Case No: A2/2012/1663
Neutral Citation Number: [2012] EWCA Civ 1892
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
CARDIFF DISTRICT REGISTRY
MERCANTILE COURT
(HIS HONOUR JUDGE MILWYN JARMAN QC) 

Royal Courts of Justice
Strand, London, WC2A 2LL
Thursday, 22nd November 2012
Before:

SIR DAVID KEENE

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	WILLIAMS MOTORS (CWMDU) LIMITED	
Appellant	
	
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POWYS COUNTY COUNCIL	

Respondent	
			
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(DAR Transcript of 
WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
Tel No:  020 7404 1400  Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
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Mr David Phillips QC (instructed by Pellys Transport and Regulatory Services Ltd) appeared on behalf of the Appellant.

The Respondent did not appear and was not represented.

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Judgment
Sir David Keene: 

1.	This is a renewed application for permission to appeal from a decision of HHJ Jarman QC in the Cardiff District Registry, permission having been refused on the papers by Tomlinson LJ.  The judge dismissed the claims in these proceedings, and thus it is the claimant who now makes this application.  

2.	The applicant is a small coach company which until 2010 provided school transport services to the respondent council.  The council terminated the contract by a letter dated 30 July 2010 on the ground that the company had claimed payment for operating one of the routes which had not in fact been fully operated, and that that was a serious and fundamental breach of contract.  In the proceedings the company brought two claims against the council, one for breach of contract and one for misfeasance in public office.  For reasons which will become apparent in a moment, I am going to deal with the second of those first.  

3.	This claim concerned the conduct of the council’s manager of these contracts, a Mr Forsey.  His conduct undoubtedly had a number of failings.  He investigated the situation inadequately and initially concluded that there had been no need for the minibus on this particular route since November 2006 rather than October 2007 as was in fact the case.  He did not pursue his enquiries to a sufficient degree and the judge in due course criticised his conduct in the judgment, saying that Mr Forsey had failed to analyse in sufficient detail what had happened.  The judge commented that he, the judge, gained the strong impression that at all times Mr Forsey was acting in a way which he genuinely thought was in the best interests of the council.  The claim of misfeasance in public office was based on the second form that is set out by Lord Steyn in the Three Rivers case ([2001] UKHL 16), namely where a public officer acts knowing that he has no power so to act and that his actions will probably injure the claimant.  It is said by Mr Phillips QC, who appears this morning on behalf of the applicant, that the judge failed to consider properly whether Mr Forsey’s state of mind was one of reckless indifference to whether his acts were lawful or not.  There should have been an analysis of the knowledge that Mr Forsey possessed and that did not occur.  In addition the judge misdirected himself in the passage which I have already referred to, in referring to Mr Forsey’s belief that he was acting in the best interests of the council, and Mr Phillips says that is not a relevant consideration on this particular issue.

4.	The judge dealt briefly with this issue because he had already by then found that the council had been entitled to terminate the contracts and consequently no damage could flow from the tort of misfeasance.  However, the judge did expressly say in paragraph 58 that the evidence failed to establish the necessary degree of knowledge on the part of Mr Forsey for a misfeasance claim to succeed.  That was a short finding but one very much to the point.  As Tomlinson LJ said on this issue, proof of misfeasance in public office is notoriously difficult to establish.  For my part, I can see no prospect of a successful appeal on this ground.  There is an allied point which relates to the absence of certain documents which the council failed to produce and which are apparently relevant.  What happened was that the applicant did not at trial pursue this to the stage of seeking an adjournment or any other remedy but they used the non-disclosure as a basis for drawing inferences and complained that the judge did not draw inferences on this issue to a sufficient degree.  

5.	I am bound to say that I cannot see that that would make any difference to the conclusion which the judge reached.  He heard Mr Forsey give evidence and be cross-examined, he had a lot of documents which did relate to this topic and I can see no prospect of the Court of Appeal interfering with a finding on misfeasance in public office.  I therefore reject grounds two and three of this application for permission to appeal.  

6.	I turn back therefore to ground one, which concerns the finding that the relevant officer of the company acted fraudulently by way of recklessness.  The judge in arriving at that conclusion had already made a finding that Mr Williams, the director of the company who signed the claim forms, had no actual knowledge of what had happened to such a degree that fraud in the more straightforward sense had been established.  Mr Phillips takes me to a number of passages in the judge’s findings.  What appears to have been the case is that the judge found that Mr Williams believed in the evidence he gave that the bus had been driven to one of the two villages outside Brecon during the relevant period.  He said at paragraph 41 that he was not prepared to find that Mr Williams, or indeed his daughter who also drove some of the time, were being deliberately untruthful in this part of their evidence.  The judge put their evidence, which was patently wrong as a matter of fact, down to a misrecollection on their part as to what had happened.  At paragraph 45 the judge said that he was not persuaded that a high probability had been shown that Mr Williams or his daughter had actual knowledge that the route was not operated out of Brecon from January 2008.  However, he did find, and the finding comes particularly in paragraph 55 of the judgment, that Mr Williams had been reckless to “a sufficient degree as to whether” the certification of the claims were true or false.  There seems no doubt that Mr Williams had not checked the terms of the contract.  There is some evidence which appears in the transcripts that he had a belief that the company was entitled to charge even though there were what he called temporary or indeed sometimes permanent changes to the routes which were to be followed.  

7.	The point which is essentially emphasised by Mr Phillips on behalf of the company today is that the judge did not adequately address the state of mind of Mr Williams when coming to the conclusion of fraud by recklessness.  Mr Phillips goes on to say that if he had, there was a real prospect that he would have found that Mr Williams had an honest belief that the company was entitled to make the claim even if he was aware that the routes had not been driven to the full extent required.

8.	It seems to me that the applicant has an uphill struggle on an appeal but I am persuaded that there is an arguable point here.  The finding of fraud by recklessness is a serious one.  There are findings that the judge made to which I have already referred that suggest that it was inefficiency on the part of Mr Williams rather than recklessness in the sense of not caring one way or the other whether his statements were true or false.  I am not required to reach any conclusion ultimately on whether this appeal will succeed, but it does seem to me that there is a properly arguable point on ground one and to that limited extent I give leave.  

Order:  Application granted.