Banking regulation and the tort of misfeasance in public office: The difficulties in suing regulators Three Rivers District Council and others (1) Bank of Credit and Commerce International SA (in liquidation) (2) v Bank of England

Pages70-72
DOIhttps://doi.org/10.1108/eb024908
Published date01 January 1997
Date01 January 1997
AuthorJoanna Gray
Subject MatterAccounting & finance
Journal of Financial Regulation and Compliance Volume 5 Number 1
Banking regulation and the tort of misfeasance in
public office: The difficulties in suing regulators
Three Rivers District Council and others (1) Bank
of Credit and Commerce International SA (in
liquidation) (2) v Bank of England
Queens Bench Division: Clarke J
Date of Judgment: 1st April, 10th May, 1996
Reported at: [1996] 3 All England Reports 558
THE FACTS
The Plaintiffs were depositors who had lost
monies in the collapse of Bank of Credit and
Commerce International (BCCI). BCCI itself
was named as a Plaintiff since it was an
assignee of the claims of Plaintiff depositors.
The Plaintiffs made a very large number of
allegations against the Bank of England (the
Bank) with regard to its exercise of its powers
and discretions under the statutory scheme of
Banking Supervision contained in the Banking
Acts of 1979 and 1987. These allegations
related to, inter alia, the Bank's decision to
grant a full licence to BCCI in 1980, its failure
subsequently to revoke that licence and various
other acts and omissions in its supervisory role
up to BCCI's collapse in 1991.
THE ACTION
The Plaintiffs were claiming damages against
the Bank, the cause of action pleaded being
the tort of misfeasance in public office. The
Plaintiffs alleged that the Bank was guilty of
the acts or omissions pleaded 'knowingly,
deliberately contrary to the statutory scheme
and hence in bad faith'. The claim for damages
was based on the allegation that if the Bank
had not acted in breach of duty BCCI would
not have been granted a full banking licence
or, alternatively, would have had any such
licence and any subsequent authorisation
revoked. As a result, the deposits would not
have been made by the Plaintiffs and hence
their losses would not have occurred.
This hearing was not a trial of the main
action against the Bank. The hearing was to
determine certain preliminary issues of law
only. However, these issues involved tortuous
argument on whether or not the Plaintiffs
could establish a cause of action and then
whether or not they had sufficiently pleaded it.
These preliminary issues were:
(1) is the Bank capable of being liable to the
Plaintiffs for the tort of misfeasance in
public office
(2) were the Plaintiffs' alleged losses capable of
being caused in law by the acts or omis-
sions of the Bank
(3) are the Plaintiffs entitled to recover for the
tort of misfeasance in public office as
existing depositors or potential depositors?
DECISION
Clarke J answered 'No' to Question 2 and so
had to answer 'No' to Question 1 as well. His
answer on the third issue was 'Yes', subject to
the Plaintiffs being able to establish the ingre-
dients of the tort and prove the necessary
causal link between those ingredients and their
losses. However, as matters stood at the date
of judgment, the Plaintiffs' claim was not
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