Anthony Wilson & Ors v Department for Transport [2025] EWHC 1387 (KB)

[2025] EWHC 1387 (KB)

Case No QB-2022-MAN-000011

IN THE HIGH COURT OF JUSTICE

KING'S BENCH DIVISION

Venue MANCHESTER DISTRICT REGISTRY, Manchester Civil Justice Centre

1 Bridge Street West

Venue Manchester

Date 05/06/2025

M60 1TE

Before

MR JUSTICE FREEDMAN

Between

MR ANTHONY WILSONClaimants

MR PAUL HANNAHClaimant

MR DAVID CHEETHAMClaimant

MR DOUGLAS BENTLEYClaimant

MR CHARLES GREAVESClaimant

DEPARTMENT FOR TRANSPORTDefendant

Mr S. Simblet KC, Mr M. Rhind KC and Mr S. Flynn (instructed by Farleys Solicitors LLP) for Claimants

Ms C. Ventham KC, Ms C. Haywood, Mr P. Laverack, Mr E. Gross and Mr M. Simpson (instructed by the Government Legal Department) for Defendant

Hearing Hearing dates: 20, 21, 23, 27, 28, 29, 30 & 31 January, 3, 4, 5, 6, 12, 13 and 14 February 2025

Judgment handed down in draft: 14 May 2025

Approved Judgment

This judgment was handed down remotely at 12noon on Thursday 5 June 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

[1]The Claimants make claims in malicious prosecution and/or misfeasance in public office arising out of a failed prosecution of the individual Claimants for fraudulent trading. They say that it was a prosecution which should never have taken place because there was no reasonable or probable cause, indeed no good reason to allege fraud. It is alleged that it was brought in bad faith and/or maliciously and/or for an improper purpose.

[2]The Claimants accept that in late 2014, Klarius Products Ltd (“KPL”) was supplying non-compliant or illegal catalytic converters. As soon as it discovered this, KPL’s case is that it reported itself to the relevant authority, the Vehicle Certification Agency (“VCA”), an agency of the Department for Transport (“DfT”). It says that it took all reasonable steps to make itself compliant and to rectify what had been done. The VCA conducted an investigation, it made a report which had several editions/rewrites. It concluded that there were no further steps to be taken.

[3]Two competitors of KPL did not accept that the investigation had been reasonable and required a further investigation with a prosecution to follow if appropriate. They claimed that the VCA had not investigated the matters properly and were not equipped to do so. In fact, the VCA had never mounted a prosecution arising out of such defaults and were not equipped to do so. Applications for judicial review were commenced by the competitors.

[4]The judicial review proceedings were capable of revealing an inadequate system within the VCA for investigating and/or prosecuting such breaches and indeed fraud in the very sensitive and publicity generating area of vehicle emissions. Rightly or wrongly, there was a belief that the investigation of the VCA was inadequate and the proceedings in the Administrative Court, if contested, would lead to a finding that the VCA did not investigate fraud or even prosecute or procure prosecution for non-compliance in an important area affecting public safety and environmental matters. Having taken advice that the DfT was likely to lose the judicial review, the DfT undertook to start a new investigation through a different DfT agency, namely the Driver and Vehicle Standards Agency (“DVSA”).

[5]As months and indeed years went by, it became apparent that nothing short of prosecutions for fraud and dishonesty would have satisfied those competitors. It was by this stage too late to prosecute for regulatory breaches because of the general limitation period of “six months from the time when the offence was committed, or the matter of complaint arose” applicable to offences triable summarily only: see section 127 of the Magistrates Court Act 1980.

[6]Whereas prior to the judicial review proceedings, the DfT had decided not to take any further action, there came a point in time when the DfT decided to prosecute the individual claimants in this action for fraudulent trading contrary to section 993 of the Companies Act 2006, in that between February 2013 and August 2015 they were knowingly party to the carrying on of KPL for a fraudulent purpose, namely, the marketing, distribution and sale of counterfeit and non-type approved catalytic converters.

[7]Whilst ostensibly the price to buy off the judicial review proceedings was the inception of a further investigation, in reality, it is claimed that the price was a prosecution. Anything short of a prosecution would not have satisfied the judicial review claimants. The allegation was that the DfT, particularly through its Mr Hurrell, an investigator, in effect took instructions from the judicial review claimants and acted as their proxies.

[8]The prosecution failed leading to not guilty verdicts being formally returned when the prosecution was not able to proceed due to deficiencies in their disclosure. There was not heard an application to strike out for abuse of process and an application to dismiss on the basis of shortcomings on the merits including an inability on the papers to prove dishonesty. A part of the alleged abuse was the same alleged improper motive by reference to the judicial review proceedings.

[9]The Claimants’ case is that there was no reasonable basis for the prosecution and that it was never fit to go for trial. There was no reason to believe that the Claimants or any of them had been dishonest or fraudulent. They had explained the reasons for the breaches of regulations which occurred due to mix ups on the acquisition of materials from a predecessor company. There had been an investigation in 2015 by an agency of DfT, namely the VCA and there were no findings of fraud, nor a requirement that any further action be taken.

[10]The Claimants’ case is that the prosecution was therefore not brought for the purpose of bringing wrongdoers to justice. It was brought for the ulterior or collateral and wrongful purpose or motive of bringing to an end the judicial review proceedings and/or any other further Administrative Court proceedings. All of this was done at the instigation and the enormous pressure of the judicial review claimants who were competitors of KPL and wanted to use the judicial review and the prosecution to destroy the competition. The improper motive of getting rid of the judicial review proceedings, it is said, led to the DfT embarking on a prosecution that was ill thought out and fatally flawed.

[11]The trial was due to last for about two months. The costs awarded in favour of the defendants were in millions of pounds. One estimate was over £2 million. The collapse of the criminal prosecution and the award of costs were not sufficient to remove what the Claimants say were the disastrous repercussions for the reputation of the individual Claimants and for at least a part of the business of KPL. By these proceedings, the Claimants seek to obtain redress. They seek many millions of pounds in damages to reflect not only general damages, but for the loss of a part of their business, namely the manufacture and supply of catalytic converters, such damages to reflect many years of loss of that part of the business.

[12]The DfT answers the claim by saying that it was not acting in bad faith or maliciously or for an improper purpose. The VCA inquiry into what had occurred was inadequate and it did not consider adequately or at all the question of prosecution. It was therefore a responsible decision in the face of the judicial review proceedings, and acting on the advice of specialist counsel, to agree to conduct a further investigation through a different agency which was more equipped to consider a criminal prosecution. This was to avoid the charge that it was simply a rubber stamp exercise of confirming the decision of the VCA.

[13]There was a more rigorous investigation which then ensued. It was overseen from 2017 onwards by prosecution counsel. There was detailed evidence which had been obtained from suppliers to KPL which revealed systemic fraud in the belief of the investigators. Whilst it had been expected for some time that there would be a prosecution, the final decision to prosecute was in the light of a charging advice signed by Mr Bennett and Mr Johnson of Counsel. It considered that there was sufficient evidence to make out the charges of fraudulent trading against all five claimants in this action and that there was a sufficient public interest to proceed. The disclosure failures ought not to have occurred, but they did. The alleged abuse of process and dismissal applications would have been fought and there was reason to believe that they would have been overcome, not least having regard to the heavy burden attendant on such applications.

[14]The DfT challenges that it acted improperly. Whatever prosecution failures there were, they were not about acting in bad faith or acting maliciously. The prosecution was brought with a view to bringing the five claimants to justice. It was believed subjectively that there was a case with sufficient prospects of success against them to justify the charges, and objectively the decision to prosecute was with reasonable and probable cause. This was not a case, says the DfT and as stated at para. 150 of the charging advice, where the motive of the Claimants was for the collateral or improper purpose of meeting the judicial review claims. The torts which are the subject of this action depend upon bad faith and/or malice and/or improper motive (which may all overlap). The DfT submitted that none of these ingredients of the torts were present and/or the Claimants have been unable to prove the same. Even if serious shortcomings in the prosecution can be established, they are not about these essential ingredients of the torts of malicious prosecution and misfeasance in public office.

[15]This is the battleground that gave rise to a hard-fought four-week civil trial raising questions of law and fact and requiring findings about the motivations of the parties.

[16]The structure of the judgment will be very broadly to consider the following:(i) the historic background and the underlying facts of the case (which involves at the same time outlining the competing views of the parties about the facts);

(ii) the view of the Court about at least some of the witnesses who were called and the extent to which inferences should be drawn about witnesses who were not called;

(iii) the law in respect of (a) the tort of malicious prosecution, and (b) the tort of misfeasance in public office;

(iv) the application of the respective torts to the facts of the instant case as found;

(v) the findings of the Court as regards (a) the evidence of fact and expert evidence as to quantum, and (b) the appropriate quantum in respect of the claims.

II The parties

[17]The first three Claimants were each of them directors or employees of KPL. The Fourth and Fifth Claimants were each senior management employees of KPL. KPL was acquired to be a successor company to Klarius UK Limited (“KUK”) which went into administration on 7 February 2013.

[18]The First Claimant, Mr Wilson, is the chairman of KPL, company director and principal shareholder. Prior to the formation of KPL, he had been the chairman of KUK. The Second Claimant, Mr Hannah, is the Business Development Director of KPL, company director and shareholder (5%), and formerly director and shareholder of KUK. The Third Claimant, Mr Cheetham, is the Chief Financial Officer, director and 15% shareholder of KPL. The Fourth Claimant, Mr Bentley, is Head of Development of KPL. The Fifth Claimant, Mr Greaves, was managing director of KPL between 2016 and 2018 when he left the company. Previously, he had been operations director of KUK and then of KPL.

[19]A part of the business of KUK was the sale of catalytic converters manufactured by two other companies. The first is A.S. SLU (“AS”), which is a company based in Spain. The second is Environmental Catalyst Technology (“ECT”), which is a company based in the USA. The products supplied by AS and ECT were the subject of Spanish E9 type approval certificates. Whereas AS supplied KUK with a complete product that was vehicle ready, ECT did not supply a vehicle ready product. They supplied what is known in the industry as a ‘canned cat’, a ‘unique cat’ or a ‘bullet’. Further work was required to make it vehicle ready, which was undertaken by KUK.

[20]KUK went into financial difficulties. They stopped paying for parts which they had received and came to owe very large sums of money to AS and ECT respectively. AS halted supply of products in 2011. ECT halted supply of products in the latter part of 2012. The ECT type approvals had been extended to permit their use by KUK in respect of the attachment of the pipe work. KPL did not have the benefit of any such approvals.

[21]The DfT was the prosecuting authority in this case. The Court heard evidence about two separate agencies within the DfT. The first is the VCA, the Vehicle Certification Agency, an executive agency of the Defendant. When non-compliant catalytic converters were reported by KPL in mid-December 2014, they were reported to the VCA and such investigation as took place was by the VCA. There is a controversy as to the particular kind of scrutiny undertaken by the VCA into the business of KPL. The second is the DVSA, a separate executive agency of the Defendant, which was responsible for the prosecution of the Claimants.

[22]The business of KPL comprised the manufacture and supply of after-market emissions equipment for motor vehicles. KPL supplied exhausts, catalytic converters, diesel particulate filters, mountings and accessories relating to exhaust and vehicle emissions control. In respect of catalytic converters, the general manufacturing process sometimes involves manufacture of the entire system and sometimes involves sourcing separate components from different manufacturers and putting them together.

[23]KPL had a number of commercial competitors including companies called:(i) BM Catalysts (“BMC”), whose managing director was Mr Toby Massey; and

(ii) Marathon Warehouse Distribution Limited (“Marathon”) whose managing director was Dr Richard Stock and his brother Tony Stock was also a director.

III Regulatory control

[24]Emissions control equipment is subject to quality and regulatory control. Catalytic converters are a critical aspect of controlling the emissions of motor vehicle exhausts. A catalytic converter reduces the amount of harmful pollutants produced by a vehicle engine by taking these gases and converting them into water vapour and less harmful gases via a series of chemical reactions. Catalytic converters form part of a vehicle's exhaust system. Catalytic converters are prohibited unless they are ‘type approved’ under relevant European or international regulations. The granting of those certificates requires the independent assessment of the quality of the product by laboratory. The assessment process is referred to as ‘homologation’, and type approval certificates often known as ‘homologations’.

[25]At all material times, catalytic converters sold in the UK were required to comply with the Motor Vehicles (Replacement of Catalytic Converters and Pollution Control Devices) Regulations 2009 (“the Regulations”). The Regulations assisted the member state within the EU in meeting legally binding EU air quality targets, improving public health and addressing the climate crisis.

[26]The approval authority in the UK responsible at all material times for issuing type approval certificates was the VCA. Sometimes the homologations would apply to a finished product, but it was also possible for manufacturers to obtain their own approvals to fit on to other manufacturers’ products fitted into their own systems. Sometimes, the manufacturer would obtain extensions to their own type approvals to build systems at customers’ premises. Each country within the EU could issue its own approvals which would then be recognised across the European Union. Each member state had its own identification code on the type approval certificates. For the United Kingdom, the code was E11. For Spain, the code was E9. In the United Kingdom, the VCA required separate testing for each vehicle. In Spain, the relevant Spanish authority called INTA would grant type approvals on categories of vehicle. If the certificate says that they can only be manufactured at a particular location, then they cannot be manufactured elsewhere and they are no longer ‘type approved’.

[27]Inside the catalytic converter, there is something called a monolith, which is also referred to as a substrate or brick. At the relevant time, these could be made out of a metal mesh or a ceramic mesh. They had to be made out of what the type approval said so that if they could only be made out of metal, and they are not, then they were no longer type approved.

[28]Further, if a company applied for a type approval/homologation, it would be granted only to that company and not to any other company.

[29]By Regulation 8, the use of non-type approved converters was prohibited unless they met certain requirements including being labelled “ILLEGAL TO SUPPLY FOR VEHICLES APPROVED TO EC REGULATION 715/2007.” Provision was made for enforcement. By Regulation 9(1), it was the duty of the enforcement authority, the Secretary of State for Transport, to enforce the regulations and the schedule to the regulation set out those who were to be involved in enforcement.

[30]The Regulations also confirmed various powers on the Secretary of State for Transport including powers of search, seizure and retention including of relevant products and records. There was a power to demand that a container be opened in the absence of compliance or if there was nobody there to break open a container. There was also a procedure for obtaining a warrant to enter premises including by force if necessary.

[31]Regulation 9(2) and the Schedule to the Regulations also created various offences for breach of the Regulations. By paragraph 1 of Schedule 1, supply and non-type approved converter or device created a summary offence with a maximum penalty of a fine not exceeding level 5. As with most offences triable summarily only, a prosecution had to be commenced within 6 months of the commission of the offence. Fraudulent trading is triable either way, and as such, does not have a limitation period.

IV The allegation that KPL was supplying illegal catalytic converters

[32]Mr Massey of BMC and Dr Richard Stock of Marathon respectively became suspicious of KPL's activities. In October 2014, Mr Massey purchased two KPL catalytic converters and noted that they were marked with ECT homologations but did not contain a unicat manufactured by ECT.

[33]On 13 November 2014, Mr Lawrence Bleasdale, at a meeting of the Independent Automotive Aftermarket Federation (“IAAF”), made an allegation that illegal catalytic converters were being supplied to the after sales market. He remarked to Dr Richard Stock that he had heard that some catalysts supplied to the aftermarket were incorrectly marked. The Claimants accept that a number of systems supplied by Mark Exhausts were wrongly marked with approvals that had been given to ECT (as stated above a US company) and also some of the approvals had expired. Mr Bleasdale informed Dr Stock on the next day that his source was an unidentified employee of KPL. This amounted to a breach of the labelling and classification obligations contained in the Regulations.

[34]On 25 November 2014 Mr Massey called Mr. Wilson and told him that he had heard that ECT had removed about 800 approvals which had the name of KPL on them, and Mr Wilson remarked that “we” (which in context must have referred to both KPL and KUK) had not done business with ECT for years. On 1 December 2014, various ECT extensions were cancelled.

[35]At about this time, Marathon and BMC set about acquiring samples in order to see if the parts had been manufactured by AS and ECT in accordance with the type approvals. On 12 December 2014, BMC and others complained to the Department for Transport about the activities of KPL. On 15 December 2014 Mr Massey emailed to Mr. Wilson and there was a second call between Mr Massey and Mr. Wilson. On the same day Richard Stock contacted Wendy Williamson at IAAF and expressed concerns about KPL. Further, KPL received telephone calls from customers about contact from competitors directing them to a website drop box setting out approval extensions which had been rescinded.

[36]On 16 December 2014, KPL issued a statement to customers in the name of Mr Wilson providing reassurance about the effect of the ECT cancellations. On 17 December 2014, KPL issued a further statement to customers stating that all stocks held by KPL’s distributors and held in its warehouse were fully compliant.

[37]In the meantime, on 16 December 2014, there was an initial report to the DfT about KPL made by Dr Stock. On 17 December 2024 there were two further calls between Mr Massey and Mr. Wilson.

V Investigation by the VCA

[38]Reference should first be made to the hierarchy within the VCA. Mr Anthony Stenning headed the original VCA investigation until his retirement in June 2015. Mr Derek Lawlor and Ms Michelle Rainey reported to Mr Stenning. Mr Lawlor was head of ‘Conformity of Production (COP) in 2014 - 2015. Ms Rainey was the VCA Head of Enforcement in 2015. She wrote the initial VCA report dated 12 February 2015 with Mr Lawlor. In the spring of 2015, she moved from the VCA to the National Measurement and Regulation Office. Mr Dave Picker was the VCA Chief Engineer at VCA Nuneaton who dealt with the original correspondence on 19 December 2014 and who referred to Mr Lawlor.

[39]On 17 December 2014, there was an attempt from KPL to make contact with the VCA, but the relevant contact was not there. KPL stated that it ceased to manufacture all type approved catalytic converters which used the withdrawn approvals. On 19 December 2014, Mr Bentley met with Mr Dave Picker and Mr Derek Lawlor at the VCA. Mr Lawlor, who was at the relevant time was the Head of COP within the VCA, confirmed that KPL should cease to manufacture all applicable catalytic converters. An internal audit within KPL revealed that KPL had used some monoliths not supplied by ECT in parts covered by the ECT approvals.

[40]On 22 December 2014 Mr Hannah and Mr Greaves went to the VCA Midland Centre in Nuneaton upon the request of KPL and met Mr Picker and Mr Lawlor. Mr Lawlor recommended an ‘8D’ report be issued by KPL. 8D is shorthand for “Eight Disciplines of Problem Solving”, which involves setting up a team to find the root cause of the problem, to resolve it and prevent its recurrence. The meeting lasted about 3 hours. Mr Lawlor’s evidence is that he was an engineer by training who came to the meeting with the mindset of that background and not looking for “any hidden motives, behaviours or practices”: see para. 33 of his statement.

[41]On 24 December 2014, an 8D report was sent by Mr Greaves to the VCA, ECT and to German and Spanish regulators.

[42]In the next few weeks, the VCA decided to investigate further. The VCA staff visited KPL on 23 January 2015 to review actions taken and to request a full stock audit and a full recall of unsold stock. It involved senior personnel including Mr Lawlor, Mr Adrian Eaton (a Senior Executive Officer who reported to Mr Duncan Kay), Mr Stenning and Ms Rainey. Further technical advice was obtained in early 2015 from Mr Keith Southerton Head of the Vehicle Safety Branch at the DVSA. Mr Lawlor approached DVSA to discuss enforcement options. However, he said that at the time, he did not believe, absent a serious and immediate risk to life, that a prosecution was on the cards.

[43]KPL said that it did carry out voluntarily a product recall which cost around £500,000. KPL began using their legacy E11 type approvals to manufacture a limited range of products from 6 January 2015 and met the Spanish regulator, INTA, to begin the process of applying for their own E9 approvals to replace those withdrawn by ECT. In 2015 and 2016, KPL sought and was granted 11 ‘families’ of E9 approval from INTA which replaced the withdrawn E9 approvals.

[44]The explanations given to the VCA by KPL and its officers and employees were that mistakes had been made in relation to the E9 and E11 CATs. There appeared to have been some confusion with the type approvals on the acquisition of part of the KUK business by KPL. The Claimants’ case is that there was no dishonesty on the part of KPL and they wished to cooperate fully.

[45]Mr Lawlor’s evidence was that the ability of VCA to investigate issues concerning misuse of type approvals was limited, particularly the E9 Spanish type approvals in respect of which the VCA had no right to withdraw or suspend them. Although Ms Rainey mentioned fraud at the time, Mr Lawlor saw the role to try and guide KPL back towards compliance: see his witness statement at paras. 59 and 65. He treated the explanations of KPL as being ‘plausible’. He did not investigate whether there was fraud. He attended the Cheadle plant of KPL on 2 April 2015, but he did not inspect any of the products. That said, by 11 May 2015 in an email to Mr Stenning, Mr Lawlor said that he was getting to the point where “incompetence and naivety are no longer sufficient to justify the findings that keep coming out.”

[46]The evidence of Mr Lawlor, Mr Kay and Mr Eaton confirm that competitors were constantly in touch and pressing for enforcement action and threatening judicial review from January 2015. Their refusal to accept no action being taken was there at an early stage. On 7 May 2015, Mr Stenning wrote “but that means that they will not accept a conclusion that Klarius made a simple mistake and it's all sorted out. They expect us to prosecute and seek a fine on Klarius.”

[47]On 1 February 2015, Mr Greaves prepared a report for the VCA which was sent on 2 February 2015. On 2 February 2015, solicitors for ECT, Browne Jacobson, sent a cease and desist letter to the Claimants stating that recent tests of products revealed that they were not manufactured by ECT and were not legal. The position of KPL was that the ECT issue was a legacy issue from the previous company KUK.

[48]In February 2015, an initial report was prepared by Ms Rainey of the VCA drawing attention to the intelligence received from BMC including how(i) the Spanish authorities had withdrawn a number of approval extensions from KUK at the request of ECT following the administration of KUK,

(ii) KPL had used non ECT monolith cans in catalysts that bore the ECT type approval marking incorrectly,

(iii) KPL had never been supplied by ECT directly, and

(iv) KPL had continued to use the withdrawn approval numbers that ECT held without using the approved ECT part.

[49]The VCA report was subsequently amended on 10 April 2015 following a site visit to the KPL premises and an audit of information submitted to the VCA. In an email of 15 April 2015 from Mr Lawlor to Mr Stenning, he said that he still erred “on the side of unintentional rather than fraud.” On 6 May 2015 Mr Stenning met BMC and then Benchmark Distribution (Marathon) to discuss the allegations. In a statement which Mr Stenning made much too late on 13 March 2018 in connection with the criminal proceedings, he said that he too was beginning to “harbour concerns that as an agency, the VCA were possibly being duped by Klarius.” Between 7 May and 8 May 2015, the VCA comprising Angie Bissett, a VCA CoP auditor and Rob Nixon, who was VCA head of Southern Europe, conducted a CoP audit covering quality processes relating to both catalysts and silencers at the KPL plant in Cheadle.

[50]In a second iteration of the VCA report dated 31 May 2015, there was a heading entitled “Allegations of Deception and Fraud”. This is relied upon by the Claimants to show that fraud was considered. VCA stated that “The evidence of a deliberate deception seems, to VCA, to be largely circumstantial and all based on sceptical interpretation of the actions taken by KPL… we do not see damning evidence. KPL’s openness in offering VCA complete access to its records and production processes, and its similar offer to its competitors and customers, must carry some weight. In VCAs dealings with KPL, they've been anxious for us to investigate any aspect and see any process that we chose, and have not appeared to hide anything. KPL has provided evidence that it has made reasonable efforts to recall potentially faulty product. It has provided evidence that it contacted several customers…”

[51]There was a final VCA report on 2 July 2015. The VCA reported that the Claimants had been cooperative and open with the DfT's investigation and investigators. It stated that KPL had spent money remedying the defaults and was now in compliance with the regulations. It stated that the VCA would actively monitor compliance with the law and regulations including providing unfettered access to DfT and regular audits. It stated that the Government's policy on regulatory inspection and compliance, as published as the Hampton Principles, militated against prosecution.

[52]The VCA investigation was revisited in the course of the trial. The Claimants’ case is that the copious amounts of information and material which KPL gave to the VCA over an extended period, as well as providing unfettered access to the business, provided a complete answer to all of the non-conformities that were subsequently relied on by the prosecution. At very least, they comprised very significant exculpatory material. The submission of the Claimants was that the outcome of the VCA investigation meant that there could have been no justifiable prosecution of the Claimants.

[53]The response of the DfT is that the VCA looked at the issue from a type-approval perspective and not as a prosecution agency. The main aim of the VCA was to work with non-conforming manufacturers to bring them back to conformity and not to prosecute. The findings of the VCA were in very general terms including that there was an administrative oversight on the acquisition of manufactured product by KPL from KUK. It was said that there was carelessness in the Technical Centre of KUK when the business was fighting for survival in 2012, and subsequently the new owners who bought the business in administration were not aware of the mistakes of the old company. It was suggested that there had been errors in overlooking the approvals of ECT only being for KUK.

[54]While this may have satisfied the VCA at the time, that might have been because of a lack of rigour in the investigation in taking at face value these explanations. It failed to consider adequately or at all that there was no entitlement to use the ECT approvals. It failed to inquire into the knowledge of those Claimants who were common to KUK and KPL so that they would be likely to have known of the fact that the ECT approvals were not valid for KPL. Mr Lawlor does not remember having conversations with Mr Wilson to discuss whether there had been fraud. He says that he would not know what to look for if it were fraud. To him, the explanations being given seemed plausible, albeit that, as noted above, he entertained doubts about the explanations about “incompetence and naivety”. This was particularly the case given that he knew that the people behind KPL were the people behind KUK, so that, in retrospect, it was questionable. Nevertheless, he believed that he erred “on the side of the unintentional rather than fraud”.

[55]Mr Lawlor made comments in an interview of 31 August 2016 that(a) it was not the VCA's remit to look at intent,

(b) he had never seen a mistake like this before, and

(c) it was naive to think that they didn’t understand what they were doing. Likewise in November 2015, Ms Celine Thomas who had worked closely with DfT throughout the VCA investigation stated that she was not sure that the investigators were resourced for an investigation about deliberate fraud or considered that it came within their remit. Seen against this background, any conclusion of the VCA to the effect that there was no evidence of fraud is more nuanced. Albeit that some of the comments post-dated the time of the judicial review proceedings, these nuances are an important backdrop on the case of the DfT to the decision to carry out a re-investigation.

VI Judicial review correspondence and proceedings

[56]The DfT accepted the rationale behind the VCA report in its final form in July 2015. It was formally approved by the Minister following a ministerial submission in November 2015. Not long after DfT had communicated this decision, Marathon intimated that it intended to seek judicial review. On 9 January 2016, Cubism Law (on its behalf) sent a detailed letter of claim in the nature of a pre-action protocol proposing to challenge the fact that the Claimants had not been prosecuted. By a letter dated 2 February 2016 from Claire Wills of the Government Legal Department (“GLD”), a letter of response was sent which stated that VCA had carried out a detailed, vigorous and thorough investigation and its conclusions were soundly based on the evidence.

[57]The Claimants’ case is that the DfT changed its position from vouching for the adequacy of the VCA investigation to commissioning a fresh investigation. It is their case that this is evidence of an improper objective on the part of DfT, namely(a) to ensure that the claims for judicial review were never ventilated, and

(b) to achieve that aim by satisfying the Claimants in the judicial review with a prosecution for fraud. The motivation for that objective was said to be the DfT's desire to avoid embarrassment through reputational harm arising from the lack of enforcement policies and indeed the lack of prosecutions as well as avoiding the huge costs involved in defending the judicial review claims.

[58]On 10 February 2016, Marathon filed a claim form seeking judicial review against the Secretary of State for Transport including the decision not to take enforcement action or to initiate a prosecution of KPL. The claim alleged that the VCA investigation was a legally inadequate investigation into allegations of serious criminal conduct. The relief sought included the following mandatory orders:

“c. a mandatory order - requiring the Secretary of State to refer the evidence against Klarius to the Crown Prosecution Service and/or the police, as appropriate for an independent decision as to whether or not a prosecution or to be instituted against Klarius e.g. for breaching the Fraud Act 2006. d. a mandatory order - requiring the Secretary of State to conduct a fresh review of evidence and/or conduct a proper investigation and make a fresh decision.”

[59]On 15 February 2016, BMC also sent a pre-action protocol letter by Gateley Solicitors. BMC filed a judicial review claim on 2 March 2016. This raised similar issues to the claim of Marathon. As a result, it was subsequently suggested that BMC should join the ADR discussions which were proposed to take place with Marathon.

[60]Ms Wills instructed Mr Andrew Kinnier of Counsel , a public lawyer, to act in the judicial review claim of Marathon and also to consider the intended claim of BMC. In the meantime, there was a consent order in the Marathon proceedings, staying the claim and referring the matter to ADR. The Judge, Holroyde J (as he then was) observed that if the claim were to proceed, KPL should be added as an Interested Party but this did not happen.

[61]A feature of this case is that legal professional privilege has been waived by DfT and a large part of the evidence has comprised the legal advice given in the judicial review proceedings and subsequently in the criminal proceedings which lie at the heart of this action. The advice given by Mr Kinnier was that the judicial review claims were very likely to succeed and should not be defended on the merits. He advised in conference on 26 January 2016 that Marathon (the company was called Benchmark) was likely to get permission to apply for judicial review on the basis of the argument that the VCA accepted the answers of KPL at face value without any rigour or proper investigation. The appropriate form of relief was less certain.

[62]On 15 February 2016, there was a more robust pre-action protocol letter on behalf of BMC which led Claire Wills to write to Mr Kinnier the next day saying:

“my initial view is that DfT should start a new investigation into Klarius and make the claim go away”

. This led to an immediate response by Mr Kinnier saying, “On a very quick read, I wholeheartedly agree with you”. On 16 February 2016, Mr Williams sent detailed advice ending “As discussed, the most pressing issue that we need to consider is whether it is possible for the DfT to carry out a new investigation into Klarius.”

[63]In a later email on 16 February 2016, Mr Kinnier said “at first blush, the VCA did not carry out the critical investigation that the conflicting accounts given by Klarius would have required. On the face of this letter, no real attempt appears to have been made to engage with BMC's evidence. Unless there are strong countervailing considerations and subject to the client's instructions, in my firm view, we should initiate a fresh investigation that deals properly with all the evidence.”

[64]On 15 March 2016, further advice was given by Mr Kinnier in which he assessed the likelihood of success as high, that is to say 70% or higher. He said that the fundamental issue was the extent to which VCA “critically examined” KPL’s evidence account “as to how they came to be using approval numbers for which they no longer had the right to use; substituting components in the catalytic converter with unapproved alternatives and failing to manage their compliance and approval duties under type approval for replacement catalytic converters and silencers.” This was set out in detail in the letter of claim for BMC and the consensus view was that it was more likely than not that the investigation of VCA was less intense than would have been desirable. In addition to this, there was no detailed enforcement policy specific to the 2009 Regulations without which there was no adequate framework to consider whether to enforce the 2009 Regulations. Indeed, the VCA had never prosecuted breaches under the 2009 Regulations, but had concentrated on the light touch mechanisms designed to encourage future compliance. There were questions about whether any relief should be ordered, but the argument was finely balanced as to whether there ought to be a declaration.

[65]In conclusion, Mr Kinnier stated that there was no obvious advantage in defending the claim. There was a likelihood that some relief would be obtained and there is “a real and significant prospect of judicial criticism of the absence of critical scrutiny applied to Klarius’ evidence by the VCA during the course of its investigation.” If the matter were to go to a substantive hearing, the Claimant would recover its costs which would be unlikely to be less than £30,000 plus VAT and maybe higher. There was therefore a recommendation of proposed ADR and DfT's proposals for resolving the disputes arising from the investigation. These views were confirmed in conference on 27 April 2016. The note says that Counsel was uneasy and that the VCA took KPL’s word for it and that that was the problem. The Claimants make the point that Mr Kinnier did not say that he had seen evidence of suspected fraud or that there should be a prosecution because of fraud.

[66]The DfT’s case is that the change in position on the part of DfT from having confidence in the VCA investigation to ceasing to have such confidence was explicable because of independent legal advice that the DfT was vulnerable to successful challenge for judicial review. This was because of a perceived failure on the part of the Secretary of State properly to discharge obligations in connection with the enforcement of regulations. This was amplified by Mr Duncan Kay at T6/88/10-14 as follows:

“I am sorry I find it difficult to see how we separate the two things, because the claims are related to there being evidence which has not been, allegedly, properly investigated. Now if that is accurate, then it is our duty to properly investigate. So you are presenting that as us investigating because there is a JR claim. I see it as us investigating because there is an allegation that we have not properly investigated it first time.”

[67]In other words, the DfT case is that the re-investigation was a proper thing to do where there was an allegation that the matter had not been properly investigated first time. That was a proper response to a claim and does not indicate that the re-investigation was for an improper or collateral motive or purpose.

[68]In response to the above, the Claimants say the following. Mr Kinnier was not suggesting that there was evidence to prove fraudulent conduct. His advice was focussed on the judicial review and he set the DfT into a mode where their dominant motive was to avoid the judicial review and the embarrassing findings that would ensue. In the sensitive area of vehicle emissions, the government agency had not conducted a thorough investigation and had not given a proper consideration to prosecution because they avoided prosecuting despite the obvious public interest.

[69]The DfT conceded that it would have been improper for the DfT or their lawyers to commit to a prosecution, but that is not what occurred. The fact that at a stage in advance of the charging advice, employees within the DfT believed that a prosecution was highly likely does not mean that there was a commitment to prosecution either at the time of the agreement to stay the judicial review or thereafter until the decision was actually made following the advice of prosecution counsel. It does mean, says the DfT, that they were reacting to the quality of the evidence that was emerging, but this was itself still subject to obtaining a charging advice and acting upon it. Mr. Duncan Kay was clear in his evidence that one of the options that was being explored was a fresh investigation and not a prosecution. He said that investigations do not necessarily result in prosecution: see T6/74/10. He also said that “we deliberately kept a distance from the DVSA investigation in order that they would investigate themselves and find what they found and be led by their findings. That was the strategy as far as I was concerned.”

[70]Mr Kay said: “for me, it's very clear. We have a duty to uphold the regulations and where there's evidence being provided of wrongdoing, then we should investigate it. It’s not just doing something because someone says we should. I completely reject that characterisation.” [Day 6/77/7-10]

[71]Likewise, Mr Macdonald rejected the Claimant’s contention that the prosecution was a foregone conclusion to give Mr Massey what he wanted: see T7/157/22 – T7/158/6.

