Timing and detail critical in misfeasance claims against HMRC

The claimant taxpayer, who had been wrongly convicted for cheating the public revenue, had his claim of misfeasance in public office against HMRC struck out by the High Court because it was brought too late and he had failed adequately to plead his case.

Background

In 2003, Mr Sandhu (the claimant) was convicted of the offence of cheating the public revenue and sentenced to seven years imprisonment. HMRC had argued that his company had been knowing participants in a 'carousel fraud' involving the purchase of mobile phones in another member state of the EU. HMRC alleged that false invoices had been used in order to off-set fictional input tax which had never been due or payable. 

The claimant appealed his conviction to the Court of Appeal in March 2006 on the basis that documents, which ought to have been disclosed by HMRC during the trial, had been improperly withheld. The Court of Appeal quashed the claimant's conviction and ordered a re-trial.

The re-trial was to commence on 8 May 2007, however, before it took place, further undisclosed material came to light which ought to have been disclosed before the trial. In the end, HMRC offered no evidence against the claimant and he was acquitted.

Some six years later, on 25 April 2013, the claimant issued proceedings alleging that unnamed custom officers under the control of HMRC and in the course of their employment had maliciously abused their power in failing to disclose evidence during his criminal trial. The claimant alleged that the documents had been deliberately concealed in order to build an artificially stronger case against him.

HMRC applied to the High Court to strike out the claim on the basis that it was out of time and inadequately pleaded.

The judgment

The claim was struck out.

In attempting to make out a claim for misfeasance in public office, a critical component of the claim involves identifying the individual or individuals who it is alleged committed the relevant acts. This is necessary because, further to the case of Three Rivers [2003] 2 AC 1, the claimant has to establish that he has been the subject of "targeted malice" which must necessarily involve a subjective valuation of a particular officer/officers' conduct.

The Court was influenced by the fact that the claimant was unable to identify the officer against whom his allegations were made. A general complaint about poor treatment is insufficient.

The Court also found that the claimant's claim had been brought out of time. The actions which could be said to have given rise to the claim took place at or before the time of the criminal trial in 2003. The standard limitation period to commence proceedings is six years, although, in certain circumstances, the date from which this period is considered to run can be extended.

The claimant attempted to rely on section 32 Limitation Act 1980, which affords an extended limitation period:

"(1)    … , where in the case of any action for which a period of limitation is                   prescribed by this Act, either—

 […]

 (b) any fact relevant to the plaintiff's right of action has been deliberately  concealed from him by the defendant; […]

 the period of limitation shall not begin to run until the plaintiff has discovered  the fraud, concealment or mistake (as the case may be) or could with reasonable  diligence have discovered it.

  […]"

HMRC accepted that the circumstances of the case were such that section 32(1)(b) would apply, and that the date from which the limitation period would run would be later than 2003. It accepted that the concealment of undisclosed material must have meant that the claimant could not be said to have discovered the concealment until later than 2003, however, it disputed that the date would be as late as a date after April 2007 (i.e. 6 years prior to the date of issue).

The claimant argued that it was not reasonable to expect him to commence his action until the outcome of the re-trial was known and it is from that date that the 6 year limitation period should run.

The Court rejected this argument. All of the material which demonstrated that documentation had been withheld by HMRC had been provided to Mr Sandhu before April 2007. The fact that HMRC entered no evidence during the re-trial was not a "fact relevant to the plaintiff's right of action"¹. The relevant facts concerned the existence of the material itself and this was in the knowledge of the claimant well before April 2007. Accordingly, the Court found that the claim had been issued more than 6 years after that date of knowledge for the purposes of section 32(1)(b) and was accordingly time-barred.

Comment

Claims for misfeasance in public office necessarily involve the establishing of bad faith or dishonesty. The courts have been at pains to draw a clear line between acts which amount merely to negligence, which would be insufficient to make out a claim for misfeasance, and those involving dishonest conduct on the part of a public official.

If this were not the case, and mere negligence on the part of a public official was sufficient to establish the tort of misfeasance in public office, it is likely that the courts would find themselves inundated with such claims.

Where HMRC officers have deliberately and wrongfully withheld information which ought to have been disclosed during the course of a prosecution, the individuals concerned will rightly feel aggrieved. That sense of grievance will be all the more acute where the consequences lead, as they did in this case, to incarceration.

The law does provide some redress to individuals in such circumstances, but the claimant's claim failed because his pleadings were insufficiently detailed or specific and the claim was too late.

For those who believe they have been treated poorly by a state authority, to a degree which involves malice or dishonest conduct, they should seek expert legal advice promptly from lawyers familiar with claims of this nature. Where the behaviour of a state authority is so bad that it amounts to malfeasance, claims must be carefully prepared and issued timeously. 

A copy of the judgment can be found here.

_________________

¹  AIC Limited v ITS Testing Services (UK) Limited (The Kriti Palm) [2006] EWCA Civ 1601.