AAI Consulting Ltd & Ors v The Financial Conduct Authority

A claim in misfeasance in public office requires an unlawful exercise of public power, the requisite mental element, bad faith, sufficient interest to sue and loss caused by the unlawful act. Where several officers made the decision, the necessary mental element must be established for each decision-maker. Conspiracy requires combination, intention or purpose of the kind alleged, unlawful means where relevant, and causation of pecuniary loss.

Summary judgment is appropriate where the claimant has no realistic prospect of success and there is no other compelling reason for trial. A claimant cannot rely merely on the possibility that helpful evidence may later emerge. Pleadings alleging bad faith, conspiracy and substantial loss must identify the essential facts and provide proper particulars.

The claim arose from regulatory action taken by the Financial Services Authority against Keydata Investment Services Ltd, which was placed into administration in June 2009. The claimants alleged that the FCA was liable for misfeasance in public office and conspiracy in connection with the investigation, regulatory intervention and appointment of administrators.

The FCA applied for summary judgment under CPR Part 24.2 and strike out under CPR 3.4(2)(a) and (b). The first claimant applied for a stay pending related Upper Tribunal proceedings. The central issues were whether the pleaded claims had a realistic prospect of success, whether the Particulars of Claim disclosed viable causes of action, and whether the proceedings should be stayed.

1. Summary judgment. The court applied the requirement that the claimant’s prospect of success must be realistic rather than fanciful, while avoiding a mini-trial. The FCA’s evidence was uncontradicted, and the claimants had produced no evidence addressing the summary judgment application. The material relied upon in support of the stay did not demonstrate a realistic prospect that further evidence would emerge. The principle against relying on speculative future evidence was applied.
2. Misfeasance. The tort requires an unlawful act or omission in the exercise of public power, the requisite mental element, bad faith, sufficient interest to sue and loss caused by the unlawful conduct. The relevant state of mind may consist of targeted malice or knowledge that the officer lacked power and that injury would probably result, including subjective recklessness as to legality and effect. Where a decision is taken by several officers, the necessary mental element must be established for all decision-makers.
3. Conspiracy. The pleaded forms were conspiracy to use unlawful means and conspiracy to injure. Both require combination and pecuniary damage. The former requires unlawful action pursuant to the combination and an intention to injure, though injury need not be the predominant purpose. The latter requires a predominant purpose shared by the conspirators to injure the claimant. Damage to reputation is not recoverable as loss in conspiracy.
4. Pleading defects. The Particulars of Claim failed to identify viable claims by several claimants, adequately particularise bad faith, plead the necessary intention or knowledge of injury, plead combination and unlawful means, identify a shared predominant purpose, or explain the loss claimed and its calculation. The deficiencies were not appropriately remediated by further time or amendment.
5. Disposition. Summary judgment was given in favour of the FCA. The Particulars of Claim were struck out under CPR 3.4(2)(a) and/or (b). The stay application was refused. The security for costs application did not arise.