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Is There any Money in it? Public Law Damages

David Hart QC

May 2005


Is There any Money in it? Public Law Damages

Seminar Paper delivered in May 2005 by David Hart

The basic rule

1. The hapless owners of M.V. Jacqueline (R. (Quark Fishing Ltd) v. Secretary of State for Foreign and Commonwealth Affairs [2004] 3 WLR 1) may have thought that they were about to receive damages from the Foreign Office for being stopped from catching the Patagonian toothfish. After all, in 2002 they had just persuaded the Court of Appeal that the FCO had acted unlawfully in telling those in charge of fish licences on South Georgia not to grant Quark a licence, and they were talking about losses in excess of £2m. What lay behind this direction was the FCO's erroneous belief that Quark was guilty of a significant conservation offence. However, it was not until another trip to the Court of Appeal in 2004 that Quark was to discover that no such damages were available to them.

2. The Quark case is a salutary reminder of the basic rule that there is no automatic claim for damages for unlawful action. True it is that a judicial review claim may include "a claim for damages, restitution or the recovery of a sum" (S.31(4) Supreme Court Act 1981), but only if "such an award would have been made if the claim had been made in an action" So, an applicant must have a conventional cause of action arising out of the same facts which made the act of a public authority unlawful in the first place.  And, as we shall see, the scope of those causes of action is narrower than the reach of administrative unlawfulness.

3. The prime candidates for damages claims against public authorities are (i) breach of statutory duty; (ii) negligence; (iii) misfeasance in public office; (iv) Human Rights Act damages; and (v) damages for breach of European obligations. In specific circumstances, an action for false imprisonment may lie.  Finally, if money was paid over to the public authority by way of taxes unlawfully demanded, then there is likely to be a restitutionary claim for the return of the money.  This paper will confine itself to the five principal causes of action.

Breach of statutory duty

4. Its name might suggest that this is the first port of all for those affected by public law unlawfulness. However, the difficulty with any claim for breach of statutory duty is that it has been well-nigh impossible to fulfill its long-established criteria, namely that (a) the duty in question was imposed for the protection of a limited class of the public and (b) Parliament intended to confer a private right of action for breach of that duty : X v. Bedfordshire CC [1995] 2 AC 633, 731D.

5. Very rarely does the statute expressly confer such a private law cause of action, and the courts are very wary of implying such a claim if alternative remedies are available for the breach. Olutu v. Home Office & CPS [1997] 1 WLR 328 is a good example of where there was a limited class under (a), but no intention to confer a remedy under (b). The CPS failed to bring Olutu before the Crown Court within the custody time limits, which were plainly passed for the protection of those in custody; there was however no indication in the statutory regime that a remedy was intended to be conferred for a breach of that regime. The claim failed. Usually, there is another remedy available (in Olutu, obviously, a bail application) which is powerful evidence against there being any implicit right to damages in the statute. A claim by our tooth-fishermen failed on both (a) and (b) (see the judgment of Collins J at [2003] EWHC 1743 (Admin) at [41]), though whether there was a relevant duty at all was itself questionable.

6. However, it should not be assumed that claims for breach of statutory duty will necessarily fail, particularly in circumstances where the claimant can convincingly invoke a constitutional right affected by the breach in question. A strong dissent from Lords Bingham and Steyn in Cullen v. RUC [2003] 1 WLR 1763 can be relied upon in this context. The RUC were found to be in breach of their statutory duty to provide the claimant with reasons for its deferral of his right of access to a solicitor. The majority found no private law remedy, with the right to seek judicial review being sufficient remedy for the breach in question.

7. The dissenting minority were sceptical about the efficacy of judicial review given the time-frame, and in the absence of reasons, and hence found it necessary to find a remedy (criterion (b)) for the undoubted language of rights (criterion (a)) found in the statutory provision. Hence, the minority found the breach actionable per se, though would have been inclined to hold that proof of a serious breach was necessary for a damages action (on EU principles, for which see below).  And in that last comment lies the clue to why breach of statutory duty has been so difficult to establish in the past, namely that, once a breach of the statute is shown, whether innocent or culpable, traditionally there has been no brake on liability.

8. Note both Olutu and Cullen were cases where there had been no judicial review, and therefore it was open to argue in these damages actions that judicial review was an ineffective remedy. Forensically, that may be difficult to pull off, if the damages claim is tacked on to a claim for judicial review (whether or not successful in itself).

Negligence

9. Traditionally claims in negligence have failed for similar reasons to those applicable to breach of statutory duty, usually because no duty of care can be established. The courts are inclined to find lack of proximity in Caparo terms between the claimant and the public authority, and often the statutory regime itself has been held to be a strong indicator that a common-law duty of care in negligence should not lie. There is a difference between the two causes of action, however, as Lord Steyn pointed out in Gorringe v. Calderdale MBC [2004] 1 WLR 1057, 1059: the question in a breach of statutory duty case is whether the statute creates a private law remedy, whereas in negligence, "a basic question is whether the statute excludes a private law remedy".

