Misfeasance in Public Office

Three Rivers District Council and others v Governor and Company of the Bank of England (No 3) (H of L TLR 19 May)

There are two different forms of liability for misfeasance in public office. First there is the case of targeted malice by a public officer, that is, conduct specifically intended to injure a person or persons. That type of case involved bad faith in the sense of the exercise of public power for an improper or ulterior motive. The second form was where a public officer acted knowing that he had no power to do the act complained of and that the act would probably injure the plaintiff. It involved bad faith in as much as the public officer did not have an honest belief that his act was lawful. In the present case the second form of misfeasance in public office was alleged. For a public officer to be liable he must have acted in the knowledge of, or with reckless indifference to, the illegality of his act and in the knowledge of, or with reckless indifference to, the probability of causing injury to the claimant or a person of a class of which the claimant was a member. The test of recklessness, in the sense of not caring whether the consequences happened or not, represented a satisfactory balance between the two competing policy considerations, namely enlisting tort law to combat executive and administrative abuse of power and not allowing public officers, who had always acted for the public good, to be assailed by unmeritorious actions. The House upheld the dismissal of the claimant’s claim based on an allegation that named senior officials of the Banking Supervision Department of the Bank of England acted in bad faith (a) in licensing BCCI in 1979 when they knew that it was unlawful to do so; (b) in shutting their eyes to what was happening at BCCI after the licence was granted; and (c) in failing to take steps to close BCCI when the known facts cried out for action at least by the mid 80s.