Stevenson & Ors v London Borough of Southwark

The tort of misfeasance in public office requires deliberate unlawful conduct by a public officer, together with the requisite intention or subjective recklessness as to harm. Serious administrative or planning errors do not themselves establish the tort. A shareholder may recover reflective loss where the company has no cause of action, including where the wrongdoer has disabled the company from pursuing its remedy. The claimant must prove that the relevant exception applies. An alleged failure to act must be deliberate and involve a conscious decision made in circumstances where the officer appreciated that action was effectively required. On the evidence, planning delays and failures to consult did not amount to misfeasance.

The claimants were shareholders and directors of a nightclub and related entertainment business. They alleged that the defendant local authority, through its officers and a councillor, deliberately or recklessly delayed planning permission and failed to consult them about a neighbouring housing development in order to protect a proposed railway station and thereby destroy their business.

The claim was pursued solely in misfeasance in public office. The claimants also relied on the shareholder exception to the reflective-loss rule, contending that the defendant’s conduct had prevented the company from pursuing its own claim. The central issues were standing and whether any conduct by the defendant or its officers constituted misfeasance.

1. Standing. The court accepted the principles stated in Johnson v Gore Wood & Co. [2002] 2 AC 1. A shareholder cannot normally recover loss which merely reflects loss suffered by the company. The exception recognised in Giles v Rhind [2003] Ch 618 applies where the company has no effective cause of action, including where the wrongdoer has disabled it from pursuing its remedy. The claimants had not established that exception.
2. Misfeasance. Applying Three Rivers District Council v Bank of England (No. 3) [2003] 2 AC 1, the tort has targeted and untargeted forms. Untargeted malice requires deliberate conduct by a public officer who knows that the act is unlawful and will probably injure the claimant, or who is subjectively recklessly indifferent to those matters. Public-law unlawfulness may arise from breach of statutory provisions, excess of power or an improper purpose.
3. A failure to act must also be deliberate. Mere inadvertence, oversight, negligence or misunderstanding is insufficient. The relevant discretion must effectively permit only one course, the officer must appreciate that position, and must consciously decide not to act with the requisite intent or knowledge of probable injury.
4. The evidence showed substantial administrative failings and delay, particularly in handling the Fairview planning application. It did not prove deliberate wrongdoing, improper pressure on officers, or a scheme to protect the railway-station proposal. The railway proposals were in any event not realistically capable of affecting the arches when the alleged conduct occurred. There was no misfeasance by any officer, councillor, or person for whom the defendant was responsible.
5. The claim therefore failed, and the claimants could not rely on the Giles v Rhind exception.