10. Further, if the impugned decision is at the policy level, particularly if it concerns the exercise of a power in the context of competing considerations, the courts may find the matter non-justiciable in the law of negligence.  The point is well illustrated by the Court of Appeal's decision in A v. Essex CC [2003] EWCA Civ. 1848. Adoptive parents sued the adoption agency for damages for failing to tell them of the past disruptive behaviour of the boy they subsequently adopted. At the policy stage on what to tell prospective adopters, there could be no criticism, unless possibly if that decision was entirely unreasonable. However, once the agency had decided what information to give, it could owe a duty of care to ensure that such information was indeed given.

11. So it can be seen that the more promising cases are those where the administrative error occurs at a fairly low level. A recent example is A & Kanidagli v. SoS Home Department [2004] EWHC 1585 (Admin). Mrs A's passport was mistakenly endorsed with an entry clearance prohibiting her from having any recourse to public funds. An administrative error in the Home Office meant that Mr K's status letter granting him exceptional leave to remain arrived 8 months late.  In each case, the error deprived the applicant of public funds.  On assumed facts, Keith J held that the Home Office was liable in negligence to the extent of the funds lost by both applicants by its error.

12. But the limitations of such a cause of action will be apparent. On the A v. Essex test, it expressly does not catch the typical judicial review case where there has error or unlawfulness prior to the decision under challenge.  Nor does the seriousness of the carelessness involved make any difference to the absence of remedy - unless it amounts to bad faith, the subject of the next tort.

Misfeasance in public office

13. In the case of misfeasance in a public office, we are by definition in public law territory. But, as is well known, the bar for liability is set very high, this time in respect of mens rea. The claimant must show that (a) D's conduct was specifically intended to harm the claimant (i.e. with improper or ulterior motive) or (b) D knew or was reckless that his conduct was unlawful and was likely to harm the claimant.  It seems unlikely that the law will relax these tests in the light of the recent reaffirmation of these principles by the House of Lords in Three Rivers DC v. Bank of England [2003] 2 AC 1.

14. This cause of action therefore does not catch typical public law cases such as (a) the authority getting the law or its facts wrong (innocently or carelessly) (b) the authority behaving in a procedurally unfair fashion prior to the decision due to some misunderstanding or lack of imagination in its investigations. Hence the plea could not be made in Quark or indeed in R (Banks) v. DEFRA [2004] EWHC 416 where the judge found a catalogue of errors by DEFRA in its making and maintenance of a herd movement restriction order.

15. If however bad faith (of either variety) is proved, then it appears that in some circumstances a claimant can recover damages, including exemplary damages, even though he has suffered no personal injury or financial loss.  This is the effect of Watkins v. Home Office [2004] 4 All ER 1158, where a prisoner recovered for deliberate interference with correspondence from his lawyers. The Court of Appeal found that this amounted to an interference with a constitutional right and was hence actionable per se. The precise boundaries of such constitutional rights are unclear and must await consideration by the House of Lords.

Human rights damages

16. A finding of unlawful administrative action appears to be a good head start in establishing a claim for damages under sections 7 and 8 of the Human Rights Act, as many losses can be characterised as breaches of one or more Articles of the Convention and there is little if no scope for establishing any "defence" under, say Article 8(2) of the Convention in the light of that unlawfulness. For a brief period it was thought by some that that this new statutory cause of action would open the door closed by the restrictive effect of existing causes of action. But Anufrijeva v. Southwark LBC [2004] 2 WLR 603 and R (Greenfield) v. Home Office [2005] 2 WLR 240 has kept the door firmly on the chain.

17. Anufrijeva involved three Article 8 claims for damages for maladministration in the handling of housing and asylum applications. The Court of Appeal sought to restrain awards of damages at all three stages of the process, namely (i) breach; (ii) whether to award damages; and (iii) quantum of any damages.

18. First of all, at the breach stage, they held that there must be (a) an element of culpability, including some knowledge that the claimant's family were at risk, coupled with (b) some substantial prejudice in fact to the claimant, before a breach of Article 8 could be established (paras 45-47).

19. Secondly the Court of Appeal underlined that there was a wide discretion as to whether damages should be awarded (unlike the common law where they are awarded as of right), and that an award should be made only when it was "necessary" (s.8(3) HRA 1998) so to do in order to afford just satisfaction.  The finding of a violation would often itself be just satisfaction: indeed damages are a "remedy of last resort": para.56. Further, the exercise of the discretion as to damages should include consideration of the balance between the interests of the victim and of the public as a whole (para.56).

20. Applying these first two criteria, all three claims for general damages arising out of the delays failed. In one of them, N, there was psychiatric evidence of depression said to have been caused by the failure of the Home Office to grant N a visa. The Court of Appeal reversed the judge's finding that the fact that the Home Office should have anticipated the possibility of this was sufficient culpability/knowledge under (a) above as to amount to a breach of Article 8. It is understood that this case may be going to the House of Lords.

