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England and Wales Court of Appeal (Civil Division) Decisions

You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Hall & Ors v Bank Of England [2000] EWCA Civ 140 (19 April 2000)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2000/140.html
Cite as: [2000] EWCA Civ 140
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CHANI 1999/0854/A3
IN THE SUPREME COURT OF JUDICATURE CH 1997 H 544
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION - THE HON. MR JUSTICE
NEUBERGER
Royal Courts of Justice
Strand, London, WC2A 2LL
Wednesday 19th April 2000

BEFORE:
THE VICE-CHANCELLOR:
THE RT. HON. SIR RICHARD SCOTT


THE RT. HON. LORD JUSTICE CHADWICK


THE RT. HON. LORD JUSTICE BUXTON


B E T W E E N


1) Harry Hall
2) John Sidney Hall
3) Richard Delaney Hall
4) Dorothy Hilda Mann

Appellants

- and -



The Governor and Company of the Bank of England

Respondents

__________________________________
(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 180 Fleet Street
London EC4A 2HD
Tel No: 0171 421 4040, Fax No: 0171 831 8838
Official Shorthand Writers to the Court)
__________________________________

Mr John Macdonald QC and Mr Nicholas Le Poidevin instructed by Ingram Clegg &Crowther, Solicitors for the Claimants
Mr Robert Hildyard QC and Mr Bankim Thanki instructed by Freshfields, Solicitors for the Defendant
__________________________________


