Three Rivers District Council and Others (Original Appellants and Cross-Respondents) v. Governor and Company of The Bank of England (Original Respondents and Cross- Appellants), (2000)
Linked as:
Extract
Three Rivers District Council and Others (Original Appellants and Cross-Respondents) v. Governor and Company of The Bank of England (Original Respondents and Cross- Appellants), (2000)
HOUSE OF LORDS
Lord Steyn Lord Hope of Craighead Lord Hutton Lord Hobhouse of Woodborough Lord Millett OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENTIN THE CAUSETHREE RIVERS DISTRICT COUNCIL AND OTHERS (ORIGINAL APPELLANTS AND CROSS-RESPONDENTS)v.GOVERNOR AND COMPANY OF THE BANK OF ENGLAND (ORIGINAL RESPONDENTS AND CROSS-APPELLANTS)ON 18 MAY 2000LORD STEYNMy LordsBefore 1979, with limited exceptions, a deposit-taking institution in the United Kingdom required no licence or other authorisation before it commenced business. There was no statutory regulation of its subsequent performance. But the Bank of England operated an informal system of supervision. The Banking Act of 1979, enacted to give effect in domestic law to the First Council Banking Co-ordination Directive of 12 December 1977 (77/780/E.E.C.), introduced a statutorily based licensing system. Subsequently, the Banking Act 1987 replaced that system. For the purposes of the First Council Banking Co-ordination Directive of 12 December 1977 (77/780/E.E.C.), the Banking Act of 1979 and the Banking Act 1987 the Bank of England was the supervisory authority in the United Kingdom. On 1 June 1998, pursuant to the Bank of England Act 1998, the Financial Services Authority assumed the Bank's powers and responsibilities under the Banking Act 1987, for the supervision of deposit-taking institutions.The Bank of Credit and Commerce International S.A. ("B.C.C.I."), a Luxembourg corporation, had carried on business in the United Kingdom as a deposit taking institution before the Act of 1979 came into force. When the Act of 1979 came into force B.C.C.I. came under the aegis of the new system. In June 1980 the Bank of England granted a licence to carry on business as a deposit-taking institution to B.C.C.I. Until 5 July 1991 B.C.C.I. carried on business at its principal place of business in the City of London, and at many branches elsewhere in the United Kingdom. On this date, the Bank petitioned the High Court to appoint joint provisional liquidators to B.C.C.I. The order was duly made. This resulted in the closure of B.C.C.I. in the United Kingdom, and led to the collapse of associated companies of B.C.C.I. in many jurisdictions. Thousands of depositors in the United Kingdom and elsewhere suffered substantial losses. The principal cause of the collapse of B.C.C.I. was fraud on a vast scale perpetrated at a senior level in B.C.C.I.The plaintiffs are more than 6,000 persons who claim to have been depositors with United Kingdom branches of B.C.C.I. The action was started in May 1993. It is unnecessary to trace the earlier procedural history of this litigation. By August 1995 the claim was formulated in a re-amended statement of claim. This is a detailed and complicated pleading. It runs to 133 pages. In outline there are two alleged causes of action. The first is based on the tort of misfeasance in public office. The plaintiffs allege that named senior officials of the Banking Supervision Department of the Bank, but not two successive Governors of the Bank, acted in bad faith (a) in licensing B.C.C.I. in 1979, when they knew that it was unlawful to do so; (b) in shutting their eyes to what was happening at B.C.C.I. after the licence was granted; and (c) in failing to take steps to close B.C.C.I. when the known facts cried out for action at least by the mid 80s. The second cause of action is based on alleged breaches of Community law, and in particular breaches of the requirements of the Directive of 1977. The alleged breaches cover the initial licensing of B.C.C.I., failure to supervise B.C.C.I. and failure to revoke the licence of B.C.C.I. The total damages claimed are apparently of the order of £550m., plus interest. In a defence the Bank comprehensively denied the material allegations under both heads of claim.On an application by the Bank, which was opposed by the plaintiffs, Clarke J. (now Clarke L.J.) ordered preliminary questions to be tried. This order was made on 19 July 1995 at a stage when discovery had not yet taken place. The judge directed that the questions should be tried on the assumption that the facts pleaded in the re-amended statement of claim were true. The preliminary issues were designed to test whether, if the pleaded facts are true, the causes of action based on the tort of misfeasance in public office and on breaches of community law are sustainable in law. The principal legal issues for decision were the precise ingredients of the tort of misfeasance in public office and whether the Directive of 1977 conferred rights of compensation on depositors.The judge tried the preliminary issues as subsequently reformulated in stages. He delivered judgments on 1 April 1996, 10 May 1996 and 30 July 1997. The first two judgments are reported at [1996] 3 All E.R. 558 and 634. These impressive and careful judgments dealt with the preliminary issues. The judge ruled that both cau...See the full content of this document
Sponsored links