21. The last word on the third criterion, quantum, can be found in Greenfield. This concerned a breach of Article 6, in that a prisoner was ordered to serve additional days imprisonment by a tribunal which was not "independent", and in circumstances where legal representation had been refused. The House of Lords made it plain that domestic courts should follow the Strasbourg standard practice of regarding findings of Article 6 violations as sufficient without awarding general damages - thus reinforcing Anufrieva on the second criterion. As for the third, in such cases where damages were warranted, damages should be modest and in line with Strasbourg awards - contrary to suggestions in earlier cases including Anufrijeva that tort damages could provide some guidance.

22. One thing should be noted about both decisions. They were both concerned with general damages (non-pecuniary losses in Strasbourg argot), for delay, frustration, depression, or the loss of an opportunity to achieve a better result from the hearing in Greenfield.   Special or pecuniary damages (of the type envisaged in Quark for loss of catch and hence profits) are considered but shortly and hence obiter. In such loss of profits claims, it will of course to be necessary to show a breach of the underlying right, but if that is shown and it "has clearly caused significant pecuniary loss, this will usually be assessed and awarded." : Anufrijeva at para.59.  Greenfield is a little less upbeat: "It is enough to say that the [Strasbourg] Court has looked for a causal connection, and has on the whole been slow to award such compensation"; para.11.

23. Now let us return to the facts of Quark.  Their claim was for the loss of a licence on renewal caused by an unlawful decision-making process. They argued that they had a possession within the meaning of Article 1 Protocol 1 in that they had "an entitlement to or a legitimate expectation of an entitlement to the licence in question." The Defendants said that this did not amount to a possession. In fact this Article had not been extended to South Georgia so the claim failed on this jurisdictional point.  However both Collins J and the Court of Appeal thought that the Article 1 point would otherwise have been arguable. Assuming that Quark had cleared this hurdle, they would then have to show that the breach by the FCO was culpable and that the FCO must have had some knowledge of their predicament when it made its decision.

24. Consideration of this example and the cases reveals that it is far from easy to turn an impact potentially affecting one's human rights into a valid claim for damages. The entitlement is far from automatic. However, it can be done, as R (Bernard) v. Home Office [2002] EWHC 2002 (housing, Sullivan J, approved in Anufrijeva) and the post-Anufrijeva case of Andrews v. Reading BC [2005] EWHC 256 (QB) in which Calvert-Smith J gave damages to someone affected by increased road noise against the Council responsible for the scheme which led to that increase. In Bernard there would have been no claim at common law, though Andrews might have had a claim that the Council caused or permitted a nuisance.

25. One other difference between a human rights claim and one in misfeasance. Exemplary damages are not awardable under the HRA whereas, as we have seen, they may lie under the claim in misfeasance.

EU damages

26. This is the fifth and last of our principal causes of action for administrative wrongs. A member state may be liable in damages for any number of EU wrongs, whether not implementing a Directive, adopting legislation against the terms of the Treaty or violating an individual's directly effective rights. The breach can be by any organ of state, whether the legislature (Factortame), the executive at any level or indeed the Supreme Court.

27. The criteria are now well known; the public body will be liable in damages if it has committed a sufficiently serious breach of a provision of EU law which was intended to confer rights on individuals and such an individual has suffered loss.

28. Note there are brakes on this liability similar to those imposed in the causes of action set out above. It is not enough to demonstrate a breach of EU law; one must show that the breach is sufficiently serious, according to the ECJ's interpretation of that phrase: see the House of Lords in Factortame (no.5) [2001] AC 524 on the details. (Compare the Anufrieva rules in the human rights context).

29. Secondly, the EU law in question must be intended to confer rights on individuals: see Three Rivers (supra) where a Banking Directive was held by the House of Lords not to confer rights on depositors and Bowden v. South West Water [1999] Env.LR 438 where a breach of the Shellfish Waters Directive was held arguably to confer rights on shellfishermen whose waters should have been designated under that Directive. The similarity with the breach of statutory duty test is perhaps obvious, though a far broader definition of "intended to confer rights on individuals" is in fact adopted by the ECJ than in the domestic breach of statutory duty case law.

Conclusion

30. Though there are common themes, there are no consistent rules for liability across the gamut of causes of action which one has to consider before deciding whether there is a good claim for loss caused by public law unlawfulness. There is a strong strand of thought that public law claims are really all about judicial review remedies, quashing, ordering or declaring. Yet it is often beyond the control of the claimant (Factortame and Quark being good examples) as to just how it takes to get a decision quashed and the entitlement of the applicant recognised, whilst it is that length of time from decision to quashing that conditions whether or not the claimant suffers significant losses.
31. There has been much judicial observation about the inadequacies of damages in this field, and this has triggered off a Law Commission discussion paper (to be found on the website) on whether this topic should be considered further by the Commission. It is early days, and whilst one might be sceptical about the chances of the Treasury relaxing the grounds upon which central and local government can be sued, it is perhaps mildly encouraging that this topic is being looked at as a public law whole, rather than, as in the past, via the fragmented requirements of the individual private law torts in question.

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Author(s):

David Hart QC

 

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