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The majority in the Court of Appeal did not examine the provisions of the Directive in detail. But at p. 84G-H they said this:
"In our judgment it is reasonably clear that the Directive of 1977 does confer enforceable rights on credit institutions which are to be supervised under its provisions. In particular, a credit institution which was refused authorisation for reasons incompatible with article 3, or which had its authorisation withdrawn which for reasons incompatible with article 8, would (in the event of non-transposition of the Directive of 1977) most probably have had a right to challenge the Bank's decision on the basis that the Becker conditions  E.C.R. 53 were satisfied. But there is not in our judgment any sufficient clarity or certainty in the position of depositors (or other customers of credit institutions)."
Subject to the qualifications that I have substituted the Francovich test as applied in Dillenkoffer for the Becker test, on the view that it is more precise and covers both types of liability, and that I do not accept that credit institutions were to be "supervised under" the provisions of the Directive, I agree with the conclusions of the majority on this issue. I would therefore dismiss the appeal on the Community law claim.
In the courts below neither party asked for a preliminary reference under article 234 E.C. (ex article 177 E.E.C.) on the issues relating to the appellants' claim under Community law. Clarke J. said, at p. 625E-F, that he would have referred the matter as to the meaning and effect of the Directive of 1977 had the parties not requested him to give a judgment on the Community law issue without doing so. In the Court of Appeal the majority said, at p. 85D, that they did not regard the question of Becker-type liability as acte clair, but that as a matter of discretion the court had decided not to make a reference. The parties' unanimity in asking the court not to make a reference had been a significant factor in that decision. That unanimity was departed from in your Lordships' House. The appellants, having regard to the observations in the courts below, to the fact that there was a dissenting judgment in the Court of Appeal and to what they saw as a change of position by the Bank as regards the purpose and intent of the Directive of 1977, have asked for a reference under article 234 E.C. (ex article 177 E.E.C.) on the question whether the Directive conferred rights, and if so what rights, on depositors which they can exercise against the competent authority designated by the member state for the purpose of carrying out that member state's obligations under the Directive.
I am of the opinion that it would not be appropriate for a reference to be made to the European Court on the critical question in this case, which is whether the Directive of 1977 entailed the granting of rights to individual depositors and potential depositors. I consider that this matter, on which I understand your Lordships to be unanimous and on which we have had the benefit of very full and helpful submissions both orally and in writing from both sides, is acte clair. So I would decline the appellants' request that we should make a reference in this case.
I would make the same order as that proposed by my noble and learned friend Lord Steyn.
The action for misfeasance in public office has long been recognised by English law. In some of the cases in the 18th and 19th centuries there are statements that the plaintiff must establish that the defendant was actuated by malice towards him and intended to injure him in the way in which he discharged his public duty; in modern cases this is referred to as "targeted malice." In Harman v. Tappenden (1801) 1 East 555, 102 E.R. 214 Lawrence J. said, at pp. 562-563, 217:
"There is no instance of an action of this sort maintained for an act arising merely from error of judgment. Perhaps the action might have been maintained, if it had been proved that the defendants contriving and intending to injure and prejudice the plaintiff, and to deprive him of the benefit of his profits from the fishery, which as a member of this body he was entitled to according to the custom, had wilfully and maliciously procured him to be disfranchised, in consequence of which he was deprived of such profits. But here there was no evidence of any wilful and malicious intention to deprive the plaintiff of his profits, or that they had disfranchised him with that intent, which is necessary to maintain the action."
But other cases suggest that an unlawful act done with an improper motive is sufficient to constitute the tort.
In Tozer v. Child (1857) 7 E.+B. 377, 119 E.R. 1286 Lord Campbell C.J. directed the jury that:
"the defendants were not necessarily liable in this action, although the plaintiff, notwithstanding his non-payment of the said church rate, was qualified and entitled to vote, and to be a candidate at the said election, as he alleged: and that it was incumbent on the plaintiff to make out that the acts of the defendants complained of were malicious; and that malice might be proved, not only by evidence of personal hostility or spite, but by evidence of any other corrupt or improper motive . . ."(see p. 379).
