Richard Ian Hughes v HMRC & Anor

For malicious prosecution, reasonable and probable cause concerns whether there was prima facie admissible evidence sufficient to prosecute each element of the offence. It is a lower threshold than the Full Code Test. Investigative or disclosure failures ordinarily affect the viability of a prosecution, not the existence of cause, unless an exceptional failure makes the evidence plainly tenuous. Negligence, incompetence and premature charging do not establish malice without proof of an improper subjective motive or reckless indifference. Statutory investigative and disclosure duties do not themselves create private law claims. A bare tort claim may be assigned only where the assignee has a genuine commercial interest assessed when the assignment is made. A massive and absurd disproportion between that interest and the assigned proceeds may make the assignment champertous and unenforceable.

The claimant, a businessman and financier, was charged with conspiracy to cheat the public Revenue and cheating the Revenue. The charges were dismissed in May 2017 because the particulars disclosed no offence known to law. The Crown later conceded stark failures in the investigation, disclosure process and timing of the charging decision, and decided not to seek a Voluntary Bill of Indictment.

The claimant sued HMRC and the CPS for malicious prosecution and misfeasance in public office. He also relied on assignments by two companies of claims concerning losses allegedly caused by the prosecution. The defendants applied for summary judgment and strike-out orders. The issues were whether the claims had a real prospect of success and whether the assignments were valid and enforceable.

1. Disposition. Summary judgment was granted to both defendants on the malicious prosecution and misfeasance claims. The assignments were held invalid and unenforceable.
2. Prosecutor. The CPS, acting through the responsible prosecutor, was the prosecutor. HMRC was not shown to have deliberately manipulated or overborne the CPS’s independent judgment. The claimant therefore had no real prospect of establishing that HMRC was a prosecutor.
3. Reasonable and probable cause. The applicable question was whether sufficient evidence existed to prosecute when the prosecution began and thereafter. The threshold was prima facie admissible evidence of each element of the offence, not the Full Code Test or a realistic prospect of conviction. The evidence gave rise to a clear prima facie case that the schemes were unlawful tax-avoidance arrangements and that the claimant possessed the necessary mens rea.
4. The failure to investigate HSBC and the serious disclosure failures were capable of showing poor judgment or improper conduct. They did not, on the evidence, remove reasonable and probable cause. The court left open an exceptional principle where a plainly necessary inquiry was omitted and the existing evidence was tenuous, but held that this case was far outside it.
5. Malice and misfeasance. A premature or incompetent decision did not itself establish malice. Misfeasance required the relevant officer subjectively to know that the prosecution failed the Full Code Test and that there was a real risk it could never meet it, or to be recklessly indifferent to that state of affairs. The evidence supported, at most, gross negligence. Breach of statutory duties under the Criminal Procedure and Investigations Act 1996 and related codes was necessary but insufficient without the other tortious ingredients.
6. Assignments. The commercial interest required to support assignment of a bare tort claim had to be the assignee’s own interest and had to be assessed when the deed was executed. The claimant had no interest in the companies at those dates, the companies would receive none of the proceeds, and the value of the assignments was massively disproportionate to any interest he personally possessed. The assignments therefore savoured of maintenance and champerty.

First-instance applications by HMRC and the CPS under CPR Part 24 and CPR r. 3.4(2). The judgment records that the claimant’s criminal charges had previously been dismissed at Birmingham Crown Court in May 2017, but no citation for that ruling is stated.