VII A new investigation by DVSA

[72]Both Marathon and BMC agreed to stay judicial review proceedings while settlement negotiations were undertaken. There was a without prejudice meeting on 11 May 2016. BMC through Gateley Solicitors was taking a hard line, as was evident by way of example from a letter of 10 June 2016. This letter marked “without prejudice save as to costs” indicated disappointment that none of the concerns/issues expressed in the letter of claim and during the meeting had been addressed, and reiterated the need for a fresh investigation on the basis that any future investigation should take account of the full extent of previous breaches, that the market is not fully aware of the extent of KPL’s breaches, that products manufactured in breach of the 2009 Regulations remain in the marketplace for sale, and that the non-punishment of KPL for such breaches will set a precedent in the market. There was a demand for a fresh investigation following their reluctant agreement to a stay on 1 June 2016. There was a determination of the Claimants in the judicial review proceedings to make sure that a new investigation took place. The letter was particularly forceful to any weak adversary because of the detail of areas identified requiring specific attention and the very specific measures called for in the investigation. It amounted to a very specific work-to-do list including nine numbered points, each of which would take considerable time and effort. Marathon followed this up also demanding an investigation.

[73]On 12 July 2016, Mr Peter Hearn (DVSA acting Head of Operations) wrote to Mr Macdonald saying, “I will need to raise this with the DVSA directing board tomorrow, can you outline the implications to DfT and ministers if it is not possible for us to support this given the short notice.” The response of Mr Macdonald on the same day was:

“It's just worth adding that if we are able to satisfy those seeking a judicial review, and if we can reach an agreement through the dispute resolution process we may be able to save significant costs for the taxpayer which could be several hundred thousand pounds”

. This is relied on as part of the Claimants’ case to show both how desperate the DfT was to settle the judicial review and the fact that the decision was being taken at a high level.

[74]A word that was used by Ms Celine Thomas (in house solicitor at the DfT) and then by Mr Williams (who took over advising as an in-house lawyer on the KPL case from Ms Thomas in about March 2016), the strategy was to ‘appease’ BMC. In cross-examination on Day 5 at pages 24-26, Mr Williams said that the word ‘appease’ may not have been the right word insofar as it connoted giving up at all costs, whereas the intention was to reach a suitable compromise. The gravamen of the evidence was that(a) the judicial review claimants were determined, and

(b) the DfT was anxious to settle.

[75]By about 19 July 2016, DfT decided to do that which was demanded, namely to set up a new investigation. Instead of using the VCA, it used its DVSA personnel including Mr Andrew Rice (Head of Counter-Fraud and Investigations), Mr Eddie Rowlands (Senior Investigator, who answered to Mr Rice), Mr Jerome Montgomery (a Senior Investigator, Counter-Fraud) and Mr Patrick Hurrell (Investigator). The operation was code named Operation Fox.

[76]There is a lengthy note of a meeting of 19 July 2016. The lawyer Andrew Williams spoke about the difficulties which would beset the DfT when it was stuck in the middle between the competitors wanting action and an accusation from KPL that it had been colluding with competitors. It could be said that now DVSA was involved, but then the response would be to ask why DVSA had not been involved from the outset, and not simply when there were claims in judicial review. A point that was made at the meeting was “we want to avoid going to court and in order to avoid we need to understand what might satisfy these two claimants. At the moment we are struggling. The danger is we do investigate a bit further and publish an updated letter of finding sort of correcting our previous one and they’ll carry on complaining and we never get to the end of it.” A consistent theme was the need to satisfy the judicial review claimants.

[77]A key point that was discussed was that by this stage, it was too late to prosecute under the Regulations because the time for bringing such a prosecution had expired due to the six-month time limit. If a prosecution was to be considered, it would therefore have to be based on an offence of dishonesty/fraud. Whatever concerns there may have been that fraud would be difficult to prove, the judicial review claimants would have none of that, so convinced were they of the existence of the fraud.

[78]The new investigation was prompted by the judicial review claims. As a matter of causation, it is clear that if there had been no judicial review applications, it is almost inevitable that there would have been no further investigation. The Claimants’ case, to which greater reference will be made below, is that this proves the purpose or motive of the further investigation. Further, their case is that the criminal proceedings which followed, were to avoid the judicial review from coming to court and from an adjudication which could have been embarrassing to the DfT. The DfT's case is that whilst the further investigation may have been caused by the judicial review, it did not follow that the investigation would lead to a prosecution. Further, when it did, the DfT’s case is that the sole or predominant purpose of the prosecution was to bring people to justice who were believed to have been guilty of serious criminal offences.

[79]In a note from Mr Hurrell’s diary of 19 July 2016, it was stated that the DVSA had been instructed to engage in a new investigation and that “it has been agreed that DVSA will so engage and DfT and VCA advises that the investigation must be independent and totally impartial and transparent.” Mr Andrew Williams was at first surprised by this approach but then favoured being upfront about the involvement of DVSA. He was concerned that BMC would regard the new investigation as a concession that the first investigation was deficient. One possibility was to agree to pay the costs of the judicial review and another was to await the outcome of the DVSA investigation, but the risk was that the DVSA would decide that there was a clear reason to prosecute which “could weaken our case.” Mr Williams’ advice was to settle the litigation at this stage and agree a costs figure. The DfT’s case is that these communications support a case that there was no pre-determined outcome of the re-investigation.

[80]The new investigation was formulated in a meeting on 3 August 2016 and was thereafter reduced to writing in the form of a note. The note identified two stages. Stage 1 would comprise obtaining statements from the relevant judicial review claimants and contacting ECT and AS to obtain statements. Having done that, there would be consideration of(a) obtaining a search warrant to search the premises of KPL, and

(b) having a joint investigation with the police. In stage 2, there would be a search of KPL’s premises, the computer systems would be secured with a specialist forensics company, the retrieved documentation would be analysed to seek out the knowledge of the Claimants of the wrongdoing. DfT stated that the note did not represent a formal investigation plan nor was the investigation team bound to act in accordance with the terms of the note. The investigation would proceed according to what was judged as required from time to time: see para. 46 of the Defence.

[81]A particular point of the Claimants is that whereas in correspondence of the GLD in opposition to the then intended judicial review, the DfT defended the quality of the investigation of the VCA, thereafter it ignored the VCA investigation. It does appear that the VCA was deliberately replaced by the DVSA in order to present the picture that this was truly a new investigation rather than a new evaluation from the agency which had been criticised. On 4 August 2016, the DfT sent a letter to BMC emphasising that the DVSA was independent of the VCA, emphasising its prosecutorial role and saying that it may prosecute.

[82]The Claimants’ case is that the starting point became the representations made by the claimants in the judicial review proceedings: hence the note and stage 1 taking statements from the Claimants. The Claimants say that Mr Hurrell became too close to the judicial review claimants. He received the judicial review papers on 20 July 2016. He had a particularly informal relationship with Mr Massey of BMC.

[83]The response of the DfT at para. 51 of the Defence is that there were serious flaws in the VCA investigation. That did not mean that they were treating the representations made by the Claimants in the judicial review proceedings as the starting point, albeit that the investigation was of the allegations of criminal conduct made (not exclusively) by Marathon and BMC. A thorough investigation required that those allegations be considered through witness statements. There were no presumptions as to whether those allegations were true. On any account, the DfT had significantly moved away from the position expressed in correspondence by GLD.

[84]The investigation did not follow the note. In particular, the CPS was not involved and instead alternative independent criminal legal advice was obtained. Further, the investigating team did not seek police support as a joint operation. This was because police support was considered unnecessary in circumstances where it was decided that the search of KPL’s premises, interrogation of its computer systems and seizure of documents and stock were not required. Further, written statements were not taken from the Claimants in circumstances where the Claimants refused to attend voluntary interviews under caution in 2018 and instead questionnaires with attachments, photographs and PACE cautions were provided in their stead.

[85]In September 2016, Mr Kinnier advised in writing in a note. He expressed concern about the absence of track record of the VCA of enforcing by prosecution and the absence of a formulated policy for enforcement and prosecution. It was this that had led to the new investigation by the DVSA. He did not comment on whether there was any credible evidence of fraud. His view was that there was a question as to whether relief was appropriate, given that an investigation had been commenced. It could not be a part of the role of the Court to order a prosecution. He regarded the merits as balanced as to whether there would be any relief at all, and he recommended that offers were made to settle the judicial review by payment of costs which might after an assessment be a sum of £50,000.

VIII Progress of the investigation

[86]As the investigation progressed, further stays were sought. The investigation did not move very quickly because of delays in obtaining evidence particularly in Spain from AS. Each stay was hard won as was evident in June 2017 and in October 2017. In internal emails within DfT, there were references at the time that the stay was being negotiated in late October 2017. In an email dated 31 October 2017 from Mr Williams to Ms Wills, he said that he had just had an impromptu meeting with Ian Yarnold and Kate Warren and said “I’d be grateful if you could look into a possible meeting with counsel in November to discuss ways forward in the light of DVSA suggesting that Klarius will most likely be prosecuted. I think we will probably involve Ian's superior and so a meeting here would probably be best.” There was a three month stay on 2 November 2017, but with a requirement to provide a report about progress of the investigation by 12 January 2018.

[87]The stays which were won may seem at odds with the aggressive approach to the judicial review proceedings of Gateley, the solicitors on behalf of BMC. The Claimants’ case is that it is no surprise that internally the investigators were referring to an expectation that the Claimants would be prosecuted, this being more than a year prior to the charging advice. The pressure being exerted in the judicial review proceedings was real and sustained and the DfT were only able to fend off the claims by being able to show the judicial review claimants that progress was being made. In his evidence, Mr Williams referred to an update provided in an email of 23 November 2017 about an off the record chat that he had had with Mr Rice about the investigation, namely that items believed to be ‘counterfeit’ or containing inaccurate type approval numbers had been found. It was suspected that wrongdoing was intentional and that there was an intent to deceive. Mr Hurrell was in regular contact with Mr Massey, and whatever instructions were given, it seems likely that he gave some indications to Mr Massey such that Mr Massey would expect that a prosecution would ensue. The Claimants say that this is a logical inference, explaining why there were so many stays agreed over a lengthy period of time.

[88]In 2018, Marathon withdrew the judicial review, but Gateley for BMC rejected the efforts of the DfT to procure the withdrawal of their application, particularly of 23 January 2018. Gateley firmly refused to withdraw on 30 January 2018 and wanted to know if the DfT would accede to the relief sought including “A mandatory order requiring the Defendant to carry out a new investigation and make a fresh decision on the true extent and seriousness of Klarius' unlawful conduct and the appropriate enforcement response”. This led to an urgency in the mind of the investigators, as reflected by an email dated 14 February 2018 from Mr Hurrell stating that there was to be “the ultimate meeting with the legals on 28th Feb. This will be the ultimate decision about who gets charged with what. After that, the service of process will be instigated and as of that time, we will be against the legal clock with regard to full disclosure of all our evidence and witness statement content.”

[89]In the meantime, Gateley was imposing considerable pressure in correspondence. On 28 February 2018, Gateley insisted on publication of any reasons not to prosecute. This led to a telephone conversation between Claire Wills and her opposite number in which for the first and only time in her legal career she put the phone down. Gateley wrote on a without prejudice save as to costs basis on the same day saying that:

“we are not trying to bind your client to making a particular decision, just a decision upon the conclusion of the DVSA investigation, as the appropriate enforcement authority... What [our] client requires is a replacement of the decision letter dated 4 December 2015 at the conclusion of the DVSA investigation. I propose the following amended wording “… take a fresh decision on the extent and seriousness of any unlawful conduct by [Klarius] and the appropriate enforcement response (if any). Please take instructions. If your client, as the appropriate authority, remains reluctant to agree to issue a fresh decision, please provide your detailed reasoning.”

[90]Later that day at 22:38, Mr Williams wrote to Lowri Rhind, Kate Warren, Ian Yarnold and Donald Macdonald suggesting that “a fair price to get rid of the litigation” would be to agree that in the event that following the investigation, action was not to be taken for “serious breaches of the Regulations”, that some form of public statement would be made.

[91]There then ensued a plethora of emails. There were concerns about having to explain why any investigation was not leading to prosecution, especially about the implications of making public statements if KPL was innocent and also not to commit the ministers to anything. However, it was reported at that stage as per an email from Mr Williams to Ms Wills that the DVSA is saying “… at this stage (for DfT only), it is highly likely that a prosecution will take place.” Kate Warren was “happy to proceed” because she thought that the chance of DVSA having to send an explanatory letter “is low (given their indications yesterday about the prospect of prosecution.)” In an e-mail dated 7 March 2018, Mr. Williams wrote to Ms Wills saying that the advice of DVSA was as follows:

“legal advice is that if no prosecution is pursued then there would almost certainly be a further judicial review claim from BMC, and if no explanation of DVSA's reason was provided to BMC, the prospects of success would be high.”

Mr. Williams also said:

“you'll see that a prosecution is “highly likely” so I feel a bit better about partially caving in to Mr Massey.”

This meant that giving in on reasons not to prosecute was not such an issue because (a) prosecution was highly likely, and (b) the reasons for not prosecuting were likely to have to be revealed in a judicial review which would almost certainly not go away.

[92]In considering a without prejudice letter from Gateley dated 9 March 2018, Ms Wills on 12 March 2018 said that she was “concerned about them poking into the transfer of functions to the DVSA (especially as we are vulnerable on the policies we have). If we can settle this now, we can avoid all these issues.” An offer was made to settle the case to the effect that in the event that there was no prosecution, the reasons for this would be published. This was not sufficient for Gateley who maintained the relief that they required of a declaration of unlawfulness in respect of the VCA investigation and the decision not to prosecute and the same mandatory order as indicated in the email of 30 January 2018 quoted above. In addition to this, they continued to maintain an entitlement to costs.

[93]On 22 April 2018, new Counsel for BMC, Mr Prashant Popat QC put forward a new without prejudice offer, namely that(1) if KPL was not successfully prosecuted by the DVSA, then a decision on KPL's actions which led to the decision not to prosecute in 2015 was to be published, and

(2) the DfT was to investigate, issue decisions and take appropriate action on the complaints that BMC have more recently raised with the market surveillance unit and to do so within the summary offence time limit. The DfT received advice from Mr Kinnier QC (as he had then become) about the problems that this might cause. The offer was well received, but on 24 April 2018, Mr Rice said that there could not be a guarantee that a jury would find guilt, because occasionally a “bizarre decision” is made. Mr Rice expected that a decision whether to prosecute would be made by the end of June 2018. On 25 April 2018, Mr Hurrell wrote that whilst the strength of the evidence was high, there was not a 100% guarantee of success.

[94]The case of the Claimants as advanced in submissions to dismiss the prosecution at the outset of the trial was that ‘they rely upon the fact of the withdrawal of the judicial review and the timing of the decision to prosecute the defendants and invite the Court to draw reasonable inferences’ and state that they are awaiting disclosure of the discussions that ‘resulted in the agreement to prosecute and withdraw the application for judicial review’.

[95]The judicial review was withdrawn in a consent order recorded on 6 June 2018 and entered on 12 June 2018 on the basis that the DfT would pay the costs to be assessed. The order recited that the DVSA had embarked upon but had not concluded a further investigation into the conduct of KPL and had withdrawn its 2015 decision. The DfT agreed to publish on its website a statement reaffirming the importance of abiding by the regulations in the form of an agreed text. It was then set out that:

“UPON the defendant agreeing that if KPL is not prosecuted for any offence in respect of the manufacture and or supply of catalytic converters in the United Kingdom, a decision regarding KPL's conduct which led to the decision will be published by the Department for Transport after any decision not to prosecute is made AND UPON the defendant agreeing that the Department of Transport is considering and will investigate the complaints raised by the claimant with the Market Surveillance Unit, make decisions in relation to those complaints and, where it is necessary and proportionate to do so, will take appropriate action within a reasonable period of time and no later than the expiry of the time limit for the commencement of a prosecution for any offences investigated.”

[96]It is apparent from the foregoing that the terms upon which the judicial review proceedings were settled did not involve any promise, undertaking or ‘deal’ under which it was agreed that either KPL or any individuals linked to KPL would be prosecuted. The DfT submits that the consent order arose from bona fide advice on the part of the DfT following their assessment on legal advice of the chances of successfully defending the judicial review claim. It reflected the nature of the judicial review application in which in the event of a decision in favour of the judicial review claimants, there would have ensued an order quashing the original non-prosecution decision. That would not have been replaced by an order to prosecute, but by an order mandating the undertaking of a fresh investigation and a fresh prosecutorial decision would have been an obvious remedy.

IX Events after consent order of June 2018

[97]The Claimants submitted that this order came back to bite the DfT and resulted in an unacceptable rush to bring the prosecution in late 2018/early 2019. If the DfT thought that the consent order would at least postpone the pressure, it would have been mistaken. Notwithstanding the relatively short time which had passed from the consent order (just over two months including August), Gateley wrote on 22 August 2018 identifying 13 instances where they said that the DfT had failed to act or to explain themselves. The combination of these instances and the absence of what they considered to be satisfactory responses since the consent order of June 2018 led to their inferring that the DfT was acting irrationally or unreasonably and/or abusing its position by failing to comply with its obligation to complete the further investigation of the matter and to proceed to prosecution or explanation.

[98]In a response from the GLD to Gateley dated 4 September 2018 denying the basis of the claim, it was stated that they had been “in discussions with Miles Bennett in relation to your client’s proposed claim.” This is relied upon by the Claimants as further evidence to connect Counsel dealing with the intended criminal prosecution with the still continuing judicial review claims. Despite the response of the DfT, on 5 September 2018, BMC through Gateley issued a further claim for judicial review seeking a mandatory order requiring investigation of all “Complaints within a reasonable time and taking appropriate action in respect of them.”

[99]This then led to correspondence between Mr Hurrell of the DVSA and Mr Lawlor in which Mr Hurrell exposed a lack of knowledge about the manufacturing process of KPL. He said that “a big problem from our point of view is that we have not actually been to the Cheadle site. So, to a large degree, other than the physical evidence we have (hundreds of apparent fake cats), we have nothing else to go on. The issue is that we included questions in the questionnaire with regard to the manufacture of these things and the responses are confusing had they agreed to face to face interviews, further questions could have been asked. This has not been possible. Quite simply, I need to know whether they were actually building the bullet on site or were they just welding the pipes onto units imported ready made. I know that you and some of your colleagues visited the site and need to know whether you are able to throw any light on what it was they were actually doing with regard to the manufacturing process…”

[100]The Claimants rely on this evidence to suggest that the investigators, despite all the time that they had spent on the investigation, did not know fundamental matters. They were important in order to establish the constituent parts of dishonesty offences.

[101]This played into the hands of the argument, whether capable of substantiation or not, that the role of the DfT was to act as a personal prosecutor on behalf of the judicial review claimants. The expression may have originated from irritation expressed in email that BMC was being “annoying and trying to use MSU as its personal prosecutor”. It is suggested inferentially that the regular contact of Mr Hurrell with the judicial review claimants, said to be a part of dispassionate investigation, was in fact too friendly and not sufficiently detached.

[102]The Claimants also rely on other aspects of lack of readiness and on what they believe shows the superficiality of the DVSA investigation. They rely upon not considering the evidence adequately as to what would be needed to prove fraud, including but not limited to the following, namely:(i) the evidence of the VCA investigation which had been looked at only cursorily, particularly in that Mr Hurrell did not understand the technical aspects of it which the Claimants say is crucial to understanding their position. They contrast the engineering degrees of Mr Lawlor, Mr Eaton, Mr Kay and Mr Macdonald with the lack of relevant expertise of the DVSA Operation Fox team of Mr Hurrell with a career in the police and Mr Montgomery who had had various driving jobs. Mr Rowlands had more technical experience, but his attention appears to have been on other cases;

(ii) a failure to investigate with any rigour the explanations provided by the claimants from December 2014 onwards including their detailed responses to the VCA investigators, and even the responses given to DVSA’s own questions in September 2018;

(iii) the KPL manufacturing facility, visited by the VCA investigators but not by the DVSA investigators;

(iv) the absence of witness statements from key suppliers and the like other than AS and ECT, leading to a flurry of activity after the decision to prosecute to obtain such evidence. There was particular focus on a failure to contact Mark Exhausts;

(v) an absence of consideration of audits or Conformity of Production (CoP) audits;

(vi) the absence of search and seizure of information relating to purchasing strategy, the data from KPL’s systems or testing of newly acquired stock.

[103]The Claimants say that this showed that the focus of the DfT was to get rid of the judicial review, leaving them unprepared for the criminal prosecution. They submit that this evidences a collateral purpose and at best a recklessness as to whether the alleged offences could be established. They say also that this was a consequence of the DVSA investigation proceeding on the basis that the judicial review claimants were right, which was not sufficient to prove the case. It is also said that it was remarkable that so shortly after this, the DfT proceeded to contend that there was evidence on which to pursue a fraud prosecution.

[104]As regards the second judicial review application, a strong defence was filed dated 10 October 2018, but the advice of Mr James Williams was more circumspect. If permission were granted, then the chances of successfully defending would fall, and it might be important to show that some action was being taken. This added to the momentum to have a decision as to whether to prosecute. More than this, given the spectre of having to justify a decision not to prosecute as per the consent order of June 2018, there might be a challenge following this in the nature even of a third application for judicial review.

[105]In fact, permission was refused on 30 October 2018 by Murray J, but there was then an application to renew the application orally. The matter came before Yip J on 27 November 2018. Whilst the Judge was minded to refuse permission, before making her decision, she asked questions as to what would be a reasonable time within which to make the decision to prosecute. She did not wish to leave the matter open ended, and so the DfT conceded that they would write to BMC by the end of January 2019 setting out the progress of the investigation agreed to end the consent order. This was effectively treated as the price for getting rid of the second judicial review. After this assurance had been given, Yip J proceeded to refuse permission for the second judicial review on the basis that the order of June 2018 did not define what a reasonable time was, and that in any event the application was premature. Yip J made an order for costs against BMC.

[106]Yip J did say the following at para. 12 of her judgment, which may have been of importance in the events as they later unfolded, namely:

“I would go further in terms of inviting the defendant to consider how best to respond to this matter. Clearly, the claimant cannot be expected to just wait indefinitely without knowing what is happening, and it seems to me that the defendant can set out a sensible timeline for when the claimant can expect to know what the outcome of the investigation is. Looking at the terms of the order, the recital before the relevant one suggests that if KPL is not prosecuted a decision will be published. So the point is that the claimant is waiting to know when a decision has been taken, they will then have access to that, as well as the members of the public via the website. Looking at general fairness, that they ought perhaps to have some indication so that they do not make any further premature applications. So if the defendant could please take that on board and consider what information can properly be given in accordance with their obligations and their duties, it would seem that that might avoid the need for further applications.”

(emphasis added)

[107]The position as it stood at that time was whether due to the order of June 2018 or the assurance given to the Court, there was pressure to complete the investigation within a reasonable time and to inform BMC about the outcome of the investigation by the end of January 2019. It may have been that by this stage a decision in principle to prosecute had already been taken. Nevertheless, the decision had not been formalised in that it depended upon the signing of a charging advice and consideration of the same by Ms Cassidy as to whether to authorise a prosecution. This was the precursor to intense activity in the weeks which followed.

[108]Steps were taken to obtain a date in the magistrates’ court for a hearing which would follow charging of the defendants. This was before any formal decision had been made to prosecute. Apparently Counsel said words to the effect of “grab the court and provide information later”: see Ms Hine’s email dated 5 December 2018. A difficulty was that at this stage the DfT either were unable or did not wish to provide the names of the intended defendants in the criminal proceedings. On 21 December 2018, Ms Hine wrote to say that a court date for 20 February 2019, later than had been hoped for, was now the only possibility, and saying that Counsel would have the summonses completed by 2 January 2019. There is evidence of emails on Christmas Eve and Boxing Day. Whether this is a correct reading of the effect of the June consent order coupled with the assurance given to the Court in the hearing of 27 November 2018, the DfT appears to have decided that the formal decision to prosecute needed to be made by the end of January 2019.

[109]The Claimants rely upon the above as evidence of a lack of preparedness in the criminal proceedings, submitting that the root of which was that the attention was concentrated entirely or predominantly on the desire to be rid of the judicial review proceedings. This was despite the passage of years from the judicial review proceedings, ending up under pressure of having to identify the outcome of the investigation and rushing into a criminal prosecution by the end of January 2019.

[110]The Claimants also point to events immediately after the decision to prosecute. There was a briefing meeting on 8 February 2019 referred to by Ms Hine in which her note says there was the potential “reputational risk” to the DfT, the DVSA and the VCA. Those present included Mr Williams, Mr Rowlands and Mr Yarnold and others. That focus seems in context about the issues thrown up by the judicial review. Further on 15 February 2019, there was a meeting at prosecution Counsel’s chambers involving Mr Williams, Mr Yarnold and the prosecution team. Although Mr Williams had forgotten about his presence at that meeting, his presence there by itself is relied upon as continued linkage between the criminal proceedings and the judicial review.

[111]The Claimants say that as at late 2018, Mr Hurrell and others were trying to upload documents and put exhibits together, showing that the case had not yet been properly prepared. By 14 December 2018, the actual charges and who was in charge was not even clear to Mr Hurrell, and until 17 December 2018, the names of the defendants in the criminal prosecution had not yet been identified. On that date, the names of the defendants were sent to Mr Hurrell.

[112]The Claimants’ case is that it is a fanciful suggestion that the decision to prosecute did not occur until Ms Cassidy received charging advice in January 2019. The fact that preparatory steps were being taken in the Magistrates’ Court for the committal is said to be inconsistent with waiting for the subsequent input of Ms Cassidy. Communications in mid-January 2019 indicated an uncoordinated approach and a need for haste to comply with the directions of the order made by Yip J. By way of example, on 13 January 2019 Mr Montgomery wanted to know what the charges were. On 15 January 2019, Mr Ashford sent to Mr Hurrell an e-mail indicating that there was not yet legal certainty that the DVSA had the necessary powers to take prosecution action. In any event, the draft charges did not specify what legislation was alleged to be breached.

[113]On 23 January 2019, Ms Hine emphasised the need for the summonses to go out that week with evidence to follow. In the event, the prosecution decision was authorised on 24 January 2019. The Claimants say that this rush is consistent with the DfT believing that the case was about to be in jeopardy. They say also that the rush which took place prior to this time in late 2018, that is before the advice of Counsel, shows that the investigators and especially Mr Hurrell were the drivers of the prosecution, which was going to take place on their say-so, and that the formality of Counsel’s written advice was not the driver.

[114]As agreed at the hearing before Yip J on 27 November 2018, on 31 January 2019, the GLD reported to Gateley for BMC identifying that they were interviewing a range of suppliers. Whilst this was the result of what was encouraged when the matter was before the Administrative Court, it was as if the GLD was answerable to BMC. This was the unfortunate consequence of what was required in the June 2018 consent order. Further, there is a concern that the investigation was behind the curve interviewing suppliers at this stage after the decision to charge. The dilemma in this regard is reflected in an internal email of Mr Williams of 26 April 2019 expressing concern that Mr Massey was acting as if the agreement was to investigate and make decisions on the complaints of BMC. It was possible to say that there was no need to focus on what BMC wanted. That would not be done because, as he said:

“I fear that will be a red rag to a bull. The fact is that we agreed to focus on what he wants us to focus on.”

[115]The Claimants say that the subsequent history of the proceedings and their collapse was because the DfT did not have a proper case. They submit that there was not adequate consideration of the case and the evidence. This was the result of the motive to prosecute being in order to avoid the judicial review instead of concentrating on what the prosecution entailed. Further, the above communications show that the DfT did not consider properly how to prove the offences of dishonesty, distracted by the primary objective of avoiding the judicial review. Likewise the case hitting the buffers was because disclosure had not been adequately addressed. This was another facet of how the DfT was distracted by the judicial review. Likewise, the case needed to be reviewed at all times. That did not occur, on the Claimants’ case, because the investigators were not interested in whether the case succeeded but rather wished to get BMC, and to a lesser extent Marathon, off their backs.

[116]A part of the Claimants’ case is that the investigators were motivated by the improper purpose of satisfying the judicial review complainants with a fraud prosecution. This was to bring to an end the judicial review and the possibility of scrutiny by the Court of the inadequacy of the investigation of the VCA and the system for prosecution within the VCA. It was clearly established in evidence that the reason why the re-investigation took place was because of judicial review. This was expressed by Mr Rowlands at T7/190/19-22:

“well, the reason we were doing the work was because of the judicial review, yes, and the judicial review didn't play any part of [in] our investigation other than already - - no, it led to the request for the investigation.”

[117]He then was asked if he was aware that part of the remit of the investigation was to satisfy Mr Massey and Dr Stock, the individuals behind the judicial review claimants. His answer was that the fresh investigation came out of the judicial review. However, the judicial review did not play any part in the investigation it did not dictate the beginning, middle and the end of the investigation: see T7/190/13-T7/191/20.

[118]When it was put to Mr Rowlands that the direction of the investigation was a prosecution, he said the following at T8/61/1-10:

“A. On the claims that they wanted, I think my understanding, they wanted a fresh investigation. We were to provide that fresh investigation. At no point was I told I needed to prosecute, or I had to prosecute. Q. I suggest everyone in the DfT knew they wanted a fresh investigation and a prosecution, and that is the direction that you were pointed into? A. That is not true at all. Q. You follow that with gusto, didn’t you. A. No, I did not.”

[119]Likewise, the evidence of Mr Hurrell was that it was “not the case at all” that his bosses wanted him to satisfy Mr Massey so that he would withdraw the judicial review. The object of the investigation was to discover if there was wrongdoing: see T9/38/15-20. There was not a determination to prove fraud from the beginning. They wanted to provenance the material to see if there had been wrongdoing and examined the parts; T10/37/8-15 and T10/40/21-25. Likewise, Mr Montgomery said that Mr Hurrell was not going into the investigation with an intention to prosecute: T10/258/15-22.

[120]The Claimants say that this evidence should not be taken at face value. They say the following:(i) the judicial review was not only for the purpose of procuring a re-investigation, but also for a prosecution to ensue. Such was the determination of Mr Massey in particular and his lawyers Gateley that nothing short of a prosecution would satisfy. If this was not clear at the outset of the judicial review, it was clear long before the prosecution was incepted.

(ii) the fact that the investigation was to start by statements from the Claimants in the judicial review proceedings shows that the starting point was the account of those Claimants who were convinced about the fraudulent intent of the individuals behind KPL, namely the Claimants in this action.

(iii) long before the prosecution was brought there were expressions by the investigators that the evidence against KPL seemed strong and that charges were highly likely to be brought. It is suggested that this would not be the case in the event that there was simply to be an investigation followed by an analysis.

[121]The DfT answers the above three points, using the same numbering, as follows:(i) there is no reason not to accept the evidence given by the DfT witnesses to the effect that the investigation was conducted with an open mind. In that regard, Mr Hurrell's diary entry for 19 July 2016 was, as noted above that the advice was that the investigation must be totally independent, impartial and transparent.Subsequently Mr Rice would write an e-mail dated 1st June 2018 saying, “I agreed on behalf of DVSA on the understanding that we conducted the investigation independently (and with no oversight by DfT) and that we started at the beginning and did not rely on anything the VCA had previously done.”

(ii) it was entirely logical to start the investigation by considering the evidence of the Claimants in the judicial review proceedings. That would involve a re-examination of the matter, which might not have been the case if the starting point had been simply to review the investigation by the VCA. Following that start, there would be every opportunity to consider whether the allegations were or not sustainable. That was what occurred culminating in the charging advice by independent counsel and the decision to prosecute.

(iii) there was nothing unusual as the investigation progressed and as matters were uncovered by meeting with the ECT witnesses in May 2017 and securing the evidence of AS in November 2017 that there was a belief in the strength of the case that was being investigated. Such expressions are not surprising nor do they evidence a predetermined outcome.

[122]In amplification of the point that a review of the VCA investigation would not be a starting point, the DfT added that, as Mr Lawlor maintained, the remit of the VCA investigation had been to establish whether the allegations of non-conforming parts were true and to bring KPL back into compliance: it was not to ascertain whether the non-conformities were attributable to mistake or deliberate action. Ms Rainey had not conducted a comprehensive investigation, and this was not her account. Repeated attempts to contact Ms Rainey were to no avail.

[123]This is not to say that the VCA material was not available to the DVSA. There was extensive questioning as to what was or was not provided or considered in that regard. It does appear to be the case that the VCA report and its annexes were printed and placed into a blue folder which was available to the investigators. Mr Hurrell had read Ms Rainey's report by 30 August 2016 because he annotated it and sent it to Mr Montgomery albeit that neither of them at that stage appear to have read the final VCA report. However, they do appear to have read the final VCA report by 2018: see the evidence of Mr Hurrell (T10/140/17) and the witness statement of Mr Montgomery at para. 62. Further, the diary of Mr Hurrell for 25 July 2016 referred to a discussion with Counsel who requested the VCA appendices. On 31 July 2016, there was an email from Mr Hurrell to Mr Montgomery which attached all the appendices to the VCA report provided by Mr Lawlor.

[124]The Claimants made more headway in cross-examination by asking the witnesses whether they had examined the VCA data stick material and the document contained in the annexes to the VCA final report. Mr Hurrell had a recollection of seeing Appendix B to the report. He said that he recalled seeing the VCA data stick material but did not understand much of it. He skimmed a lot of it and he did not produce a schedule of its contents. Whilst the totality of the material on the VCA stick was provided to the defence, the impression of the evidence as a whole was that most of it had not been considered as part of the investigation. Mr Hurrell struggled to make sense of it, which is no doubt true, albeit that this does not excuse a failure to enlist someone else with greater understanding to get to grips with this material.

[125]The DfT make the point that the failure to review the contents of the data stick is only probative if it can be shown that the investigators were not interested in looking at any material that could potentially have been exculpatory. The Claimants say that that does not matter. The failure to review that material, even if it is the case that none or little of it would have been exculpatory, shows that this was not a true investigation. It is said to evidence a closed mind about the guilt of the Claimants and an intent to bring about a prosecution come what may. In the event, the Claimants have not drilled down with the witnesses into the material on the VCA data stick, as to the ways, if at all, in which this might have made a difference to the investigation.