Judgment
As Approved by the Court
Crown Copyright ©



Wednesday 19th April 2000
THE VICE-CHANCELLOR:-
1. This is an appeal from the judgment of Neuberger J. given on 14 July 1999. The appellants, three brothers and a sister, Mr Harry Hall, Mr John Hall, Mr Richard Hall and Mrs Dorothy Mann, had sued the Bank of England for damages for misfeasance in public office. The misfeasance complained of related to the Bank's alleged inaction in supervising a company, Bradford Investments plc, of which the Halls were the shareholders. The judge struck out the action. He did so, first, on the ground that the Halls had no prospect of succeeding in establishing misfeasance in public office against the Bank, and, second, on the ground that, if the tort had been committed, the proper claimant would be the company not its shareholders. There was also a minor point regarding delay. The Halls have appealed.
2. The Halls are a Yorkshire family who carried on business in partnership under the style Bradford Investments. They formed a company on 2 July 1985 which was registered as a public limited company on 1 November 1986 under the name Bradford Investments plc (the company). They were the only ordinary shareholders of the company. They were also directors. Mr Harry Hall was the chairman. Together they controlled the company.
3. On 31 December 1986 the Halls transferred their partnership business to the company. The business consisted of taking deposits from the public, investing the funds in the purchase of cheap terraced houses in Yorkshire and, later, in Lancashire and disposing of the properties on rental purchase terms under which the purchaser would pay the purchase price by instalments over a period of up to ten or eleven years. In the meantime the property would be rented to the purchaser who would hope to obtain a contribution to the rent from housing benefit. The company's accounts showed substantial profits.
4. Because the business involved the taking of deposits from members of the public, authorisation to do so from the regulatory authority was necessary. The regulatory authority under the Banking Act 1979 and, later, the Banking Act 1987 was the Bank of England. Its role was taken over by the Financial Services Authority pursuant to the Bank of England Act 1998. For the period with which this litigation is concerned, however, the regulatory authority was the Bank of England and the governing Act was the Banking Act 1987. Under section 3 of the 1987 Act the authorisation of the Bank of England was required for the carrying on of a deposit-taking business. Section 11 gave the Bank power to revoke an authorisation on various grounds and section 12 gave the Bank power to restrict an authorisation instead of revoking it. Sub-section (2)(b) of section 12 allowed the Bank to restrict an authorisation:-
"by imposing such conditions as it thinks desirable for the protection of the institution's depositors or potential depositors".
5. Section 13 of the 1987 Act applied where the Bank proposed to revoke or restrict an authorisation or to vary restrictions which it had imposed. The section required notice of the Bank's intention to be given to the institution concerned, and enabled the institution to make representations. It obliged the Bank to take the representations into account in deciding what next to do and, under sub-section (7) required the Bank, unless the decision was to take no further action, to give written notice of and written reasons for its decision. I should refer also to sections 19 and 20 of the Act under which the Bank, subject to much the same procedure as applied under sections 12 and 13, could give an institution directions for the purpose, in the interests of depositors or potential depositors, of safeguarding its assets.
6. On 31 December 1986, the same date as that on which the partnership business was transferred to the Bank, the Bank gave the company an authorisation to carry on the deposit-taking business. But within a fairly short time the Bank became dissatisfied with the manner in which the business was being carried on. On 8 February 1988 the Bank gave the company written notice under section 13(7) of its decision to impose restrictions on the company's section 3 authorisation. The notice said that the Bank had decided to restrict the authorisation by imposing conditions under section 12(2)(b):-
"... designed to provide the company with a further opportunity to undertake remedial action rather than, as previously proposed, to allow the company time to repay its deposits in an orderly manner".
7. The allegations made against the Bank in this litigation make it desirable to refer to some of the written reasons given by the Bank for its decision as well as to some other parts of the contents of the notice.
8. Part 1 of the notice, which set out the Bank's written reasons, began by referring to the representations that had been made on behalf of the company. It included the following passage:-
"... the company asserts that the Bank is blatantly opposed to the company and suggests that it has adopted an inflexible approach in its supervision because of political pressure, bad publicity which the company has received, and the fact that the company is a property company. It also asserts the Bank has no regard for the truth. The Bank wishes to state that none of these points has any foundation ... [the Bank] has been concerned for some time at the degree of concentration of the business of Bradford Investments in a very specialised area. The company's recent difficulties with regard to disposal of housing stock and increased re-possessions have crystallised these concerns ...".
9. Paragraph 4 in Part 1 expressed the Bank's opinion that the company's net assets were
"...neither commensurate with the nature and scale of the company's operations nor sufficient to safeguard the interests of its depositors and potential depositors ..." (para . 4.1 )
noted that
"... the company has had difficulty in meeting the Bank's requirement that unsecured depositors should be protected by unencumbered assets of at least an equal amount" (para .4.3).
and concluded that
"the company's net assets have not been and are not sufficient to meet the minimum requirement" (para. 4.12).
10. The Bank expressed the view in paragraph 5.1 that the company's provisions were inadequate and, in paragraph 6.1, that the company's records and systems "have been and are inadequate".
11. In paragraph 7.2 the Bank re-iterated its view that the company had "imprudently pursued high growth whilst its management information systems were incapable of dealing with the resulting level of business" and, in paragraph. 7.4, emphasised that its duty under the Act was to supervise the company in the interests of depositors and potential depositors.
12. Under the sub-heading "fit and proper" the Bank expressed its opinion about Mr Harry Hall and about the company's managing director, a Mr Holdsworth. As to Mr Hall, the Bank made clear its conclusion that it was he who was responsible for the formulation of the policy and strategy of the company's business. It said that