In Bourgoin S.A. v. Ministry of Agriculture, Fisheries and Food  Q.B. 716 the issue was debated whether the defendant must intend to injure the plaintiff and it was held that damages could be recovered for misfeasance in public office where the defendant acted deliberately, not with the intent to harm the plaintiff, but with knowledge that he had no power to act as he did and that his action would injure the plaintiff. In that case the Minister of Agriculture, knowing that he had no power to do so, prohibited the importation of French turkeys into the United Kingdom knowing that the prohibition must necessarily injure French turkey producers but acting with the motive, not of injuring them, but of benefiting English producers. French producers claimed damages for misfeasance in public office.
Mann J. rejected the argument that an intent to injure the plaintiff was an essential ingredient of the tort and stated at page 740D:
"I do not read any of the decisions to which I have been referred as precluding the commission of the tort of misfeasance in public office where the officer actually knew that he had no power to do that which he did, and that his act would injure the plaintiff as subsequently it does. I read the judgment in Dunlop v. Woollahra Municipal Council  A.C. 158 in the sense that malice and knowledge are alternatives. There is no sensible reason why the common law should not afford a remedy to the injured party in circumstances such as are before me. There is no sensible distinction between the case where an officer performs an act which he has no power to perform with the object of injuring A (which the defendant accepts is actionable at the instance of A) and the case where an officer performs an act which he knows he has no power to perform with the object of conferring a benefit on B but which has the foreseeable and actual consequence of injury to A (which the defendant denies is actionable at the instance of A). In my judgment each case is actionable at the instance of A . . . "
His judgment on this point was upheld by the Court of Appeal and Oliver L.J. stated at p. 777G:
"For my part, I too can see no sensible distinction between the two cases which the judge mentions.
If it be shown that the minister's motive was to further the interests of English turkey producers by keeping out the produce of French turkey producers an act which must necessarily injure them it seems to me entirely immaterial that the one purpose was dominant and the second merely a subsidiary purpose for giving effect to the dominant purpose. If an act is done deliberately and with knowledge of its consequences, I do not think that the actor can sensibly say that he did not 'intend' the consequences or that the act was not 'aimed' at the person who, it is known, will suffer them."
The principal issue which arises for determination on the present appeal is whether in order to succeed the plaintiffs must prove that the public officers of the Bank of England knew that their unlawful acts or omissions would probably injure them or persons in a class of which they were members or that the officers were subjectively reckless as to such likely injury.
In a learned judgment  3 All E.R. 558, 632, after a full and detailed consideration of the authorities, Clarke J. summarised his conclusions as to the ingredients of the tort as follows:
"1. Misfeasance in public office
(1) The tort of misfeasance in public office is concerned with a deliberate and dishonest wrongful abuse of the powers given to a public officer. It is not to be equated with torts based on an intention to injure, although, as suggested by the majority in Northern Territory v. Mengel (1995) 69 A.L.J.R. 527, it has some similarities to them.
(2) Malice, in the sense of an intention to injure the plaintiff or a person in a class of which the plaintiff is a member, and knowledge by the officer both that he has no power to do the act complained of and that the act will probably injure the plaintiff or a person in a class of which the plaintiff is a member are alternative, not cumulative, ingredients of the tort. To act with such knowledge is to act in a sufficient sense maliciously: see Mengel 69 A.L.J.R. 527, 554 per Deane J.
(3) For the purposes of the requirement that the officer knows that he has no power to do the act complained of, it is sufficient that the officer has actual knowledge that the act was unlawful or, in circumstances in which he believes or suspects that the act is beyond his powers, that he does not ascertain whether or not that is so or fails to take such steps as would be taken by an honest and reasonable man to ascertain the true position.
(4) For the purposes of the requirement that the officer knows that his act will probably injure the plaintiff or a person in a class of which the plaintiff is a member it is sufficient if the officer has actual knowledge that his act will probably damage the plaintiff or such a person or, in circumstance in which he believes or suspects that his act will probably damage the plaintiff or such a person, if he does not ascertain whether that is so or not or if he fails to make such inquiries as an honest and reasonable man would make as to the probability of such damage.
(5) If the states of mind in (3) and (4) do not amount to actual knowledge, they amount to recklessness which is sufficient to support liability under the second limb of the tort.