X The conduct of the investigation

[126]The DfT has at the heart of its case that a charging advice was prepared by Counsel signed by Mr Miles Bennett and Mr Andrew Johnson on 11 January 2019. There is no allegation made to the effect that Counsel acted other than in good faith. A part of the challenge of the claimants is that such were the shortcomings of the investigation that not all relevant documents and information were placed before Counsel. The investigators had little relevant experience in respect of this unusual and significant investigation. Mr Montgomery’s experience was limited (paras. 7-8 of his witness statement). Mr Rowlands was the Senior Investigating Officer, but he was not the active investigator in that he simply oversaw the team: see T7/194/24-25 and T8/38/14. Further, if the investigators were motivated in bad faith or for an improper purpose and if this was not communicated to Counsel, then the advice of Counsel was limited in how much could be relied upon by the DfT. It was not the whole picture and it was therefore undermined.

[127]In the light of the complexity and scale of the investigation, legal advice was sought at an early stage. Whilst a solicitor in private practice was instructed, namely Ms Felicity Hine who was a sole practitioner in a firm called Hine and Co, in January 2017, she instructed Counsel, namely Mr Miles Bennett, as recommended by Mr Hurrell. Evidently Mr Hurrell and Mr Bennett had worked on another case or other cases before. It has not been suggested that Mr Bennett was anything other than experienced Counsel acting within his field. It was Counsel who decided what to do at each stage rather than taking instructions in the more conventional sense. It is clear from both the witness and documentary evidence that Counsel was extensively involved and understood the steps that were being taken and provided advice and guidance as to what evidence should be obtained.

[128]There are extensive notes of conferences with Counsel which took place on 30 January 2017, 1 February 2018 (which occurred a few days following an email of 26 January 2018 of advice of Mr Bennett to Ms Hine and sent on to DVSA), 28 February 2018 and 23 October 2018 (by which stage Mr Johnson was present in addition to Mr Bennett).

[129]At the conference of 30 January 2017, there was discussion about the material from the VCA, about the statements from the judicial review claimants, about statements from ECT and AS and about financial gain. It appears from the outset that Mr Bennett was aware of the judicial review proceedings. The Claimants say that it can be inferred that he would have known about the pressure being imposed by the judicial review claimants. This can be seen from a draft email of Ms Hine to Mr Lawlor of 1 February 2017 which stated as follows:

“By the end of this week I expect to have information from the Government Legal Department as to where they are with the JR proceedings and to put them on notice that an investigation into the criminal activities of Klarius is underway. Criminal case Miles [Bennett] will talk to the Counsel involved in the case. Miles is going to provide an advice but I am also going to provide a bullet point summary of next steps for the investigation. The existing witness statements in the gaol proceedings, with the consent of the makers, can be used as a template for section 9 statements in the criminal proceedings. Most of the information that you will need is there already.”

[130]The inference is that there was contact from the outset between Counsel instructed in the potential criminal case and Counsel in the judicial review proceedings. It is not clear if this is a reference to Counsel instructed for BMC (as opposed to Mr Kinnier), but Mr Rice said in his evidence (para. 77 of his witness statement) that he “agreed for Miles to speak to Gateley on a “legal to legal” basis to try to resolve any issues...”. This indicates that for two years prior to the decision to prosecute, Counsel (Mr Bennett) was extensively involved in the DVSA investigation and was involved in seeking to “resolve” the judicial review proceedings. The attendance of Mr. Williams, a GLD lawyer dealing with the judicial review claims at a conference with Counsel dealing with the criminal matters is further evidence of a connection or cross over between the criminal investigation and the judicial review claims.

[131]Counsel asked for it to be checked that KPL had not been told that they would not be prosecuted. In the conference of 1 February 2018, there was discussion of further prosecution evidence and of the questions to ask the claimants. In the conference of 28 February 2018, there was discussion among other things about many of the matters discussed above in connection with the five issues and including the costs benefits of metallic rather than ceramic monoliths. There were points of detail discussed in the conference of 23 October 2018 and about the provision of an advice and of the charges. There was an issue as to whether the charging decision was made at that meeting. In evidence, Ms Hine indicated that this was the time when the decision was taken. It seems more accurate to say that whilst there may have been an indication that a prosecution would ensue, this was subject to Counsel’s formal written advice and the DVSA agreeing to follow it.

[132]The closing submissions for the DfT identify how Counsel had relevant materials to enable them to complete their detailed review in advance of providing their charging advice. Reference was made to the following:(a) counsel were provided with their data stick and box of evidence by Mr Hurrell in March 2018;

(b) despite attempts to show to the contrary in cross examination, prior to finalising their written advice, Counsel were in possession of both versions of the VCA Report which were emailed to them by Mr Hurrell on 4 July 2018 and the VCA Report’s attachments which were exhibited to Mr Lawlor’s witness statement dated 17 August 2018;

(d) before the charging advice was finalised, Mr. Johnson attended the DVSA officers on 28 November 2018 to go through the material;

(e) counsel were aware that the unused material review had not been concluded by the time of the charging advice. On 2 January 2019, Ms Clare Ashford wrote to Mr. Johnson saying, “I will start work on the unused list”. Para. 89 of the charging advice stated that “essential going forward is a very careful consideration of all material held by the VCA.”

[133]In the charging advice, it was stated:

“ It cannot be stressed strongly enough that the VCA must appreciate that proceedings will be commenced in the name of the Secretary of State for Transport, and therefore any relevant material held by the VCA is material in the hands of the prosecuting authority for the purpose of discharging the duties of the prosecutor under the Criminal Procedure and Investigations Act 1996. Whilst the fact of the earlier VCA investigation does not in our view pose a risk to the prosecution, a failure to properly deal with unused material held by the VCA may very well do so.”

(emphasis included in the original advice) XI The decision to charge (a). Charging advice

[134]The advice was intended to be “concise” and to contain only an “overview”. It identified the source of the allegations, and in particular how DVSA investigators obtained witness statements establishing the continuity of the parts passed to BMC and Marathon. It was not intended to serve as a replacement for a more extensive case summary that would be necessary to produce and serve prior to the Plea and Trial Preparation Hearing: see para. 3 of the charging advice. The advice expressly addressed the potential ulterior motive of the complainants as competitors of KPL. Counsel believed that the evidence of the complainants in the judicial review proceedings was not essential. The primary evidence relates to the production of physical evidence the source of which appears to be corroborated by a number of witnesses: see para. 35 of the charging advice.

[135]The advice set out the two key strands of the prosecution case relied upon to show that the companies trading was dishonest, namely(i) manufacturing their own catalysts with unapproved materials, namely ceramic not metallic bricks/monoliths, and

(ii) distributing counterfeit products as if they were ECT and AS products, which they were not. The explanation that there was a mistake in the handing over from KUK to KPL was said not to stand up to scrutiny because (a) improper use of ECT parts has to be seen in the context of the improper use of AS type approvals and E11 type approvals, and (b) the improper use of ECT parts involved not only the use of ECT parts without authority but the use of the ECT type approval for parts that were non ECT parts. This comprised 335 out of the 353 products examined by Mr Peter Nitoglia of ECT: see paras. 132-134 of the charging advice.

[136]The advice set out what was required to be proven for an offence of fraudulent trading under s.993 of the Companies Act 2006. There was also addressed the position of each of the first five Claimants separately. Although it concluded that the case was not equally strong against all of them, it was advised that there was a realistic prospect of conviction in respect of each of them: see paras. 137-141. The advice also dealt with why the investigation of VCA could be discounted on the basis that the investigation of DVSA was more rigorous and based on firm evidence from AS and ECT. If the charging advice had not been a concise overview, it could have deconstructed the statements under caution of the first five Claimants which were summarised in the charging advice (paras. 91-129). It could then have shown by reference to paras. 137-141 why these statements were not answers to the knowledge which they each appeared to have of the alleged fraudulent conduct of the business of KPL. Subsequently, this has been set out in more detail in the prosecution opening note prepared for the trial on 19 November 2019, but the case of DfT is that this is an extension of the information which the prosecution had by the time of the decision to prosecute.

[137]The charging advice set out statements made by KPL in the form of press releases about how KPL had been unaware prior to 15 December 2015 of the cancellation of ECT approvals when the reality was that they had never been transferred from KUK to the new company KPL: see paras 61-62 of the charging advice. It pointed to a statement issued on 17 December 2015 that all stocks held by the distributors and held in their warehouse were fully compliant with all relevant type approval legislation. The charging advice stated that anyone with a basic knowledge of the type approval process could not have believed this to be correct. The type approval related to the manufacture of the catalytic converter. A monolith supplied before the type approval had been revoked could not be used to manufacture a catalytic converter: see paras. 63-64 of the charging advice. Likewise other statements issued by KPL later in December 2014 and in January 2015 could not be accurate for the same reasons. There was also evidence that contrary to the statements to the market, there was evidence of continuing manufacture on 24 December 2014, that is after it was stated that production had been suspended as per a statement of 22 December 2014: see paras. 65-67 of the charging advice.

[138]The Claimants sought to draw an inference that Counsel was not provided with the final VCA report. It has now been shown by reference to an email from Mr Hurrell to Counsel dated 4 July 2018, the attachments of the interim report in May and the final report in July 2015 were sent to Counsel.

[139]The advice dealt directly with whether the case was impacted by the judicial review and the agreed terms of settlement of the same. At para. 150, the following was stated:

“we add...that our advice has not been impacted by the judicial review that was bought by the competitor companies against the Secretary of State for Transport in relation to the VCA's investigation. It is our understanding that the Secretary of State settled a judicial review on agreed terms, including an agreement that there would be an investigation by the DVSA. We have not paid any note to that agreement, or to the fact that there had been proceedings in the Administrative Court, in reaching the conclusion set out in this advice. Our conclusions are the result of our assessment of the evidence as presented to us, and that alone.”

[140]Ms Hine confirmed that it was for the prosecution and legal service (“PLS”) decision-maker to decide whether to prosecute: see T12/115/20 – T12/116/1 and T12/132/3-20. Ms Hicks’ witness statement [at para. 58] was that in large investigations, the charging decision was fast tracked to place the case before someone of sufficient seniority. This was supported by the oral evidence of Ms Cassidy and Ms Hine. The investigators denied working to, or even being aware of, any particular deadline in connection with any judicial review claim.

[141]Ms Cassidy confirmed that it was she who authorised the prosecution. She did so in accordance with the standard procedure applicable to a complex case such as the instant one. She considered Counsel's advice and no other material. It would have taken her about half a day. The decision was hers and it was not delegated to Counsel or anyone else. She said at para. 37(1) her witness statement that she “believed that there was sufficient evidence to provide a realistic prospect of conviction against each proposed defendant, i.e. enough to prove the charges beyond reasonable doubt.” She denied that she was put under any pressure to prosecute, including from Mr Hurrell: see T11/184/23 – T11/185/2. She knew nothing about the judicial review applications other than that which was set out at para. 150 of the Charging Advice, quoted above.

[142]Ms Cassidy was challenged to the effect that she should have reviewed all of the evidence and unused material herself and to make inquiries into some of the evidential issues identified by Counsel and to make her own assessments as to disclosure. Her response was to deny this. She said that it would have been impossible for her to review the evidence and come up with the same conclusions that Counsel was able to do: see T11/110/18-21. She knew that Counsel had been involved throughout the investigation. The claimants rely upon this as evidence that she was not in reality authorising the prosecution. She had no legal qualifications. Her evidence was that she believed that the process of relying on Counsel’s charging advice in complex cases was robust and satisfied the cases with which she had dealt. She herself made an objective assessment of whether the two stage in the CPS code had been met, namely whether there was sufficient evidence to justify a prosecution and whether it was in the public interest to prosecute.

[143]Ms Cassidy said that she was able to approve the prosecution on the basis of her review of “37 pages of charging advice that detailed the background, the process of the investigation, the evidence, and their views and opinions on how to proceed in relation to further evidence that might be obtained, disclosure. So all of those things I took into account when I reviewed that charging advice to make my own decision on whether there was more that I needed to see, whether [there was] the need for a case conference, or whether I was satisfied with in that charging advice that there was a reasonable prospect for prosecution”: see T11/136/12-24.

[144]Ms Cassidy said that she did not perceive any need for further review of the evidence or unused material prior to charging the claimants. She understood Counsel to be satisfied that the two stage test was met and a charge could be authorised immediately. This was indicated by the terms of the advice and the fact that they had provided a draft of the charge with it: see T11/143/22 – T11/150/18. She believed that the continued review would be done by the external lawyers: see T11/156/19 – T11/157/1 and T176/14-17. In her witness statement at para 37(1), she said that she “believed that there was sufficient evidence to provide a realistic prospect of conviction against each proposed defendant, i.e.

(b) Conduct of the prosecution

[145]Following the charging decision, Ms Cassidy believed that the continued review would be done by the external lawyers. Her evidence was that the review of the VCA material would be for the legal team. Shortly after the decision to charge, on 8 February 2019, there was a meeting attended by Counsel and senior people from the DVSA and VCA to discuss the obviously very important issue of further disclosure from the VCA. Ms Hine said that she had complete confidence in the specialist Counsel which she had instructed. She confirmed the role played by Andrew Johnson of Counsel as regards disclosure. Mr. Johnson liaised with Clare Ashford, the disclosure officer, and they put together disclosure schedules and set up the digital case system. Two junior barristers were instructed to review the material. Queries went to Mr Johnson who made the decisions on disclosure and scheduled the material.

[146]Ms Cassidy's evidence was that had she been made aware of disclosure failings; she would have organised a conference. As it transpired, the DfT accepts that there were significant disclosure failings in the conduct of the prosecution which were trailed extensively in the witness evidence of the various DVSA witnesses. Subject to one exception, it was not put that the failures were done deliberately or in bad faith or as a result of an improper motive. The exception related to a single allegation concerning the position of the decimal point in the expert report of Dr Morales. The evidence is that Mr Hurrell asked Dr Morales to move the decimal point to show a lower precious metal content in one of KPL's ceramic bricks, allegedly to promote erroneous evidence to damage the Claimants.

[147]The answer, which was supported by contemporaneous documentary evidence, was that he was simply asking if it was possible that a mistake had been made because another expert Dr Rose assessed the precious metal content as 10 times higher than she did. Faced with this, Mr Hurrell emailed Dr Morales on 8 August 2019 saying, “due to the confusion I have spoken to Dr Rose and he believes that it is possible that the decimal point should [move] to the left… can you check to see if that is a reasonable suggestion?” The response of Dr Morales was that she would not amend the certificate. Whatever led to the difference between Dr Morales and Dr Rose, and whoever was right or wrong, Mr Hurrell was trying to understand a difficult subject matter where two experts would reach very different conclusions. If and to the extent that it is suggested that Mr Hurrell was seeking to manipulate expert evidence, this is not borne out by the evidence.

(c) The issues in the prosecution

[148]The case of the Claimants is that the case against them was obviously going to fail and therefore there was no reasonable or probable cause. Further, the failure to grapple with these points which are said to have been so obvious is relied upon as evidence of bad faith and malice. It is said that it shows how the prosecution was in order to stem the complaints and pressure from BMC and Marathon, and not because of any proper independent analysis which would have ensued if they had not acted at the bidding of the judicial review claimants. In particular, they rely upon the following facts and matters, namely:(i) they had fully complied with the VCA investigation. In particular, they had reported themselves to the VCA. They had provided explanations as regards the confusion consequent upon the acquisition of part of the business of KUK by KPL. There had been chaos in the transfer of the stock from the KUK administrators to KPL, and that in the confusion, MES bullets must have been mistaken for ECT bullets. They had provided access to the Cheadle plant and attended meetings when sought by VCA. The result of the investigation was that there was no action to be taken.

(ii) other than the First Claimant who had a majority interest in KPL, it made no sense that the others would be involved in the particular fraud. This was especially the case of the Fourth and Fifth Claimants who were mere employees, that is to say neither directors nor shareholders. In no sense could they be said to be running the business. The Charging Advice which ultimately did decide that they should be included did advert to the weaker case against them: see para, 141. In an application to dismiss the charges, the Fourth Claimant relied not only on absence of dishonesty but on case law to the effect that as Head of Development of KPL and neither a shareholder or a director, he was not running the business and therefore could not be carrying on the business and therefore was not trading within the meaning of section 993 of the Companies Act 2006. In particular, an employee would not be trading if he was taking instructions from others. Likewise, the Fifth Claimant who was also an employee and neither a director nor a shareholder adopted the same argument.

(iii) the Court should not take into account the arguments constructed after the decision to charge. For example, the Opening Note prepared by Counsel prior to trial on 11 November 2019 went beyond the Charging Advice. Further, to the extent that the DfT has created arguments at para. 44 of its opening note (pages 16-21) going beyond the case at the time of the Charging Advice, this too should not be taken into account.

XII The dismissal of the case

[149]On 18 August 2019, the Fifth Claimant made an application to dismiss the criminal proceedings. This was followed two days later with applications by the other four individual claimants to dismiss the proceedings. On 19 September 2019, the prosecution responded.

[150]The essence of the applications was as follows:(i) substantively there was no case to answer of dishonesty on the part of the claimants. This was demonstrated by the degree of cooperation on the part of the claimants with the VCA which had led to a proper investigation and a carefully taken decision not to prosecute up to ministerial level;

(ii) in the case of the claimants other than the First Claimant, and in particular in the cases of the Fourth Claimant and the Fifth Claimant, there was no case to answer that they were in control of KPL for the purpose of charges under section 993 of the Companies Act 2006. This was demonstrated by an analysis claimant by claimant of the weaknesses of the cases against them;

(iii) the proceedings were an abuse of process because they were pursuant to a deal between the DfT and the judicial review claimants to prosecute and thereby bring to an end the judicial review claims or the risk of new judicial review claims;

(iv) the proceedings were an abuse of process because the DfT acted to the bidding or instructions of the judicial review claimants instead of properly investigating the same in which case there would not have been a prosecution;

(v) there were serious concerns in respect of the integrity of the disclosure process such that there could be no confidence that all relevant documents had been disclosed as would be required for a fair trial.

[151]The prosecution responded in writing to these applications in a document dated 19 September 2019 settled by prosecuting counsel, Mr Bennett and Mr Johnson. It said among other things the following, (following the numbering in para. 150 above, but splitting the first sub-paragraph three times) namely: (i.i) evidence obtained in the DVSA investigation revealed a prima facie case not merely of breach of technical regulations, but of joint engagement of the first five claimants in a dishonest enterprise to defraud their customers. There was systemic dishonest conduct at KPL over a significant period of time comprising the unauthorised use of type approvals for monoliths and/or catalytic converters that had(i) only ever been authorised for use by KUK and not KPL, and

(ii) involved parts purchased from AS and ECT by KUK but not paid for. It also involved

(iii) the purchase and/ or manufacture by KPL of counterfeit monoliths and/or catalytic converters that claimed to be manufactured by other legitimate companies but in truth were simply counterfeits. (i.ii) claims by the first five claimants (the defendants in the criminal prosecution) that it was all a genuine mistake is said to be contradicted by the totality of the evidence that there was a concerted attempt dishonestly to mislead the VCA investigators. Likewise, the press releases issued in late December 2014 and early 2015 that all parts supplied were “compliant” is said to be inaccurate, and knowingly so, not least because the catalytic converters were then being produced with incorrect ceramic mesh when metal meshes were required. (i.iii)the wrongdoing involved far more than continuing to use ECT parts acquired from the administrators of KUK. The overwhelming majority of the products examined by Peter Nitoglia of ECT, 335 out of the 353 products examined, were found not to be genuine ECT products at all. He also gave evidence that in the middle of 2013, ECT informed Mr Bentley that ECT refused to do business with the new company KPL after KUK had failed to pay a vast sum of money in respect of parts supplied. The management that transferred from KUK to KPL must therefore have known that KPL could not use these parts and KPL could not represent that bullets were made by ECT when this was not the case. (ii) there was an analysis claimant by claimant as to how they were each involved in the fraudulent conduct and how despite their denials they knew that the parts were not compliant. The section in respect of the Fourth and Fifth Claimants was at paras. 83-94 of the prosecution response document of 19 September 2019. (The Charging Advice had considered their position, as described in paras. 310 and 311 below). (iii) there was no ‘deal’ to prosecute. There was an undertaking to re-investigate which led to the discovery of evidence on which the DfT had a prima facie case as described in (1.1)-(1.3) above and which in turn led to a decision to prosecute for the purpose of bringing the five claimants to justice.

(iv) the judicial review claimants did not dictate the decision to prosecute and did not override the independence of the DfT as prosecuting authority. The judicial review claimants (through Mr Massey, Dr Stock and Mr Stock) were involved in obtaining key physical evidence, but the DVSA carried out a complex investigation with an international context independently of them and made a decision to prosecute based on Counsel’s advice and the consideration of the same of the DVSA.

(v) at the point in time of the responsive document to the abuse of process application, it was believed that the process of disclosure was being conducted in a proper manner.

[152]In the event, the applications were not tested on the merits. What happened was that Counsel for the DfT were professionally embarrassed about shortcomings in disclosure. This prompted them to advise that they could not assure the court that adequate disclosure had been given. They therefore advised that an application should be made to adjourn the trial, knowing that there was a serious risk that the court would refuse so to do in which event they could not professionally prosecute the case on the state of the disclosure that had been thus far undertaken.

[153]The deficiencies in disclosure were perceived to include the following as of 27 November 2019, namely:(i) despite repeated assurances given to the defence teams that all attachments to disclosable emails had been identified and disclosed, there had repeatedly been such serious failure to disclose such attachments that a full review was required by disclosure counsel in order to be satisfied that all relevant attachments had been disclosed. This has already caused embarrassment because these assurances were communicated to the solicitors for the defendants, only to find that the assurances were wrong and unreliable.

(ii) without the knowledge of the prosecution team, not all emails had been disclosed and in particular between the investigators and the primary complainant, probably Mr Massey of BMC.

(iii) a bundle of emails provided by the representatives of Mr Greaves included emails between representatives of KPL and VCA employees. A comparison of those emails and the data provided by the VCA to the investigation team found that a number of those emails were not present in the emails supplied by the VCA to the prosecution team.

(iv) there had been delays in effecting disclosure to date. That included having to disclose a file for the first time on 18 November 2019 which ought to have been disclosed much earlier.

[154]The deficiencies in disclosure were such that Counsel believed that they could not, consistent with their duty to the Court, give assurances that disclosure was complete or that the trial could take place fairly without vigorous checks as to the adequacy of the disclosure given. In the event, the Judge was very critical of the approach of the DfT to disclosure. He accordingly refused to allow an adjournment with the effect that, absent an appeal, the prosecution would be unable to proceed and the defendants to the prosecution would have not guilty verdicts entered in their favour.

[155]In addition to advising about the deficiencies of disclosure which by themselves indicated to Counsel that an appeal against the decision of the Judge to refuse an adjournment would fail, the following was stated at para. 30, namely:(i) “the difficulties that have now arisen weaken the prosecution case significantly-in relation to the prospects of success of both the application to stay the proceedings as an abuse of process and the substantive case to be determined by the jury”

(ii) In a footnote to the word “significantly”, it was added “for instance, by way of example, the failure to disclose correspondence that would strengthen the defendants’ case that there was a lack of professional distance between the investigator and Mr Massey, and also the discovery of a deletion of an unknown quantity of emails between VCA staff and director/employees of Klarius.”

(iii) “we are concerned about the issue now raised by the defence about the decision making process brought to institution of the proceedings, both in terms of underlying merit and in terms of the further disclosure that we consider would be required.”

[156]It follows that the applications to dismiss were not the subject of a judicial decision. Instead, the prosecution felt constrained for the professional reasons identified above to seek an adjournment. When that was refused, the prosecution felt unable to proceed. The issues as to whether there was a case to answer in respect of dishonesty or the role of the particular defendant in the criminal case being sufficient to amount to fraudulent trading or the abuse of process points were not determined by the court. If there had not been the disclosure difficulty, those points would have been considered.

[157]Counsel’s advice was that the Judge’s criticisms were excessive and that there had been many things done in order to give disclosure in this very complicated case. Nonetheless their advice was that ultimately any appeal would be unsuccessful. Apart from the difficulties of appealing against a case management decision, in this case Counsel would have to accept certain avoidable deficiencies in the disclosure which had brought about the lack of readiness of the prosecution to proceed. In those circumstances it was difficult to conceive how a Court of Appeal would form a view that there had been any error of the trial judge in the exercise of his discretion.

[158]Immediately before and after 27 November 2019, there was consideration as to how the prosecution decision had been made. Mr Rice stated on 21 November 2019 that investigators made a recommendation to prosecute but ultimately it was the prosecution and legal service (“the PLS”) that made the actual decision. Ms Hicks then set out five points:(i) the PLS follows the Prosecutors’ Code for prosecutors;

(ii) this means that the PLS consider the evidence in every case and balanced it against the requirements of the Code;

(iii) the senior investigating officer or local manager is the person who normally recommends that a case should be considered for prosecution by the PLS;

(iv) once the PLS is satisfied that there is sufficient evidence for a reasonable expectation of conviction, and that it meets all of the test which it applies, it processes a case for prosecution;

(v) at the material time, there were two people in the DVSA authorised by SOS to sign off prosecutions: Caroline Hicks and Heidi Cassidy.

[159]On 27 November 2019 Mr Bennett forwarded that e-mail to Ms Marion Kitson saying that “the potential problem is paras. 2 and 4.” Ms Hicks replied and said that a review of the evidence and a charging advice [she said charging sheet, but in her evidence said that she meant charging advice] met the requirement to review the evidence prior to charging. Mr Bennett asked for the guidance document for decision makers. Ms Hicks attached Case Check & QA List, QA Tick List and PLS Team Member Desk Instructions. On 1 December 2019, Mr Bennett and Mr Johnson signed a 10 page long advice regarding an appeal and dealing with disclosure issues and expressed a concern about the decision-making process prior to the institution of the proceedings.

[160]On 2 December 2019 Mr Bennett stated in an e-mail to Mr Kitson, Mr. Johnson and Ms Hine that “2. Caroline's e-mail stated that [in] all cases… PLS review the evidence before authorising the proceedings…3. That didn't happen in this case.” In response later that morning, Ms Kitson referred to Mr Bennett’s synopsis and noted that Caroline would provide her synopsis. Caroline Hicks then responded that afternoon explaining that there were different routes to laying charges, including:

“in more complex cases... the evidence is reviewed fully by our contracted solicitors/counsel and they are responsible for full charging advice based on that examination of evidence in stating that PLS review the evidence in every case, I still maintain this to be accurate. MB [Miles Bennett] has taken this to mean only the team in BH [being a reference to the office Berkeley House of PLS in Bristol] as opposed to the wider contracted services that form the ‘Legal Services’. However we take it to be legal services contracted to PLS to be the ones directly reviewing the evidence and we then review the charging advice.”

[161]When the case was not ready to proceed following the unsuccessful application for an adjournment, formal verdicts of not guilty were entered. This occurred on 2 December 2019. Following advice on appeal, the DfT chose not to appeal against the decision not to allow the adjournment. There was an order for costs made against the DfT, which as noted above, were very large.

XIII General approach to the evidence

[162]The Claimants rightly draw attention to the approach to evidence in Gestmin v Credit Suisse (UK) Limited

[2013] EWHC 3560 (Comm)

, and particularly at para. 22 per Leggatt J (as he then was):

“In the light of these considerations, the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.”

[163]This is a case which is heavily documented, particularly as regards the VCA and DVSA investigations, the judicial review proceedings and the decision to prosecute and the subsequent prosecution culminating in their failure. These events happened predominantly in the period between 2014 and 2019, that is a very long time before the trial. The Gestmin points are particularly apposite.

[164]Nevertheless, the personality, motivations and working practices of witnesses are important in this case because the Claimants’ case depends upon findings of malice whether in the case of malicious prosecution or misfeasance in public office. It is therefore important to be able to hear what witnesses have to say about allegations of bad faith, particularly about the case that the primary concern was the judicial review proceedings with at best an indifference about the criminal prosecution.

(a) Claimant’s evidence

[165]The Claimants sought clarity or confirmation about the nature of the case of DfT. Was it the case of the DfT that the Claimants were in fact guilty of fraudulent trading? The answer was that whilst not accepting that they were not innocent, it was not a necessary part of the DfT’s case that they were guilty. The way in which the case progressed was that the DfT have not sought to establish guilt, rather to answer the case about reasonable and probable cause and to meet the allegations of absence of good faith.

[166]It therefore followed that the evidence of the Claimants’ witnesses was not a re-run of the criminal case. That was reflected by the relatively short ambit of their evidence. On Day 2, the Court heard the evidence of Mr Bentley (the Fourth Claimant), Mr Johnson and Mr Hannah (the Second Claimant) in a long morning, starting at 9.30am, but completed at 1.30pm. On Day 3, the Court heard the evidence of Mr Greaves (the Fifth Claimant), Mr Cheetham (the Third Claimant) and Mr Wilson (the First Claimant), starting at 9.30am, but completed by about 11.30am. They were scheduled to last over two days, but in fact their evidence did not last much more than a day. There was no significant attempt to prove that they had behaved dishonestly, but that was not the essence of the case which concerned the knowledge and state of mind of the prosecution and whether at the time of the decision to prosecute there was a reasonable and probable cause.

[167]Given the limited cross-examination of the Claimants, it would be unfair to make detailed findings about the way in which each of them performed. They were each upset about the impact of the prosecution on their lives. No doubt it affected all of them, but the emotion of Mr Greaves was the most visible.

[168]There was some limited evidence on the part of the Claimants of their personal losses which will be revisited in connection with damages. The evidence here was rather limited, but such attempts as were made to undermine the evidence did not have any significant effect. The Claimants have concentrated their efforts as regards quantum on the expert evidence. The assessment of that evidence as to quantum will be for later in this judgment.

[169]The fact that the cases for the prosecution were not put to the Claimants in any detail does not prevent the DfT from running the case which they are running. If they were running a case that the Claimants were in fact guilty, then that failure to put the cases would be highly objectionable. Since the focus was not the guilt of the Claimants but the knowledge of the DfT at the time of the decision to charge, it is the evidence of the Defendants’ witnesses which is the key in this case.

[170]In their written submissions, the Claimants have submitted that “such challenge as there was to the Claimants’ evidence, including their own evidence and that of Mr Wayne Johnson, came nowhere near to creating any doubt that had the Claimants’ contentions been properly appraised prior to criminal charges being brought, or been investigated in any Crown Court trial before a jury, that they had, and would have been, able to provide full explanations, and that those explanations are inconsistent with fraud.” The corollary of that submission would be that the DfT would be expected to conduct a mini-prosecution in order to show that they would have had a real prospect of showing fraud or rebutting explanations of the Claimants. If the DfT had embarked on a mini-trial, then they would have had to embark on days of cross-examination which would not have been a substitute for what would have happened at the criminal trial and which in any event would not have been decisive of the real issues in the case. In my judgment, a mini-trial of what would have occurred in the event of a trial is the wrong focus because it does not concentrate on the state of mind and knowledge of the DfT at the time of the decision to prosecute.

(b) Defendant’s witnesses and evidence

[171]The fact that the focus must be on the witnesses for the DfT reflects the above, namely the concentration on the mind and state of knowledge of the DfT witnesses. The Court expressed some dissatisfaction about the nature of the witness statements. They were of great length comprising over 400 pages. They contained in large part a recitation at length of documents and points of detail which it is unlikely that the witnesses will have recalled in any detail or at all so many years after the event. I have serious doubts as regards much of the statements that they were the words of the witnesses. They seemed to be the product of lawyering in terms of preparing large parts by reference to documents and then having the input of the witnesses as to what they did and did not recall. This became particularly apparent with certain witnesses who had very little detailed recall of the events, which contrasted with their lengthy witness statements.

[172]The mischief of preparing witness statements in this way has led to major practice directions in recent years in the Business and Property Courts, but not yet mirrored in the non-specialist lists of the King’s Bench Division. The relevant part of the King’s Bench Division guide is at para. 10.61 and includes the following:

“2) Those issues should consist only of the issues on which the party serving the witness statement wishes that witness to give evidence in chief and should not include commentary on the trial bundle or other matters which may arise during the trial or may have arisen during the proceedings. 3) A witness statement should be as concise as the circumstances allow; inadmissible or irrelevant material should not be included…. 4) Witness statements should, so far as possible, be expressed in the witness’s own words. … 6) The cost of preparation of an over-elaborate witness statement may not be allowed.”

[173]The evidence that was led comprises different kinds of evidence. First, Mr Eaton worked in the International Vehicle Standards division of the DfT. He made a 25-page witness statement. He had very little recollection of the case outside documents and therefore may have had his evidence more confined in chief than was the case. He was a cooperative and straightforward witness despite his being unwell.

[174]Second, there was the evidence of in-house lawyers within DfT. There was Ms Celine Thomas, a DfT advisory lawyer who provided advice to Mr Adrian Eaton and the IVS over the VCA investigation. There was Mr Andrew Williams, who took over the KPL case from Ms Thomas and advised throughout the judicial reviews. There was also Ms Claire Wills, a GLD litigation lawyer who handled the first judicial review of BMC and the judicial review of Marathon. They gave evidence which was, as one might expect of lawyers, not subject to serious criticism. Their recollection was not good outside the documents. Ms Thomas was open in her evidence about the reputational concerns in connection with judicial review, particularly in answer to my questions at the conclusion of her evidence and in answer to supplemental questions of Counsel thereafter [T4/109-11]. Mr Williams gave his evidence in a cooperative and informative way as to the thinking at each stage. Ms Wills had almost no recall, even of a unique case in her career, when she slammed down the phone on the lawyer for a judicial review claimant.

[175]In respect of the non-legal witnesses, the Claimants have sought to contrast the evidence of Mr Adrian Eaton, Mr Derek Lawlor and Ms Clare Ashford whom they accept as being witnesses who were prepared to make concessions. That is an implicit and realistic recognition that their evidence was measured and cooperative with the process. They have sought to contrast their evidence with the evidence of Messrs. Duncan Kay, Donald Macdonald, Patrick Hurrell, Andrew Rice and Jerome Montgomery.

[176]Mr Duncan Kay worked at the International Vehicle Service (“IVS”) a division of the DfT, becoming in July 2015 head of Vehicle Environmental Services. He came over as an intelligent person. However, his evidence was not satisfactory regarding the decision to re-investigate and the scenario of what would occur if the investigation did not lead to a decision to prosecute. He says that he did not contemplate at the point of agreeing to further investigation what would happen in that scenario. He was unable to explain why there had not been consideration of the VCA materials.