"Mr Hall must be held primarily responsible for the lack of cohesive direction of the company and the imprudent way in which it has been run"
and that
"Mr H. Hall is not fit and proper to hold his present position as chairman and effective chief executive".
13. As to Mr Holdsworth the Bank concluded that he, as managing director, had to bear his share of responsibility for the imprudent way in which the business had been run (para. 8.7) and that he was "not fit and proper to hold his position as managing director" (para. 8.8).
14. In paragraph 11 the Bank expressed the view that the remedial measures necessary to enable the company to meet the criteria for authorisation would require "substantial reductions in the housing stock and .. changes in the structure of the management" (para. 11.2).
15. The conditions imposed on the company under section 12 of the Act included the following:-
(1) the company was barred from advertising for deposits;
(2) the company was barred from accepting deposits if as a result deposit liabilities would exceed the level of those liabilities outstanding at the date of the notice;
(3) the company was barred from purchasing any more houses;
(4) the company was barred from paying any dividend or any director's fees to any shareholder;
(5) the company was given three months within which to ensure that it held unencumbered assets at least equal to its unsecured liabilities.
16. It is clear from the terms of the notice that the Bank was imposing restrictions on the company's authorisation for the purpose of protecting depositors. Paragraph 7.4 said that:-
"The Bank can only emphasise its duty under the Act to supervise the company in the interests of depositors and potential depositors".
17. By notice dated 26 February 1988 the Bank made some alterations to the restrictions it had imposed. In doing so it was taking account of representations made under section 13(9) by Mr Harry Hall and Mr Richard Hall. It extended the three month time limit to six months. The Bank warned, however, that:-
"until the company's business is run in what appears to the Bank to be a prudent manner and the Bank's concerns, in particular about management and the inadequacy of the Risk Asset Ratio (´RAR'), have been satisfactorily addressed the Bank cannot agree to any further relaxation of the conditions ...".
18. After the February 1988 notices had been given Mr Holdsworth resigned and a Mr Hampson was appointed in his place. Mr Hampson was acceptable to the Bank. He had been chosen by and was appointed by the Halls. Mr Hampson appointed a Mr Cooper to assist him in marketing the company's portfolio of houses.
19. On 22 August 1988 the bank replaced the February restrictions with new restrictions. At the end of August 1988 the company surrendered its authorisation to take deposits from the public. So the restrictions imposed by the February notices were no longer relevant. Upon the surrender the Bank issued a notice under section 19 of the Act repeating a number of the directions given in August for the purpose of safeguarding its (the company's) assets. The directions included a requirement that the company "as a matter of urgency take all reasonable steps to sell unoccupied properties as soon as reasonably possible for the best price reasonably obtainable". Every sale was to be "for cash settlement upon completion". The directions also barred the Halls from management of the company. The notice was expressed to be given "in order to protect the interests of depositors by safeguarding the company's assets and by ensuring that the company has competent management".
20. It is, in my opinion, of some importance in the context of this litigation that no allegation has been made that the Bank acted improperly or unlawfully in serving on the company the two February 1988 notices or the September 1988 Notice. It must, therefore, be accepted that the Bank's intentions were proper intentions and that the Bank was entitled thereafter to pursue a policy directed to achieving the purposes for which it had served these notices. The Halls' allegations against the Bank of misfeasance in public office must be assessed against this backcloth.
Misfeasance in Public Office
21. The tort of misfeasance in public office is currently in the public eye. It is well-known that a major judgment analysing the tort and its ingredients was handed down by the Court of Appeal on 4 December 1998 in Three Rivers District Council -v- Bank of England now reported in [2000] 2WLR 15. In this case, too, an application had been made to strike out a claim against the Bank based on misfeasance in public office. Clarke J. struck out the claim. The Court of Appeal upheld him. The struck-out claimant appealed to the House of Lords. The hearing in the House of Lords has concluded and the verdict of their Lordships is awaited.
22. It might be thought that, in prudence, we should have delayed giving judgment in the present appeal until the views of the House of Lords on the issues arising in Three Rivers have been made known. There are three reasons why we have not done so. First, neither side has asked us to do so. Second, much of the debate in the House of Lords has centred upon an issue of European law which does not arise in the present appeal. Third, there is no real issue between the parties as to the matters that must be found to be present for a claim based on misfeasance in public office to succeed. The argument before us, as to whether or not the Halls can establish misfeasance in public office on the part of the Bank, has not been an argument about the ingredients of the tort. Nor has it been an argument about any primary facts. The primary facts pleaded and relied on by the Halls are either common ground or, this being a strike-out, must be assumed to be correct. The argument has centred upon the inferences that can be drawn from those facts. The question is whether the Halls have any real prospect of success in contending that the requisite inferences can be drawn from the primary facts.
23. The complaints made by the Halls against the Bank are based upon the alleged failure by the Bank to intervene and prevent damage being caused to the company by its new management. The Halls contend that Mr Hampson's and Mr Cooper's management decisions in marketing the houses were disastrous. They charge Mr Cooper with fraud. They charged Mr Hampson, too, with fraud until, in the course of the hearing before Neuberger J., they proposed amendments to the Statement of Claim so as to remove the allegation of fraud against Mr Hampson. There is no doubt but that the Bank's powers under the 1987 Act would have enabled the Bank, if it had thought it right to do so, to have intervened and prevented the marketing processes, to which the Halls so vehemently objected, from being continued. The Bank, however, did not intervene. It is this failure that, it is contended, constituted misfeasance in public office.