(6) Where a plaintiff establishes (i) that the defendant intended to injure the plaintiff or a person in a class of which the plaintiff is a member (limb one) or that the defendant knew that he had no power to do what he did and that the plaintiff or a person in a class of which the plaintiff is a member would probably suffer loss or damage (limb two) and (ii) that the plaintiff has suffered loss as a result, the plaintiff has a sufficient right or interest to maintain an action for misfeasance in public office at common law. The plaintiff must of course also show that the defendant was a public officer or entity and that his loss was caused by the wrongful act."
In the judgments of the Court of Appeal on appeal by the plaintiffs  2 W.L.R. 15 there was again a learned and comprehensive review of the authorities. The majority of the court, Hirst and Robert Walker L.JJ., expressed broad agreement with the conclusions of Clarke J. and dismissed the appeal. In his dissenting judgment Auld L.J. held that as the core of misfeasance in public office is abuse of power it is sufficient for a plaintiff to prove that the abuse of power was an effective cause of his loss and that there is no requirement for the plaintiff to prove foresight of probable harm on the part of the public officer. Auld L.J. stated, at p. 167F:
"It follows that, in my view, the test of abuse of powerdishonestyby a public officer does not necessarily include as an essential ingredient some appreciation by the officer of an injurious consequence. A public officer who dishonestly disregards his plain duty or who does not honestly attempt to do it, acts at his peril, and if injury results he is liable for it.
But, even if I am wrong about that, I can see no basis, whether as a matter of interpretation of Mann J.'s judgment in the Bourgoin case  Q.B. 716 or otherwise, for requiring a plaintiff in a claim for misfeasance in public office to prove foresight in at least the form of suspicion of probable harm. That would be a much more onerous burden than that imposed on a plaintiff in a negligence claim, where the defendant is not necessarily a public officer and the claimant has not had to go to the lengths of proving dishonesty. Interestingly, it could also be more onerous than that in a tort of intentional injury such as fraudulent misrepresentation."
Before this House the principal submission of Lord Neill Q.C., on behalf of the appellants, was that Bourgoin established that there was a second limb of the tort, separate and distinct from the limb constituted by abuse of power with the intent to injure, and that the second limb was constituted by a public officer abusing his power by knowingly acting unlawfully. When such an abuse of power is established and where it is also proved that the abuse has caused loss to the plaintiff the law does not require, and there is no reason why it should require, that for liability to arise there should be foresight by the public officer that loss will probably occur to the plaintiff or to a class of persons to whom the plaintiff belongs, or that there should be subjective recklessness as to such likely loss.
My lords, I am unable to accept this argument for two principal reasons. The first reason is that I consider that the second limb of the tort cannot be viewed in isolation from the first limb and that the concept of targeted malice which is the underlying principle of the first limb exercises a restrictive effect on the ambit of the second limb. This is implicit in the passage of the judgment of Oliver L.J. in Bourgoin  Q.B. 777H which I have quoted above because the learned Lord Justice said:
"If an act is done deliberately and with knowledge of its consequences, I do not think that the actor can sensibly say that he did not 'intend' the consequences or that the act was not 'aimed' at the person who, it is known, will suffer them."
Therefore it was his opinion that if a person acts deliberately, knowing that his action will injure another person, he must be taken to intend the consequences and is equated with the person who acts with the intent to cause injury. This is a view which is inconsistent with a liability which arises where there is an abuse of power without knowledge that it will probably injure the plaintiff but where the abuse is an effective cause of such injury.
The judgments of the High Court of Australia in Northern Territory of Australia v. Mengel (1995) 69 A.L.J.R. 527 and the judgment of the Court of Appeal of New Zealand in Garrett v. Attorney-General  2 N.Z.L.R. 332 are the second factor which leads me to reject the wider ambit of the second limb of the tort contended for by the plaintiffs. In those two cases there was a full discussion of the issue now before this House (save that in Mengel the distinction between foresight by the public officer and objective foreseeability was not directly considered) and in both cases it was held that it was insufficient for the plaintiff to show a knowing breach of duty by a public officer coupled with resultant injury.
