Key Facts
- •Richard Hughes (Claimant) was charged with conspiracy to cheat and cheating the Revenue in 2015, charges later dismissed in 2017 due to defects and improper conduct of the prosecution.
- •Hughes sued HMRC and CPS for malicious prosecution and misfeasance in public office, claiming vast sums in losses suffered by two companies, ZCL and ZRL, whose rights and causes of action were assigned to him in 2019.
- •Defendants applied to strike out the claims, arguing Hughes lacked a real prospect of success and the assignments were unenforceable.
- •The criminal charges stemmed from investment schemes designed, in HMRC's view, to obtain tax advantages, with most investments failing.
- •Hughes contended HMRC failed to pursue crucial lines of inquiry, particularly regarding HSBC's involvement, and that disclosure was inadequate.
- •The Court examined internal documentation revealing the Crown's shortcomings, including concessions of improper conduct and premature charging decisions.
- •The assignments transferred the companies' rights and causes of action to Hughes, with a significant portion of any proceeds going to his wife.
Legal Principles
Principles governing summary judgment applications; focus on whether Defendants can succeed on summary judgment.
White Book, paras 24.3.2 – 24.3.4; King v Stiefel [2021] EWHC 1045 (Comm)
Elements of malicious prosecution: (1) prosecution instituted by Defendant; (2) malice; (3) absence of reasonable and probable cause; (4) termination of proceedings in Claimant's favour.
Common law
Elements of misfeasance in public office: unlawful act by public officer; knowledge of illegality or reckless indifference; improper motive; causal link between unlawful act and loss.
Three Rivers (No 3) [2003] 2 AC 1
Test for reasonable and probable cause in malicious prosecution: sufficient grounds for thinking the plaintiff was probably guilty of the crime; not requiring belief in probability of conviction or testing the full strength of the defence; sufficient evidence for a fit case to be tried.
Glinski v McIver [1962] AC 711
Assignments savouring of maintenance and champerty are unenforceable; assignment of a bare right of action is generally ineffective unless the assignee has a genuine commercial interest.
Treitel, The Law of Contract, 15th edn., paras 15-060 to 15-067; Trendtex Trading Ltd v Crédit Suisse [1982] AC 679
Outcomes
Summary judgment granted to Defendants on the malicious prosecution claim.
HMRC was not the prosecutor; sufficient evidence existed for reasonable and probable cause, even considering alleged failures to investigate HSBC and disclosure issues.
Summary judgment granted to Defendants on the misfeasance in public office claim.
Claimant failed to demonstrate a real prospect of proving subjective malice or reckless indifference on the part of the relevant officers; despite shortcomings, no evidence suggested officers knew the case was unviable.
Assignments of ZRL and ZCL's rights and causes of action to the Claimant deemed invalid and unenforceable.
Claimant lacked a genuine commercial interest in the assignments at the time they were made; the disproportion between the consideration paid and the potential proceeds favoured maintenance and champerty.