24. Section 1(4) of the Banking Act 1987 provides the Bank with an important protection against liability arising out of its discharge of its statutory functions. The sub-section provides an immunity from liability for damages -
"... for anything done or omitted in the discharge or purported discharge of the functions of the [Bank] under the Act unless it is shown that the act or omission was in bad faith".
25. There was some debate in the Three Rivers District Council case as to the extent to which dishonesty was a necessary ingredient of the tort of misfeasance in public office. But in the present case, in view of section 1(4), the debate is immaterial. Bad faith must be shown if the Bank is to be held liable. There is, in my opinion, no relevant difference for the purposes of the tort between bad faith and dishonesty.
26. The ingredients of the tort are those identified by the majority of the Court of Appeal in the Three Rivers District Council case. It was held, approving the approach of Clarke J. at first instance, that the requisite bad faith could be shown in one or other of two alternative ways. It would be sufficient to show that the public officer had acted with the positive intention of injuring the claimant. It is convenient to describe an intention of that character as "targeted" bad faith. Alternatively, it must be shown that the public officer knew that he had no power to act in the way he did and that in so acting he would probably injure the claimant.
27. The second of the two alternative formulations runs into some difficulties where what is complained of is not an act but an omission. The concept of acting with knowledge on the part of the public officer that he had no statutory power to do what he was doing cannot easily be applied to an omission, to a mere failure to exercise a power available to be exercised. It is difficult to apply the concept of ultra vires to an omission. Mr Macdonald Q.C., counsel for the Halls, reformulated the alternative in order to cater for this difficulty. He submitted, and I would accept, that a failure to exercise a statutory power would be capable of constituting the tort. But, unless targeted bad faith were to be relied on, there must, he submitted, be actual knowledge that to do nothing would, in all the circumstances, be unreasonable in the Wednesbury sense. If with that knowledge the public officer continued to do nothing and knew that his inaction would be likely to injure the claimant, the requirement of bad faith would, Mr Macdonald submitted, be satisfied.
28. I would accept those submissions. So, too, I think would Mr Hildyard Q.C., counsel for the Bank. He submitted that the Halls had to show a deliberate and dishonest decision by the Bank to refrain from exercising the statutory powers available to them. There is, in my view, no relevant difference between the respective tests formulated by counsel. They are consistent with the principles expressed by the Court of Appeal in the Three Rivers District Council case.
The Facts
29. What happened after Mr Hampson had been appointed managing director and Mr Cooper had been appointed to assist in marketing the houses is fully and clearly set out in Neuberger J's judgment. It is unnecessary for me to set out the facts again in this judgment. I shall do so only to the extent necessary for me to explain my conclusions about the grounds of appeal relied on by the Halls and to draw attention to the particular matters which have featured in the argument before us.
30. The Bank continued, after the February 1988 notices had been served and until the company went into liquidation in July 1991, to keep an eye on the company and its progress in selling its housing stock. There were a number of meetings between Bank officials and Mr Hampson, or the Halls, or both. The official within the Bank with whom Mr Hampson and the Halls had most contact was Mr Ball.
31. Although Mr Hampson had been chosen and appointed by the Halls, the relationship between him and them deteriorated rapidly. The reason for this was that there were fundamental disagreements as to the steps to be taken in order to sell the company's housing stock. This had to be done in order to comply, first, with the conditions imposed by the February 1988 and August 1988 notices and, later, with the directions given by the September 1988 notice. The disagreements were never resolved and led to the charges of fraud against Mr Hampson and Mr Cooper.
32. In particular, the Halls challenged the valuations of the company's housing stock that had been made by Mr Cooper and that formed the basis of the prices at which the properties were offered for sale. The Halls reiterated that the properties were being sold at undervalues. This complaint lay at the root of the fraud allegations. Mr Hampson took the view that because of the need for prompt sales and because the properties were deteriorating in condition, discounts off what might otherwise have been achievable sales price were justified. The judge accepted that there was nothing inherently improbable in Mr Hampson's explanations of his policy, given both to the Halls and to the Bank. The Bank was entitled to accept them.
33. Moreover, when the valuations were challenged by the Halls, Mr Hampson brought in two independent valuers, a local firm, Robinsons, and a Leeds firm, Donaldsons. The latter firm had some criticisms to make, but made none that could be said to demand the intervention of the Bank. Mr Macdonald has not suggested otherwise.
34. Although the allegations being made by the Halls against Mr Hampson and Mr Cooper did not lead the Bank to intervene and insist upon a further change in management of the company, a number of investigations of the allegations were instituted over the period between June 1988 and July 1991 when the company went into liquidation:-
(i) In September 1988 the Bank appointed KPMG to provide monthly reports to the Bank under section 41 of the 1987 Act. The matters on which KPMG were to report included the company's compliance with the directions the Bank had given under the September 1988 notice and, also, "any other matters which come to your attention which in your view are relevant to the Bank's supervisory responsibilities under the Act in relation to the company".
(ii) On 6 September 1988 the company appointed Mr Wilson, of Baker Tilly, to investigate the allegations. The Bank agreed that Baker Tilly's charges for this investigation could be met by the company. Mr Hampson's letter of instructions to Mr Wilson confirmed that he was "to carry out an investigation into allegations made by the shareholders against the present Executive Directors of the company and certain of the company's appointed agents". By a letter dated 9 September 1988, Mr Harry Hall confirmed Mr Wilson's instructions.
