Hughes v HM Revenue & Customs & Anor

Factual and Procedural Background

The Plaintiff initiated proceedings against Company A and Company B for malicious prosecution and misfeasance in public office arising from criminal charges of conspiracy to cheat and cheating the Revenue. The Plaintiff was charged in December 2015, and the case was sent for trial in the Crown Court at The City. In April 2017, the Plaintiff and co-defendants successfully applied for dismissal of the charges, terminating the criminal proceedings in the Plaintiff's favour.

In December 2021, the Plaintiff issued civil claims against Company A and Company B, alleging malicious prosecution and misfeasance. The Plaintiff's claim included rights assigned from two private companies in 2019, which had suffered most of the alleged loss. Company A and Company B applied to strike out the claims in October 2023, and a judge granted summary judgment in their favour in June 2024, concluding the Plaintiff had no real prospect of success and that the assignments were void as contrary to public policy.

The Plaintiff sought permission to appeal on nine grounds, which was heard by a two-judge court. This summary reflects the court's judgment on that application.

Legal Issues Presented

1. Whether the Plaintiff's claim for malicious prosecution against Company B failed due to the absence of reasonable and probable cause for the prosecution.
2. Whether the judge erred in his application of the test for reasonable and probable cause, particularly regarding the sufficiency of evidence and investigation of a third party's involvement.
3. Whether the judge improperly conducted a "mini-trial" on the merits of the prosecution's case.
4. Whether the Plaintiff could establish malice on the part of Company B in the decision to prosecute.
5. Whether the Plaintiff had a real prospect of establishing misfeasance in public office against Company A or Company B, including the requirement of bad faith or malice.
6. Whether the assignment of rights from the two private companies to the Plaintiff was valid and enforceable.

Arguments of the Parties

Appellant's Arguments

• The judge applied the wrong test for reasonable and probable cause by failing to consider the objective element requiring a reasonable prosecutor to take reasonable steps to inform themselves, including investigating the involvement of the third party, Company C.
• The judge erred by conducting a mini-trial on the merits of the prosecution case and allegedly made findings implying the Plaintiff's dishonesty, which was inappropriate at this stage.
• The judge failed to properly consider the issue of malice, particularly regarding the rushed charging decision and the alleged political sensitivity that prevented investigation of Company C.
• The judge did not adequately analyze the pleaded claim of misfeasance in public office and erroneously found no real prospect of establishing bad faith or malice.
• The Plaintiff challenged the judge's finding that the assignment of claims from the private companies was void and unenforceable.

Respondents' Arguments

• The principles in Abbott v Refuge Assurance Co Ltd and Glinski v McIver were not applicable as those cases involved private prosecutors or police officers acting as prosecutors, whereas Company B was a public prosecutor relying on counsel's advice.
• The test for reasonable and probable cause is subjective, requiring an honest belief in sufficiency of evidence to prosecute, which was satisfied here.
• The prosecution process is multi-staged and evolving; the case did not need to be ready for trial immediately after charging to meet the test.
• Negligence or incompetence in the prosecution or investigation does not establish malice or bad faith necessary for malicious prosecution or misfeasance claims.
• The involvement of independent counsel advising on charges weighs against any inference of bad faith.
• The statutory duties alleged to have been breached do not give rise to private law claims.
• The assignment of claims was properly found void as contrary to public policy.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Abbott v Refuge Assurance Co Ltd [1961] 1 QB 432	Objective element in "reasonable and probable cause" requiring reasonable inquiry.	Rejected as inapplicable because it involved private prosecutors, not public prosecuting authorities.
Glinski v McIver [1962] AC 711	Subjective test requiring honest belief in sufficiency of evidence; "fit case to be tried" means honest belief, not readiness for trial immediately after charge.	Applied to confirm the test for reasonable and probable cause; the court agreed with the judge's interpretation.
Coudrat v Commissioners of HMRC [2005] EWCA Civ 616	Authority supporting the test for reasonable and probable cause in malicious prosecution claims.	Supported the judge's conclusion on sufficiency of evidence and reasonable cause.
Rudall v CPS [2018] EWHC 3287 (QB)	Further authority on reasonable and probable cause and prosecutorial discretion.	Reinforced the judge's approach to the legal test.
Three Rivers DC v Bank of England (No 3) [2003] 2 AC 1	Principles of misfeasance in public office requiring bad faith or reckless indifference.	Used to outline the requirements for misfeasance claims; supported the judge's finding that the Plaintiff had no real prospect of success.
Thacker v CPS (1997)	Negligence or incompetence does not establish bad faith or malice necessary for misfeasance or malicious prosecution.	Applied to reject the Plaintiff’s claim that incompetence amounted to bad faith.
SFO v Evans and others [2014] EWHC 3803 (QB)	Exceptional circumstances where a voluntary bill of indictment might be sought following dismissal of charges.	Referenced to explain why no voluntary bill of indictment was sought after dismissal of charges against the Plaintiff.

Court's Reasoning and Analysis

The court carefully examined the test for reasonable and probable cause in malicious prosecution claims, affirming that it is a subjective test requiring an honest belief that there was sufficient evidence to prosecute. The court rejected the Plaintiff's reliance on precedents involving private prosecutors or police officers, emphasizing that the prosecuting authority here was Company B, which acted on the advice of independent counsel. The court agreed with the judge that the prosecution was a multi-stage process and that the case need not have been trial-ready immediately after charges were laid.

The court found no error in the judge's refusal to treat the hearing as a mini-trial on guilt or innocence, noting that the judge's findings related solely to the sufficiency of evidence to justify prosecution rather than the Plaintiff's character or guilt. The court also found no real prospect of establishing malice, as malice requires bad faith or reckless indifference, which was absent given counsel's involvement and the absence of evidence that the charging decision was influenced by improper motives.

Regarding misfeasance in public office, the court reiterated that bad faith or reckless indifference is necessary, not mere negligence or incompetence. The judge's analysis was upheld as thorough and correct, noting that extending the tort to cover the Plaintiff's claims would require departing from established law.

The court also agreed with the judge's conclusion that the assignment of claims from the private companies was void as contrary to public policy, though it did not need to decide this issue conclusively given the dismissal of the substantive claims.

Holding and Implications

The court REFUSED PERMISSION TO APPEAL, affirming the judge's summary judgment in favour of Company A and Company B.

The direct effect is the dismissal of the Plaintiff's claims for malicious prosecution and misfeasance in public office, confirming that the Plaintiff has no real prospect of success. No new legal precedent was established, and the decision reinforces existing principles regarding the subjective test for reasonable and probable cause, the necessity of bad faith for malicious prosecution and misfeasance claims, and the invalidity of certain assignments of claims contrary to public policy.