In Mengel stock inspectors employed by the defendant, without statutory or other authority, wrongly quarantined the plaintiffs' cattle whereby the plaintiffs suffered loss. Before the High Court of Australia the plaintiffs contended that they were entitled to succeed on a claim for misfeasance in public office, and they argued that the mental element of that tort is made out if the public officer either knows or ought to know that he is acting without authority and the unlawful exercise of the power results in damage. This argument was rejected by the High Court. In their joint judgment Mason C.J., Dawson, Toohey, Gaudron and McHugh JJ. stated, at p. 540:
"The cases do not establish that misfeasance in public office is constituted simply by an act of a public officer which he or she knows is beyond power and which results in damage. Nor is that required by policy or by principle. Policy and principle both suggest that liability should be more closely confined. So far as policy is concerned, it is to be borne in mind that, although the tort is the tort of a public officer, he or she is liable personally and, unless there is de facto authority, there will ordinarily only be personal liability. And principle suggests that misfeasance in public office is a counterpart to, and should be confined in the same way as, those torts which impose liability on private individuals for the intentional infliction of harm. For present purposes, we include in that concept acts which are calculated in the ordinary course to cause harm, as in Wilkinson v. Downton, [ 2 Q.B. 57] or which are done with reckless indifference to the harm that is likely to ensue, as is the case where a person, having recklessly ignored the means of ascertaining the existence of a contract, acts in a way that procures its breach.
It may be that analogy with the torts which impose liability on private individuals for the intentional infliction of harm would dictate the conclusion that, provided there is damage, liability for misfeasance in public office should rest on intentional infliction of harm, in the sense that that is the actuating motive, or on an act which the public officer knows is beyond power and which is calculated in the ordinary course to cause harm. However, it is sufficient for present purposes to proceed on the basis accepted as sufficient in Bourgoin, namely, that liability requires an act which the public officer knows is beyond power and which involves a foreseeable risk of harm."
Brennan J. stated, at p. 546:
"I respectfully agree that the mental element is satisfied either by malice (in the sense stated) or by knowledge. That is to say, the mental element is satisfied when the public officer engages in the impugned conduct with the intention of inflicting injury or with knowledge that there is no power to engage in that conduct and that that conduct is calculated to produce injury. These are states of mind which are inconsistent with an honest attempt by a public officer to perform the functions of the office. Another state of mind which is inconsistent with an honest attempt to perform the functions of a public office is reckless indifference as to the availability of power to support the impugned conduct and as to the injury which the impugned conduct is calculated to produce. The state of mind relates to the character of the conduct in which the public officer is engaged whether it is within power and whether it is calculated (that is, naturally adapted in the circumstances) to produce injury."
Deane J. stated, at p. 554:
"In the context of misfeasance in public office, the focus of the requisite element of malice is injury to the plaintiff or injury to some other person through an act which injuriously affects the plaintiff. Such malice will exist if the act was done with an actual intention to cause such injury. The requirement of malice will also be satisfied if the act was done with knowledge of invalidity or lack of power and with knowledge that it would cause or be likely to cause such injury. Finally, malice will exist if the act is done with reckless indifference or deliberate blindness to that invalidity or lack of power and that likely injury. Absent such an intention, such knowledge and such reckless indifference or deliberate blindness, the requirement of malice will not be satisfied."
The judgment of Deane J. is important because, as in the judgment of Oliver L.J. in Bourgoin, it emphasises that the second limb of the tort is a species of malice, and that the requirement for malice is satisfied where the public officer knows that the abuse of power will cause injury, or is recklessly indifferent or deliberately blind to the likely injury.
Lord Neill relied on a passage in the judgment of Brennan J., at p. 547, where he said:
"It is the absence of an honest attempt to perform the functions of the office that constitutes the abuse of the office. Misfeasance in public office consists of a purported exercise of some power or authority by a public officer otherwise than in an honest attempt to perform the functions of his or her office whereby loss is caused to a plaintiff. Malice, knowledge and reckless indifference are states of mind that stamp on a purported but invalid exercise of power the character of abuse of or misfeasance in public office. If the impugned conduct then causes injury, the cause of action is complete."
But in my opinion this passage cannot be read in isolation and must be read together with the earlier passage at p. 546 which I have quoted.
In Garrett v. Attorney-General  2 N.Z.L.R. 332 the plaintiff claimed that there had been an abuse of power by a police sergeant who had failed to investigate properly her complaint that she had been raped by a police constable in a police station. The Court of Appeal held that to succeed in a claim for misfeasance in public office the plaintiff had to prove that the public officer knew that his disregard of his duty would injure the plaintiff or that the officer was recklessly indifferent to the consequences for the plaintiff.