(iii) In April 1989 the Bank instructed Price Waterhouse under section 41 of the 1987 Act to investigate and report on the Halls' allegations. The Bank's letter of instructions said:-
"You should report on whether there is any basis for the allegations of the shareholders that fraud has been perpetrated on the company in the manner in which it has disposed of houses in its possession and in which it has paid for repairs to houses held by it in stock. You should also report on whether the company's procedures and practices, which have given rise to those allegations, are appropriate in respect of the sale of and repairs to its housing stock".
(iv) In addition, the Bank on several occasions urged the Halls to place their fraud complaints before the Police. In April 1989 the Halls did so and a police investigation followed.
35. None of the investigations to which I have referred produced any basis on which it could arguably be contended that the Bank's failure to intervene in the management of the company was Wednesbury unreasonable, let alone dishonest or in bad faith.
(i) As to KPMG's monthly reports, it has not been contended that any part of the contents of any of the reports was such as to require the Bank to intervene.
(ii) As to Mr Wilson's investigation he produced a final report on 12 October 1988. He reported that he had not found "any evidence whatsoever that would indicate any dishonest or fraudulent activity" (para. 7.01). He expressed some criticism of the quality of the professional advice that Mr Hampson had received:
"We would conclude that although the taking of advice is commendable, the sources of the advice and their recommendations are inappropriate to the company's current status and problems".
The most serious problem referred to in the report was Mr Wilson's apprehension that the company was insolvent and that the realisations policy and the policy for repayment of depositors were not taking that feature sufficiently into account. The report contained no serious criticism of management. The Halls contend that the absence of such criticism was attributable to the intervention of the Bank and to pressure brought to bear on Mr Wilson by the Bank. I will return to this allegation.
(iii) The Price Waterhouse report was handed over to the Bank on 10 November 1989. The Report, like the Baker Tilly report, said that no evidence of fraud had been found (para. 41). The report did, however, conclude, that Mr Cooper had had an unacceptable potential conflict of interest (para. 24) and provided support for the allegation that some of the company's properties had been sold at an undervalue (paras. 28 to 33) and that there had been other errors of judgment in the steps taken to market the properties (e.g. para. 42).
(iv) Nothing resulted from the police investigations. No charges were brought.
36. In summary, none of these several investigations gave any support to the serious allegations of fraud that the Halls were making.
The "Threat" and the "Secret Instruction"
37. There were two matters in particular on which reliance was placed by Mr Macdonald in arguing that the Halls had shown an arguable case for contending that the Bank's failure to intervene in the management of the company by Mr Hampson was in bad faith.
38. The first matter relates to a meeting on 23 June 1988 at which the Halls complained that the company's properties were being offered for sale at an undervalue and threatened to bring proceedings for an injunction restraining the sales unless independent valuations were obtained. Mr Harry Hall, in his Witness Statement of 26 May 1999, referred to the incident and then says this:-
"[Mr Ball] later said in the interview that if we did apply to the court he would ensure that the company was put into liquidation and all its properties auctioned, and he made clear what sort of prices the company could expect if he did that . .... The Bank considered taking legal advice about our proposal to seek an injunction ...".
39. The Halls rely on the threat to place the company in liquidation, made by Mr Ball at the 23 June 1988 meeting, as evidencing the Bank's bad faith.
40. The second matter relates to a secret instruction that, it is alleged, the Bank gave to Mr Wilson. Mr Wilson, it is said, was told to confine his investigation of the allegations being made by the Halls to their allegations of fraud and not to make any criticisms of management decisions.. The Bank has denied that this instruction was ever given. Mr Wilson, too, has denied it. The Halls' case in support of their contention is that on 29 September 1988, at a meeting between Mr Wilson and the Halls, "Mr Wilson ... told us ´off the record' (his words) that the Bank had informed him that it did not want to see any criticism of management decisions in the report". (per Mr Harry Hall in para. 56 of his witness statement). This was said, according to Mr Harry Hall, at a time when Mr Wilson was alone with the Halls, his associate having temporarily left the room. In paragraph 57 of his witness statement, Mr Harry Hall completes the story:-
"Mr Wilson's associate then re-entered the room with coffee and as he placed it on the table Richard said to Mr Wilson "So its the Bank then?" and Mr Wilson gave him a slight nod and then shut up".
41. The Halls rely on this alleged secret instruction from the Bank as evidencing the Bank's bad faith.
The Judge's Findings
42. Neuberger J. asked himself whether the Halls had a ´real prospect of success in establishing that the Bank reacted to the vociferous complaints being made by the Halls in a way in which no reasonable person in the position of the Bank could have done (p. 75 of the judgment). The judge described the Halls' case as weak but concluded:-
"Although I have strong doubts as to whether the claimants can succeed in establishing the Bank acted in a "Wednesbury unreasonable" way, I consider that they have made out a case for saying that they have a chance, indeed a real chance, of establishing that" (p. 76).
43. There has been no respondent's notice from the Bank challenging that conclusion. So we must accept it. I doubt very much, however, whether it is one that I would have come to.
44. The judge then went on to consider whether the vital ingredient of dishonesty on the part of the Bank could be shown to be present. He directed himself, in my view, impeccably and concluded as follows:-
"... even on the most generous view, it appears to me that [the claimants' arguments] get nowhere near giving the claimants a case on dishonesty which could even be pleaded against the Bank. As I understand it Mr Macdonald accepts that, and it is for this reason that he relies, and understandably relies so strongly on the alleged threat and the alleged instruction".
45. As to the alleged threat, the judge said he could not see how, taken on its own, it could be said "to constitute dishonesty, to be evidence of dishonesty, or even to be something from which dishonesty could fairly be inferred" (p. 79).
46. As to the alleged secret instruction, the judge found the allegation so improbable as to have no real chance of success.
