Weir & Ors v Secretary of State for Transport & Anor

Misfeasance in public office requires proof that a public officer exercised public power with the specific intention of injuring the claimant or the relevant class. Knowledge that conduct will foreseeably cause financial loss does not, by itself, establish that intention. The court may assume, without deciding, that injury need only be one non-trivial purpose. Human rights claims concerning interference with corporate property generally belong to the company directly affected. Shareholders are not victims merely because the value of their shares falls, particularly where the company could itself complain and has waived its claims.

More than 48,000 shareholders in Railtrack Group brought claims against the Secretary of State for Transport and the Department for Transport. They alleged that the Secretary of State had engineered Railtrack’s railway administration to transfer control of the railway infrastructure to a company limited by guarantee without compensating Group’s shareholders.

The claims were based on misfeasance in public office and the right to peaceful enjoyment of possessions under Article 1 of the First Protocol to the Convention, applied through the Human Rights Act 1998. The court determined liability only. The central issues were whether targeted malice had been proved and whether the shareholders were victims of an unlawful interference with their possessions.

1. Misfeasance. The claim concerned the first limb of misfeasance in public office. The relevant acts were objectively within the Secretary of State’s powers. Liability therefore required proof of specific intent to injure the claimants, or the class to which they belonged. Foreseeability or knowledge that withdrawal of financial support would damage the share price was insufficient.
2. The court assumed, without deciding, that the specific intent could be one purpose of the conduct provided it was more than de minimis. The claimants nevertheless failed to prove that purpose. Railtrack’s operational and financial condition supplied substantial and legitimate public-policy reasons for seeking a new structure. The evidence did not establish that administration had been engineered to harm shareholders, or that the Secretary of State had acted with the pleaded targeted malice.
3. Railtrack’s administration was not itself an unlawful removal of Group’s assets. Group retained its Railtrack shares and later sold them to Network Rail for £500 million. The administrators were independent and owed duties concerning the interests of creditors and members. The misfeasance claim was dismissed.
4. Human rights claim. The claimants remained shareholders in Group, and Group remained the owner of the Railtrack shares until the sale. Any direct interference with the relevant corporate property would therefore have concerned Group, not its individual shareholders. Under Agrotexim and Others v Greece and related authority, the corporate veil could not be lifted in these circumstances. Group could have brought its own claim and had waived claims connected with the administration as part of the sale agreement. The claimants were not victims within section 7 of the Human Rights Act 1998.
5. The human rights claim was dismissed. The action as a whole was dismissed.