In its judgment the Court of Appeal set out Clarke J.'s summary of his conclusions which I have set out earlier in this judgment and stated their agreement with them, at pp. 349-350:
"We are in respectful agreement with Clarke J. that it is insufficient to show foreseeability of damage caused by a knowing breach of duty by a public officer. The plaintiff, in our view, must prove that the official had an actual appreciation of the consequences for the plaintiff, or people in the general position of the plaintiff, of the disregard of duty or that the official was recklessly indifferent to the consequences and can thus be taken to have been content for them to happen as they would. The tort has at its base conscious disregard for the interests of those who will be affected by official decision making. There must be an actual or, in the case of recklessness, presumed intent to transgress the limits of power even though it will follow that a person or persons will be likely to be harmed. The tort is not restricted to a case of deliberately wanting to cause harm to anyone; it also covers a situation in which the official's act or failure to act is not directed at the injured party but the official sees the consequences as naturally flowing for that person when exercising power. In effect this is no more than saying the tort is an intentional tort. In this context, a person intends to bring about the known consequences of his or her actions or omissions, even if other consequences form the primary motive. Bourgoin is an example. The concept of attributing intention by necessary inference in this way is well established."
The court also stated the reasons why it considered that the tort should not be extended to cover a wrongful act done without a realisation of the consequences for the plaintiff and stated, at pp. 350-351:
"The purpose behind the imposition of this form of tortious liability is to prevent the deliberate injuring of members of the public by deliberate disregard of official duty. It is unnecessary, to attain this objective, to extend the tort to catch an act which, though known to be wrongful, is done without a realisation of the consequences for the plaintiff. The law may still provide a remedy in negligence if the situation is one of those in which it is appropriate to impose a duty of care or, if the plaintiff is someone intended by statute to have the particular benefit or protection of an Act of Parliament or subordinate legislation, the plaintiff may have a remedy in the form of an action for breach of statutory duty; or the circumstances may give rise to another of the traditional tort actions, for instance, for false imprisonment or assault . . . .
In our view this intentional tort should not be allowed to overflow its banks and cover the unintentional infliction of damage. In many cases the consequences of breaking the law will be obvious enough to officials, who can then be taken to have intended the damage they caused. But where at the time they do not realise the consequences they will probably not be deterred from exceeding their powers by any enlargement of the tort. As Clarke J. observes, they may well think that they are acting in the best interests of those persons whom they actually have in mind. In any modern society administration of central or local government is complex. Overly punitive civil laws may oftentimes deter a commonsense approach by officials to the use or enforcement of rules and regulations. We prefer to err on the side of caution and not to extend the potential liability of officials for causing unforeseen damage. To do so may have a stultifying effect on governance without commensurate benefit to the public. . .
The common law has long set its face against any general principle that invalid administrative action by itself gives rise to a cause of action in damages by those who have suffered loss as a consequence of that action. There must be something more. And in the case of misfeasance of public office that something more, it seems to us, must be related to the individual who is bringing the action. While the cases have made it clear that the malice need not be targeted there must, as we have said, be a conscious disregard for the interests of those who will be affected by the making of the particular decision."
The opinion of the New Zealand Court of Appeal, in agreement with Clarke J., that it is insufficient for the plaintiff to show objective foreseeability that the breach of duty will probably cause damage and that it must be proved that the public officer himself foresaw the probability of damage, or was reckless as to the harm which is likely to ensue, is the same as the view taken by Deane J. in Mengel. I also consider that the opinion of Brennan J. is not inconsistent with it as, at p 546 he referred to "conduct
calculated to produce injury." In Bourgoin  Q.B. 716 the Minister knew that the prohibition would harm French turkey producers and therefore the issue as between foresight and foreseeability did not have to be determined by Mann J., but as Clarke J. pointed out in his judgment, at p. 568, Mann J. had previously referred more than once to the public officer knowing that his act would injure the plaintiff, and I agree with Clarke J. that Mann J. must have meant "foreseen" at page 740F in the passage of his judgment which I have quoted above.