47. Before this Court Mr Macdonald has relied on the threat and the secret instruction every bit as strongly as he did below. He was probably bound to do so, for the history of the Bank's dealings with the Halls and the company over the period May 1988 to July 1991 contains nothing else which could be of the slightest assistance in fixing the Bank with bad faith in not interfering with Mr Hampson's management role and management decisions regarding the marketing of the company's properties.
48. For my part I do not see how the alleged threat adds anything at all to the Halls' case. It is plain that the Bank wanted sales of the company's properties to take place urgently. The Bank's reasons for wanting this to happen have not been challenged as being unreasonable or improper. The directions given on 1 September 1988 have not been challenged. An interlocutory injunction would have prevented sales from taking place until, at best, the trial of the action when the injunction could be discharged. In the meantime depositors interests would be at risk. I can see nothing surprising in Mr Ball responding to the Halls' threat of injunction proceedings by referring to the possible consequence that a winding-up application would be made. The incident, if it happened, gets nowhere in fixing the Bank with bad faith.
49. The alleged secret instruction likewise, in my opinion, has no weight. First, it is quite clear that the Bank's main concern, and rightly, was whether there was any substance in the fraud allegations that were being made by the Halls. If it were the case that some official of the Bank had indicated to Mr Wilson that his priority should be to investigate the fraud allegations I would not find it surprising or a matter of criticism. Positive instructions from the Bank to Mr Wilson that he was to make no criticisms of management would have been plainly improper and, if established, might provide the basis for an inference of bad faith on the part of the Bank to be drawn. But, in my judgment, the Halls' have no prospect at all of establishing that the alleged instruction was given. Mr Wilson does not support them. The probabilities are entirely against them. Mr Wilson is a professional accountant. His client was the company. His instructions came from Mr Hampson. Why would he accept such obviously improper instructions? Mr Wilson plainly owed a professional duty to the company. If the Halls are right he was in gross breach of that duty. But no claim against him for the loss caused by his alleged breach of duty to the company has ever been made or intimated. Why have the Halls reserved the incident for the purpose of making a far-fetched claim for misfeasance in public office against the Bank when, if they are right in claiming that the secret instruction had been given, the company would have had an open and shut claim against Mr Wilson?
50. Neuberger J. concluded that the alleged secret instruction was not of sufficient weight in the scales to allow the Halls' contention of bad faith on the part of the Bank to have any real prospect of success. I agree with him. He gave careful consideration to other matters alleged to point to bad faith on the part of the Bank. He found none of them to be of any weight. I agree with him.
51. Mr Macdonald invited us to view the history of the Bank's dealings with the Halls and the company in the round. We should not, he submitted, concentrate on any particular incident in isolation. The particular incidents, viewed in the context in which they took place, provide, he submitted, a reasonably arguable case of dishonesty against the Bank. My conclusion is exactly the reverse. The particular incidents relied on, viewed in the context of the whole history, seem to me to deprive the incidents of whatever weight they might have had in isolation. It seems to me impossible to suggest that the Bank's decisions, whether or not ill advised, were taken in bad faith. The judge's conclusion that the Halls' case against the Bank ought to be struck out seems to me to be one that he was entitled to reach. I would dismiss the appeal.
The Prudential -v- Newman Industries Issue
52. The other major issue that was dealt with by the judge and has been debated before us is whether it is open to the Halls to recover by way of damages the loss to the value of their shares brought about by the Bank of England's conduct towards the company in which they held the shares. I can, I think, deal with this issue relatively quickly since the appeal no longer depends on it.
53. Prudential Assurance Co Ltd -v- Newman Industries Ltd (No. 2) [1982] Ch. 204 is Court of Appeal authority for the proposition that, where a wrong has been committed against a company, the company is the proper claimant for the damage caused to it by the wrong, and that shareholders cannot sue the wrongdoer for the loss in value of their shares that has resulted from the damage to the company. As Lord Justice Templeman put it at p. 223.
"The shareholder does not suffer any personal loss. His only "loss" is through the company, in which he has, say, a 3 per cent, shareholding ... The shares themselves ... are not directly affected by the wrongdoing".
54. The proposition for which the Prudential case stands as authority was applied in Johnson -v- Gore Wood [1999] PNLR 426 (C.A.). An appeal to the House of Lords is pending. The Prudential case was distinguished in George Fischer (GB) Ltd -v- Multi Construction Ltd [1995] 1BCLC 260 (C.A.). That was a case in which the claimant entered into a contract with the defendant under which the defendant was to install equipment on the premises of one of the claimant's subsidiaries. The equipment was to be used by the subsidiary. The equipment was defective and damage was suffered by the subsidiary in consequence. The claimant sought to recover in a breach of contract action the loss caused to its subsidiary. The claim was allowed. Prudential Assurance -v- Newman Industries was distinguished on the ground that there the company, Newman Industries, had a cause of action to recover the damage it had suffered, whereas in George Fischer the subsidiary had no cause of action to recover the damage it had suffered (see Sir Michael Kerr at p. 270). Accordingly, it was held, the Prudential Assurance case did not bar the action.
55. Barings plc -v- Cooper & Lybrand [1997] 1 BCLC 427 (C.A.) was another case in which Prudential Assurance -v- Newman Industries was distinguished. Coopers & Lybrand (C&L) were auditors of the claimant, Barings plc. C&L's associated firm in Singapore were the auditors of the Barings' Singapore subsidiary. For the purpose of auditing Barings' accounts, C&L required their Singapore firm, C&L Singapore, to report to them any matters of significance which came to their attention regarding the Singapore subsidiary's accounts. Barings sued C&L Singapore for alleged negligence in detecting frauds in the conduct of the subsidiary's business. C&L Singapore relied on Prudential Assurance -v- Newman Industries as barring an action by Barings to recover damage which had been caused to the subsidiary by the alleged negligence. The Court of Appeal declined to strike out Barings' action. Leggatt L.J. distinguished the Prudential Assurance case on the ground that:-