[177]Mr Donald Macdonald was in 2015 head of business support within the IVS and reporting to his manager Mr Ian Yarnold who was the head of the IVS. His evidence was, in my judgment, particularly unsatisfactory. He had prepared a long and detailed witness statement. At first, he appeared to be a precise witness who would not commit himself to an answer unless he was sure that he understood the question and the documents put to him. As his evidence went on, he was more pedantic than precise. This was so much so that it became difficult to understand how he could commit himself to so much in his witness statement. This level of defensiveness seemed to have at its root an attempt to distance himself from the VCA and Ms Rainey. He said that he could not say whether her figures were right or not, when one might expect that this would have been checked at some stage. He went far beyond being cautious by insisting that he read through the entirety of long documents put to him before he could answer a question. When matters were put to him, his stock answer was that he could not confirm that something was the case. The question which arises is whether there are inferences to be derived from this evidence that he was not only uncooperative but was in some way suppressing something about the alleged improper motive of the DfT.

[178]Mr Eddie Rowlands was a senior investigating officer who reported to Mr Andrew Rice. His evidence showed a lack of detailed knowledge of the investigation as if much had been left to Mr Hurrell and his supervision was limited.

[179]Mr Patrick Hurrell, a DVSA investigator, initially reported to Mr Jerome Montgomery. He had a background serving for 30 years as a police constable and becoming a sergeant. Unlike most investigators, most of whom had degrees in engineering, he had no such background. His evidence was over a period of one and a half days. There was a flourish about the DVSA replacing the VCA and a conviction that it would do a fresh investigation, but he was very poor in dealing with the extent to which he used the materials which VCA had assembled. It was apparent that if he had looked at any of it, he would have had limited understanding of technical matters. Given his absence of technical knowledge, it would have been expected that he would have done things to compensate for this, but this did not seem to occur.

[180]He placed emphasis on the judicial review claims and the Statements of Facts and Grounds and was too close in particular to Mr Massey. He appears to have given inadequate thought to the explanations of the Claimants given to the VCA. There were numerous documents to which he was taken where he was unable to address the detailed points. Although he worked diligently on trying to show what had happened with the materials from Spain (AS) and from the USA (ECT), he evidently believed that once proven how the materials from Spain and the USA had been used improperly, the fraudulent conduct could be proven. He assumed at too early a stage, by mid-2017, that there would be a prosecution, long before a decision was made.

[181]He appears not to have given much thought to the inevitable argument of Mr Bentley and Mr Greaves that they should not be treated as responsible for fraudulent trading since they were neither directors nor shareholders of KPL. He did not consider in any depth the financial benefits to KPL and the Claimants by the fraud. A significant mitigation about the impact of the foregoing was the unusual degree of involvement of prosecution counsel from an early stage. Mr Hurrell worked closely with them, as he had previously.

[182]Mr Montgomery’s evidence did not provide answers to the unsatisfactory aspects of Mr Hurrell’s evidence, particularly as regards the lack of examination of the VCA material and the explanations provided by the Claimants to the VCA.

[183]The Court heard the evidence of Mr Andrew Rice, the head of fraud at the DfT between 2007 and 2021. He was very senior in the chain. Mr Rowlands, a senior investigating officer, was answerable to him. Despite the authoritative appearance from his statement, his knowledge was very limited. When he was asked about specifics, he was unable to assist the Court and frequently retreated to his lack of day-to-day involvement. The appearance was that he might have been busy with other prosecutions or investigations. It may be that he has lost his command of detail since his retirement. It may be that he wished to distance himself from what has been an embarrassment to the DfT.

[184]The Claimants draw attention to his witness statement at para. 11 in which he claimed to “recall” that he “fed back to Peter [Hearn] verbally” that the VCA Report was “just a compliance report”. Whilst it may have limitations to which this judgment shall return, it seems unlikely that it can be downgraded that far. In any event, he had not read the VCA Report, which is particularly surprising given its centrality to the issues in the case. I regret to record that his evidence was unimpressive.

[185]By contrast, the evidence of Ms Heidi Cassidy was impressive. She was a member of the prosecution and legal service (“PLS”). She gave her evidence in an intelligent way as to the way in which charging decisions were made. She provided her explanation as to how the system was for a person in her position to consider the advice of Counsel without considering the underlying documents. It did seem an odd system that the charging advice should be considered by one person who would read it and understand it and authorised a major prosecution on the basis of the advice. This would be without consultation with a team of people or without examining at all or in any detail any underlying documents. Insofar as this gave rise to questions, it was not about the veracity of her evidence or her competence, but whether such a system was fit for purpose.

[186]The role of Ms Hine was strange. Although she notionally instructed Counsel, it was Counsel who took the initiative, and it was as if she was instructed by Counsel. She appears to have felt marginalised by Mr Hurrell who liaised directly with Mr Bennett of Counsel. Ms Hine seemed capable of greater things, but her role was too limited, and so the case lacked a solicitor directing the stages towards the prosecution and using Counsel when required.

[187]It may have been this lack of leadership which contributed to the sense of rush before the Charging Advice. She was unable to explain the rush and the apparent lack of readiness of her and the investigators. It will be discussed below as to whether she was working under an apprehension, whether correct or not, that the effect of the order of Yip J was that the decision to prosecute had to be made one way or the other by the end of January 2019.

(c) Inferences from evidence not called

[188]The Claimants ask the Court to draw inferences from the failure on the part of the DfT to call prosecution counsel and judicial review counsel. Whereas in some previous cases of malicious prosecution (and misfeasance in public office), counsel has been called, that has not happened in the instant case. It is said that the failure to call Mr Miles Bennett or Mr Andrew Johnson (as he then was) and also Mr Andrew Kinnier was telling.

[189]As regards the law about adverse inferences, this is derived from the following cases.

[190]In Wisniewski v Central Manchester Health Authority

[1998] Lloyds Reports Med 223

, Brooke LJ set out the principles as follows:

“(1)In certain circumstances a court may be entitled to draw adverse inferences from the absence or silence of a witness who might be expected to have material evidence to give on an issue in an action. (2)If a court is willing to draw such inferences they may go to strengthen the evidence adduced on that issue by the other party or to weaken the evidence, if any, adduced by the party who might reasonably have been expected to call the witness. (3)There must, however, have been some evidence, however weak, adduced by the former on the matter in question before the court is entitled to draw the desired inference: in other words, there must be a case to answer on that issue. (4)If the reason for the witness’s absence or silence satisfies the court then no such adverse inference may be drawn. If, on the other hand, there is some credible explanation given, even if it is not wholly satisfactory, the potentially detrimental effect of his/her absence or silence may be reduced or nullified.””

[191]However, as Ryder LJ made clear in Manzi v King’s College NHS

[2018] EWCA 1882

“Wisniewski is not authority for the proposition that there is an obligation to draw an adverse inference where the four principles are engaged. As the first principle adequately makes plain, there is a discretion i.e. ’the court is entitled to draw adverse inferences’.”

[192]In Magdeev v Tzvetkov

[2020] EWHC 887 (Comm)

Cockerill J said:

““(i) This evidential ‘rule’ is, as I have indicated above, a fairly narrow one …, the drawing of such inferences is not something to be lightly undertaken. (ii) Where a party relies on it, it is necessary for it to set out clearly (i) the point on which the inference is sought (ii) the reason why it is said that the ‘missing’ witness would have material evidence to give on that issue and (iii) why it is said that the party seeking to have the inference drawn has itself adduced relevant evidence on that issue. (iii) The court then has a discretion and will exercise it not just in the light of those principles, but also in the light of: (a) the overriding objective; and (b) an understanding that it arises against the background of an evidential world which shifts—both as to burden and as to the development of the case—during trial.”

[193]There is no reason given about the unavailability of the previous counsel. Mr Bennett and Mr Kinnier (now KC) are still in practice at the Bar and Mr Johnson (as he then was) is now a Circuit Judge. The natural person to call them would be the DfT rather than the Claimants: if they had been called by the Claimants, they can be expected to have had concerns of client confidentiality.

[194]What were the points, according to the Claimants, where their evidence would have been relevant to the issues before the Court? They include the following, namely:(i) the attention given to the VCA investigation and report including the appendices, and the extent to which they were taken into account in the decision to prosecute, including whether or not the report was passed on to Counsel, and, if so, whether it was properly considered by Counsel;

(ii) the closeness of the DVSA and in particular Mr Hurrell to the judicial review claimants and in particular Mr Massey, as well as the consultation which took place between Mr Bennett and Counsel for the judicial review claimants, and the inferences to be drawn from this;

(iii) the extent to which the prosecution was motivated by the desire to bring to an end the judicial review proceedings current or future;

(iv) the impact of the judicial review proceedings and the extent to which they were taken into account in the decision to prosecute, including the reasons for the apparent haste in the steps taken in late 2018 and in January 2019;

(v) whether the disclosure shortcomings and the failure of the prosecution were attributable to the DfT concentrating on the judicial review at the expense of whether a prosecution was appropriate;

(vi) whether the rushing including the grabbing of the Court at a time when there had not been a Charging Advice pointed to the prosecution being driven by the investigators and not by Counsel’s advice.

[195]The reasons given by the DfT why no inferences should be drawn include the following, namely:(i) the advices of Counsel are recorded in detail in the contemporaneous documents including the charging advice, the opening of the case, the response to the abuse of process application and the advice on appeal against the refusal of the Judge to adjourn the trial. In addition to that, there were detailed notes of conferences with Counsel. In the case of Mr Kinnier, his advice was contained in or evidenced by attendance notes and his own notes and emails.

(ii) there was no allegation of malice against Counsel in the pleadings. The allegations of malice were against the employees of the DfT, and they have been called to respond to them.

(iii) a very large number of the employees of the DfT were called who were able to deal with allegations of bad faith and improper purpose.

(iv) counsel would have provided interesting information about the case against the DfT, but this is not a basis on which to draw inferences.

[196]I have given careful consideration to the issue of adverse inferences, particularly because of the role of Mr Bennett being unusually extensive. This was manifest in(a) his role being broader than Ms Hine as set out above: it was as if he was both counsel and instructing solicitor,

(b) the unusual closeness of his working relationship with Mr Hurrell,

(c) the fact that he was instructed over a period of three years from early 2017 until the collapse of the prosecution case at the end of 2019, and

(d) his consultation with Gateley or more likely counsel instructed by them on behalf of BMC in the judicial review proceedings. It is not an answer necessarily to say that he would just be reviewing documents which speak for themselves. Many of the witnesses who were called were doing little more than reviewing documents, but they were able to talk about their personalities, motivations and working practices. In a case where legal professional privilege was waived and where Mr Bennett had such a major role, it may have been expected that he would be called. Likewise, if he was called, it might have been expected that Mr Kinnier might be called to understand the inter-relationship between judicial review and the prosecution.

[197]From the perspective of the court, it would have added something to have heard from Counsel. The evidence in respect of what they said may have carried more weight if it had been confirmed following cross-examination. Despite this, in my judgment, this is not a case where the Court ought to draw an inference from their not being called. The reasons for this are as follows:(i) their roles have been extensively documented such that the Court can get most of the picture from the documents and would be unlikely to wish to depart from the thrust of the views which they expressed at the time as there documented.

(ii) no allegations of bad faith and malice have been pleaded against Counsel, which makes their position different from that of the DfT employees.

(iii) as regards the final VCA report including the appendices, the documentary evidence is that it was passed on to Counsel. Insofar as criticism can be made that it was not considered adequately in the advices of Counsel, it is not apparent what aspect of the reports or the appendices would have altered Counsel’s view which was founded upon the DVSA investigation as well as a case to the effect that the VCA were not given a full and honest account by each of the first five claimants. The charging advice dealt with why the investigation of the VCA could be discounted on the basis that the investigation of DVSA was more rigorous and based on firm evidence from AS and ECT.

(iv) as regards the closeness to the judicial review claimants, this was an allegation predominantly levelled at Mr Hurrell. There was no reason for Counsel not to understand the connection between the judicial review and the prosecution. They have stated in writing that they did not allow the judicial review claimants to dictate the decision whether or not to prosecute.

(v) that there was no ‘deal’ to prosecute was confronted head on in counsel’s response to the abuse of process application which contended that there had been a deal. There was an undertaking to re-investigate which led to the discovery of evidence on which the DfT had a prima facie case for the reasons summarised above and which in turn led to a decision to prosecute for the purpose of bringing the five claimants to justice.

(vi) the judicial review claimants (through Mr Massey, Dr Stock and Mr Stock) were involved in obtaining key physical evidence, but the DVSA carried out a complex investigation with an international context independently of them and made a decision to prosecute based on Counsel’s advice and the consideration of the same of the DVSA.

[198]There was an area in respect of the failure of the disclosure process upon which some thought has been given as to the impact of the failure to call Counsel. First, it is whether Counsel could have addressed the nature, extent and reasons for the failure of the disclosure process. This is largely covered in the contemporaneous documents. The extent of the failure was not appreciated until a very late stage when an additional counsel was enlisted to assist in a task which required more than one month of her assistance. The nature of the disclosure failures were of a poor system for dealing with disclosure, even what the Judge described as a shambolic failure. The process was not assisted by the assurances that the disclosure would be completed and by the failure to complete the same. It is not obvious that Counsel could have added much to that which was apparent from the documents.

[199]There is a matter where Mr Bennett or Mr Johnson could have assisted. It was about the rather elliptical passage in the advice about appeal against the refusal of the adjournment referred to at para. 165 above where it was stated that the difficulties about disclosure had affected significantly the prospects of success as regards the abuse of process and the substantive case. There was also the unspecified concern about the point made by the defence in the prosecution about the decision-making process leading to the prosecution. Whilst it would have been interesting to have heard from Counsel in order to understand more about this part of the charging advice, there is enough in the documents to show the following, namely:(i) the disclosure failings did have an impact on the prospects of success both as regards the abuse of process application and the case generally, for example by reference to the example given in the footnote to para. 30 referred to at para. 165 above. Having failed as regards disclosure, it was inevitable that even if the position had been said to be rectified, the Court was likely to consider the possibility that a fair trial would not be possible. Alternatively, forensic experience is that once that a case has been beset by disclosure failings, they tend to be subject to greater scrutiny than would otherwise be the case.

(ii) the particular concerns of Mr Bennett about process were addressed by Ms Hicks in the documents identified above.

(iii) this did not mean that the decision to prosecute was not justified at the time when it was made for the following reasons, namely: (a) the disclosure difficulties had not arisen, and it is not expected that disclosure should have been undertaken at that stage; (b) as set out in the section about law below, the threshold for the decision to prosecute is significantly lower than the threshold under the Prosecutor’s Code.

(iv) despite the concerns of Mr Bennett, Counsel did not state that the original decision to prosecute was no longer justified, and that the Charging Advice or the response to the abuse of process application should be withdrawn.

[200]In the light of the foregoing, there is no inference to be drawn as regards the failure to call Counsel whether generally or as regards the specific matters pertaining to the disclosure failings and their impact on the case. If it had been the case that Counsel had considered that there was no longer a case, the advice would have said so. It did not say that and there is no reason to say that the failure to call Counsel to clarify a small part of the advice about an appeal is that Counsel must have intended such a conclusion. If that were not correct and there was just about an inference that could be made out, the Court would exercise its discretion against coming to making an inference. It takes into account how thin the material is to justify such an inference. It also takes into account the vast amount of other evidence called from live witnesses as well as the large volume of documentary evidence relating to the involvement of Counsel. Regard has been had to the overriding objective and to the extent to which the evidential burden shifts during the action and the trial.

XIV The law in respect of malicious prosecution

[201]It is now necessary to consider the law in respect of the torts of malicious prosecution and misfeasance in public office. The Court has been assisted by the respective detailed submissions from the parties on the ingredients of the torts. It is necessary to set out the law before seeking to apply the law to the facts of the case.

(a) Malicious prosecution

[202]In order to succeed in his action for malicious prosecution, the Claimant must prove(a) that he was prosecuted by the Defendant

(b) that the prosecution was determined in his favour

(d) the prosecution was malicious: see Lord Keith of Kinkel in Martin v Watson

[1996] 1 AC 74

at 80C (citing the then edition of Clerk & Lindsell on Torts).

[203]There is no difficulty in this case in establishing that each of the 1st 5 claimants were prosecuted by the DfT. Likewise, there is no difficulty in establishing that that that prosecution was determined in their favour. When the case was not ready to proceed following the unsuccessful application for an adjournment, formal verdicts of not guilty were entered. The issues therefore to consider are whether the prosecution was without reasonable and probable cause and whether the prosecution was malicious.

(b) Reasonable and probable cause: legal framework

[204]Reasonable and probable cause has a subjective element and an objective element. As Lord Devlin explained in Glinski at p.768, “the question is a double one: did the prosecutor actually believe and did he reasonably believe that he had cause for prosecution?”

[205]There is a useful summary of the legal principles of when there is a reasonable and probable cause in the judgment of Lambert J in Rudall v Crown Prosecution Service

[2018] EWHC 1587

at [76] as follows: “a. the question of whether there was an absence of reasonable and probable cause has two strands; the objective and the subjective: it involves considering whether the prosecutor had an honest belief in the charge and whether, viewed objectively, there was a reasonable basis for that belief. b. An absence of honest belief in the charge by the prosecutor is conclusive of the absence of reasonable and probable cause, even if a reasonable man could have believed in the charge on the basis of the facts known to the prosecutor. See: Haddrick v Heslop [1848]12 QB 268 at 274 -5 "It would be quite outrageous if, where a party is proved to believe that a charge is unfounded, it were to be held that he could have reasonable and probable cause" per Lord Denman CJ. c. It is not necessary for the prosecutor to believe in the guilt of the person accused, he has only to be satisfied that there is a proper case to lay before the court: see Thacker v Crown Prosecution Service

[1997] EWCA Civ 3000

where Kennedy LJ observed "Guilt or innocence is for the Tribunal and not for him" and Coudrat v Commissioners of Her Majesty's Revenue and Customs

[2005] EWCA Civ 616

where Smith LJ stated "an officer is entitled to lay a charge if he is satisfied that there is a case fit to be tried. He does not have to believe in the probability of conviction." d. The Court arrives at the answer to the question of whether there was reasonable cause by examining the facts as they were known to, or appeared to, the prosecutor at the time of charge, "the facts upon which the prosecutor acted should be ascertained.. when the judge knows the facts operating on the prosecutor's mind, he must then decide whether they afford reasonable and probable cause for prosecuting the accused": see Herniman v Smith

[1938] AC 505

at 316 per Lord Atkin. e. The absence or otherwise of reasonable and probable cause involves an analysis of the sufficiency of the evidence. As Sharp J expressed the position in Besnik Qema v News Group Newspapers Limited

[2012] EWHC 1146 (QB)

"whether one considers the objective or subjective element of reasonable and probable cause, the focus is always on the sufficiency of evidence to support the prosecution of the offence in question, and the defendant's knowledge of and honest belief in that." f. In Coudrat, Smith LJ framed the assessment of evidential sufficiency as follows: "when considering whether to charge a suspect, consideration must be given to the elements of the offence with which it is intended to charge him. There must be prima facie admissible evidence of each element of the offence. Although anything plainly inadmissible should be left out of account, we do not think that, at the stage of charging it is necessary or appropriate to consider the possibility that evidence might be excluded at the trial after full legal argument or in the exercise of the judge's discretion. Nor is it necessary to test the full strength of the defence. An officer cannot be expected to investigate the truth of every assertion made by the suspect in interview." (my emphasis). g. Absence of reasonable and probable cause must be established, like each of the elements of malicious prosecution, separately. Want of reasonable and probable cause can never be inferred from malice: i. "From the most express malice, the want of probable cause cannot be implied. A man from malicious motives may take up a prosecution for real guilt, or he may, from circumstances which he really believes, proceed upon apparent guilt and in neither case is he liable to this kind of action": Johnstone v Sutton (1786) 1 Term Reports 510, 545 ii. "The importance of observing this rule cannot be exaggerated… It behoves the judge to be doubly careful not to leave the question of honest belief to the jury unless there is affirmative evidence of the want of it" Glinski v McIver

[1962] AC 726

per Viscount Simonds. h. The preparedness of counsel to act for the crown is relevant to (and potentially determinative of) the question of reasonable and probable cause. However, each case must be considered on its own facts: see Abbott v Refuge Assurance Co

[1962] 1 QB 432

"the variations in the circumstances of cases are almost infinite. Clearly the view of counsel, who was not experienced in work of this kind, would not be of any great value to persons seeking his advice; neither would that advice be of any great value however experienced the counsel, if the whole of the facts were not put before him." i. "From the most express malice, the want of probable cause cannot be implied. A man from malicious motives may take up a prosecution for real guilt, or he may, from circumstances which he really believes, proceed upon apparent guilt and in neither case is he liable to this kind of action": Johnstone v Sutton (1786) 1 Term Reports 510, 545 ii. "The importance of observing this rule cannot be exaggerated… It behoves the judge to be doubly careful not to leave the question of honest belief to the jury unless there is affirmative evidence of the want of it" Glinski v McIver

[1962] AC 726

per Viscount Simonds.

[206]The last of these points at (h) above can be amplified by reference to the case of Glinski. A person laying a charge is entitled to act on the advice of counsel to the effect that there is reasonable and probable cause to prosecute, see e.g. Glinski, per Viscount Simonds at 744-745 (and also Lord Denning at 759 and Lord Reid (who agreed with Viscount Simonds) at 753):

“Can he rely on the legal advice given to him? He believes the facts and is advised that they constitute an offence. He prosecutes accordingly, but the accused is acquitted either because the advice is wrong or because the information proves to be wrong or incomplete, or because some unexpected defence is revealed. ... It appears to me that, just as the prosecutor is justified in acting on information about facts given him by reliable witnesses, so he may accept advice upon the law given him by a competent lawyer. That is the course that a reasonable man would take and, if so, the so-called objective test is satisfied. Applying this principle to the case of a police officer who lays an information and prefers a charge, and at every step acts upon competent advice, particularly perhaps if it is the advice of the legal department of Scotland Yard, I should find it difficult to say that that officer acted without reasonable and probable cause. I assume throughout that he has put all the relevant facts known to him before his advisers.”

[207]An issue arose in that case as to whether the test in Coudrat in the last sentence of sub-para. c of the quotation, namely that it was sufficient for the officer to lay a charge if there was a case which was fit to be tried, and it was not necessary for the officer to believe that the defendant was probably guilty. In her analysis at para. 80, Lambert J stated that she did not accept that the evidential Code for Prosecutors was the correct test for the purpose of examining whether there is reasonable and probable cause. She said:

“The exercise undertaken by the prosecutor in that context is to identify whether there is a realistic prospect of conviction which is a different, and higher, threshold than that which I must apply when considering whether there is a case fit to be tried or a proper case to lay before the court. The intensiveness of the scrutiny to be applied to the evidence is correspondingly different and greater than that relevant to the consideration of reasonable and probable cause.”

[208]This view of the law has been confirmed by the clarification on this point by the Privy Council, obiter but intended expressly to clarify the law, in the Privy Council case of Stuart v A-G for Trinidad and Tobago

[2022] UKPC 53

at [26] per Lord Burrows with whose judgment the other Justices agreed: “26. Nevertheless, and although nothing turns on it in this case, there is one point on the law which it is helpful to clarify. This concerns the question as to what the police officer’s honest (and reasonably held) belief must be about in the context of deciding whether there is a lack of reasonable and probable cause. It has commonly been stated that the honest belief must be as to the accused’s guilt in respect of the offence charged: see Hicks v Faulkner

(1878) 8 QBD 167

, 171, per Hawkins J, which was approved by the House of Lords in Herniman v Smith

[1938] AC 305

. But in the Board’s view, the principled and correct approach was articulated by Lord Denning in the House of Lords in Glinski v McIver

[1962] AC 726

. He said at pp 758-759: “[T]he word 'guilty' is apt to be misleading. It suggests that in order to have reasonable and probable cause, a man who brings a prosecution, be he a police officer or a private individual, must, at his peril, believe in the guilt of the accused. That he must be sure of it, as a jury must, before they convict. Whereas in truth he has only to be satisfied that there is a proper case to lay before the court. … After all, he cannot judge whether the witnesses are telling the truth. He cannot know what defences the accused may set up. Guilt or innocence is for the tribunal and not for him ... So also with a police officer. He is concerned to bring to trial every man who should be put on trial, but he is not concerned to convict him. ...No, the truth is that a police officer is only concerned to see that there is a case proper to be laid before the court." (Apart from second sentence, emphasis added) “[T]he word 'guilty' is apt to be misleading. It suggests that in order to have reasonable and probable cause, a man who brings a prosecution, be he a police officer or a private individual, must, at his peril, believe in the guilt of the accused. That he must be sure of it, as a jury must, before they convict. Whereas in truth he has only to be satisfied that there is a proper case to lay before the court. … After all, he cannot judge whether the witnesses are telling the truth. He cannot know what defences the accused may set up. Guilt or innocence is for the tribunal and not for him ... So also with a police officer. He is concerned to bring to trial every man who should be put on trial, but he is not concerned to convict him. ...No, the truth is that a police officer is only concerned to see that there is a case proper to be laid before the court." (Apart from second sentence, emphasis added)

[209]It therefore follows that insofar as a higher standard is expected of Crown Prosecutors in the current guidance of whether or not to prosecute, that does not provide a definition of whether or not it is proper for a case to be laid before the Court. This is different from the higher realistic prospect of success test under the Code for Crown Prosecutors which involves determination of whether a fair minded tribunal properly applying the law would be more likely than not to convict, and if it is the public interest to proceed. The Court will therefore accept the law as articulated to this effect by Lambert J in Rudall v CPS at [76] and by Lord Burrows in Stuart at [26].

[210]A prosecutor may not pick and choose so as to rely only on portions of the evidence that support prosecution. However, the prosecutor is not bound to assume that a theory put forward by the defence is sound, but in certain cases “on the explanation given... the reasonable and probable cause cease[s]”: Musgrove v Newell (1836) 150 ER 567 at p.568. Similarly, in Herniman v Smith

[1938] AC 305

, Lord Atkin said at p.319:

“It is not required of any prosecutor that he must have tested every possible relevant fact before he takes action. His duty is not to ascertain whether there is a defence, but whether there is reasonable and probable cause for a prosecution”

. Herniman was approved by Viscount Simonds in Glinksi at p.745.

[211]More recently, in Hughes, Jay J cited Glinski, Coudrat and Rudall and held (judge’s emphasis): “The authorities which I have cited demonstrate that the CPS’s failure to undertake a line of inquiry which might just have been relevant to the Claimant’s defence does not negative the existence of reasonable and probable cause” [105].

[212]Similarly, Jay J held that the fact that almost no work had been done on disclosure prior to charge (i.e. there were no disclosure schedules, and a review of unused digital material had not even been commenced - see [28]) did not have a bearing on reasonable and probable cause: “even taking the matter at its very highest I do not think that full disclosure was capable of more than indicating possible lines of defence for the Claimant. That is not relevant to the existence or otherwise of reasonable and probable cause” ([106]).

[213]If it is established that there is relevant material that was not placed before the prosecutor the Court will assess what difference it would have made to the charging decision. In Alford v Chief Constable of Cambridgeshire Police

[2009] EWCA Civ 100

the Court of Appeal agreed with the first instance judge’s view that a report, which clearly should have been placed before the CPS and the prosecutor, would have weakened the strength of the evidence but the “advice and the decision would probably have been the same” [46].

[214]A malicious prosecution claim may be based on a wrongful decision to initiate criminal proceedings and/or the wrongful continuation of criminal proceedings. It was said at first instance in Tims v John Lewis & Co Ltd

[1951] 2 KB 459

, at p.472, that a prosecutor who continues with the prosecution after “something comes to light which shows the prosecution to be in fact groundless” will “possibly have no reasonable or probable cause for continuing the prosecution and at any rate will be guilty of malice” if he does not inform the Court of the facts that he has since discovered. The decision was reversed on another point by the House of Lords, but not on this point: see [1952] A.C. 676 (HL).

(c) Malice

[215]It has been said that malice means “some other motive then a desire to bring to justice a person whom [the accuser] honestly believes to be guilty.”: see Brown v Hawkes

[1891] 2 QB 718

, 732 per Cave J.

[216]In Glinski, Lord Devlin said at 766 "Malice, it is agreed, covers not only spite and ill-will but also any motive other than a desire to bring a criminal to justice." Or "any motive other than that of simply instituting a prosecution for the purpose of bringing a person to justice, is a malicious motive on the part of the person who acts in that way."

[217]Malice can be inferred from the absence of reasonable and probable cause but not from a finding of lack of reasonable and probable cause where there is an honest but unreasonable belief: see Thacker v Crown Prosecution Service

[1997] EWCA Civ 3000

[218]Mere incompetence or gross negligence falling short of reckless indifference will not suffice to prove malice. “A failure to take steps which it would be elementary for any reasonable person to take before instituting proceedings might in some circumstances serve evidentially as a pointer towards deliberate misuse of the courts process, but sloppiness of itself is very different from malice.” per Lord Toulson in Juman vA-G of Trinidad and Tobago

[2017] UKPC 3

at [19].

(d) Improper motive

[219]Some definitions of malice have focused on the motive of the defendant in that it has been said that “an improper and wrongful motive lies at the heart of the tort”: see Williamson v A-G of Trinidad and Tobago

[2014] UKPC 29

at [12] per Lord Kerr. Lord Kerr went on to say as follows at [12]:

“It must be the driving force behind the prosecution. In other words, it has to be shown that the prosecutor's motives is for a purpose other than bringing a person to justice: Stevens v Midland Counties Railway Company (1854) 10 Exch 352, 356 per Alderson B and Gibbs v Rea [1998] AC 786, 797D. The wrongful motive involves an intention to manipulate or abuse the legal system Crawford Adjusters Ltd (Cayman) v Sagicor General Insurance (Cayman) Ltd [2013] UKPC 17, [2014] AC 366 at para 101, Gregory v Portsmouth City Council [2000] 1 AC; 426C; Proulx v Quebec [2001] 3 SCR 9. Proving malice is a "high hurdle" for the claimant to pass: Crawford Adjusters para 72a per Lord Wilson.”

[220]There are difficulties where a claimant has mixed purposes. It may be that it is necessary to show the predominant purpose is improper or that there is an improper purpose which negates a proper purpose.

(e) Examples of improper motive

[221]An example of an improper motive case where a re-trial was ordered is Paul v Chief Constable of Humberside

[2004] EWCA Civ 308

where the improper motive considered was (paragraph 26), “that the police had been activated in their dealings with his client by an improper motive, namely that they wished to distract public attention from the fact that a young black man had died while lying on the floor in a police custody suite with his hands handcuffed behind his back. The fact that the conduct of the police was in question in relation to the events surrounding Mr Alder's death had induced them to take decisions they would not have taken in the way they did if there had not been this background, and these decisions had rebounded to Mr Paul's manifest disadvantage.”

[222]To similar effect is a dictum of Lord Richards in Maharaj v A-G of Trinidad and Tobago

[2024] UKPC 1

at 11:

“The element of malice requires the claimant to prove that the proceedings initiated by the defendant were not a bona fide use of the court's process. While proceedings brought in the knowledge that they were without foundation may be the most obvious case, it will be sufficient if, for example, the defendant was indifferent whether the charge was supportable and brought the proceedings for an illegitimate collateral purpose: see Willers v Joyce at para 55 per Lord Toulson.”

[223]Para. 55 of Willers v Joyce involved consideration of the related tort of malicious abuse of process which was found to exist. Lord Toulson said the following in respect of malice:

“Malice is an additional requirement. In the early cases, such as Savile v Roberts, the courts used the expression “falso et malitiose”

. In the 19th century “malitiose” was replaced by the word “malicious”, which came to be used frequently both in statutes and in common law cases. In Bromage v Prosser (1825) 4 B & C 247, 255, Bayley J said that “Malice, in common acceptation, means ill-will against a person, but in its legal sense it means a wrongful act, done intentionally, without just cause or excuse.” His statement was cited with approval by Lord Davey in Allen v Flood

[1898] AC 1

, 171. (For a recent discussion of the nineteenth century understanding of the meaning of “malicious” in the law of tort, see O (A Child) v Rhodes

[2016] AC 219

, paras 37 to 41.) As applied to malicious prosecution, it requires the claimant to prove that the defendant deliberately misused the process of the court. The most obvious case is where the claimant can prove that the defendant brought the proceedings in the knowledge that they were without foundation (as in Hobart CJ’s formulation.) But the authorities show that there may be other instances of abuse. A person, for example, may be indifferent whether the allegation is supportable and may bring the proceedings, not for the bona fide purpose of trying that issue, but to secure some extraneous benefit to which he has no colour of a right. The critical feature which has to be proved is that the proceedings instituted by the defendant were not a bona fide use of the court’s process.

(f) Mixed motive

[224]Winfield & Jolowicz on Tort 20th Edition at [20-016] refers to cases where motives are mixed and says “... We suggest that malice exists where the predominant purpose of the accuser is something other than the vindication of law.”

[225]There have been cases where the Court has avoided making a ruling on this. In some cases, judges have assumed for the purpose of the judgment (without deciding the point) that a predominant intention is not required in respect of the tort of misfeasance in public office: per Lindsay J in Weir v Secretary of State for Transport (No.2)

[2005] EWHC 2192 (Ch)

and per Wyn Williams J in Romantiek v Simms & Ors

[2008] EWHC 3099 (QB)

at [84] . Despite the tort of lawful means conspiracy where a predominant purpose is required, Lindsay J derived some assistance from misrepresentation where it sufficed for the misrepresentation to have an effect, even if there were other operative factors causing the claimant to enter into the contract.

[226]The Crawford case there referred to is another Privy Council case, full name Crawford Adjusters Ltd (Cayman) v Sagicor General Insurance (Cayman) Ltd

[2013] UKPC 17

. That was consideration of the tort of malicious abuse of process in which Lord Wilson said that the tort of abuse of process was committed where civil proceedings were initiated or conducted for a predominant purpose other than that for which they were designed, so as to obtain an extraneous benefit other than, and not reasonably connected with, the relief sought. In that case, the defendant insurers had brought proceedings in fraud with the predominant intention of destroying the claimant professionally. The Privy Council agreed with the first instance judge that, since it was not alleged that the defendants intended to achieve his destruction other than through the initiation and successful prosecution of the action, the action had not been brought for a purpose other than that for which it was intended. At [63], Lord Wilson held as follows:

“What is an improper purpose? A helpful metaphor suggested by Isaacs J in the High Court of Australia in Varawa v Howard Smith Co Ltd (1911) 13 CLR 35, 91, is that of a stalking-horse: If the proceedings are merely a stalking-horse to coerce the defendant in some way entirely outside the ambit of the legal claim on which the court is asked to adjudicate they are regarded as an abuse of process for this purpose . . .”

