KING'S BENCH DIVISION
MANCHESTER DISTRICT REGISTRY
1 Bridge Street West Manchester M60 1TE |
||
B e f o r e :
____________________
(1) MR ANTHONY WILSON (2) MR PAUL HANNAH (3) MR DAVID CHEETHAM (4) MR DOUGLAS BENTLEY (5) MR CHARLES GREAVES (6) KLARIUS PRODUCTS LTD |
Claimants |
|
- and |
||
DEPARTMENT FOR TRANSPORT |
Defendant |
____________________
Ms C. Ventham KC, Ms C. Haywood, Mr P. Laverack, Mr E. Gross and Mr M. Simpson (instructed by the Government Legal Department) for the Defendant
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
____________________
Crown Copyright ©
SECTION NUMBER |
SUBJECT | PARAGRAPH NUMBER |
I | Introduction | 1 16 |
II | The parties | 17 23 |
III | Regulatory control | 24 31 |
IV | The allegation that KPL was supplying illegal catalytic converters | 32 37 |
V | Investigation by the VCA |
38 55 |
VI | Judicial review correspondence and proceedings | 56 - 71 |
VII | A new investigation by DVSA | 72 85 |
VIII | Progress of the investigation | 86 96 |
IX | Events after consent order of June 2018 | 97 125 |
XI | The conduct of the investigation | 126 133 |
XI | The decision to charge | |
(a) Charging advice | 134 144 | |
(b) Conduct of the prosecution | 145 147 | |
(c) The issues in the prosecution | 148 | |
XII | The dismissal of the case | 149 161 |
XIII | General approach to the evidence | 162 164 |
(a) Claimants' evidence | 165 170 | |
(b) Defendant's witnesses and evidence | 171 187 | |
(c) Inferences from evidence not called | 188 200 | |
XIV | The law in respect of malicious prosecution | 201 |
(a) Malicious prosecution | 202 - 203 | |
(b) Reasonable and probable cause: legal framework | 204 214 | |
(c) Malice | 215 - 218 | |
(d) Improper motive | 219 220 | |
(e) Examples of improper motive | 221 223 | |
(f) Mixed motive | 224 231 | |
XV | The law in respect of misfeasance in public office | 232 |
(a) The nature of the tort of misfeasance in public office | 233 | |
(b) Elements (1), (2) and (3): conduct in the exercise of public power | 234 235 | |
(c) Element (4): Malice as an essential ingredient of the tort | 236 240 | |
(d) Targeted malice | 241 242 | |
(e) Untargeted malice | 243 247 | |
(f) An unlawful act is required for both limbs of the tort and acting for an improper motive can be an unlawful act | 248 251 | |
(g) Element (5): causation | 252 | |
(h) Element (6): actionable damage (that is not too remote) | 253 257 | |
XVI | The list of issues | 258 272 |
XVII | Was there material to place before the Court of fraud? | |
(a) The Claimant's case on fraud | 273 280 | |
(b) The DfT's case | 281 296 | |
(c) Evidence of financial gain and/or harm to competitors | 297 304 | |
(d) Failure to obtain evidence about the manufacturing process of KPL | 305 307 | |
(e) Failure to investigate nature and quality of the exhaust system | 308 309 | |
(f) Decision to prosecute the Fourth and Fifth Claimants who were not directors/shareholders | 310 311 | |
XVIII | The various stages from the VCA inquiry to the withdrawal of the prosecution | 312 |
(a) The impact of the VCA inquiry (issues 1 3) | 313 314 | |
(b) Discussion | 315 329 | |
(c) The impact of the judicial review claims (issue 4) | 330 331 | |
(d) Discussion | 332 343 | |
(e) The impact of the DVSA investigation (issues 5 and 6) | 344 345 | |
(f) Discussion | 346 359 | |
(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 | |
(h) Issue 6: What deficiencies, if any, there were in the conduct of the DVSA investigation. | 361 | |
(i) The impact of the advice of prosecution counsel | 362 367 | |
(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 | |
(k) The impact of the collapse of the case (issues 8 and 9) | 369 370 | |
(l) Discussion | 371 374 | |
(m) Issue 8: Did the DfT seek to manipulate the evidence against the Claimants? | 375 | |
(n) Issue 9: Did any of the admitted or proven disclosure failures help to establish an absence of reasonable and probable cause? | 376 | |
(o) Conclusion on reasonable and probable cause | 377 379 | |
(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 - 388 | |
XIX | Misfeasance in public office: the six Claimants | 389 |
(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 because it was for an improper purpose and/or the DfT did not have an honest belief in the lawfulness of the decision? | 390 392 | |
(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? | 393 398 | |
XX | Damages | 399 405 |
(a) The First Year | 406 412 | |
(b) The Second and Third Years | 413 429 | |
(c) The Remaining Years | 430 | |
(d) KPL's additional costs | 431 | |
(i) Additional borrowing costs | 432 437 | |
(ii) Wasted recruitment costs | 438 440 | |
(iii) Wasted management time | 441 | |
(iv) Other costs incurred by KPL | 442 443 | |
(e) Claim of the first three claimants | 444 | |
(f) Claim of the Fifth Claimant | 445 451 | |
(g) Claims for general damages | 452 458 | |
(h) The law on general damages | 459 465 | |
(i) Aggravated and exemplary damages | 466 470 | |
XXI | List of quantum issues | 471 |
(a) Quantum list of issues | 472 477 | |
XXII | Conclusion | 478 479 |
MR JUSTICE FREEDMAN:
I Introduction
(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
(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
IV The allegation that KPL was supplying illegal catalytic converters
V Investigation by the VCA
VI Judicial review correspondence and proceedings
"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."