"... here the person in the position of shareholder, namely Barings, has a right of action independent of the company, BFS. On the other hand unlike the situation in the George Fischer case, BFS does have a right of action itself. As that case shows, there is no legal principle that a holding company is unable to recover damages for loss in the value of its subsidiaries, resulting from a breach of duty owed to it, as distinct from a duty owed (or not owed as the case may be) to the subsidiaries" (p. 435).
56. The circumstances giving rise to the cause of action relied on by the shareholder, the Prudential, in Prudential Assurance -v- Newman Industries were part of the circumstances creating the cause of action on which the company could, and eventually did, rely. The defendants were directors of Newman Industries. They had put together a deal under which a bundle of assets, consisting of shares in other companies, were to be purchased by Newman Industries. The deal was required, under Stock Exchange rules, to be approved by a general meeting of Newman Industries. The directors prepared a prospectus recommending the deal to the shareholders. It was alleged that the prospectus contained misrepresentations known by the directors not to be true, that the shareholders in reliance on the prospectus had approved the deal and that the company had been induced by the same misrepresentations to enter into the deal. If the allegations were true, both the shareholders and the company would have causes of action for the tort of deceit.
57. The conduct on the part of the directors that was complained of gave rise to both causes of action. The damage suffered by the shareholders was the loss in value of their shares, brought about by the company having paid an excessive price for the assets it had purchased. The excessive price was the damage suffered by the company.
58. It is easy enough to follow the basis on which, in George Fischer, the court was able to distinguish the Prudential Assurance case. In George Fischer the subsidiary had no cause of action at all. It is less easy to follow the distinction drawn in Barings. The facts relied on by the Barings parent as giving the parent a cause of action were the same facts that could have been relied on by the Singapore subsidiary as giving the subsidiary a cause of action. The damage caused by the alleged negligence of C&L Singapore and sought to be recovered by the parent was the damage to the Singapore subsidiary. This was exactly the same damage which the subsidiary, if the negligence were established, would have been entitled to recover. Moreover, the assets of the subsidiary would include the chose in action represented by its damages claim against C&L Singapore. So it is very difficult to see how the Barings parent could have a claim to recover for itself the amount of that damage. However, the judgment of Leggatt L.J. expressly refrained from expressing a concluded view as to whether Barings' action was maintainable. The decision was simply to refuse to strike the action out as being unarguable.
59. Neuberger J. concluded that even if the Halls could establish that the Bank was guilty of misfeasance in public office, they would have no realistic prospect of recovering damages for loss in value of their respective shares in the company. I agree with that conclusion. The conduct of the Bank relied on by the Halls is conduct directly affecting the company. This is not a case in which any targeted malice directed at the Halls personally is alleged. The requisite dishonesty or bad faith on the part of the Bank has to be inferred from the Bank's knowledge that its failure to protect the company against the managerial incompetence or dishonesty of Mr Hampson and Mr Cooper was Wednesbury unreasonable. But if this premise were correct, and if the other ingredients required for the tort of misfeasance in public office were present, the primary victim would be the company. Next in line, as secondary victims, would be the company's depositors and other creditors. The Halls, as victims would come behind these creditors. In such a case the secondary victims cannot, in my judgment, recover the damage allegedly caused to the company. The company is the only proper claimant. The Prudential Assurance case is, in my judgment, binding authority for that proposition. None of the subsequent cases has weakened its authority in respect of a case such as this.
Delay
60. Neuberger J. held, also that in respect of other items of damage claimed by the Halls, additional to the main item, namely, the loss in value of their shares in the company, the action was barred by delay. On this aspect of the case I would simply say that, in my view, the judge was entitled to come to the conclusion to which he came for the reasons which he gave.
Conclusion
61. Accordingly, this appeal, in my judgment, fails. It fails, first, because no arguable case of misfeasance in public office on the part of the Bank has been shown and, second, because it is not open to the Halls as shareholders to bring an action in tort to recover the damage allegedly caused to the company by the Bank's conduct.
62. I am relieved to be able to come to this conclusion because the litigation seems to me to bear all the signs of having been vexatiously brought and pursued. If the allegations made by the Halls are correct, the company would have had a case against Mr Hampson for breach of duty as a director. It would have had, on the same premise, a cause of action against Mr Cooper for fraud. It would have had, on the same premise, a cause of action against Mr Wilson of Baker Tilly for breach of duty in carrying out his investigation. For Mr Wilson to have allowed himself to be influenced by the alleged "secret instruction" would have been an obvious breach of duty.
63. No step was taken by the Halls to have any of these conceptually straight-forward causes of action instituted by the company. Instead they commenced an improbable action against the Bank based on a far fetched allegation of misfeasance in public office. No explanation why they preferred this cause of action as a means of remedying the wrongs they believed the company had suffered rather than the more obvious ones has been offered.
64. For the reasons given, I would uphold Neuberger J's judgment and dismiss the appeal.
THE RT. HON. LORD JUSTICE CHADWICK
65. I agree that, for the reasons given by the Vice-Chancellor, the judge was entitled to reach the conclusion that the claims based on allegations of misfeasance in public office had no real prospect of success. On that ground, alone, an appeal against the judge's order must fail.