The metaphor aids resolution of the conundrum raised by the example of a claimant who intends that the result of the action will be the economic downfall of the defendant who may be a business rival or just an enemy. If the claimant’s intention is that the result of victory in the action will be the defendant’s downfall, then his purpose is not improper: for it is nothing other than to achieve victory in the action, with all such consequences as may flow from it. If, on the other hand, his intention is to secure the defendant’s downfall or some other disadvantage to the defendant or advantage to himself by use of the proceedings otherwise than for the purpose for which they are designed, then his purpose is improper.” If the proceedings are merely a stalking-horse to coerce the defendant in some way entirely outside the ambit of the legal claim on which the court is asked to adjudicate they are regarded as an abuse of process for this purpose . . .”

[227]In the case of Rees v Commissioner for the Metropolitan Police

[2018] EWCA Civ 1587

, the Court found that malice could be established notwithstanding that a prosecutor believed in the guilt of the accused. The reason for this was that it was found that the prosecution was heavily reliant on the evidence of a witness which the prosecutor procured by subornation amounting to a criminal intention to pervert justice. In that case, McCombe LJ held at [81] that “that bringing a prosecution in that manner is not "bringing a criminal to justice" at all.” McCombe LJ said at [90] that it was difficult to better what Mr Simblet (as he then was) counsel for an appellant in that case had submitted, namely that “…the dishonest pursuit of a case even in a "noble cause" is always malicious prosecution”. At para. 91, McCombe LJ said:

“…I consider that DCS Cook's belief (as found by the judge) that the appellants were guilty of the murder cannot prevent the prosecution having been malicious. He knowingly put before the decision-maker a case which he knew was significantly tainted by his own wrongdoing and which he knew could not be properly presented in that form to a court. To find that the element of malice was not satisfied in this case, to my mind, would be, quite simply, a negation of the rule of law.”

[228]In the same case, it was held that there was an inability for the prosecutor to show that there was a reasonable and probable cause because the subjective element could not be shown. The consequence of the finding of malice was that the prosecutor did not have a subjective reasonable and probable cause for a prosecution if they present a case heavily reliant upon evidence which, because of his own misconduct, they know is "certain or at least highly likely" to be ruled inadmissible by any trial judge.

[229]A question which arises is whether Rees was a case with a mixed motive such that an object of bringing the accused to justice is not an answer to a malicious prosecution case even where the improper motive is not a predominant one. Properly analysed, Rees is a case where the motive to bring a person to justice is negatived by the criminal conduct of the prosecutor by suborning a witness. In such a case, there is no longer a mixed motive: the effect of the criminal conduct has been to negative any motive of bringing a criminal to justice.

[230]The above cases provide sufficient support for the conclusion that where there is a mixed purpose or motive in the tort of malicious prosecution, a predominant improper purpose or motive needs to be established for malice to be established. In my judgment, that is derived from the following matters, namely:(i) the words used by Lord Kerr in Williamson that the improper and wrongful motive has to be “the driving force behind the prosecution” connote that the improper motive has to be the sole or the predominant purpose;

(ii) the words used by Lord Richards in Maharaj that the proceedings must not be a bona fide use of the court’s process and the example of being indifferent to whether the charge was supportable coupled with an illegitimate collateral purpose. This is echoing the words of Lord Toulson in Willers v Joyce. The above cases support the need for the improper purpose to be such that there is no longer a bona fide use of the court’s process;

(iii) the nature of the tort is to use the justice system other than to bring a wrongdoer to justice. If a substantial purpose is to bring the wrongdoer to justice, then it would interfere with the ability of achieving that purpose if it became unlawful because there was a collateral but not predominant illegitimate purpose: see Crawford above;

(iv) on the other hand, where the purpose of purporting to bring the wrongdoer to justice involves criminal conduct to achieve the purpose, this can negative the original lawful purpose such that malice can be established by reference to the wrongdoing: see Rees above.

[231]This judgment will revisit what is an improper or collateral motive or purpose in connection with the tort of misfeasance in public office.

XV The law in respect of misfeasance in public office

[232]This common law tort imposes liability for “an abuse of power accompanied by subjective bad faith” (per Lord Steyn in Three Rivers DC v Bank of England (No.3)

[2001] UKHL 16

;

[2003] 2 AC 1

at p.191). It has been described as a “tort of obloquy”: see Hussain v Chief Constable of West Mercia

[2008] EWCA 1205

per Maurice Kay LJ at [20]. The ingredients of this tort can be summarised as follows.

(a) The nature of the tort of misfeasance in public office

[233]The tort of misfeasance is an intentional tort, that is to say negligence or gross negligence falling short of reckless indifference will not suffice. The leading authority in respect of misfeasance in public office remains the case of Three Rivers DC v Bank of England (No 3)

[2003] 2 AC 1

("Three Rivers"). As explained in the speech of Lord Steyn, the constituent elements of the tort (set out at 191-196) are that:(i) the tortfeasor must be a public officer;

(ii) the tortfeasor committed an act (or, in narrow circumstances, deliberately decided not to do an act);

(iii) the act amounted to the exercise of power as a public officer;

(iv) the tortfeasor was acting dishonestly or in bad faith (whether in the form of targeted malice or untargeted malice);

(v) an act or omission of the tortfeasor caused loss to the Claimant;

(vi) there was actionable damage that was not too remote. (b) Elements (1), (2) and (3): conduct in the exercise of public power

[234]There can be no issue as to the first element. As to the second and third elements, the exercise of public power may be by way of positive act or by omission. However, “it must be a deliberate one involving an actual decision and liability will not arise from injury suffered by mere inadvertence or oversight” (Three Rivers, Lord Hutton at p.228). A claimant’s ability to establish liability on an omission is much more limited. Lord Millett in Three Rivers (at 237C)characterised an actionable omission as one in which “the discretion whether to act can only be exercised in one way so that there is effectively a duty to act [and] the official appreciates this but nevertheless takes a conscious decision not to act”.

[235]The requirement that the act in question amounts to the exercise of public power was described by Lord Bridge in Calveley v Chief Constable of Merseyside Police

[1989] AC 1228

at 1240D as the exercise, or purported exercise, by the public officer of “some power or authority with which he is clothed by virtue of the office he holds”. In Reesv Commissioner of the Metropolitan Police

[2017] EWHC 273 (QB)

at first instance, Mitting J held at [182] that misconduct in the performance of police functions, even if not in the course of exercising a specific statutory or common law power, would be sufficient to found the tort (Mitting J’s finding in this regard was not disturbed on appeal).

(c) Element (4): Malice as an essential ingredient of the tort

[236]The fourth matter emphasises that malice is an essential ingredient of this tort. Lord Steyn said that there were not two separate torts, but that there was one tort with two forms, namely misfeasance in public office with targeted malice and with untargeted malice. Lord Steyn explained in Three Rivers (No.3), at p.191:

“First there is the case of targeted malice by a public officer, ie conduct specifically intended to injure a person or persons. This type of case involves bad faith in the sense of the exercise of public power for an improper or ulterior motive. The second form is where a public officer acts knowing that he has no power to do the act complained of and that the act will probably injure the plaintiff. It involves bad faith in as much as the public officer does not have an honest belief that his act is lawful.”

[237]He said at p.192A-B that although there were differences between the two different forms, "…there are unifying features, namely the special nature of the tort, as directed against the conduct of public officers only, and the element of an abuse of public power in bad faith." In other words, the unlawful element had to be established in both forms.

[238]The official concerned must be shown not to have had an honest belief that he was acting lawfully; this is sometimes referred to as not having acted in good faith. In Northern Territory v Mengel 69 ALJR 527 at 546, the expression honest attempt is used. Another way of putting it is that he must be shown either to have known that he was acting unlawfully or to have wilfully disregarded the risk that his act was unlawful. This requirement is therefore one which applies to the state of mind of the official concerning the lawfulness of his act and covers both a conscious and a subjectively reckless state of mind, either of which could be described as bad faith or dishonest.

[239]It is inherent in both forms of malice that the intent or subjective recklessness, as the case may be, is directed to the harm, or at least to harm of the type, actually suffered. So, in targeted malice, it is an intention to cause a particular harm (or type of harm) to the claimant that constitutes the bad faith. In untargeted malice, it is the knowledge, or wilful disregard of the risk that, the claimant will probably suffer a particular harm (or type of harm) that, at least in part, constitutes the bad faith.

[240]In the above mentioned case of Rees considered in the section above about malicious prosecution, the conduct of the prosecutor in deliberately misusing their powers of prosecution was found to give rise to liability in misfeasance in public office in addition to malicious prosecution. At [97], the point was described by McCombe LJ as follows: “As I have said elsewhere already, I find that it is inconceivable that any properly informed prosecutor, or counsel advising him or her, would have countenanced the preferring of charges on the relevant date based, as these were, on the report of an SIO who had procured a significant plank of the proposed Crown case by committing the crime which the judge held that DCS Cook had committed. Such a prosecutor would, I am convinced, have wanted DCS Cook, and any influence deriving from him, to be cleared from the scene and a fresh untainted assessment made of the remaining evidence before considering again whether a prosecution should be brought. Given the circumstances, the prosecutor would have wanted to be assured that the taint of DCS Cook's conduct had not otherwise affected the investigation.

(d) Targeted malice (d) Targeted malice

[241]In the case of "targeted malice", the official does the act intentionally with the purpose of causing loss to the plaintiff, being a person who is at the time identified or identifiable. This limb does not call for explanation. The specific purpose of causing loss to a particular person is extremely likely to be consistent only with the official not having an honest belief that he was exercising the relevant power lawfully. If the loss is inflicted intentionally, there is no problem in allowing a remedy to the person so injured.

[242]In a case of targeted malice, the abuse of power consists in the very intention to injure the claimant. Examples of such cases are rare: in Watkins v Secretary of State for the Home Department

[2006] UKHL 17

;

[2006] 2 AC 395

, at [73(2)], Lord Walker cited the Canadian case of Roncarelli v Duplessis

[1959] SCR 121

(where the Prime Minister of Quebec ordered a licensing commission to revoke the claimant’s liquor license as part of a sustained campaign against his church).

(e) Untargeted malice

[243]In the case of "untargeted malice", the official does the act intentionally being aware that it will in the ordinary course directly cause loss to the claimant or an identifiable class to which the plaintiff belongs. The element of knowledge is an actual awareness but is not the knowledge of an existing fact or an inevitable certainty. It relates to a result which has yet to occur. It is the awareness that a certain consequence will follow as a result of the act unless something out of the ordinary intervenes. The act is not done with the intention or purpose of causing such a loss but is an unlawful act which is intentionally done for a different purpose notwithstanding that the official is aware that such injury will, in the ordinary course, be one of the consequences: Garrett v Attorney General

[1997] 2 NZLR 332

, 349-350.

[244]There are passages from Three Rivers which illustrate the degree of knowledge of likely harm that is required in a case involving untargeted malice: “The element of knowledge is an actual awareness but is not the knowledge of an existing fact or an inevitable certainty. It relates to a result which is yet to occur. It is the awareness that a certain consequence will follow as a result of the act unless something out of the ordinary intervenes. The act is not done with the intention or purpose of causing such a loss but is an unlawful act which is intentionally done for a different purpose notwithstanding that the official is aware that such injury will, in the ordinary course, be one of the consequences: Garrett v Attorney General

[1997] 2 NZLR 332

, 349-350.” per Lord Hobhouse at 231 A-B. “It is not, of course, necessary that the official should foresee that his conduct will certainly harm the plaintiff. Nothing in life is certain. Equally, however, I do not think that it is sufficient that he should foresee that it will probably do so. The principle in play is that a man is presumed to intend the natural and probable consequences of his actions. This is the test laid down by Mason CJ writing for the majority of the High Court of Australia and Brennan J in Northern Territory v Mengel 69 ALJR 527 viz that it should be calculated (in the sense of likely) in the ordinary course of events to cause injury. But the inference cannot be drawn unless the official did foresee the consequences. It is not enough that he ought to have foreseen them if he did not do so in fact.” per Lord Millett at 236 F-G.

[245]Untargeted malice includes reckless untargeted malice. The official does the act intentionally being aware that it risks directly causing loss to the plaintiff or an identifiable class to which the plaintiff belongs and the official wilfully disregards that risk. What the official is here aware of is that there is a risk of loss involved in the intended act. His recklessness arises because he chooses wilfully to disregard that risk.

[246]The emphasis on subjective rather than objective recklessness was described by Zacaroli J (as he then was) in Brent LBC v Davies

[2018] EWHC 2214 (Ch)

as follows. "Recklessness is used, in this context, in a subjective sense. That is, it is essential to find that the defendant appreciated the possibility that the action was unlawful but acted anyway (and is to be contrasted with objective recklessness, where a person fails, recklessly, to appreciate the risk of unlawfulness at all)" (at [666(3)]).

[247]In a case of “untargeted malice”, the abuse of power consists not in the public officer’s intention to cause injury by (mis)using the power, but in the public officer’s lack of honest belief that they are lawfully exercising their power, combined with the knowledge that what they are doing will probably injure the claimant. Accordingly, where untargeted malice is alleged, it is a pre-condition of liability that the public officer acted unlawfully but such an act will only amount to misfeasance if it is accompanied by the requisite bad faith. In London Borough of Southwark v Dennett

[2007] EWCA Civ 1091

, May LJ held at [21]: “….misfeasance in public office the public officer must act dishonestly or in bad faith in relation to the legality of his actions. The whole thrust of the Three Rivers case was that knowledge of, or subjective recklessness as to, the lawfulness of the public officer's acts and the consequences of them is necessary to establish the tort. Mere reckless indifference without the addition of subjective recklessness will not do.” (f) An unlawful act is required for both limbs of the tort and acting for an improper motive can be an unlawful act

[248]The act has to be unlawful for both limbs of the tort. The way in which this exists can sometimes be subtle in that it does not have to be a breach of a statute or a tort separately justiciable. It suffices if there is a lawful act where the public official uses the power for his own private purposes outside the public purpose. Then that which would have been a lawful act becomes unlawful.

[249]Lord Hobhouse referred at [229H] to a requirement that "the official must have dishonestly exceeded his powers and he must thereby have caused loss to the plaintiff which has the requisite connection with his dishonest state of mind". Lord Hobhouse identified the ingredients of the tort of misfeasance as follows [230F]: "The relevant act (or omission, in the sense described) must be unlawful. This may arise from a straightforward breach of the relevant statutory provisions or from acting in excess of the powers granted or for an improper purpose. Here again the test is the same as or similar to that used in judicial review.” (emphasis added)

[250]Lord Steyn at p.190 said that the tort of misfeasance in public office is an exception to the general rule that, if conduct is lawful apart from motive, a bad motive will not make him liable. Lord Steyn said also at p.191E that this type of case involves bad faith in the sense of the exercise of public power for an improper or ulterior motive.

[251]Lord Millett expressed the matter as follows (p.235): "The rationale underlying the first limb is straightforward. Every power granted to a public official is granted for a public purpose. For him to exercise it for his own private purposes, whether out of spite, malice, revenge, or merely self-advancement, is an abuse of the power. It is immaterial in such a case whether the official exceeds his powers or acts according to the letter of the power: see Jones v Swansea City Council

[1990] 1 WLR 1453

(g) Element (5): causation (g) Element (5): causation

[252]Causation is an essential element of the tort (Three Rivers, p.194B). It is a question of fact whether, but for the misfeasant conduct, the damage allegedly suffered by the claimant would not have occurred.

(h) Element (6): actionable damage (that is not too remote)

[253]As stated above, in untargeted malice, it is the knowledge, or wilful disregard of the risk that, the claimant will probably suffer a particular harm (or type of harm) that, at least in part, constitutes the bad faith. It therefore follows that the public officer can only be liable for the harm that they actually foresaw to be a probable consequence of their act/omission and not for any (theoretically) foreseeable losses (see Three Rivers (No.3), p.195H-196C). This can be analysed either as a remoteness test or as part and parcel of the required state of mind for the tort (see Three Rivers, p.194D). Lord Steyn explained at p.196 that the less restrictive “recklessness” basis for finding liability was balanced by the requirement of “knowledge of probability” of injury, so that, in terms of remoteness of damage, there was “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 must always act for the public good, to be assailed by unmeritorious actions”.

[254]In Watkins v Secretary of State for the Home Department above,the House of Lords held that misfeasance is not actionable per se: it is necessary for a claimant to show “material loss”. Material loss was described as financial loss or physical or mental injury which included recognised psychiatric illness but not distress, injured feelings, indignation or annoyance (Lord Bingham at [7] and [27]). In Hussain v Chief Constable of West Mercia

[2008] EWCA Civ 1205

, the Court of Appeal applied Watkins in dismissing an argument that symptoms of stress and anxiety were material damage. There was obiter disagreement in the Court as to whether it was necessary for the symptoms alleged to meet the threshold of a recognised psychiatric illness or whether “a grievous non-physical reaction” would suffice (per Stanley Burton LJ at [14] to[16], Kay LJ at [19]-[20 and Sir Anthony Clarke MR at [21]).

[255]In Watkins Lord Bingham cited Kuddus v Chief Constable of Leicestershire

[2001] UKHL 29

;

[2002] 2 AC 122

. In Kuddus, Lord Slynn appears to have accepted (paragraph 50) that damages were recoverable for “mental distress arising from the circumstances in which the tort was committed, such as justified feelings of outrage at the defendant's conduct”, which “are sometimes called aggravated damages”. Reading the judgments together, any non-pecuniary loss relied upon as actionable damage must reach a severity at or comparable to personal injury (but not necessarily at the threshold of a recognised psychiatric illness), but provided the same is established, the claimant can claim for distress, upset, humiliation as a part of aggravated damages.

[256]In Karagozlu v Commissioner of Police of the Metropolis

[2007] 1 WLR 1881

, the Court of Appeal held (at [45]) that loss of liberty is (additionally) a form of material damage capable of supporting a claim for misfeasance in public office and that nothing that was said in Watkins (in which that particular question did not arise) led to a different conclusion. The discussion in Karagozlu – and in particular the consideration given to the question of actionable damage in the comparable tort of malicious prosecution – does not permit of a clear conclusion as to whether the mere prospect/risk of a loss of liberty (as opposed to an actual loss of liberty) is sufficient to establish actionable damage in misfeasance. However, in most cases arising from a prosecution (including this one), that distinction is likely to be somewhat academic given that, even if no remand in custody occurred, the requirement to surrender to the custody of the court for hearings would constitute a loss of liberty in any event.

[257]As observed above in the context of the analysis of the mental element required to establish the tort, the potentially wide-reaching effect of the tort of misfeasance in public office is kept “within reasonable bounds” by a “special rule of remoteness” (Three Rivers (No.3), p.193), namely that the defendant must have an intention or knowledge that a person or class of persons will, or will probably, suffer particular harm. The claimant is to be compensated for that harm, not for all harm which was reasonably foreseeable (Three Rivers, pp.194-196).

XVI The list of issues

[258]The parties have agreed a list of issues. It is necessary for the Court as far as reasonably possible to decide these issues in the case. The parties have understandably focused on the pleadings and highlighted the areas of disagreement with extensive cross-referencing. Without incorporating the cross-referencing and with some simplification, the issues as to liability for malicious prosecution can be recited as follows. The first set of issues are in respect of the claim for malicious prosecution. They contain 9 sub-issues in para. 1 of the agreed list of issues, which will be referred to herein for ease of reference not as issues 1(a)-(i), but as issues 1-9.

[259]The agreed list of issues also refers to further issues in respect of malice as follows:(i) List of issues para. 2 for the tort of malicious prosecution only. (This will now be referred to as issue 10), and

(ii) List of issues 3 and 4 for the tort of misfeasance in public office only. (These will now be referred to as issues 11 and 12).

[260]There will remain for consideration the issues of quantum which will be considered after the issues of liability.

[261]It is agreed between the parties that the Claimants were prosecuted by DfT for fraudulent trading and that the proceedings were resolved in the claimant's favour. The following matters arise for determination:(i) The VCA investigation issues Issue 1: The Claimants responded to the allegations of non-compliance with the regulations to the VCA on 19 December 2014, having become aware of non-compliance on or around 15 December 2014. Issue 2: Whether the VCA investigation was rigorous as alleged by the Claimants or whether there was a proper basis for considering it was seriously deficient as the DfT alleges. Issue 3: Whether the conclusions of the VCA investigation in respect of the activities of the DfT were such that the DfT should not have in effect reversed them by having a new investigation.

(ii) The judicial review proceedings issue Issue 4: Whether the circumstances leading to the reversal of the decision to take no action were the judicial review proceedings, the advice given on those proceedings and the resolution of the judicial review proceedings.

(iii) The DVSA investigation issues Issue 5: Whether the DVSA investigation took the representations made by the judicial review claimants as its starting point. Issue 6: What deficiencies, if any, there were in the conduct of the DVSA investigation.

(iv) The decision to charge issue Issue 7: What was the relevance of the fact that the decision to prosecute was taken on the advice of Counsel, and did it invalidate or lessen the quality of the advice that at least one Counsel had been involved in the investigation for almost two years prior to the charging advice?

(v) Manipulation/suppression of evidence issue Issue 8: Did the DfT seek to manipulate the evidence against the Claimants? Issue 9: Did any of the admitted or proven disclosure failures help to establish an absence of reasonable and probable cause.

(vi) Improper purpose and bad faith issues Issue 10: Have the Claimants established that the prosecution was brought for an improper purpose such as the appeasement of the judicial review claimants and/or can inferences be drawn from an absence of reasonable and probable cause?

[262]There now follow issues 2-3 in the list of issues which will be referred to here as issues 11-12. They are in respect of misfeasance in public office. They are as follows: Issue 11: Have the Claimants established that the Defendant’s decision to lay charges against the first five claimants was in bad faith either because it was for an improper purpose or it was unlawful and the DfT did not have an honest belief in the lawfulness of the decision? Issue 12: Having regard to the admitted and/or proven failings in disclosure, have the Claimants established that the DfT’s conduct of the prosecution was in bad faith either because it was for an improper purpose or it was unlawful and the DfT did not have an honest belief in the lawfulness of the conduct of the prosecution?

[263]There is also in respect of misfeasance in public office an issue 4 which is now to be issue 13, namely to the extent that any bad faith on the part of DfT is proven, what, if any, actionable damage was caused to each of the Claimants by the proven acts of bad faith?

[264]The remaining issues in respect of malicious prosecution are about causation of loss and quantum to which the judgment will turn in due course.

[265]It is recognised at the outset that this case is very different from the case where a police officer without the involvement of lawyers decides to prefer a charge. The relative complexity of this case is because of the very lengthy process which had preceded the decision to charge. This involves consideration of two investigations by different government agencies within the DfT leading to different decisions, the first not to charge and the second to charge. It involves considering what led to the change of decision and especially the impact on the question of reasonable and probable cause at various aspects and stages of the case, namely:(i) the VCA investigation (agreed issues 1-3);

(ii) the judicial review (agreed issue 4);

(iii) the DVSA investigation (agreed issues 5-6);

(iv) the decision to prosecute (agreed issue 7);

(v) the disclosure and preparation for trial (agreed issues 8-9).

[266]These are not necessarily separate stages. By way of examples only, the VCA investigation arises for consideration not only when it took place, but also in relation to the impact it ought to have had thereafter and the extent to which it was or was not considered thereafter. The judicial review arises not only in respect of the stages when it was before the Court but also about its impact on the decision making processes thereafter.

[267]There are also difficulties in presenting the application of the law to the facts in part because of having to consider the subjective and the objective. This judgment has referred to the relevant law of malicious prosecution and the proof of no reasonable and probable cause. The question is a double one, at the time of charge:(a) did the prosecutor have an honest belief in the charge (the subjective element), and

(b) was there a reasonable basis for that belief? (the objective element).

[268]There is a concern that the list of issues by themselves do not directly invite the Court to decide the issue as regards whether(a) at the time of the decision to prosecute, and

(b) in the course of the conduct of the prosecution, there was a reasonable and probable cause against the first five named Claimants or each of them. Further, they do not separate the objective and the subjective elements of the reasonable and probable cause. By contrast, as regards whether malice is established, that has been summarised in issues 10-12, but not by reference to each of the aspects and stages referred to in issues 1-9.

[269]The practical solution to these difficulties will be as follows. The Court will endeavour to consider whether the Claimants have proven an absence of reasonable and probable cause at the time of the decision to prosecute and in the course of the prosecution. It will also consider whether improper purpose or bad faith has been proven at the time of the decision to prosecute and/or in the conduct of the prosecution. The Court will as part of that consider issues 10-12 (formerly list of issues 2-4).

[270]The Court will also consider issues 1-9 (formerly issues 1(a)-(i)). In order to facilitate that, the Court will consider the following:(1) What was the impact of the VCA inquiry/investigation on whether there was ever a reasonable and probable basis for a prosecution including whether the results of the VCA inquiry/investigation was suppressed and/or not adequately considered? (“the impact of the VCA inquiry/investigation”). This will involve considering as part of it issues 1-3.

(2) What was the impact of the judicial review proceedings, and was the decision to prosecute in whole or in part in order to bring to an end the reputational concerns for the DfT of the judicial review claims? (“the impact of the judicial review claims”). This will involve considering as part of it issue 4.

(3) What was it about the investigation of the DVSA that was different from the investigation of the VCA, and what was new about the findings following the DVSA investigation which prompted the 180 degree change in the decisions? (“the impact of the DVSA investigation”). This will involve considering as part of it issues 5-6.

(4) Is it an answer that the DfT relied upon the advice of prosecution counsel? Did Counsel have all the relevant facts on which to make the decision to prosecute? (“the impact of advice of prosecution counsel”). This will involve considering as part of it issue 7.

(5) Does the collapse of the case following failures in disclosure and/or against the backdrop of abuse of process applications (made but not adjudicated upon) cast a different light on the issue of whether there was ever a reasonable and probable cause to prosecute? (“the impact of the collapse of the case”). This will involve considering as part of it issues 8-9.

[271]It is important as far as possible consistent with intelligibility of the judgment not to repeat the detailed analysis of the facts and the background set out above. There has already been undertaken some amount of highlighting respective arguments and emphases of the parties.

[272]A matter which has been explored is whether on the evidence there was material to be placed before a court to the effect that the regulatory breaches gave rise to a case of fraudulent trading by the time of the decision to charge. This will be considered before examining the impact of the VCA report, the judicial review, the DVSA investigation, the charging advice, the failures of disclosure and the collapse of the prosecution. This is relevant because it goes to whether there was an objective basis for the existence of a reasonable and probable case for the prosecution. In some of the submissions, there have been sections about whether the breaches were innocent mistakes on the one hand or deliberate and evidence of fraudulent trading on the other hand. It is to this that the judgment now turns.

(a) The Claimant’s case on fraud

[273]The claim has been on the footing that the departures from regulations were innocent or negligent, but not deliberate or fraudulent. It was the finding of the VCA that there was no or no significant evidence of dishonesty or fraud. There was substantial cross-examination, particularly of the DVSA witnesses to the effect that that remained the case. Some of the witnesses who gave evidence found themselves believing that the Claimants were guilty of fraud but were unable to match that in evidence when matters were put to them.

[274]The Claimants submit that they cooperated fully with the VCA investigation. They were not prosecuted for regulatory offences. The VCA had adopted a fully considered and carefully evaluated decision with the formal and significant step of ministerial approval. The process of the VCA was to prepare a report with numerous documents attached to it. It was decided in a principled informed and proportionate way the prosecution was not appropriate and the evidence obtained supported KPL’s contentions that there had been no deliberate wrongdoing or fraud. On the contrary, there was evidence to show that the Claimants had been open and transparent. This culminated in a detailed VCA report in the autumn of 2016.

[275]This obviously was not to the liking of trade rivals who were determined to bring about the prosecution of KPL and its officers so as in effect to destroy its business in catalytic converters and pick up the pieces for themselves. That is behind the judicial review application analysed in detail above. The only explanation for the volte face of moving from the decision not to prosecute for regulatory offences to the decision to prosecute for fraud, that is to say fraudulent trading, was to deflect attention from the criticism, legal liabilities and apprehended cost liabilities of the judicial review.

[276]It would be expected of a government department that faced with the judicial review, the department would concede the claim or accept that something had been done that was wrong. The expectation would be that this would be in an acknowledgment of service containing summary grounds supported by a statement of truth. This was all part and parcel of the duty of candour and cooperation which falls on public authorities.

[277]The Claimants’ case is that this did not occur in the instant case in that the DfT managed over years to obtain postponements of the judicial review without ever filing an acknowledgment of service. To this end, they sidelined the VCA without admitting the claim. The reason why they did this was because they hoped that the judicial reviews might be resolved without embarrassing revelations that the DfT investigation was flawed and should be done again. In particular they did not want the revelation that no one had ever enforced the 2009 Regulations by prosecution.

[278]The Claimants say that a prosecution was pre-judged and inevitable from almost the start. Accordingly, instructions went to the DVSA to lead a new investigation that would start the investigation again without using the VCA investigation as a starting point. The case of the Claimants is that Mr Hurrell in particular began the DVSA investigation without any regard to the VCA findings and took as the starting point and the finishing point that which was being asserted by the judicial review claimants. Insofar as they made inquiries and obtained evidence from suppliers in California and Spain, its purpose was not to test whether the judicial review claimants were right, but simply to obtain corroborative evidence to support them. It was also the first step of many in order to avoid or mitigate the reputational and financial consequences of the judicial review.

[279]This set the DfT on a path of no return where everything that followed was motivated by the judicial review. Not only did it yield to the judicial review by starting a new investigation and jettisoning the VCA investigation, it then used the time being spent by the DVSA investigators in order to obtain numerous stays of the judicial review. By 2018, as appears from the summary of the judicial review, the DfT was being pushed into a corner in the judicial review where it felt constrained to agree that it would by a deadline either decide to prosecute or to explain why it was not going to prosecute. That agreement came in the context of a second judicial review, where an oral renewal of the permission application led to an agreement of that nature. The problem about the latter eventuality was that anything other than a prosecution carried with it the threat of another judicial review about an inadequate investigation. Faced with vigorous opposition in the judicial review, and in particular from Gateley on behalf of BMC, the problem could not be resolved without a prosecution.

[280]It followed on this analysis that the prosecution occurred on a path set by the judicial review, the supplanting of the role of the DVSA for the VCA determined from the start or without any adequate investigation to launch a prosecution and bringing to an end the judicial review claims by a pre-judged, ill-prepared and ill-conceived prosecution. Hence it is said that there was no reasonable and probable cause for the prosecution. Further, the Claimants say that the DfT embarked on the same for the improper purpose of bringing to an end the judicial review and/or with knowledge or subjective recklessness about the merit or absence of merit of the prosecution.

(b) The DfT’s case

[281]The DfT has included a whole section of the argument to the effect that there was a proper case to be tried even if the Claimants had potential defences available to them. The DfT does not have to prove that the Claimants were guilty and they have not sought in this case to do so. That was referred to above in the section considering the evidence of the Claimants in this action and how they were not on trial in this action. That explained the relatively short ambit of that section of the case. The essence of the case is to examine the evidence to go to a jury about dishonesty and rebutting the arguments to the effect that there was no evidence of dishonesty.

[282]The Claimants responded by saying that it is no answer to a claim in malicious prosecution to rely upon matters which the prosecutor did not have in mind at the decision to prosecute. They said that much of the arguments presented were based on arguments, whether well-conceived or not, which were as the skeleton closing says “foreshadowed in the prosecution Opening Note” which was prepared by Counsel prior to trial on 11 November 2019 many months after the decision to prosecute and went beyond the Charging Advice. The Claimants say that the Court should not take into account the arguments constructed after the decision to charge. Further, to the extent that the DfT has created arguments at para. 44 of its opening note (pages 16-21) going beyond the case at the time of the Charging Advice, this too should not be taken into account. The same applies to the closing skeleton argument of the DfT in which it has set out five “key issues” in the section headed “evidence as to mistake vs. deliberate error” at paras. 19-27 of the Charging Advice.

[283]In answer to this, as has been stated above, the Charging Advice on its face was merely a concise overview and not a more extensive case summary. The more extensive case summary in the Opening Note was not a document which introduced for the first time large amounts of new evidence obtained for the first time since the Charging Advice. It was expanding on themes which were in the Charging Advice and it was bringing together evidence which, to a large extent, had been prepared at the time of the Charging Advice.

[284]By the time of the Opening Note, there had been prepared many documents of the prosecution defendants (the first five Claimants in this action) setting out their defences. There were applications to dismiss the case the substance of which has been set out above. Likewise, there were position statements and/or defence case statements in the period between 18 October 2019 and 19 November 2019. To the extent that the Case Summary was a response to this, it was based in large part on the case thesis which had been created by the time of the decision to prosecute. It was not based on a new case which had been created subsequently.

[285]The closing skeleton argument brought together five “key issues” designed to show that there was a case to present before the Crown Court which points to dishonesty rather than mistaken belief. The first of five “key issues” was said to be the transfer of ECT type approvals from KUK to KPL. The case of the Claimants was that these had been overlooked on the change from KUK to KPL. In fact, the investigation obtained evidence about KUK owing ECT hundreds of thousands of dollars before KUK went into administration. Further, when Mr Bentley approached ECT about KPL doing business with ECT, he was told that this “was just not going to happen again” and it was rejected out of hand: see witness statement of Peter Nitoglia of ECT of 14 October 2017. This was not surprising because of the overlap in personnel between the failed KUK and the new KPL. Whilst it is right that DfT heavily rely on the Opening Note to make this point, the evidence of Mr Nitoglia was known about long before the decision to prosecute and this provided evidence for a jury to consider to the effect that there was no error in using ECT approvals, but knowledge that the type approvals of ECT were not available to KPL.

[286]The second of five “key issues” was said to be the ECT counterfeit issue. There was said to be chaos as to the ECT and MES parts had become mixed up on the production line. The investigation revealed evidence to the effect that the difference between an ECT part and a non-ECT part would or should have been apparent to persons working in the industry: see the witness statement of Mr Lawlor of 31 August 2016. When asked about the issue of mixed MES and ECT monoliths in the interview of 31 August 2016, Mr Lawlor said he had never encountered this sort of mistake. He said: “when I worked in industry you would never give a different supplier the same part number…” and “I think it's naive to think that they did not know what they were doing.

[287]The ECT counterfeit issue was set out in more detail in the opening note of 19 November 2019. It was pointed out that Mr Massey and the brothers Stock had acquired CATs in an effort to demonstrate both in respect of ECT and AS that KPL were supplying CATs claiming that they had been made by AS and ECT when they had not. Statements were taken from ECT that parts which KPL claimed had come from ECT had not in fact come from ECT.