"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."
VII A new investigation by DVSA
VIII Progress of the investigation
"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."
IX Events after consent order of June 2018
(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.
"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)
"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."
(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.
(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.
X The conduct of the investigation
"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."
(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;
(c) the Claimants' interview responses were sent as soon as they became available;
(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."
XI The decision to charge
(a) Charging advice
"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."
(b) Conduct of the prosecution
(c) The issues in the prosecution
(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
(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.
(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.
(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.
(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."
(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.
XIII General approach to the evidence
"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."
(a) Claimant's evidence
(b) Defendant's witnesses and evidence
"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."
(c) Inferences from evidence not called
"(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.""
"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'."
""(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 shiftsboth as to burden and as to the development of the caseduring trial."
(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.
(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.
(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.
(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.
XIV The law in respect of malicious prosecution
(a) Malicious prosecution
(b) Reasonable and probable cause: legal framework
"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."
"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."
"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)
(c) Malice
(d) Improper motive
"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."
(e) Examples of improper motive
"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."
"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. In the Crawford case Mr Delessio knew that there was no proper basis for making allegations of fraud against Mr Paterson, but he did so in order to destroy Mr Paterson's business and reputation."
(f) Mixed motive
"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."
" 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."
(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.
XV The law in respect of misfeasance in public office
(a) The nature of the tort of misfeasance in public office
(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
(c) Element (4): Malice as an essential ingredient of the tort
"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."
"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. The case would have had to be assessed from an unaffected point of view."
(d) Targeted malice
(e) 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.
"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)]).
(f) An unlawful act is required for both limbs of the tort and acting for an improper motive can be an unlawful act
"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 . His deliberate use of the power of his office to injure the plaintiff takes his conduct outside the power, constitutes an abuse of the power, and satisfies any possible requirements of proximity and causation."
(g) Element (5): causation
(h) Element (6): actionable damage (that is not too remote)
XVI The list of issues
(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).
(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?
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?
(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).
(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.
XVII Was there material to place before the Court that there was fraud?
(a) The Claimant's case on fraud
(b) The DfT's case
(c) Evidence of financial gain and/or harm to competitors
(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.
(d) Failure to obtain evidence about the manufacturing process of KPL
(e) Failure to investigate the nature and quality of the exhaust system
(f) Decision to prosecute the Fourth and Fifth Claimants who were not directors/shareholders
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)
(i) the VCA 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.
(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
(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.
(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.
(i) there was 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.
(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)
(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.
(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
(e) The impact of the DVSA investigation (issues 5 and 6)
(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.
(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
(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.
(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.
(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.
(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.
(g) The DVSA investigation issues: Issue 5: Whether the DVSA investigation took the representations made by the judicial review claimants as its starting point.
(h) Issue 6: What deficiencies, if any, there were in the conduct of the DVSA investigation.
(i) The impact of the advice of prosecution counsel
(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.
(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.
(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?
(k) The impact of the collapse of the case (issues 8 and 9)
(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.
(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
(m) Issue 8: Did the DfT seek to manipulate the evidence against the Claimants?
(n) Issue 9: Did any of the admitted or proven disclosure failures help to establish an absence of reasonable and probable cause?
(o) Conclusion on reasonable and probable cause
(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.
(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.
(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?
XIX Misfeasance in Public Office: the six Claimants
(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?
(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?
XX Damages
(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
(b) The Second and Third Years
(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.
(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.
(c) The Remaining Years
(d) KPL's additional costs
(i) Additional borrowing costs
(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.
(ii) Wasted recruitment costs
(iii) Wasted management time
(iv) Other costs incurred by KPL
(e) Claim of the first three claimants
(f) Claim of the Fifth Claimant
(g) Claims for general damages
(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
"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."
(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.
(i) Aggravated and exemplary damages
(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 prosecutors acting 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.
XXI List of quantum issues
(a) Quantum List of issues
"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)?"
(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.
XXII Conclusion