66. I agree also that, even were the allegations of misfeasance arguably well founded, the claims for damages in respect of the loss to the claimants of the value of their shares in Bradford Investments plc are misconceived. The reason is that the loss in the value of the shares is attributable, and attributable only, to the loss suffered by the company as the result of the wrong (if any) done to the company. The loss in the value of the shares is not attributable to any wrong done to the shareholders. The company is the proper claimant in respect of the wrong done to the company. If the company recovers damages by way of full compensation for the loss which it has suffered, the shareholders will be fully compensated for any loss in the value of the shares. To allow the shareholders to sue the wrongdoer in those circumstances would be to invite a duplication of proceedings and a risk of double recovery. The principle was affirmed by this Court in Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204 - see, in particular, the passage in the judgment of the court at pages 222H-223D to which the judge referred. The principle was endorsed, again by this Court, in Johnson v Gore Wood [1999] PNLR 426.
67. The position is otherwise where the shareholder suffers loss in the value of his shares as the result of a wrong done to him in circumstances in which the company itself has no cause of action against the wrongdoer. In such a case there is no possibility of double jeopardy and no risk of double recovery. George Fischer (Great Britain) Ltd v Multi Construction Ltd [1995] 1 BCLC 260 provides an example. But that is not this case.
68. The position is otherwise, also, where the shareholder suffers a loss other than a loss in the value of his shares in the company as the result of a wrong done to him. In such a case it is immaterial that the company may, itself, have a cause of action against the same wrongdoer in respect of a loss caused to the company. Recovery by the company in respect of its loss does not compensate the shareholder for the loss (not being, on this hypothesis, a loss in the value of his shares) which he has suffered.
69. The more difficult case is one where the shareholder suffers both a loss in the value of his shares and a loss of some other nature in circumstances where a wrong has been done to the company but where the shareholder has a separate and independent cause of action in respect of a wrong done to him. Barings plc v Coopers & Lybrand [1997] 1 BCLC 427, as pleaded, was such a case. This, for the reasons which I shall explain shortly, is not.
70. If the claims made in these proceedings in respect of loss of reputation and loss of remuneration were otherwise well founded, those claims should not, in my view, be struck out on the Prudential ground. But, in the present case, those claims are founded on allegations of misfeasance in public office which (even if they could be made good) would not lead to the conclusion that there had been a wrong done to the shareholders as individuals. There is no allegation of "targeted" bad faith in the present case. The allegations are that the Bank failed to exercise powers which were exercisable for the benefit of the company or, perhaps, the depositors. There is no arguable case that the claimants suffered loss of reputation or loss of remuneration as a result of any actionable wrong done to them.
71. It is unnecessary to address the question of delay. But I see no reason to differ from the view, expressed by the Vice-Chancellor, that the judge was entitled to reach the conclusion to which he came on that question for the reasons which he gave.

72. I am content with the order proposed by the Vice-Chancellor.
THE RT. HON. LORD JUSTICE BUXTON
73. I agree that this application should be disposed of in the manner proposed by the Vice-Chancellor, and for the reasons that he has given.

Order: Appeal dismissed minute of order to be provided by counsel.
(Order does not form part of the approved judgment)

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