[288]Mr Nitoglia, the president of engineering of ECT, identified to the DVSA 335 parts that were manufactured and covered by ECT type approvals which were counterfeits. They were not manufactured by ECT in California. Mr Nitoglia said that “under no circumstances [can] the manufacturing process be undertaken at any other place.” The parts were not covered by the supposed type approval: see para. 74 of the opening note. Both Mr Nitoglia and also Mr Payne, the international sales director of ECT, provided statements setting out the business model of ECT, the results of the examinations in 2017 and the course of ECT dealings with Klarius (referring to KUK, because it had no dealings with KPL).

[289]The position has been explained in more detail in the opening speaking note for the instant civil trial at para. 44a-i. It is unnecessary to set this out in this judgment comprising about four dense pages of detail. It suffices to say that if the trial had taken place, the details of the chaos theory of the first five claimants would have been challenged on the basis that there were specific systems which were adhered to. The manufacture was undertaken by ECT in accordance with a type approval certificate which permitted only manufacture of that canned cat by ECT at their factory in California only if it met the technical requirements of the approval certificate. The agreement for supply was with KUK only and there were approval extensions one for each part number which KUK wanted to supply to its customers.

[290]As Mr Nitoglia explained in his statement, each canned cat or bullet would have etched into its casing the ECT series number and the date of manufacture. When it arrived in KUK’s plant, the KUK markings would appear so that there would be the ECT markings and the KUK markings. The jury would have been informed that this system was the opposite of the chaos described by the Claimants in their case so that the process could not have had bullets for use in a non-type approved parts mixed with bullets for type approved parts. Indeed, in Mr Nitoglia’s evidence, there were 12 of the 335 parts which he examined which were not ECT parts despite bearing ECT approval numbers which had date stamps preceding KUK entering into administration. This does not accord with a chaos theory caused by the administration of KUK because it preceded the administration.

[291]The third of the “key issues” was said to be the AS counterfeit issue. This overlaps with the reasons that applied to the ECT counterfeit issue. In addition to this, the evidence was that in respect of the AS parts “there would be no manufacturing process for Klarius to get involved in…it was not necessary for Klarius to manufacture anything that had…an AS approval on it”: see the evidence of Mr Montgomery at trial at T11/88/1-19. It was said in the Opening Note for trial (at para. 142) that “the arrangement with AS was that they would supply vehicle ready parts... fully marked with the Klarius symbol…Klarius was not authorised to undertake any manufacturing under those approval extensions”. This was apparent from the investigation and long before the decision to prosecute. It indicated a case to answer that the work done to the AS parts in KPL was not caused by confusion or accident but was deliberate.

[292]The analysis of parts purportedly manufactured by AS took place in Spain, pursuant to a letter of request issued in the name of the Secretary of State and facilitated in Spain by cooperation with the Guardia Civilia. DVSA investigators took out to Spain a number of CATs that they had been given by Mr Massey from his attempts to obtain stock of KPL which purported to be from AS. Examination of products was undertaken by Julio Mendoza Garcia, the industrial manager of AS. The 14 parts which he examined all contained an AS E9 number. They were all assessed by him not to have been manufactured by AS and were therefore counterfeits. A general overview of the business of AS and their dealings with KUK was provided by Miguel Paloma Mora, the managing director of AS. AS made catalytic converters pursuant to Spanish type approvals. The approvals required the manufacture of the converters to take place at the premises of AS in Pamplona, Spain. As in the case of KUK's relationship with ECT, KUK became indebted in a six-figure sum to AS. On 22 February 2013, AS requested the cancellation of the type approvals extensions allowing the manufacture and sale of their products under the Klarius brand. The extensions were cancelled on 12 March 2013: see the Opening Note at paras. 65-70.

[293]The fourth of the “key issues” was the E11 ceramic v metallic brick issue. The use of ceramic monoliths instead of metallic monoliths does not appear to have been a matter considered by the VCA, or if it was, the DVSA does not appear to have understood that the VCA had authorised this practice. The prosecution case was that even at a time when the Claimants were supposed to be cooperating by ceasing to produce ECT E9 parts, KPL started to do something else by producing ceramic instead of metallic brick monoliths. As it was subsequently put in the response of the prosecution to the dismissal application at [67] by reference to Mr Massey's second statement “KPL were producing catalytic converters in late 2014 and early 2015, which contained the incorrect (ceramic) mesh when metal measures were required…after assurances were being given to the market that everything supplied conformed.” Mr Nitoglia understood that the type approvals held by KUK were for metallic catalysts only. As was apparent from cross-examination at trial in the instant civil case, there was a question as to the relative merits and cost of ceramic and metallic brick monoliths, but the case of DfT is that the use of ceramic monoliths was deliberate and it was known that it was not permitted.

[294]The fifth of the “key issues” was whether those who were involved on behalf of KPL in providing information to the VCA in late 2014 and early 2015 had greater knowledge than that to which they admitted. There were so many instances of non-conformity that the prosecution theory was of deliberate breaches and there was what would be described in the Opening Note as a strategy of “confess and avoid” to the VCA. The instances of misleading statements contained in the Charging Advice are relied upon by the DfT to show that there was a false picture for the consumption of the public and the VCA at the time despite the appearances. Further, if the above key issues are correctly set out, then this would suggest that not only was there a case to present to the Court about fraudulent trading, but that the Claimants may have had some difficulties in their respective explanations.

[295]None of the above is to show that the fraud was proven. None of the above affects the acquittals of the first five Claimants. It is rather that the DfT is able to rely on this material as evidence of a proper case to go to a court. It is able to deploy it to meet the case that the prosecution was so fundamentally flawed evidentially as to give rise to an inference of bad faith on the part of the prosecution.

[296]There are various issues relating to whether fraud could be proven which shall be discussed in this section about whether there was a case of fraud to place before a court.

(c) Evidence of financial gain and/or harm to competitors

[297]A central feature of the Claimants’ case is that the investigators failed to grapple with the value of the fraud. This was a challenge raised by the defence in the criminal proceedings and in particular in Mr Wilson's position statement and in the defence case statements of Mr. Wilson and Mr Cheetham. The points made include the following. In order to prove a fraudulent intent in a commercial matter, it is almost invariably necessary to prove either a financial gain or an intent to cause a financial loss. The cross-examination has been on the basis that the failure properly to address so fundamental a point undermines the case that there was a reasonable and probable cause for the prosecution either at the charging stage or in the conduct of the prosecution once the matter had been raised in the defence statements.

[298]In the instant case, the following points were raised in connection with this point. First, the percentage of the business of KPL comprising catalytic converters was well less than 10%, and the large majority comprised exhausts. Second, even in respect of the relatively small part of KPL’s business comprising catalytic converters, there is no evidence that there was a great saving to the business by using unauthorised cats relative to acquiring the same legitimately in the market. Third, given the ability to have acquired the same legitimately, there is no evidence that they were causing harm to their competitors, given that they could have secured this business legitimately.

[299]It is said that these issues were not properly considered in the investigation or in the decision to prosecute. If they had been considered, the decision to prosecute would or might not have been taken. So basic was this omission that it must been the case that it was deliberately ‘overlooked’ or subjectively recklessly ignored so that the prosecution would ensue. This is relied upon as evidence that the motive of avoiding the judicial review was not simply to have a further investigation, but also to have a prosecution irrespective of weaknesses in the prosecution case which, in normal circumstances, would have weighed against a prosecution.

[300]The DfT case is that the issue of financial gain or harm to competitors was considered in advance of the decision to prosecute. Reliance is placed on very limited references to this in notes of conferences with counsel, particularly a note of 30 January 2017 and a note of 28 January 2018. There are also some references to conferences immediately after the decision to prosecute on 8 February 2019 and 15 February 2019. The essence of the prosecution case was set out in the Opening Note. This was either known about at the time of the decision to prosecute or would have been capable of being worked out at that time on the information then available. The fraud enabled KPL to compete unfairly. If they could not supply, consumers would have gone elsewhere. In evidence, the investigators gave evidence when challenged about value that the issue was market share: see the evidence of Mr Rowlands T8/14/1-T8/16/6, T8/19/6-10 and T8/61/23-25 and Mr Hurrell at T9/20/20 – T9/21/7.

[301]The witness statements of the investigators did not include evidence of the value of the alleged fraud. When asked about this in cross-examination and in re-examination, the witnesses used the expression that it was to preserve or acquire a ‘market share’. The suggestion of the Claimants was that this must have been something which the witnesses heard from others or amongst themselves and chose opportunistically. This does not seem to be an unreasonable criticism.

[302]Nevertheless, there is something objective that the reference to market share raises. This is for the following reasons, namely:(i) When KPL started trading, it was running down the stock which it had purchased from the administrators. The issue was not the differential between the cost of this stock and the cost of acquiring stock in the market, but the ability to use this stock at all. There was no realistic prospect of ECT being prepared to permit KPL to use the stock.

(ii) If KPL were to launch a type-approval-compliant manufactured cats business, the immediate expense would have been the cost of obtaining approvals and the associated costs of delay in production. By using the ECT E9s, and using whatever stock they had, KPL was able to manufacture catalytic converters without delay, and without the expense of obtaining new type approvals.

(iii) Whilst the part of the business of catalytic converters was small relative to the exhaust part of KPL’s business, the business was perilous at the outset in that it was succeeding to a business of KUK which had gone into insolvency. If the previous business had been unable to survive the pressures of the market, then it was not unreasonable to fear that the new company would face existential challenges.

(iv) An unlawful head start over competitors was of value at this vulnerable time of the inception of trading. There was a motive to cut corners in order to obtain or maintain a market share, which might otherwise not have been available to them. Trading lawfully in this market may have taken much longer to organise, given how heavily regulated it was and the rigorous nature of the type approvals.

[303]Seen in this context, the invocation of the expression ‘market share’ did have some meaning. It meant that KPL was able to compete with competitors unfairly and to obtain business which otherwise would have been likely to have gone to them. It may have been a short term advantage, but without the short term advantage, it might have been difficult or impossible to obtain and/or retain this part of the market.

[304]There is a further point. The Claimants start by saying that the unlawful acts cannot have been dishonest because they posit that there was no motive of financial gain. The DfT is able to answer that by the argument which it was said was fit for a court to consider, namely that the conduct and the nature of the acts were so protracted and numerous that they cannot have been done innocently. That in turn feeds the argument that there must have been some financial incentive, and the motivation about market share is a possible explanation. It therefore depends whether one starts by identifying the financial motive or with the unlawful acts and work back to the financial motive. Whichever way it is done, whilst the Claimants can suggest that there was no financial motive, the DfT is credibly able to say the reverse. It follows that whilst the point about financial benefit is one which would arise before a jury, it is not a knock out point. It does not by itself or in league with other points demonstrate that there was no reasonable and probable cause for the prosecution. (d) Failure toobtain evidence about the manufacturing process of KPL

[305]The Claimants point to the case plan which referred to obtaining a search warrant. The Claimants submit that the available evidence would not justify the issue of such a warrant. This must have been recognised in the decision not to apply for a warrant. It is therefore submitted that this is a recognition of the weakness of the prosecution generally and that the improper purpose of continuing with it was in order to remove the judicial review.

[306]The DfT says that the case plan was an initial case plan in the absence of Mr Hurrell who was on holiday and was not some agreed plan of action. A search warrant was not actioned because it was never considered to be a runner. It was recalled that this was on the advice of Counsel who were involved closely at all stages. In the circumstances, an application for a search warrant would have been problematic after the VCA investigation had passed without any search warrant and the apparent cooperation which had taken place.

[307]The DfT explanation makes sense and is a tenable answer to this point. In any event, there is nothing to indicate that this was a recognition of the weakness of the case. If the case had been regarded as so weak, it seems unlikely that the exhaustive steps including visiting Spain and obtaining statements from representatives of AS and ECT over a period of many months would have been undertaken. (e) Failure to investigate the nature and quality of the exhaust system

[308]The Claimants say that the failure of the investigators to make any significant effort to investigate the nature and quality of the Mark Exhausts system was a significant and deliberate failure. It was in connection with Mark Exhausts Systems products that Mr Hurrell used highly inappropriate language (for which he subsequently apologised), and which will not be dignified by quoting it in this judgment. Inappropriate though the language was, and it is a factor in the assessment of his evidence, it is not ultimately probative as to the ingredients of the alleged torts.

[309]It is said by the DfT in the re-amended defence that it did not consider issues of nature and quality to be a reasonable line of inquiry having regard to the focus of the investigation. The Claimants say that this ignores the fact that KPL was building its own systems integrating catalytic converters sourced from others. This was not a counterfeit part but a new piece of manufacturing. Further and in any event, a part of the case of DfT became using ceramic not metallic bricks/monoliths. This is said to be inconsistent with an inquiry not being about the nature and quality of the system. Whilst this was a possible line of inquiry, the decision of the DfT not to pursue it does not indicate that there was no reasonable and probable cause in the prosecution. The prosecution believed that they had enough evidence to prove their case without this further line of investigation. (f) Decision to prosecute the Fourth and Fifth Claimants who were not directors/shareholders

[310]The evidence of Mr Hurrell was that each of the Claimants were suspected of fraudulent trading either because they were directors/shareholders or senior employees: see Hurrell witness statement para. 170 and T10/60/1 – T10/62/6. The Claimants submit in particular that the decision to charge the Fourth and Fifth Claimants (Mr Bentley and Mr Greaves) who were not directors/shareholders is an indicator that there was no proper consideration of the case and that the case at least as against them was without reasonable and probable cause and that the whole prosecution was in bad faith. The Claimants say that they were not carrying out the trading of the company but acting under the direction of the directors. The Charging Advice of Counsel advised (paras. 2 and 141) that whilst the case in respect of these claimants was not as strong as in respect of the first three claimants, there was sufficient evidence to provide a realistic prospect of conviction against them. The DfT’s case is that trading can be carried out through senior management employees. Further, senior employees, with or without bonus arrangements, can be expected to be invested in the future of the company. The DFT’s case was that Mr Bentley and Mr Greaves were not mere employees but senior management employees both knowingly a party to KPL carrying on business by taking part and participating and taking positive steps in the business for a fraudulent purpose contrary to section 993 of the Companies Act 2006. Their involvement in management was profound, particularly bearing in mind that they had been involved in KUK and were involved in the inception of the trading of KPL challenged with retaining as many customers as possible to exploit the benefit of the previous business through, what the DfT says, was fraudulent means. Mr Bentley was head of product development (R & D) at KUK and KPL. It is said in respect of Mr Greaves that his application to Autoneum for a job in December 2018 referred to his involvement as Operations Director of KPL in seeking to revive the business of KUK. He had been operations director at KUK and described himself as operations director of KPL. They demonstrated a detailed knowledge of and involvement in the production and manufacture of the catalytic converters having no satisfactory explanation how monoliths were ceramic instead of metallic.

[311]There was discussion with and consideration by Counsel about the identity of the persons to be interviewed over the course of two conferences before invitations to interview were sent to the suspects on 5 April 2018. The responses were considered by Counsel. Counsel considered the roles of each of the Claimants and in each case assessed that there was a realistic prospect of conviction: see the Charging Advice at paras 91 - 129 and 137 - 141. This point like the other points in this section does not in my judgment assist to prove the ingredients of malicious prosecution. On the contrary, there are answers to each of the points of the Claimants, and overall, they do not prove or assist in proving a case of absence of reasonable and probable cause to prosecute or to prove malice or bad faith of the prosecution.

XVIII The various stages from the VCA inquiry to the withdrawal of the prosecution

[312]There will now be considered the impact of the five various aspects and stages identified above in the section about the list of issues.

(a) The impact of the VCA inquiry/investigation (issues 1-3)

[313]The Claimants submit that:(i) theVCA inquiry/investigation should have been the end of the matter, that there was no reasonable basis in the light of it for any further investigation, let alone prosecution.

(ii) the Claimants cooperated fully with the concerns of the DfT, gave a coherent explanation of what had led to breaches of the regulations, such that there was no reasonable basis to raise a case of fraud against them or any of them.

(iii) the DfT thereafter suppressed or failed adequately or at all to consider the VCA inquiry/investigation and in particular the technical engineering aspects which were not considered or understood in the subsequent inquiry/investigation and as a corollary by Counsel in the decision to prosecute.

[314]The DfT submits that:(i) the VCA inquiry was inadequate: it did not amount to an investigation of wrongdoing but accepted at face value the information provided on behalf of KPL which was later found to be misleading or sufficiently so to merit a criminal prosecution.

(ii) the VCA was an agency which promoted observance of regulations, but had no relevant experience of prosecution and did not consider prosecution of regulations let alone fraudulent conduct.

(iii) there was no suppression of the VCA report but a conscientious basis for an investigation by a different agency which led to a reasonable and probable basis for a prosecution.

(b) Discussion

[315]Reference is made to the section above headed “Investigation by the VCA” at paras.38 – 55 above. It is not necessary to repeat the above which summarises the findings of the VCA particularly:(i) in an interim report in May 2015 that evidence of deliberate deception was largely circumstantial and at odds with the openness of KPL with the VCA and recalling potentially faulty products; and

(ii) in a final report in July 2015 that the Claimants had been cooperative and open with the DfT's investigation and investigators. It stated that KPL had spent money remedying the defaults and was now in compliance with the regulations.

[316]The Claimants rely upon the immediate reaction of cooperation of KPL immediately after communications with Mr Massey in mid-December 2014 and being told about alleged non-compliance with regulations. They rely upon reporting themselves to the VCA, attending on the VCA and responding to requests including the preparation of an action plan and calling in potentially non-compliant parts at very great expense. They refer to admitting senior personnel from the VCA to the Cheadle, Staffordshire premises of KPL and acceding to requests to have a full stock take and a full recall of unsold stock.

[317]The VCA report had various drafts which commented on the extent of openness and cooperation of KPL and formed the view that KPL was not hiding anything. This in turn led to a decision that there was no reason to take any further action against KPL, being satisfied that it had learned appropriate lessons and that the problems had been adequately addressed. There was then prepared a report which subsequently obtained ministerial approval. The Claimants point to the technical level of expertise of the VCA in considering detailed engineering evidence such as to dispense with the need for further investigation.

[318]The Claimants say that there was no reason to re-open the matter, and this would not have happened but for the applications for judicial review brought by competitors of KPL with collateral purposes to cause damage to KPL and concomitant commercial advantage for themselves. Since the VCA inquiry had been the subject of a report taken up to and approved at government level, there is reason to subject to intense scrutiny the change in position to initiating a criminal prosecution, and not just for regulatory matters which were the subject of the VCA inquiry, but for fraudulent trading.

[319]The starting point must be the VCA report and the decision not to take any further action against KPL and the individual claimants. The volte face from that to a criminal prosecution is stark. So is the contrast between the technical and engineering backgrounds of the key VCA employees and the relative technical ignorance of Mr Hurrell and Mr Montgomery who were the key employees having day to day charge of the DVSA investigation.

[320]The suggestion of the Claimants is that there was no reason to move from the VCA report. On the basis of the VCA report, there was no reasonable and probable cause for the criminal prosecution. The defensive reaction to the judicial review of rejecting the VCA report was not justified. The essential points of the VCA were ignored at that stage and thereafter. The Claimants say that the DfT has failed to take on board the key findings of the VCA report about the nature and extent of the cooperation of the Claimants with the VCA, about the expense undertaken by KPL in calling back parts, the explanations which they provided about the circumstances in which they came to acquire non-conforming parts and the satisfaction of the VCA with their cooperation. The Claimants say that the DVSA and their investigators subsequently ignored the VCA report: had they taken it into account, they would have recognised that there was no reasonable and probable cause for the criminal prosecution.

[321]The claim that the prosecution was without reasonable or probable cause rests in part on the contention that it was unreasonable to depart from the position of the VCA and/or to give in to the judicial review requiring a further investigation.

[322]I am satisfied from the evidence as a whole that there was a reasonable justification on the part of the DfT for forming the view that a further investigation was required, and that the decision taken thus far was not based on a sufficiently robust investigation for the following reasons, namely:(i) the judicial review raised serious concerns or shortcomings about the VCA inquiry. It does not follow from the fact that the claims were from competitors that the desire to re-investigate was not based on proper grounds, namely those identified in the judicial review claims and in the advice of Mr Kinnier.

(ii) the DfT acted on Mr Kinnier’s independent specialist legal advice who was properly instructed and expressed firm views about the perceived shortcomings of the VCA inquiry.

(iii) the VCA had no track record in investigation of such offences, let alone prosecuting the same. Their primary role was to work with non-conforming manufacturers to bring them back to conformity and not to prosecute. The advice of Mr Kinnier, on which the DfT reasonably relied, is that this fell short of what would be expected of a government agency in such an important area of public safety as vehicle emissions.

(iv) the advice of prosecution Counsel revealed respects in which the Claimants and KPL may not have been as open as had been assumed by VCA in its inquiry. These respects were identified in the DVSA investigation which did not take at face value the matters of explanation of the Claimants to the DVSA. This was reflected in the charging advice, and there was more of the same in the subsequent opening note and in the note in response to the application to dismiss the case for abuse of process.

(v) the VCA took at face value the explanations which they received from KPL without testing them. The VCA was not equipped to test whether conduct had been fraudulent and had no experience of consideration of a prosecution for fraud.

[323]These matters were then enhanced after the event by the matters revealed in the DVSA investigation including especially the statements obtained from representatives of ECT and AS respectively. It was these statements which revealed not simply that there were breaches of regulatory matters, but that there was a case to be put before a court about such trading being with a fraudulent intent.

[324]If and to the extent that despite the apparent cooperation, the Claimants misrepresented actively or by omission the nature and extent of the breaches and their involvement in the same, then this was a further reason for pursuing further investigation and for departing from the decision of the VCA to take no further action. Likewise, if in fact there were continuing active steps being taken in continuing breach of the regulations at the same time as professed cooperation, then this was a further reason for further investigation.

[325]After the event, the statements obtained in the DVSA investigation reveal a cumulative nature and scale of breaches of regulations which provided a substantial argument capable of being put before a court to the effect that the breaches were deliberate and dishonest. Further, they provided the material then which enabled Counsel to present a case about the explanations provided by the individual Claimants being deliberately false.

[326]It therefore follows from the above that as regards the first two matters submitted by the parties in the three point summary under the heading “the impact of the VCA inquiry/investigation”, the Court is not revisiting the question of whether or not the Claimants were guilty. It is simply considering whether the Claimants have proven that there was no reasonable and probable cause for the prosecution and/or whether the DfT was actuated by malice. In the context of the VCA stage, the conclusions are that there was a reasonable basis for further investigation. Further, there was a reasonable basis for finding that(a) VCA was an agency which promoted observance of regulations but had no relevant experience of investigating or prosecuting for fraud,

(b) it accepted at face value the information provided on behalf of KPL without any attempt to subject it to close scrutiny,

(c) such were the nature of even the admitted breaches that the explanation that it was an unfortunate mistake was worthy of further investigation.

[327]The third of the three point summary concerned the suggestion that the VCA inquiry was suppressed. My findings in that regard having heard the evidence are as follows:(i) therewas a conscientious decision to have a methodology in the DVSA investigation that it was not was reviewing the VCA inquiry, but starting the inquiry from scratch;

(ii) to that end, its methodology was to start from the statements of the judicial review claimants and to analyse the evidence of the supply of the materials from ECT and AS and consider the responses of the individual Claimants (who would become the prosecution defendants);

(iii) the VCA report and appendices were not considered adequately by the investigators Mr Hurrell and Mr Montgomery in particular, but it was not suppressed from prosecution counsel. Insofar as they ought to have considered it properly either themselves or with the assistance of the VCA or experts to assist them, this was not borne of malice: it may be arguable that it was caused by incompetence but that would not suffice. For the avoidance of doubt, no finding of incompetence one way or the other is made because this was not an issue which arose for decision.

(iv) their failure to consider the VCA report did not have as its effect that there was no argument to place before a court of a reasonable and probable cause because the matters revealed in the DVSA investigation revealed a basis for the prosecution irrespective of the conclusion of the VCA.

[328]If and to the extent that there was not adequate consideration of the technical aspects of the VCA report and the appendices in the course of the DVSA investigation, it did not follow that this nullified the points about the identified shortcomings of the VCA report or the matters revealed by the DVSA report or in the charging report and thereafter. It follows that the decision to depart from the VCA report and the decision not to take any further action do not provide evidence by themselves (or indeed with anything else in this case) to support the contention that the subsequent prosecution had no reasonable and probable cause or was actioned as a result of malice.

[329]It therefore remains to answer the first three of the agreed list of issues as follows:(i) Issue 1: The Claimants responded to the allegations of non-compliance with the regulations to the VCA on 19 December 2014, having become aware of non-compliance on or around 15 December 2014. The premise is that the Claimants were not aware of non-compliance prior to 15 December 2014 and that their response was honest and complete. For all the reasons discovered in the course of the DVSA investigation and set out in the charging advice and subsequently in the opening note and other documents prepared by prosecution counsel, there was material to place before a court to the effect that the Claimants and each of them must have been aware of non-compliance before 15 December 2014 and were dissembling in their statements that they did not have that knowledge. Likewise, there was material to place before a court that the responses on 19 December 2014 were selective and misleading and did not reveal the full nature and extent of their conduct. Again, it is emphasised that these are not findings of guilt which is not the issue in these proceedings but are findings in the context of whether there was a reasonable and probable cause for the prosecution.

(ii) Issue 2: Whether the VCA investigation was rigorous as alleged by the Claimants or whether there was a proper basis for considering it was seriously deficient as the DfT alleges. There was material to be placed before a court that the VCA investigation was not sufficiently rigorous in not investigating this case in a deeper way and in taking at face value the explanations provided by the Claimants. In that regard and further as evidenced by the material arising out of the DVSA investigation as subsequently analysed by prosecution counsel, there was material to be placed before a court that the VCA investigation was seriously deficient.

(iii) Issue 3: Whether the conclusions of the VCA investigation in respect of the activities of the DfT were such that the DfT should not have in effect reversed them by having a new investigation. It follows from the analysis above that there was material to be placed before a court that it was reasonable to have embarked on a new investigation. That did not mean that the conclusions were reversed at that stage, but that they were set aside to the extent that a new investigation was commenced.

(c) The impact of the judicial review claims (issue 4)

[330]The Claimants submit that:(i) the judicial review claims were baseless claims based on the opportunistic intervention of competitors of KPL who wished to destroy at least the catalytic converter part of KPL’s business and to acquire for themselves the market share of KPL’s business.

(ii) the DfT ought to have analysed the findings of the VCA report and to have found on that basis that there was no regulatory failure or no reason for the relief claimed in the judicial review whether in the nature of a further investigation or a prosecution. This approach was adopted by the DfT in early February 2016 in its response to an early pre-action protocol letter, and it ought to have been maintained.

(iii) the capitulation in the judicial review was caused by a failure to understand and/or grapple with the technical aspects of the VCA report and being unnecessarily defensive about claims in judicial review that were motivated by commercial opportunism.

[331]The DfT submits that:(i) the DfT instructed specialist counsel with the relevant expertise known to it from other work. The DfT was entitled to take very seriously this assessment of the merits of the judicial review claims, particularly about the absence of rigorous investigation on the part of the VCA and its lack of track record as an investigator/prosecutor.

(ii) it did not accept the advice of Counsel without proper examination by the in-house lawyers of the same and consideration that a fuller investigation was required in a matter of public concern about vehicle emissions. There were concerns that representatives of KPL may not have been cooperative with the VCA as had been thought to be the case.

(iii) the way ahead was a fresh investigation and bringing an end to the judicial review claims in as economical way as possible rather than defending claims which would be very costly and might be embarrassing reputationally. A re-investigation did not commit the DfT to a prosecution.

(d) Discussion

[332]Reference is made to the section headed “Judicial review correspondence and proceedings” at paras. 57 – 71 above. Having considered the evidence of the witnesses about the judicial review, there is no reason to believe that there was an unreasonable response of the DfT to the judicial review. Whilst the original reaction was to defend the position of the VCA in the response to the pre-action protocol letter, it was reasonable to take advice from specialist counsel. Mr Andrew Kinnier was specialist counsel. He appears to have been properly and fully instructed. His advice was firm and unequivocal. It was in effect that the DfT was likely to lose if it challenged the judicial review claims, although the arguments were evenly balanced as regards relief.

[333]It was not wrong to take into account considerations about the reputation of the DfT. There were potentially serious criticisms which a judge in the Administrative Court may have of a high profile aspect of the business of DfT, namely to enforce compliance with regulations relating to vehicle emissions and particularly so in the event that there was fraudulent conduct. If it were established that the relevant agency never prosecuted and simply promoted compliance with the regulations, that would be potentially harmful to the reputation of the DfT. A responsible reaction to that was to confront this by having a further investigation. That was the advice of specialist Counsel, and it was reasonable to act on that by commissioning a further investigation.

[334]There is no indication that Mr Kinnier was steered in the direction in which he travelled. First, as noted above, before taking his advice a vigorous response defending a judicial review pre-action protocol letter had been sent. Second, the advice of Mr Kinnier was not taken easily. The first reaction within the VCA and in particular of in house lawyers was different. As noted above, the response to the pre-action protocol letter had taken a strong view in opposition to the intended claims for judicial review. Likewise, there were indications in the documents that Mr Kinnier’s advice should not be taken. In the end, the advice of independent specialist counsel prevailed. That was a responsible and objective approach of a government agency to accept the criticism.

[335]That was not the end of the matter. The concern was in agreeing to have a further investigation, the DfT was going down a path set by determined judicial review claimants who would rest at nothing short of a prosecution. The argument of the Claimants is that in the desire to bring to an end the current judicial review claims and/or to forestall any future claims in the event of a subsequent decision not to prosecute, the only way of assuaging the concerns of these Claimants would be by a decision to prosecute. The strong desire to settle the judicial review was therefore only achievable by proceeding on the prosecution route.

[336]In my judgment, this analysis is too simplistic. It ignores the fact that the stays of the judicial review claims were not on the basis of a promise to prosecute, but on the basis of a willingness to have a further investigation. This was not going to be a review or a rubber stamp of the inquiry/investigation of the VCA. This was demonstrated by undertaking the investigation not by the VCA, but by a different agency within the DfT, namely by the DVSA which had greater experience of prosecution, albeit not of a prosecution of the complexity of this case.

[337]Given the determination of the judicial review claimants not to give up the judicial review proceedings simply because an investigation was to take place, there was nothing unreasonable about agreeing stays of the judicial review proceedings in order to give time for a further investigation to take place. By the end of that process, it might be that the judicial review would be academic, save for the question of costs.

[338]There was criticism on the part of the Claimants about the fact that there was not an acknowledgment of service in the judicial review proceedings over the years which followed prior to the orders bringing the judicial review to an end. That assumes that there was no argument available to the DfT. There was within the DfT (expressed by Mr Williams in particular), a view that there was a case to put in opposition to the judicial review claims. The strategy was to contain the judicial review claims and the attendant costs by getting on with the further investigation and hoping that this would lead to the judicial review claimants, subject to costs considerations, being willing to dispense with their claims.

[339]The subsequent events proved that this was wishful thinking. The subsequent approach particularly of Gateley for BMC was that nothing was going to convince them short of prosecution for fraud. That was evident by(a) how hard won were the stays of the judicial review claims,

(b) the intense questioning of the approach of the DfT by Gateley,

(c) the recitals to the order of June 2018 wanting to have transparency about a decision to prosecute one way or the other and within a finite time, and

(d) the second judicial review proceedings brought very little time after the order of June 2018, which culminated in the assurance given to the Court on 27 November 2018.

[340]From the above, the three arguments of each side as summarised above under the heading of “the impact of the judicial review claims” can now be considered. It is possible that the judicial review claimants were being opportunistic and wished to obtain the benefit of KPL’s business in catalytic converters and/or to cause harm to KPL. That was an obvious point which must have been taken into account and was mentioned expressly by Counsel considering the criminal prosecution. It did not necessarily prevent the judicial review applications from having merit. The DfT instructed independent Counsel who was properly instructed. The DfT was entitled to act on his advice. It was entitled to take very seriously his assessment of the merits of the judicial review claims, particularly about the absence of rigorous investigation on the part of the VCA and its lack of track record as an investigator/prosecutor. I reject the submission that the capitulation in the judicial review was caused by a failure to understand and/or grapple with the technical aspects of the VCA report and being unnecessarily defensive about the claims in judicial review. In the circumstances, the DfT was entitled to conclude that the way ahead was a fresh investigation and bringing an end to the judicial review claims in as economical way as possible rather than defending claims which would be very costly and might be embarrassing reputationally.

[341]It therefore remains to visit the fourth of the agreed list of issues: Issue 4: The judicial review proceedings issue: whether the circumstances leading to the reversal of the decision to take no action were the judicial review proceedings, the advice given on those proceedings and the resolution of the judicial review proceedings.

[342]It is important to note a point here about causation. It is the case that without the judicial review claims, the VCA decision to take no further action against KPL and its directors and employees would have stood. The further investigation only took place because of the judicial review proceedings. Further, the subsequent prosecution only took place as a result of the further investigation. In terms of ‘but for’ causation, it can be said that ‘but for’ the judicial review, the prosecution would not have occurred. The focus must be on the immediate or proximate cause of the decision to prosecute. That involves consideration of the nature and the impact of the DVSA investigation and/or the basis and reason for the decision to prosecute.

[343]That then leads to consideration as to whether the Claimants are able to show that the prosecution was without reasonable and probable cause and/or brought in bad faith whether not for the purpose of bringing wrongdoers to justice or for the improper purpose of bringing the judicial review proceedings to an end or otherwise maliciously. It is to the DVSA investigation and to the subsequent decision to prosecute that this judgment will now turn.

(e) The impact of the DVSA investigation (issues 5 and 6)

[344]The Claimants submit that:(i) the evidence shows that the DVSA investigation was completely inadequate in that it was led in effect by Mr Hurrell, who lacked supervision or assistance by those to whom he was answerable. His evidence shows that he lacked the experience and qualifications required to understand the technical matters involved. He wilfully ignored the work undertaken by the VCA: had he read the appendices to their final report, he would not have understood them.

(ii) the primary motive of the DfT was in order to remove or reduce the impact of the judicial review proceedings. They failed to make basic inquiries in the investigation which Mr Hurrell was unable to explain in the evidence.

(iii) instead, the DfT and Mr Hurrell in particular took at face value the evidence of the competitor judicial review claimants, to whom he was so close that he undermined the independence required for a proper and rigorous examination. The only value added was to trace the manufacturers of parts in Spain and in the USA in order to prove the matters much of which had been admitted about regulatory failures, a process which lasted over two years.

