in the guilt of the accused based on a sufficiency of evidence.
2. There must be no malice—in other words, no improper or extraneous motivation behind bringing the prosecution.

The Court clarified how “reasonable and probable cause” involves both honest belief and evidential sufficiency that the case is “fit to be tried.” Citing Coudrat v Commissioners of HMRC [2005] EWCA Civ 616 and Rudall v CPS [2018] EWHC 3287 (QB), it stressed that this threshold relates to having a prima facie case, rather than ensuring the prosecution is fully trial-ready from the start.

For misfeasance in public office, the Court referred to Three Rivers DC v Bank of England (No 3) [2003] 2 AC 1 to reaffirm that an element of bad faith or malice is required. Additionally, it noted Thacker v CPS (1997) to emphasize that negligence alone (however gross) does not amount to bad faith or malicious intent.

3.2 Legal Reasoning

The Court found that the Claimant misconstrued the requirement of having a “case fit to be tried.” The Claimant argued that because the criminal prosecution was dismissed in the Crown Court, there could never have been “reasonable and probable cause” to charge him. The Court firmly rejected that approach, holding that:

• The threshold for charging involves determining whether the evidence is sufficient to support the allegation(s), not verifying absolute trial readiness at the time of the charge.
• The CPS did not have to investigate every potential suspect or angle—such as fully exploring the role of HSBC—to satisfy the test. Omissions, if any, do not necessarily negate the existence of a prima facie case against the Claimant.
• A case dismissed on distinct legal grounds for failing to disclose an offense does not automatically retroactively invalidate the original decision to prosecute.

On the misfeasance claim, the Court underscored that the Claimant needed to show the public officers acted with malicious intent or at least “reckless indifference” to illegality and the likelihood of causing injury. The Court concluded that the Claimant’s allegations at most demonstrated prosecutorial mismanagement, incompetence, or negligence and did not rise to the level of malice or bad faith required.

3.3 Impact

This Judgment reinforces established principles while offering greater clarity on several points:

• Malicious Prosecution Threshold: Prosecuting authorities only need a bona fide belief, backed by sufficient evidence, that the suspect has committed an offense. The early-stage readiness of the case is not determinative of reasonable and probable cause.
• Negligence vs. Malice: Failures (including potentially gross mismanagement in disclosure) do not necessarily equate to bad faith or malice.
• Public Policy on Assignments: While the Court did not substantively need to dwell on the assignment issue given its main findings, it agreed with the lower court that such assignments could be contrary to public policy in claims of this nature. That principle could shape future commercial litigation strategies.

Practitioners in tort and criminal procedure will note that Hughes continues the trend of courts requiring robust evidence of dishonesty or improper motive before allowing public authorities to face liability for malicious prosecution or misfeasance. This threshold will likely discourage speculative claims based on mere prosecutorial missteps.

4. Complex Concepts Simplified

Malicious Prosecution: This is a civil cause of action brought by a person who has been subjected to criminal proceedings without reasonable cause, generally requiring proof of actual malice and lack of any good reason to prosecute. A simple failure of the criminal case does not automatically mean it was malicious.

Reasonable and Probable Cause: The test used by the courts to assess whether there was enough legitimate evidence or grounds to believe the accused had committed a crime. It involves both a subjective “honest belief” component and an objective “sufficiency of evidence” component.

Misfeasance in Public Office: A tort under common law requiring an unlawful act by a public officer, done with malice or reckless indifference to the lawfulness of the act and the harm it would cause. Merely violating a statutory duty or being negligent (even grossly) is insufficient; the claimant must prove dishonesty, malice, or reckless wrongdoing.

Assigned Claims: An assignment is when one party transfers its legal rights to another. Public policy considerations can sometimes render these assignments void, especially where the rights pertain to tort claims against public authorities and raise concerns about “trafficking in litigation.”

5. Conclusion

In Hughes v HM Revenue & Customs & Anor, the Court of Appeal clarifies that a claim of malicious prosecution will rarely succeed unless the claimant can demonstrate a prosecutor’s lack of genuine belief in the case and the absence of any sufficient factual basis for prosecution. Overall procedural failings, including delays or perceived inadequacies in investigation, do not necessarily negate “reasonable and probable cause.”

The Judgment also illustrates that for liability in misfeasance in public office to attach, prosecutors must be shown to have acted with bad faith, rather than mere incompetence. As reaffirmed, malpractice or mishandling, without evidence of improper motive or reckless indifference, will not cross the threshold of misfeasance. In that respect, Hughes fortifies traditional legal principles surrounding malicious prosecution, helps refine the evidentiary requirements for proving misfeasance in public office, and underscores the high bar of demonstrating malice against prosecuting authorities.