[345]The DfT submits that:(i) the process of compiling detailed evidence to prove the regulatory breaches was very time intensive, requiring in particular the assistance and cooperation of manufacturers in Spain and in California.

(ii) a case emerged to be put to the Court that in respect of each of the individual claimants, they did not reveal the full extent of the breaches of the regulations and they gave false explanations of the nature of the breaches, not least when they were still continuing to their knowledge.

(iii) there emerged a case fit to be put before a court that the individual claimants, who had been involved in the previous failed business of KUK, used dishonest means comprising fraudulent trading to help set up the catalytic converters part of the business of KPL Without this, they may not have been able to have obtained a market share for KPL as successor to KUK in the manufacture, distribution and sale of catalytic converters.

(f) Discussion

[346]It is unnecessary to set out again Mr Hurrell’s evidence and the section about the new investigation of the DVSA which is at paras. 72 – 96 above. There have been set out findings about Mr Hurrell’s evidence which includes significant criticisms about him including:(i) his starting position which was to sideline the VCA report as if it had not occurred;

(ii) related to (i) was his lack of understanding or limited understanding of the VCA report and its appendices;

(iii) his being too close to the judicial review claimants was unprofessional and regrettable, and it is apparent from the totality of the correspondence that they put sustained pressure on the DfT at all times;

(iv) his pre-judging at too early a stage that there would be, or that there would very likely be, a prosecution;

(v) his failure to consider in any detail the financial motives, if any, for a fraud;

(vi) the criticisms about his performance in cross-examination.

[347]Given how poorly supervised he was, these are important criticisms. The mitigations are as follows:(i) there was a sensible reason in the context of a decision to have a fresh investigation for the reasons advised by Mr Kinnier to start the investigation afresh rather than simply review the VCA findings;

(ii) to this end, important statements were obtained from AS and ECT and there is no evidence to indicate that Mr Hurrell in any way acted in bad faith in the evidence which he obtained such as to undermine its reliability;

(iii) Mr Hurrell worked closely with Mr Bennett from early 2017: Counsel’s involvement was greater than one might have expected; ultimately the advice that was acted upon was that of Counsel.

[348]It has been submitted on behalf of the Claimants that the decision to prosecute in this case and the prosecution was carried out by the DfT through Mr Hurrell and the team carrying out the re-investigation. The argument goes that the decision was either independent of Counsel and those approving Counsel’s advice or that their investigation caused the prosecution to take place. It follows that if bad faith were to be found on the part of Mr Hurrell and his team, this should be attributed to the prosecution generally. The case of the DfT is that the decision to prosecute was carried out by Ms Cassidy as the officer within the DfT who approved the Charging Advice and was authorised to do so. This judgment shall return to that argument in due course. However, at this stage, it will be assumed that the decision to prosecute was that of the DfT acting through the various people involved in the investigation including Mr Hurrell, Mr Montgomery, Mr Rowlands and Mr Rice.

[349]If this is the assumption to be made, it does not find that Mr Hurrell or the investigation team or any members of the team were acting without reasonable and probable cause or that they were acting with malice. In reaching those conclusions, the following matters are taken into account, namely:(i) whilst the DVSA investigation would not have taken place without the judicial review, I am satisfied that the DfT and Mr Hurrell in particular conducted the investigation with a view to finding out if there was criminal conduct on the part of KPL and its officers/senior managers. The investigators and Mr Hurrell, in particular, believed that the route to secure that evidence was through not only the evidence of the judicial review claimants, but critically through the suppliers of the catalytic converters and especially of ECT and AS.

(ii) there was a belief, particularly of Mr Hurrell, that the prosecution had a good prospect of success. As he said at the end of his witness statement, none of the events that led to the collapse of the prosecution affected his view that had the evidence which he had obtained been put before a jury, they would have found that there had been criminal activity: see para. 261. (Likewise, Mr Rice at para. 110 of his witness statement, said that he continued to believe that the prosecution was a very solid case with a high chance of success, which was lost due to disclosure issues.)

(iii) there were various matters which may have clouded Mr Hurrell’s judgment: his closeness to the judicial review claimants and his over-enthusiasm for the process (assuming that there would be a prosecution about 18 months before the decision to prosecute was made).

(iv) there is also scope to contend that he was too narrow in his approach, failing to consider or learn any lessons from the VCA report.

[350]Despite all of the above, Mr Hurrell liaised closely with Mr Bennett from early 2017, and thereafter also with Mr Johnson. This was not a case where he has provided information incapable of verification or where there is evidence that he contaminated the evidence which he obtained or that he compromised the process. There was a full opportunity for Counsel to consider the evidence which he and others prepared. It is very different from those cases where either there was a corrupt officer who contaminated the evidence or from a complainant on whose veracity the complaint hinged and who was found to be lying.

[351]Further, Mr Hurrell and the investigators knew that ultimately the evidence would be considered by Counsel in the form of a charging advice, and a person authorised within the DfT would make a decision as to whether to charge. There was an attempt to suggest that the inference from a rush in the last 3-4 months before the decision to prosecute was the decision must have been taken before the charging advice. If it was taken by the charging advice, then that was evidence that it must have been taken other than through the official channels of the DfT. The evidence in that regard is that:(i) as far as Mr Hurrell was concerned by at latest the time of the conference with Counsel in October 2018, the prosecution was bound to happen on the basis that even if a written advice was required, he believed from then onwards that Counsel would recommend a prosecution;

(ii) there may have been a mistaken apprehension on the part of the DfT to the effect that there was an obligation to decide to prosecute by the end of January 2019. The source of the confusion may have been an interpretation of a recital to the June 2018 consent order and to the undertaking given to the Court on 27 November 2018;

(iii) this would explain the steps taken with Ms Hine prior to the receipt of the Charging Advice to obtain a fixture in a Magistrates’ Court for the case to come to court for the first mention;

(iv) on this basis, it is possible that at least Mr Hurrell and the other investigators regarded the charging advice as a mere formality.

[352]It seems unlikely that this is what occurred. The scope for the confusion about the need for a decision to prosecute by the end of January 2019 seems likely to be an explanation for the rush even though in fact any obligation was to identify the stage reached in the investigation by 31 January 2019. However, such was the collaboration between Mr Hurrell and counsel that Mr Hurrell must have known that the formal Charging Advice was a critical step in the process without which the DfT could not, at least finally and formally decide to prosecute. It is likely that there was a clear indication that the Charging Advice would be a decision to prosecute, but that a formal advice was required and then an authorised person from the DfT, in this case, Ms Cassidy had to authorise the decision to prosecute. On this more likely scenario, Mr Hurrell and/or the investigators did not cause the prosecution.

[353]Even if, contrary to the foregoing, Mr Hurrell and/or the investigators did cause the prosecution, I find on the basis of the evidence that the prosecution occurred because Mr Hurrell and/or the investigators were convinced of the guilt of the first five named Claimants, and at lowest that they believed that there was a case fit to be placed before the Court. Whilst the DVSA investigation was commenced because of the judicial review, the decision to prosecute was by reference to bringing people believed to be wrongdoers to justice.

[354]This is confirmed by para. 150 of the Charging Advice, quoted in full above, to the effect that the decision to prosecute was not being taken by reason of the judicial review and irrespective of the agreement settling the judicial review, but result from a decision that the case was one which was fit to prosecute. Of course, those are the words of Counsel, but on the basis that Mr Hurrell and others were involved in causing the prosecution to take place, there is no reason to believe that they were approaching the prosecution in a different way.

[355]It therefore follows that the case of improper purpose on the part of Mr Hurrell and the other investigators is rejected. Likewise, it is rejected that Mr Hurrell and the other investigators believed that the prosecution was not well founded or that they were subjectively reckless as to the merits of the prosecution.

[356]On this basis, the Court will now consider the three points of the parties referred to above. There were serious shortcomings of and limitations in the investigation of the DfT and Mr Hurrell in particular. Mr Hurrell conscientiously, if misguidedly, believed that the report of the VCA did not need to be considered, such was the impact of the information from AS and ECT in particular. Nonetheless, he believed at lowest that there was a case to be put before a court of fraud against the five named Claimants.

[357]I reject the case that Mr Hurrell and the DfT investigators were motivated at the stage of the decision to prosecute or at any stage thereafter by the judicial review proceedings. There were more inquiries which could have been made, but none which invalidated the evidence that there was objectively and subjectively a reasonable and probable cause of fraud to put before a court. This conclusion was not invalidated either by the consideration in the first instance of the evidence of the judicial review claimants or by any unprofessional closeness to them or by the marginalisation of the report of the VCA. There was an argument to be placed before the Court that the VCA did not make a rigorous inquiry, and that the evidence obtained through the DVSA inquiry raised a case of dishonesty. It did so because it did not accept at face value the explanations of the first five named Claimants but subjected it to a critical examination derived from the inquiries made in particular of ECT and AS.

[358]By contrast, the Court accepts the three submissions of the DfT in the section headed “the impact of the DVSA investigation.” In particular, it is accepted that there emerged a case which they reasonably believed was fit to be put before a court that the individual claimants, who had been involved in the previous failed business of KUK, to be able to trade as KPL by dishonest means comprising fraudulent trading. Without this, they may not have been able to have obtained a market share for KPL as successor to KUK in the manufacture, distribution and sale of catalytic converters.

[359]Finally in this section, it is necessary to consider issues 5 and 6. (g) The DVSA investigation issues: Issue 5: Whether the DVSA investigation took the representations made by the judicial review claimants as its starting point.

[360]The DVSA did start the analysis by considering the evidence of the judicial review claimants. That is not to say that this created a presumption as to its veracity. It was simply the first matter to consider. It was their intervention which led to the scrutiny of the judicial review claimants. It is important to note that this did not represent the central part of the investigation which came from the inquiries made of ECT and AS which lasted a very long period of time and give rise to a number of important statements. Even if the judicial review was the starting point, there was no reason to indicate that that led to findings which ought not to have been made. (h) Issue 6: What deficiencies, if any, there were in the conduct of the DVSA investigation.

[361]The deficiencies in the DVSA investigation have been identified in detail above. As discussed, in my judgment, none of these deficiencies affected the overall conclusion that there was a reasonable and probable cause for the charges and for them to be placed before the Court.

(i) The impact of the advice of prosecution counsel

[362]The Claimants submit that:(i) prosecution counsel was not the central piece of the jigsaw. Whilst prosecution counsel was instructed, the driving force was not his advice but the agenda of representatives of the DfT acting under the control or excessive influence of the judicial review claimants acting with the improper purpose or motive of bringing an end to the judicial review claims.

(ii) the Court is entitled to infer from the failure to call prosecution Counsel as a witness that this was an unorthodox prosecution in which the decision to prosecute occurred prior to the charging advice being finalised. This evidences the way in which the prosecution was driven by others within the DfT for their own collateral purposes.

(iii) the subsequent conduct of the prosecution was testimony to the case being out of control of which disclosure was a part.

[363]The DfT submits that:(i) prosecution counsel was pivotal to the prosecution as is apparent from the following, namely (a) Mr Bennett leading the way from early January 2017, having numerous communications with Mr Hurrell and having regular conferences, (b) his advising about the prosecution case separately from the judicial review claim.

(ii) nothing that happened in the judicial review claims amounted to a decision to prosecute or a promise to prosecute. The judicial review provoked the investigation, but as stated in the charging advice, the consideration of a prosecution and the decision to prosecute were separate from the judicial review.

(iii) the prosecution was brought only in consequence of Counsel’s charging advice and Ms Cassidy as the duly authorised person acting on it and making the decision within her authority to authorise the prosecution. As the law above states, it is difficult to show in such circumstances that a prosecution has been brought without reasonable and probable cause: see paras. 205h and 206 above.

[364]There is a large overlap between the decision to charge issues and the discussion in respect of the impact of the VCA investigation as to who decided to prosecute, and the possibility that Mr Hurrell and other investigators caused the DfT to prosecute. There has been set out above how in my judgment, the decision to prosecute was made by Ms Heidi Cassidy as the authorised officer on the basis of the Charging Advice of Counsel. This system was known about to the investigators and the system did not allow for a prosecution in circumstances such as this case without that system being followed. It would follow that Mr Hurrell and the fellow investigators did not cause the prosecution to take place.

[365]Further, they were not like those in previous cases who through corrupt or deceitful practices caused a prosecution to take place without the knowledge of the person purporting to decide to charge. Nor were they like the informer officer/complainant upon whose information a charge was made without any opportunity for independent thought or assessment. By way of example, it was not like the case of Copeland v Commissioner of Police of the Metropolis

[2015] 3 All ER 391

where the officer making the decision to prosecute did so on the basis of information provided in bad faith by another officer such that the latter and not the former was “instrumental in the bringing of the prosecution or was in substance the person, or at the very least a person, responsible for the prosecution being brought.” Likewise, in the case of Rees v Commissioner for the Metropolitan Police

[2018] EWCA Civ 1587

where the person who could be deemed to be the prosecutor was an officer who procured false evidence by subornation amounting to a criminal intention to pervert justice: see paras. 45 and following, and especially at 56-60. By contrast, the instant case was one where Counsel was properly instructed. It has been noted above how there was no suppression of the VCA report which was passed on to Counsel or anything else contaminating or compromising the information on the basis of which the Charging Advice was prepared. It therefore followed that there was no reason to treat anyone other than Ms Cassidy proceeding on the basis of the charging advice as the prosecutor.

[366]In case this is not correct, and Mr Hurrell and others caused the prosecution to take place, then as set out in the section about the DVSA investigation, in my judgment they had an objective and subjective reasonable and probable cause for the prosecution. They did not act for an improper purpose or in any other way in bad faith, as set out above in the same section about the DVSA investigation. In short, whoever was the prosecutor, the essential elements of the tort of malicious prosecution (and also, as appears below, misfeasance in public office) are not established.

[367]It is then necessary to mention issue number 7 which reads as follows: (j) Issue 7: the decision to charge issues: What was the relevance of the fact that the decision to prosecute was taken on the advice of Counsel, and did it invalidate or lessen the quality of the advice that at least one Counsel had been involved in the investigation for almost two years prior to the charging advice?

[368]On the basis that Counsel was responsible for the Charging Advice, then the consequence is that this advice and its approval by the authorised representative of the DfT caused the decision to prosecute. There is nothing in the question as to whether it invalidated or lessened the quality of the advice that at least one Counsel had been involved in the investigation for almost two years prior to the charging advice. Far from lessening the quality of the advice in this regard, it enhanced the ability of Counsel to give such advice from a position of involvement. There is no question of Counsel being contaminated by the details over the period of almost two years of involvement. This has not been suggested in the pleadings. Reference is made to para. 205h and 206 above regarding the preparedness of counsel to act for the prosecution being relevant to the question of reasonable and probable cause: see Glinski above at 744-745 and Rudall v Crown Prosecution Service above at para. 76h.

(k) The impact of the collapse of the case (issues 8 and 9)

[369]The Claimants submit that:(i) the inability to conduct the disclosure exercise was because the case was being conducted not for the primary purpose of being wrongdoers to justice, but to respond to and bring to an end to the judicial review claims.

(ii) the abuse of process claims, if they had been pursued before trial, would have revealed that there were other fatal flaws in the prosecution case such that the case was without a reasonable and probable cause and should never have been pursued.

(iii) malice or bad faith was apparent because of prosecuting a case without a reasonable and probable cause and/or because of the predominant motive being to bring an end to the judicial review claims.

[370]The DfT submits that:(i) the subsequent failure of the case was because of disclosure failings and the refusal of the Judge to adjourn the case.

(ii) whilst the adjournment of the case due to inadequate disclosure of the case affected the prospects of the case when it would resume, and there may have been concerns that the disclosure would still not be conducted properly, the underlying case theory was believed to be sound and reasonably so.

(iii) there was no malice or bad faith in that the prosecution was for the purpose of bringing wrongdoers to justice and it was believed reasonably to be a sound case.

(l) Discussion

[371]It does not follow from disclosure failings that the case must have been prosecuted for an improper purpose. Far more likely is that the failure to make full and prompt disclosure was the result of incompetence. Even if, contrary to the foregoing, the case had been prosecuted for an improper purpose, this would not explain what the Judge described as “shambolic” failures of disclosure. The overwhelming likelihood is that would be a result of a lack of competence in the process.

[372]The scope for incompetence is apparent in the contemporaneous documents. In the Charging Advice, Counsel had urged upon the DfT the need to be especially vigilant about the VCA disclosure documents, but despite this, there was a particular failure in this regard recently revealed. The issue about the attachments to disclosable emails had been identified, but despite opportunities to deal with it, this defect persisted. If in fact, as seems likely, the ambit of this problem was very large, then this makes the scope for incompetence particularly acute. All of this suggests carelessness being a more likely cause than some conspiracy theory of suppression. The cross-examination mainly undertaken by Mr Rhind KC, despite being searching and skilful, did not lead to a picture of a deliberate suppression of documents.

[373]The advice on appeal, as set out above, referred to concerns about the impact of disclosure failings on the case of the prosecution. This was in respect of the prospect of getting over the abuse of process application and the result of the case. That was not because these matters necessarily provided knock-out blows, still less that it indicated that there had never been a reasonable and probable case to put before the Court. It is simply that once there had been late or incomplete disclosure, Counsel was right to be concerned about the forensic effect on the case generally. Those experienced in the forensic process know how a case which could have been sound can become derailed and fall apart. That is not because there was never a reasonable and probable cause but because such failures sometimes do have the effect of undermining the case more generally. This is especially so in a criminal case bearing in mind the need to prove the case to the criminal standard of proof.

[374]The two issues relevant to this section are issues 8 and 9 about the manipulation and suppression of evidence which read as follows: (m) Issue 8: Did the DfT seek to manipulate the evidence against the Claimants?

[375]Issue 8 is not about disclosure, but about a communication of Mr Hurrell with an expert as to whether there had been an error in where a decimal point was to go. There was a major difference between experts, and Mr Hurrell was entitled to test the point with an expert. As already noted above this was not evidence of manipulation but a bona fide attempt on the part of Mr Hurrell to understand the difference in the evidence between the experts. (n) Issue 9: Did any of the admitted or proven disclosure failures help to establish an absence of reasonable and probable cause?

[376]For the reasons just given, Issue 9 on the facts of the instant case does not help to establish an absence of reasonable and probable cause. The reason for this is that, as set out above, the admitted or proven disclosure failures did not prove suppression or anything which would give rise to an inference that documents have been deliberately hidden or not disclosed. Further, even making allowances for the Claimants, there is no scope for an inference that the documents would lead to a different conclusion on the questions of an absence of reasonable and probable cause. It is important to distinguish between two different scenarios, namely the criminal case and the civil case. As regards the criminal case, the effect on a criminal case of incomplete disclosure is that it might be fatal to the case because of procedural fairness or the need for a jury to be sure of guilt. As regards this civil case of malicious prosecution, the incomplete disclosure does not alter the conclusion that the Claimants have been unable to prove no reasonable and probable cause for the prosecution.

(o) Conclusion on reasonable and probable cause

[377]Stepping back and looking at the whole picture and applying the law, there are the following conclusions:(i) whether the prosecutor is the DfT through Ms Cassidy acting on Counsel’s advice (the primary finding) or through the DVSA investigation team (the secondary finding), the decision to prosecute was on an honest belief in the charges made and that there was a reasonable basis for that belief.

(ii) the belief was based on a sufficiency of evidence at the point of the decision to charge whether that was made, as seems to be the case, upon the consideration of the Charging Advice (the primary finding), or whether it was at an earlier stage in about October 2018 around the time of the conference with Counsel (the secondary finding).

(iii) the belief was that there was a proper case to lay before the Court, that is to say that there was a case which was fit to be tried. That was particularly so in the instant case when Counsel who was fully briefed and who was experienced in this area was supportive of a prosecution both in conference and in the Charging Advice.

[378]It is not intended to revisit the entirety of the law set out above, but without being selective of the legal propositions, it is important to remind oneself of the relatively low bar of the reasonable and probable bar to prosecute. Particular examples of how the bar is set comprising:(i) it suffices for the subjective element for the prosecutor to be satisfied that there is a proper case to lay before the court, that is to say that there is a case fit to be tried: the prosecutor does not have to believe in the probability of conviction: see Coudrat v Commissioners of Her Majesty's Revenue and Customs per Smith LJ and Stuart v A-G for Trinidad and Tobago

[2022] UKPC 53

at [26] per Lord Burrows.

(ii) there must be prima facie admissible evidence of each element of the offence, but it is not at the stage of charging necessary or appropriate to test the full strength of the defence or to investigate the truth of every assertion which may be made by the intended defendant: see Coudrat again.

(iii) provided the whole of the facts are presented before them, the willingness of counsel experienced in the area of law concerned to act for the Crown is relevant and in some cases determinative of the issue of reasonable and probable cause: see Glinski

(iv) the failure to undertake a line of inquiry which might just have been relevant to the Claimant’s defence, or the failure to commence or complete the disclosure exercise, do not negative the existence of reasonable and probable cause: per Jay J in Hughes citing Glinski, Coudrat and Rudall v CPS per Lambert J.

[379]This is not the end of the analysis. A part of the issues in the case is not only what the case was at the point of the decision to prosecute, but whether there was a reasonable and probable cause in the conduct of the prosecution. As the Charging Advice emphasised, it was necessary to keep the case under review as it progressed. In my judgment, until the point when the prosecution ceased, the dual test was satisfied of the existence of a reasonable and probable cause in the conduct of the prosecution. The developments which occurred of the failure in the disclosure did not lead to the subjective and the objective tests no longer being satisfied, albeit that the prospects of success of the prosecution were affected by these developments. In any event, almost as soon as the disclosure failings had been revealed, the Judge made his decision not to adjourn and after the briefest of thinking time, the decision was made not to appeal and the prosecution came to an end. (p) Improper purpose and bad faith issues: Issue 10: Have the Claimants established that the prosecution was brought for an improper purpose such as the appeasement of the judicial review claimants and/or can inferences be drawn from an absence of reasonable and probable cause?

[380]For all the reasons set out above and especially in the sections about the impact of the VCA inquiry, the judicial review, the DVSA investigation and the decision to prosecute, the Court rejects the case that the prosecution was brought for an improper purpose. In particular, the prosecution was not brought to appease the judicial review claimants. The decision to have a re-investigation was made in the context of the judicial review application and belief that there were serious shortcomings about the VCA inquiry. That did not bring with it a commitment to have a prosecution. Any commitment was to have a further investigation. The prosecution was brought because of a belief that there was material to bring before court prosecution defendants, that is the first five claimants in this action, against whom there was a belief that there was a case to be considered by the court against them. As regards the second part of issue 10, this does not arise because there is no finding of an absence of reasonable and probable cause.

[381]Issue 10 about malicious prosecution is narrower than issues 11 and 12 about misfeasance in that issue 10 refers only to the bringing of the prosecution and not the conduct of the prosecution. As noted above, for the tort of malicious prosecution, it can be the case that the absence of reasonable and probable cause and/or malice occur not when the prosecution is brought but in the course of the conduct of the prosecution. In my judgment, neither was there malice including acting for an improper purpose at the inception of the prosecution nor in its conduct thereafter. The reasoning for this appears above.

[382]This judgment has considered malice including acting for an improper purpose in connection with the detailed analysis above. The Court has accepted the submissions of the DfT at para. 314 above. The departure from the VCA report was not actuated by malice but was based on a reasonable justification on the part of the DfT for forming the view that a further investigation was required for the reasons set out in para. 322 above. There was no suppression of the VCA inquiry, and the relevant findings are set out at para. 327 above. If and to the extent that it was not adequately considered, that does not support the contention that this was due to malice: see para. 328 above.

[383]Likewise, this judgment has considered the impact of the judicial review claims. At paras. 332 – 340, it has found that the DfT acted on advice of specialist and independent counsel and did not act unreasonably in response to the judicial review claims in undertaking a new investigation. Further, as set out at paras. 345-358, and especially at para. 349, the contention that the investigators and in particular Mr Hurrell acted with malice has been rejected. Nothing that occurred at the time of the collapse of the case including the failures of disclosure show that this was a case which was prosecuted with malice. At each stage, the Claimants have failed to prove that there was malice including acting for an improper purpose or in bad faith in that the prosecution was for the purpose of bringing wrongdoers to justice and it was believed to be a sound case.

[384]In my judgment, the test of malice is not satisfied in that neither at the point in time of the decision to prosecute or at any time in the conduct of the prosecution until it came to an end were the proceedings being initiated or conducted other than for the purpose of bringing persons to justice. This was the sole motive. It was an honest belief whether the prosecution was brought by Ms Cassidy acting on Counsel’s advice or by the members of the DVSA investigation team.

[385]To the extent that it has been submitted that there was an alternative improper motive of bringing to an end the judicial review, it has not been shown that this was a motive. If, contrary to the foregoing, there was a mixed motive, the predominant motive or the driving force (in the language of Lord Kerr in Williamson v A-G of Trinidad and Tobago at para. 12) was still the desire to bring the prosecution defendants to justice, and that was the motive of the DfT whether the decision to prosecute was on the authority of Ms Cassidy who acted on Counsel’s advice or even whether the decision was that of the investigators. On any formulation and whether the prosecution was brought by Ms Cassidy acting on Counsel’s advice or by the members of the DVSA investigation team, there was an honest belief that there was a reasonable and probable cause for the prosecution. This continued in the conduct of the prosecution until its abandonment.

[386]For the purpose of completeness, motive has not been established in another way such as proving the case on the basis of a witness whose evidence has been procured through criminal means such as by subornation amounting to a criminal intention to pervert justice. Whatever criticisms have been made about Mr Hurrell and other members of the DVSA investigation teams, it has not been about the dishonest fabrication of evidence or the like. This is possibly with the exception of issue 8 which has been rejected as above set out.

[387]There is a feature in this case which has similarities with the case of Hughes referred above. In that case, like this one, there were parallel judicial review proceedings. In Hughes, that was at the instigation of a defendant. The suggestion was made that there had been an erroneous understanding of a deadline for bringing criminal proceedings. It was therefore said that the decision to prosecute had been rushed. At para. 107, Jay J found that the rushing of a decision may have led to error, but it did not prove that there was malice in and about the making of the decision. So here, if there was a rush to decide about whether to prosecute, which may like Hughes have been caused by a misunderstanding about the judicial review proceedings, that did not indicate malice. Nor does it affect the Court’s conclusions in this case about the existence of a reasonable and probable cause to prosecute whether at a subjective or an objective level.

[388]For all these reasons and whether on the basis of the primary formulations or a secondary or even tertiary formulation, the essential ingredient of malice has not been proven by the Claimants. On all the formulations set out above, the claim in malicious prosecution must fail.

XIX Misfeasance in Public Office: the six Claimants

[389]It is now necessary to move on to the issues which are specifically about misfeasance in public office, but where there is a large overlap with malicious prosecution. Just as proof of bad faith or improper purpose must be established for the tort of malicious prosecution, so too public officials misusing their powers in bad faith and or in the knowledge that so doing would result in a prosecution without justification. It is likely to give rise to malice to the purpose of the tort of misfeasance in public office. The same evidential difficulties which have bbeset the claim in malicious prosecution also beset the claim in misfeasance in public office. (a) Issue 11 (formerly issue 3 in the agreed list of issues): Have the Claimants established that the Defendant’s decision to lay charges against the first five claimants was in bad faith either because it was for an improper purpose and/or it was unlawful and the DfT did not have an honest belief in the lawfulness of the decision?

[390]This is a re-hash of Issue 10, albeit that it focusses on the state of mind of DfT at the point of the decision to prosecute. Neither was there an improper purpose at that stage or at the later points in time during the course of the prosecution before its collapse. Likewise, both Counsel and Ms Cassidy had a belief in the lawfulness of the decision, as did Mr Hurrell and other investigators at the point of the decision to prosecute and at all times up to the collapse of the prosecution.

[391]There have been identified shortcomings of the evidence of a number of the DVSA investigators and especially Mr Rice, Mr Macdonald and Mr Hurrell amongst others. Despite this and the failings in disclosure (issue 12), there is no reason to find a cover up of the truth or bad faith in and about the DVSA investigation or the decision to prosecute or acting for an improper purpose. Any shortcomings may well be attributable to incompetence as identified above.: see especially paras. 371 and 372 above about the failures in disclosure. However, as the analysis of the law sets out, for the torts of malicious prosecution and misfeasance in public office, incompetence and even gross negligence falling short of reckless indifference will not suffice.

[392]It has not been established that the prosecution and the decision to lay charges against the individual Claimants was in bad faith whether due to improper purpose or that it was unlawful and there was no honest belief in the lawfulness of the decision. (b) Issue 12 (formerly issue 4 in the agreed list of issues): Having regard to the admitted and/or proven failings in disclosure, have the Claimants established that the DfT’s conduct of the prosecution was in bad faith because it was for an improper purpose and/or the DfT did not have an honest belief in the lawfulness of the conduct of the prosecution?

[393]In the conduct of the prosecution, it has not been proven that it was conducted in bad faith either that it was conducted for an improper purpose or that there was no honest belief in the lawfulness of the conduct of the prosecution.

[394]It has been set out above that on the PLS model, the decision to prosecute was made by Ms Cassidy based on the legal advice which she read. Ms Cassidy's good faith has not been impugned and indeed it was not put to her that she was acting in bad faith. It was suggested that she should have considered not just the advice but also tested it by reference to the underlying evidence. Such a state of affairs falls very short of the state of mind required to establish misfeasance.

[395]Even if it is the case, contrary to that which was rejected above in connection with malicious prosecution, that the prosecutor is DfT through the investigators and in particular Mr Hurrell, the position is the same as in respect of misfeasance in public office. It has not been shown that the investigators acted in bad faith or for an improper purpose and therefore malice, whether targeted or untargeted, must fail for the purpose of the tort of misfeasance in public office.

[396]This is not a case where there is evidence of targeted or untargeted malice. For the same reasons as already set out above, there was no bad faith in the sense of the exercise of a public power for an improper motive or purpose. Further, for the same reasons, there is no evidence that a public officer knew that he had no power to do the act complained of. On the contrary, the steps taken were made for the purpose or the predominant purpose of bringing persons believed to be wrongdoers to justice and acting on legal advice that it was proper to pursue them, to charge them and for the case to go to the Crown Court. Neither was this a case of targeted malice of conduct specifically intended to injure the Claimants by causing them to be prosecuted without reasonable and probable cause or for an improper motive or power. Nor was it a case of untargeted malice of causing the prosecution to take place without an honest belief that it was justified knowing that injury or loss will likely be a consequence.

[397]It therefore follows that the claim in the tort of misfeasance in public office must fail.

[398]In the agreed list of issues, issue 5 was as follows: “to the extent that any bad faith on the part of the defendant is proven, what, if any actionable damage was caused to each of the claimants by the proven acts of bad faith? This does not add some discrete issue on its own but is a segue to the issue of damages to which this judgment now turns.

XX Damages

[399]In view of the rejection of the claims of the Claimants and the finding that there is no liability of the DfT for the same, no issue arises as regards damages. In these circumstances, the judgment will be shorter in this regard than would otherwise have been the case. It will state the findings that would have been made in the event that liability had been found.

[400]There was limited oral evidence before the Court in respect of quantum, albeit that there have been very lengthy submissions thereafter in respect of quantum. The witness statements of the Claimants were relatively brief in respect of the matters relevant to their respective claims for general damages for distress and the like and in respect of special damages. The evidence of the first five Claimants lasted less than a day of which only a part of their evidence was about quantum. There were expert reports of Mr Fairhurst for the Claimants and Ms Ewing for the DfT. They prepared a joint experts’ report containing considerable common ground, which helpfully narrowed the contentious points on special damages. Their combined oral examination was not long comprising just over half a day.

[401]The experts both assisted the Court and gave measured evidence. The Court is not critical of the evidence of either expert, but where there has been preferred some conclusions to others, it is because of the assessment of the objective facts and evidence and the inherent probabilities of the issue in the case.

[402]It is to be noted that the claims upon which the experts opined comprised mainly the claim of KPL for special damage. That claim only arises in the misfeasance in public office claim: there is no equivalent claim in the malicious prosecution claim which is only brought by those who were prosecuted. In the event that the claim for special damage of KPL succeeds, it is accepted that there should be no additional claim by the three shareholders namely the first, second and third claimants for shareholder losses since this would give rise to a double recovery.

[403]The DfT makes the point that it does not suffice simply to have the claim for damages quantified in the experts’ reports. It is necessary for there to be evidence of fact in that regard. There is some relevant evidence in the witness statements of the individual claimants, albeit that it is rather limited in its scope and detail.

[404]The DfT also submits that it is necessary to show on one view of misfeasance that there has been at least subjective recklessness to cause loss. It submits that there is no evidence on the part of the DfT and/or its witnesses of subjective recklessness to cause harm to the Claimants. In my judgment, it was not necessary for this to be put or led. It only arises on DfT’s case in the event that the Claimants have established liability. It is artificial in the evidence on the basis of a case which is denied, to seek to have positive evidence adduced that if there had been bad faith for the tort of malicious prosecution or misfeasance in public office, there would have been at least subjective recklessness to cause loss. In my judgment, the consequence of the hypothesis of bad faith or improper purpose on the facts of this case, namely to appease competitors is to raise inferences against the DfT. The inferences include that there would have been knowledge that the prosecution would or might cause loss of business at the expense of KPL and to the benefit of the competitors and that the DfT acted in this malicious way despite that knowledge not caring whether or not that would occur. In the circumstances, this is counterfactual because there has been rejected the case of bad faith or improper purpose. However, on the counterfactual case, inferentially at least subjective recklessness would have been proven at lowest on the balance of probabilities.

[405]There will be considered first the claim for special damage of KPL in the event that liability had been established. The experts have considered the following in the joint experts’ report, namely:(i) the claim should start in April 2019 when the decision to prosecute became known in the market and when there was a pattern of declining sales. The effect of that to the end of the calendar year, that is to December 2019 (by which stage, the first five Claimants had been acquitted in December 2019) was on the catalytic converter sales and the remainder of KPL’s business, the exhaust sales (“the First Year”).

(ii) in respect of the next two years to December 2021, it is not contended that there was a continuing effect on the remaining exhaust sales which had shown recovery and growth. There was an effect on the sale of catalytic converters (“the Second and Third Years”).

(iii) thereafter, the Claimants say that there was a continuing effect on the sales of catalytic converters whereas the DfT says that there should be no damages in that regard beyond that time (“the Remaining Years”).

(a) The First Year

[406]As regards the First Year, the loss of profits has been calculated by assessing the projected turnover of KPL for the year ended 31 December 2019 (which was agreed at £19.75 million) but for the prosecution and deducting the actual turnover for the same period. Ms Ewing posited that there may have been points that contributed to such sales not having materialised. She pointed to certain business being in decline in advance of April 2019, which would then explain that the projection may not have been realised due to factors other than the prosecution. In fact, there were seasonal variations and other matters the effect of which is that on the balance of probabilities, these other factors are not proven and so no adjustment is required in the calculation of the sales that would have taken place but for the prosecution.

[407]The decrease in sales in the First Year is said to be 25% in respect of catalytic converters and 5% in respect of exhausts. The point is made by the DfT on the basis that KPL was being shunned for fear that the business would collapse in the event of a successful prosecution that it is illogical that this would not affect all parts of the business equally or more equally. Certain parts of the exhausts business did better during the period.

[408]It is also suggested on behalf of the DfT that there were other factors which might explain the decrease in turnover e.g. the competitor BMC had a more competitive offering or absence of witness evidence about the decline in the turnover. By reference to a number of documents, it is suggested that competitors were chosen when orders were being made.

[409]There are criticisms in the presentation of the Claimants’ case including(a) wrong oral evidence that the downturn occurred at the inception of the prosecution, whereas it happened three months later at the publicising of the prosecution in April 2019,

(b) the paucity of documentation to show the link between the prosecution and the decline in turnover, and that such documents as there are, are not particularly supportive of this case, and

[410]These points are not accepted. The stark point is that the overall turnover went down sharply from April 2019 onwards and this coincided with the publication of the prosecution whether through official channels or through the competitors trying to capitalise on the prosecution. It would be unlikely that there would be such a precise correlation of the publication of the prosecution and downturn in turnover. There is no difficulty in finding the correlation as regards the catalytic converter part of the business.

[411]It is less easy to infer this as regards the exhausts side of the business. Indeed, one suggestion for DfT is that the fall of 5% in respect of exhausts is within a margin of variation as might occur from year to year. In my judgment, on the balance of probabilities, it is more likely that the downturn is by reference to the prosecution. In my judgment, on the basis of the evidence, the entirety of the downfall of the business in the period between April 2019 and December 2019 is attributable to the news about the prosecution.

[412]The loss of net profits should then be calculated as per the table in the joint experts’ report at para. 2.4 which starts with the lost sales of £3,072,000. It then allows an agreed gross profit percentage (33.8%), giving rise to lost gross profit of £1,038,000. After an agreed 8% in respect of variable costs savings, the loss for the First Year is a sum of £793,000.

(b) The Second and Third Years

[413]The parties disagree about the ongoing projection of KPL’s catalytic converter sales in respect of the Second Year (and the Third Year). The sum claimed for these two years is not in respect of exhausts which represented by far the largest part in turnover of the business of KPL. Despite this, the sums claimed for these two years alone is a sum of £1,039,234 for 2020 a sum of £1,328,788 for 2021: see the report of Mr Fairhurst at para. 5.48. These sums are so great in part because they assume annual growth of 25%. They are also speculative for a number of other reasons.

[414]As regards the increase in growth, Mr Fairhurst’s logic is that this is much less than growth of 86% to September 2018, albeit that the growth to March 2019 was about 26%. In my judgment, that growth reflects a low starting point of a relatively new market. The figure of 26% shows that the growth was slowing down. There was growth of BCM over this period which was of a much lesser order. There was an attempt to explain this in that the base, that is the turnover of BCM was a multiple of the catalytic converter turnover of KPL.

[415]Another factor is that there was not any supporting documentary evidence to support such a large growth over this period, and how such growth would be accommodated in terms of manufacturing potential. Another issue is the extent to which COVID would have affected growth in the second quarter of 2020, with the DfT’s case relying upon the evidence of Ms Ewing to say that this should lead to a finding of nil growth for 2020. In the light of the evidence as a whole, it is not proven that there would have been any growth in 2020.

[416]It is further said on behalf of the DfT that there is an unsatisfactory element at the heart of all of this, namely that there is a decision largely without disclosed documents to explain it, that KPL made a decision in 2020 to cease to manufacture catalytic converters. Mr Hannah was pressed about this in cross-examination (T2/86G-88B), but he was unable to explain why there were no documents about it. It does seem unlikely that such a major decision was made without any contemporaneous documents. The explanation which is given in the evidence without documents is to the effect that the problem directly resulted from the loss of custom in 2019 and therefore resulted in directly from the prosecution. This undermined KPL's ability to revive its manufactured cats business in circumstances where it had lost customers, a critical mass in the market and the ability to benefit from economies of scale. The decision was allegedly made in October 2020. It is said that it was implemented in January 2021, but it is not clear when and how the manufacturing came to an end.

[417]It is contended in the evidence without substantiation by contemporaneous records that the decision to cease manufacture of cats was because of the “decimation” of the business following the prosecution when the critical mass was lost. This is an assertion in circumstances where one would expect that there would have been contemporaneous documents to bear this out and to provide much more detail.

[418]In fact, it is apparent from a document appendix 13 of the report of Mr Fairhurst that there may be another explanation. Manufactured cats were a lower margin product line than either exhausts or the retail of cats which had been purchased by KPL. Once KPL stopped manufacturing cats and limited its cats business to the retail of bought in products, KPL started to make significant profits, albeit on fewer sales which occurred until mid-2022. Further, it is to be noted that there is no claim in respect of the exhaust business from the end of 2019 onwards because it appears to be the case that the exhaust part of the business did well. This raises questions which have not been explored, namely(a) if there was a stigma from the prosecution, how were the exhaust sales able to bounce back immediately following the acquittals,

(b) why was KPL to make greater profit margins from already manufactured cats, and

(c) was the success of the exhaust sales a cause of the decision to cease the manufacture of catalytic converters (with or without the greater profit margin available on sales of already manufactured cats)?

[419]The onus is on the Claimants to explain the business decision to prove its case for consequential loss of the cats business. The inability to explain by reference to contemporaneous documents the decision to terminate the manufacture of catalytic converters is therefore a problem. In the light of these unanswered areas:(i) the Court should allow consequential losses in respect of the reduction in the business of the manufacture of catalytic converters until the decision to cease manufacture in October 2020 and the end of manufacture at the end of the year. In other words, it will allow consequential losses for the year of 2020 in respect of the loss of manufactured catalytic converters.

(ii) it is said that there is no evidence about a separate loss in respect of the sale of non-manufactured catalytic converters in 2020 and that the thrust of the evidence was that the damage was to the manufacturing side of cats: see Mr Hannah witness statement para. 42, Mr Wilson witness statement para. 39 and Mr Cheetham witness statement para. 28. There is reference to a decline in the sale of non-manufactured cats in 2014 relative to 2018, but not to the position in 2020. Despite this, the forensic accountants have compiled figures for the loss of expected sales (both from manufactured products and non-manufactured products each year.) The Court will allow the losses for the year 2020 for the manufacturing side of the business. The Court will not allow an increased turnover for 2020. The Court will not allow for the loss of sales of non-manufactured cats.

[420]The assertion is to the effect that the manufacture of catalytic converters was in addition to the exhaust part of the business. On this basis, the assumption is that the giving up of manufacture of catalytic converters at the end of 2020 was because one part of the business had become uneconomical and that this was a result of the prosecution. This has led the Claimants to seek to claim that the profits would have gone on in the manufacture of catalytic converters in 2021 until trial and thereafter until 30 January 2028 and likely beyond comprising losses for this head alone at over £1,000,000 per annum. It is also said that year on year a sustained growth of 25% per annum can be assumed.

[421]The evidence provided by Mr Hannah at para. 42 and by Mr Wilson at para. 39 and Mr Cheetham at para. 28 is not a substitute for detailed contemporaneous documentary evidence on which to base a case about long term loss of the manufacturing business of catalytic converters. The argument which is presented by reference to that evidence is that a critical mass of the custom for manufactured catalytic converters had been lost and that without it, that part of the business had become uneconomical.

[422]Whilst the Claimants have done sufficient to prove very substantial losses of profit due to the prosecution between April 2019 and the end of the prosecution in December 2019 and for a year thereafter, the case for damages continuing in 2021 and thereafter is not proven. Despite the assertions about the closure of the manufacturing of catalytic converters, there has been no contemporaneous documentary evidence about the reasons for bringing to an end the manufacturing side of the catalytic converter part of the business.

[423]Nor is there evidence about the effect of ceasing the manufacture of catalytic converters on the exhaust part of the business. The exponential growth of the business of exhausts especially from 2021 until the sale of the shares in KPL in 2024 coupled with the vast increase in EBITDA referred to in the next paragraph suggests that irrespective of the downturn in the manufacturing of catalytic converters, there may have been overall a business case to concentrate on the exhaust part of the business. The extent expansion and increase in the profits of the sale of exhausts may well have been made possible by the concentration of effort and resources on exhausts and without the manufacture of catalytic converters.

[424]There are particular reasons to be concerned about this in addition to the fact that there have not been produced contemporaneous evidence in respect of the decision to close the manufacture of catalytic converters. This includes the following. There is evidence, albeit not developed, that the exhausts part of the business did well after the prosecution collapsed. This can be seen from the following:(i) there was no continuing claim for loss of profits of the exhaust part of the business after 2019;

(ii) the EBITDA of KPL and its associate companies has risen from £2.33 million in 2018 to £4.287 million in 2023 despite the prosecution: see Ms Ewing’s report at paras. 8.17 - 8.21, thereby supporting Ms Ewing’s conclusion that the profits generated from exhausts and other products have compensated for the decline in profits from catalytic converters;

(iii) absent contemporaneous documents, Ms Ewing’s view that there is likely to be a combination of factors including lower profitability of catalytic converters relative to bought in products, the need for conformity of production and the strength of competitors including BMC;

(iv) such was the exponential growth of the business as a whole that either there was a decision on the part of the business of KPL to focus on the more profitable exhaust side of the business or the subsequent performance of the exhaust side of the business may have not been possible without the termination of the manufacture of catalytic converters.

[425]The case of the Claimants on continuing loss of profit after the time of the closure of the manufacturing of catalytic converters depends upon an assumption that this was a self-contained part of the business and that the remainder of the business was unaffected by it. In my judgment, it has not been proven that but for the prosecution, KPL would have scaled up and made significant profits from the manufacture of cats in addition to the increased profits in the exhaust business. It is for the Claimant to prove the case and in the context of the spectacular growth in EBITDA straddling the period of the prosecution and the termination of the manufacture of catalytic converters, a lot more would have been required to make out the case of loss not only for 2020 (the year after the prosecution), but for losses in subsequent years.

[426]The decision to stop the manufacture of catalytic converters has to be seen in the context of the success and growth of the exhaust business coupled with the greater gross profit margins available on non-manufactured cats and on exhausts relative to manufactured cats. It is far from speculative to suggest that a decision to cease to manufacture cats may have freed up resources to concentrate on the more successful and growing exhausts business. That apparent success story within the business of KPL may have contributed to the intended share sale in 2024 referred to in para. 22 of the additional statement of Mr Cheetham comprising a sale of the shares by the first three claimants in a total sum of £23,050,000. Mr Cheetham supposes that if there had not been a loss of the manufacture of catalytic converters, then the value of the EBITDA would have been higher still when the sale of shares took place.

[427]There has been no analysis by reference to documents which must have existed about the decision to give up the manufacture of catalytic converters or thereafter about the impact of giving up that part of the business on the rest of the business. The Claimants have not proven that the growth of the business would have been even more successful with the manufacturing business of catalytic converters. This would have required extensive proof, and it is not proven without subjecting to examination the upward trajectory of the business up to the sale in 2024 and considering what would have been the impact of trying to go on with the much less profitable manufacturing business side by side.

[428]The failure to consider these very significant aspects of the history of the business is such that KPL is unable to prove the continuing claim for losses after 2020, coinciding as it does with a period of growth leading to a sale of shares in 2024. It is not made good simply by the making of assertions by the shareholders to that effect, and by Mr Cheetham in particular. There are too many factors which might show a contrary picture for the Court to be persuaded on the limited material which it has that such a case is made out. The onus of proof is ultimately with the Claimants and, in my judgment, it has not been made out.

[429]In the circumstances, the Court is unable to find substantiated the alleged continuing losses for the year 2021.

(c) The Remaining Years

[430]The reasoning in respect of 2021 applies also to the Remaining Years. Further and in any event, even if there had not been a decision to cease to manufacture in 2020, it would have found that the causal link between the prosecution had by then ceased, such that no losses could be attributed by 2022 and thereafter to the prosecution. This was in the context of a business which despite the prosecution was then doing well at least in respect of exhausts, and where at least the profit margins on the sales of already made catalytic converters was greater than any manufactured items. The claim for loss of profits for the Remaining Years is therefore rejected.

(d) KPL’s additional costs

[431]There are various heads of alleged additional costs of KPL which now stand to be considered.

(i) Additional borrowing costs

[432]KPL seeks compensation for arrangement fees of £88,081 and additional interest payments of £610,849 arising from a refinancing package entered into in part by KPL and in part by Timec 1395 Ltd alleged to be necessitated by the impact of the prosecution. KPL has sought to prove this predominantly by reference to Mr Fairhurst’s report in which information not contained in the witness statements has been related to the expert.

[433]There are a number of unsatisfactory features about this head of special damages. First, there has been an almost ninefold increase in the sum claimed from the sum of £81,700 as contained in its schedule of special damages of November 2023. This change is unexplained. The original claim comprised increased administrative charges of £72,000 being four years increased cost of £18,000 per year and increased interest costs of £9700. It was explained that these arose as a result of having to alter a factoring agreement with Close Asset Finance in 2020 which resulted in the administrative charge increasing from £30,000 to £48,000 per annum and the interest rate increasing by 0.025%. The schedule did refer to charges for re-finance being met by Timec 1395 Limited, an associated company of KPL, but which had not to date been charged to KPL, and so no claim was made in respect of the same at that stage in November 2023.

[434]The witness statement evidence was very limited, comprising para. 23 of Mr Cheetham’s witness statement to the effect that the declining turnover in 2019 and 2020 caused KPL to have to seek new finance from Cambridge and Counties Bank to Timec and also from Close Finance. There were details of a loan of £1 million. This did not say that there was a departure from the schedule of special damages.

[435]Ms Ewing then considered the claim for £81,700. Mr Fairhurst presented the larger claim of almost £700,000 which was said to be on the basis that Timec had by this stage passed on additional charges incurred by it, although Ms Ewing said that £250,000 had not been re-charged.

[436]The criticisms now made by the DfT are as follows:(i) the absence of explanation for the departure from the special damages position in November 2023 of £81,700;

(ii) very detailed criticisms of the loan charges as set out in the Counter-Schedule at paras. 30d, , 30e, 32a and 32b. This shows that such financing arrangements as have been made appear to have to come to an end by 2020, and the position thereafter has not been described. Further, the purpose of the loans is not stated and no supporting evidence has been provided;

(iii) the alleged additional costs contradicted in the accounts of KPL which show that KPL’s total interest payments in the years following the decision to prosecute are less than in the preceding years. Further, the combined interest charges incurred by KPL and Timec are greater in the years after refinancing by £47,000 per annum. This is set out in detail in the Counter-Schedule at paras. 30c, 32c and 32d.

[437]The original claim for £81,000 has not been substantiated but has been taken over by the new formulation of the claim for almost £700,000. In the light of these gaps and inconsistencies, the Claimants have failed to prove additional interest charges as per the figures provided to Mr Fairhurst in the sum claimed of almost £700,000. In the circumstances, no claim for additional interest charges has been made out. (ii) Wasted recruitment costs

[438]The claim is made for increased employment costs on the basis that in April 2018, KPL dispensed with the services of Mr Greaves and employed Mr Mark Brickhill in the expectation of a management buyout (“MBO”). It is said that by reason of the prosecution, the MBO did not proceed and so the costs of acquiring Mr Brickhill's expertise were entirely wasted. There are therefore sought(a) the costs of compromising employment claims of Mr Greaves,

(b) the agency costs in respect of Mr Brickhill,

(d) the costs of compromising any employment claims of Mr Brickhill. They comprise a sum of £389,400.

[439]Even assuming that Mr Brickhill was employed in anticipation of an MBO, and the MBO did not proceed because of the prosecution, it does not follow that the costs were wasted. It is to be inferred that there were substantial benefits which arose from employing Mr Brickhill. Otherwise, he would not have remained with KPL for 4.5 years. The last two years of his tenure in KPL coincided with the very substantial profits made by KPL in 2021 and 2022 and beyond. Mr Brickhill has not been called to give evidence. It is not apparent why his employment ended or what employment claims he might have had, but this was three years after the end of the prosecution and was not therefore damage suffered referable to the prosecution.

[440]This head of claim depends upon showing that Mr Brickhill was engaged solely for a purpose which failed due to the prosecution. His engagement over a period of four and a half years demonstrates that, whatever the original intention, his services were of such value to KPL that he was retained. In those circumstances, and absent an explanation to the contrary, it is not proven that the replacement of Mr Greaves by Mr Brickhill was wasted expenditure as alleged or at all. (iii) Wasted management time

[441]The Claimants make a claim for wasted management time in a sum of £193,315. This is said to comprise the costs to KPL for time diverted to dealing with the prosecution and is by reference to the hourly rate charged. The assertions of the hours wasted do not appear to be substantiated by contemporaneous documents and there is minimal evidence from the first four named claimants as to the amount of time diverted. In the end, the claim for wasted management time fails for a more fundamental reason. There is not identified profits which would have been earned by KPL but which were not earned because of the diversion of the time of the first to fourth claimants. Insofar as there have been profit loss because of the prosecution in 2019, those would have been awarded if liability had been found as set out above. There was an argument in Mr Fairhurst's report that if management time had not been diverted then there could have been new additional lines of business sought which would not have been reflected in the loss of profits claim. There is no evidential basis for that assertion and so it is not an arguable head of claim. (iv) Other costs incurred by KPL

[442]There was a PR campaign in the sum of £24,560. If liability had been found, that claim together with interest of £4151.22 at 1% above base rate is not disputed.

[443]There is said to be a claim in respect of legal costs relating to Toby Massey of BMC in the sum of £4,875. There is no evidence to support these legal costs. In the claim of KPL there is referred to a sum of £3273 comprising costs incurred by four of the claimants in dealing with the prosecution. These are not costs recoverable at the suit of KPL.

(e) Claim of the first three claimants

[444]Misfeasance in public office, like malicious prosecution, has not been established. However, if the tort of misfeasance in public office had been established as regards the first three claimants, then it would also have been established as regards the sixth claimant. Likewise, if the tort of malicious prosecution had been established as regards the first three claimants, then the tort of misfeasance in public office would likewise have been established both as regards the first three claimants and KPL. In these circumstances, the first three claimants do not contend that they have suffered any additional loss beyond that which KPL will already recover in damages.

(f) Claim of the Fifth Claimant

[445]In April 2018, Mr Greaves resigned as an employee and made way for Mr Brickhill, as referred to above. He says that his ability to obtain substitute employment was damaged because of the decision to prosecute and the prosecution as a result of which he has suffered and will continue to suffer losses in a sum of £237,259 plus interest and continuing.

[446]In the schedule of special damages of Mr Greaves, he said that he did not seek employment until shortly before the commencement of the prosecution against him. He says that due to the prosecution and the stresses and stigma associated with them, he was unable to find equivalent work until August 2021 when he secured a post with an initial salary of £22,000. Thereafter, he was never able to obtain comparable work although in his current employment he now receives £40,000 per annum.

[447]As stated in the closing submissions of DfT at para 88, it is apparent that in the period of June to December 2018, Mr Greaves made five job applications all of which offered comparable remuneration to the KPL package. All of these applications were unsuccessful. The Court bears in mind his evidence that he was not in a good place to perform well in interview because of the questions which he was being asked by the DVSA at that point in time: see T/3/24/4 and following. It is however striking that Mr Greaves made such little progress in a number of applications.

[448]Mr Greaves only applied for a single role during the currency of the prosecution. It was not unreasonable that Mr Greaves on advice believed that he needed to disclose the prosecution. It was inevitable, and it was the case, that the prospective employer was not able to look beyond the prosecution.

[449]After the prosecution had failed, he only made one further application for a role in the beginning of 2021. He refers to the effect of COVID making his position difficult. He has not produced any evidence to substantiate his difficulties from December 2019 onwards.

[450]Mr Greaves has also failed to produce evidence to show what his prospects would have been in the job market at that stage as a man in his mid-fifties. Even making some allowance for the interview where he was not in good form in 2019, the failure to make headway in the job market in that period of between June to December 2018 is still telling as regards his prospects of obtaining employment. His case is not made better by the fact that he did not make applications prior to COVID in the period of over three months between the collapse of the prosecution and the outbreak of the pandemic. Without evidence to substantiate what was going on in the market at the time, COVID does not explain why the next application was not until February 2021.

[451]The onus here is on the party making the claim. There is no evidence led of the relevant market to prove that search opportunities would have been available to him at the relevant times but for how he felt in 2018 and after the collapse of the prosecution in December 2019. This would include considering the effect of COVID. In my judgment, Mr Greaves has failed to show that he had more than a speculative chance of obtaining a suitable job.

(g) Claims for general damages

[452]Before discussing the claims for general, aggravated and exemplary damages, there will be summarised parts of the witness statements of the claimants referring to the impact of the prosecutions on them.

[453]The First Claimant, Mr. Wilson said that from 28 January 2019 when he was told that he was to be prosecuted for fraudulent trading until the acquittal in December 2019 was an incredibly stressful emotional and demanding time. He recalls how it overshadowed the preparations for his daughter's wedding, how he had to resign from being chair of a cancer charity which he had chaired for 11 years and how the business lost a large part of its catalytic converters to BMC. He was asked to leave the motor industry management committee IAAF and he believes that his personal reputation in the industry and in the Manchester business community was severely tarnished.

[454]The Second Claimant, Mr Hannah, found terrifying the prospect of a custodial sentence as well as financial ruin for himself and his family. He described a planned trip to the Grand Canyon for 2019 having to be cancelled due to the prosecution at a time when his wife was losing her sight and how that opportunity became lost for his wife and himself. He referred to having to give up trusteeships of charities in the field of combating homelessness and loneliness.

[455]The Third Claimant, Mr Cheetham, said that the experience of being prosecuted was life changing and terrifying. He had to cancel a family holiday. He believes that the prosecution affected not only himself but his wife and four children who were teenagers.

[456]The Fourth Claimant, Mr Bentley, said that the prosecution had a profound effect on him with the prospect of going to prison, a confiscation order and his career in ruins. He started to suffer from anxiety and panic attacks. He became withdrawn from his friends and family. It was humiliating on a professional level and he does not think that he will ever shake off the bitterness.

[457]The Fifth Claimant, Mr. Greaves, said that he felt like a ‘rabbit in the headlights’ and in a state of disbelief. He felt a sense of bitterness which led him to voluntary works with NHS Samaritans to channel some of his negative thoughts and feelings to help others. He was unable to send his younger son to a fee paying secondary school. As he recalled the experience in the witness box, he was palpably distressed.

[458]The above evidence has not been challenged significantly in cross-examination. The features relevant in addition to the above are as follows:(1) the prosecution was for serious financial wrongdoing;

(2) the proceedings were protracted and longstanding over a period of 11 months from intimation of prosecution to acquittal, causing inevitably significant loss of time, worry and pressure to each of the Claimants;

(3) the almost certain prospect of imprisonment on conviction and further of large costs orders and confiscation proceedings;

(4) the impact on the reputations of the first five claimants;

(5) the Claimants are persons of good character. They believed that they had previously cooperated and had the possibility of a prosecution behind them which added to the distress and feeling of being prosecuted unjustifiably.

(h) The law on general damages

[459]Damages can be awarded for damage to reputation as well as injuries to feelings, that is the indignity, humiliation and disgrace ensuing from the prosecution. They are not separated in the case law.

[460]The decision of the Court of Appeal in Thompson v Commissioner of Police of the Metropolis

[1998] QB 498

referred to damages before any element of aggravation and any pecuniary loss, Lord Woolf MR said:

“The figure should start at about £2,000 and for prosecution continuing for as long as two years … about £10,000 could be appropriate. If a malicious prosecution results in a conviction which is only set aside on an appeal this will justify a larger award to reflect the longer period during which the claimant has been in peril and has been caused distress.”

[461]Lord Woolf MR said (at p.516) that the guideline figures are not to be applied in a mechanistic manner. In Simmons v Castle

[2012] EWCA Civ 1039

, it was stated that there is to be 10% uplift on damages for non-pecuniary loss in all types of civil claim.

[462]Adjusting the above for inflation, the guideline figures are adjusted from(a) £2,000 to £3,857, and with a 10% adjustment to £4,243, and

(b) from £10,000 to £19,285 and with a 10% adjustment to £21,214.

[463]Other cases cited as relevant comparators include:(i) Rees v Commissioner for the Metropolitan Police

[2019] EWHC 2339 (QB)

where each claimant was awarded a sum of £27,000 [equivalent of £33,842 allowing for inflation] in a malicious prosecution for a murder, but this case involved a 50% uplift because of everlasting taint of murder case. There was also a reduction from £30,000 [equivalent of £37,602] because of previous criminality. The general damages were not the subject of the appeal.

(ii) Clifford v Chief Constable of Hertfordshire Constabulary

[2011] EWHC 815 (QB)

£10,000 [£15,914 with inflation and 10% uplift] in a malicious prosecution for child pornography noting the particular stigma of the offence.

[464]The submission of the DfT is that the “basic award” should be £12,500 each and the submission of the Claimants is that it should be “considerably in excess of £75,000 each.” There is nothing to indicate in the submissions of the Claimants the principled basis of a figure of in excess of £75,000.

[465]Having taken into account the witness evidence and the features summarised above as well as the case law, the basic award per claimant would have been a sum of £25,000 each.

(i) Aggravated and exemplary damages

[466]The following points are derived from McGregor on Damages 22nd Ed. at para. 45-013 – 45-014:(i) aggravated damages are “Such damages [that] can be awarded where there are aggravating features about the case which would result in the plaintiff not receiving sufficient compensation for the injury suffered if the award were restricted to a basic award”: see Thompson at p.516;

(ii) aggravating features may include“humiliating circumstances” and /or the prosecutorsacting in a“high handed, insulting, malicious or oppressive manner ... in conducting the prosecution”, and“aggravating features [in] the way the litigation and trial are conducted”.

(iii) aggravated damages can only be awarded to individuals (so not C6). They remain compensatory in nature and so double counting with the basic award must be avoided – see Rowlands v Chief Constable of Merseyside Police

[2007] 1 WLR 1065

at [26]).

(iv) likewise, insofar as they are warranted by oppressive etc behaviour on the part of a defendant, double counting with any award of exemplary damages must also be avoided.

[467]Exemplary damages are available where there is oppressive, arbitrary or unconstitutional conduct or where the conduct is calculated to result in profit: see Rookes v Barnard

[1964] AC 1129

. Further, the decision of the House of Lords in Kuddus v Chief Constable of Leicestershire

[2002] 2 AC 122

led to the features of the defendant’s behaviour having to be considered rather than the cause of action.

[468]The Claimants place considerable reliance on the amounts awarded in Rees, where the aggravated damages were £18,000 and the exemplary damages between three claimants were £150,000. That was a very different case of murder where claimants were held in prison for almost two years based on falsely manufactured evidence which was characterised as disgraceful. It is important to tailor the award to the particular facts of each case.

[469]In the instant case, the factors which might give rise to aggravated damages may also give rise to exemplary damages, and, as noted at para. 466(iv) above, double counting must be avoided. If the court had accepted the case of the Claimants, it would have found that the prosecution was brought for an improper purpose. That is to say that on the Claimants’ case, the DfT deliberately misused its public powers and prosecuted in order to evade findings that the prosecution system of the DfT within the VCA was non-existent or wholly unsatisfactory. The prosecution therefore was brought on this analysis, to protect the VCA and its officials and at a fairly senior level. On this basis, this conduct would have been sustained over a period of years, it would have been premeditated and deliberate and subjecting the individual claimants to fear and jeopardy of losing their liberty, livelihoods and reputations.

[470]This can be expressed either by way of aggravated damages of £15,000 for each of the five individual claimants or as exemplary damages of a sum of £75,000 to be shared between the individual claimants. This should be expressed as one or the other, but not as both. It will be expressed as exemplary damages rather than aggravated damages. It is important to repeat in case this and the preceding paragraphs are seen out of context that no findings to this effect have been made, and this analysis is to give an indication as to the findings which would have been made if liability had been established.

XXI List of quantum issues

[471]It therefore remains to see that the quantum issues have been dealt with in such a way as to answer the quantum issues.

(a) Quantum List of issues

[472]As regards the five individual claimants, their collective quantum issues are as follows:

“Issue 6: are they entitled to damages under the following heads of loss: a. Damages for distress, vexation and anxiety (Particulars of Claim at 79(1)(e) and Amended Defence at 79) b. Damages for loss of liberty (Particulars of Claim at 79(1)(f) and Amended Defence at 79)?” a. Damages for distress, vexation and anxiety (Particulars of Claim at 79(1)(e) and Amended Defence at 79) b. Damages for loss of liberty (Particulars of Claim at 79(1)(f) and Amended Defence at 79)?”

[473]As regards issue 6(a), the Judgment has so held in the sums set out above. As regards issue 6(b), damages for loss of liberty, this is about attending at the police station to be charged and at court for the various hearings. This has not been the subject of separate submission, but to the extent that it is relied upon, it is embraced within the other general damages.

[474]As regards the first three named claimants, as regards issue 6(c), damages would have been sought in respect of a reduction of the value of their shareholdings in KPL, but it was accepted that this would not arise because of the awards in favour of KPL. As regards issue 6(d), there is a claim for damages for loss of earnings of Mr Greaves, but this has been rejected. As regards Issue 6(e), the claim for loss of profits of KPL has been accepted to the extent set out above. The claims for increased finance costs and damage to value have not been accepted (to the extent that they were pursued).

[475]As regards issue 7, the basic damages have been dealt with. Likewise, as regards issue 8, the claims for aggravated and/or exemplary damages have been considered.

[476]It therefore follows that the damages which would have been established, if the claim on liability had not failed, comprise the following:(i) loss of profits of the whole business for 2019 from April 2019 when the decision to prosecute became known in a sum of £793,000;

(ii) there has been proven a partial loss of turnover of profit on the manufacture of catalytic converters for the Second Year, that is 2020. There is to be taken into account the turnover of manufactured converters for that year. In a helpful further joint report, the relevant figures have been set out which are agreed on the basis of no annual growth. There is a query as to whether there was meant no increase in volume or no increase in volume and prices. I agree with the Claimants’ approach of using the increased prices. It therefore follows that in the table at the end of the report, the Court will adopt Alternative A and the sum of £185,042.

(iii) the loss of profit figures are subject to interest at a rate to be assessed;

(iv) general damages of a sum of £25,000 for each of the first five claimants;

(v) aggravated damages of £15,000 for each of the first five claimants or: alternatively exemplary damages in a collective sum to be divided between these claimants of a sum of £75,000. It will be expressed as the exemplary damages rather than aggravated damages;

(vi) other miscellaneous sums including PR charges in a sum of £24,560 and interest thereon of £4,151.22.

[477]No sums have been calculated in respect of interest. In the event that this arose for determination, the scope of the argument about the rate of interest or the period of interest would be confined. Unless required, this judgment will not be prolonged still further by considering the precise interest payable.

XXII Conclusion

[478]The discussion about quantum has been for the purpose of completeness. In fact, for all the reasons set out above, the claim in malicious prosecution is dismissed. So too, the claim in misfeasance in public office is dismissed. The case that the DfT brought a case and conducted a case with no reasonable or probable cause or acted in bad faith or maliciously has been rejected. The Claimants have failed to establish the essential ingredients of the alleged torts. It should be added that none of this detracts from the acquittals in the Crown Court, but it reflects on the fact that a liability for these torts is not a corollary of an acquittal or even the collapse of a prosecution. For the reasons above stated, the claims for malicious prosecution and for misfeasance in public office are dismissed.

[479]It remains to thank and commend all Counsel in this case for their enormous industry, for their deep knowledge and experience in this area of the law, and for the assistance which they have provided to the Court at all times.

Anthony Wilson & Ors v Department for Transport [2025] EWHC 1387 (KB)

II The parties

III Regulatory control

IV The allegation that KPL was supplying illegal catalytic converters

V Investigation by the VCA

VI Judicial review correspondence and proceedings

VII A new investigation by DVSA

VIII Progress of the investigation

IX Events after consent order of June 2018

X The conduct of the investigation

(b) Conduct of the prosecution

(c) The issues in the prosecution

XII The dismissal of the case

XIII General approach to the evidence

(a) Claimant’s evidence

(b) Defendant’s witnesses and evidence

(c) Inferences from evidence not called

XIV The law in respect of malicious prosecution

(a) Malicious prosecution

(b) Reasonable and probable cause: legal framework

(c) Malice

(d) Improper motive

(e) Examples of improper motive

(f) Mixed motive

XV The law in respect of misfeasance in public office

(a) The nature of the tort of misfeasance in public office

(c) Element (4): Malice as an essential ingredient of the tort

(d) Targeted malice (d) Targeted malice

(e) Untargeted malice

(g) Element (5): causation (g) Element (5): causation

(h) Element (6): actionable damage (that is not too remote)

XVI The list of issues

(a) The Claimant’s case on fraud

(b) The DfT’s case

(c) Evidence of financial gain and/or harm to competitors

XVIII The various stages from the VCA inquiry to the withdrawal of the prosecution

(a) The impact of the VCA inquiry/investigation (issues 1-3)

(b) Discussion

(c) The impact of the judicial review claims (issue 4)

(d) Discussion

(e) The impact of the DVSA investigation (issues 5 and 6)

(f) Discussion

(i) The impact of the advice of prosecution counsel

(k) The impact of the collapse of the case (issues 8 and 9)

(l) Discussion

(o) Conclusion on reasonable and probable cause

XIX Misfeasance in Public Office: the six Claimants

XX Damages

(a) The First Year

(b) The Second and Third Years

(c) The Remaining Years

(d) KPL’s additional costs

(i) Additional borrowing costs

(e) Claim of the first three claimants

(f) Claim of the Fifth Claimant

(g) Claims for general damages

(h) The law on general damages

(i) Aggravated and exemplary damages

XXI List of quantum issues

(a) Quantum List of issues

XXII Conclusion

Cited in 2 later judgments