In another chapter of the long-running Lloyd's Names litigation, the Court of Appeal confirmed that Lloyd's does not have the requisite characteristics to be a "public officer" for the purposes of the tort of misfeasance in public office. The judgment (Stockwell and others v Society of Lloyd's [2007] EWCA Civ 930) considers the nature of Lloyd's and the relevance of the tests for amenability to judicial review and under the Human Rights Act 1998. The following key points arise.

  • "Public officers" for the purposes of the tort must be essentially governmental bodies exercising executive powers
  • The existence of commercial objectives is inconsistent with the nature of governmental bodies in this context
  • Lloyd's is not a public regulator akin to the FSA but is only responsible for the self-regulation of a particular part of the market
  • Jurisprudence on the susceptibility of bodies to judicial review and/or their susceptibility to challenge under section 6 Human Rights Act 1998 is not directly relevant to the issue of whether a body is a "public officer" for the purposes of the tort


From 1988 to 1992, Lloyd’s suffered billions of pounds in losses caused by a series of natural disasters, asbestos and environmental claims. In 1996 it proposed a settlement to limit its Names' liabilities. When some Names refused to participate and Lloyd’s brought claims against them, many cross-claimed against Lloyd’s alleging that it was liable for misrepresentations that were said to have induced them to become or remain Names or to increase their exposure. The Names initially claimed in deceit, alleging that the representations were fraudulent in that Lloyd’s had no honest belief in their truth. They subsequently attempted to change their case to one of negligent misrepresentation. Then, in 2005, a number of Names lodged applications for permission to introduce an amended defence and counterclaim, in order to allege against Lloyd’s the tort of misfeasance in public office. The recent Court of Appeal judgment deals with those applications, central to which was the issue of whether Lloyd's possessed the characteristics necessary to be a public officer susceptible to liability for the tort of misfeasance in public office.

The test – what is a "public officer"?

Buxton LJ started with the House of Lords' exposition of the elements of the tort of misfeasance in public office in Three Rivers District Council v Bank of England (No. 3) [2003] 2 AC 1. Lord Steyn there identified the rationale of the tort to be "that in a legal system based on the rule of law executive or administrative power may only be exercised for the public good", while Lord Hobhouse added that the tort concerned "the acts of those vested with governmental authority and the exercise of executive powers".

Buxton LJ reasoned that the subject of misfeasance in public office should be a "governmental body…with the power to interfere with the way in which other citizens wish to conduct their affairs." His view was that the nature of Lloyd's, a body which was said to be "concerned with the internal commercial interests of its own members", militated against such a characterisation. However, before reaching a conclusion on the issue he considered the appellants' argument that the regulatory functions carried out by Lloyd's give it the character of a public body.

Regulator or self-regulated?

The Names argued that the powers enjoyed by the Council of Lloyds in relation to its members' affairs indicate that Lloyd's is a regulator of at least the part of the insurance market in which it underwrites, and thus performs public functions "such as to serve as at least a strong indicator that it is a public body in the sense relevant to misfeasance in public office." To support this point they relied on section 6 of the Lloyd's Act 1982, which states that the Lloyd’s Council "shall have the management and superintendence of the affairs of the Society and the power to regulate and direct the business of insurance at Lloyd's."

However, Buxton LJ noted that these statutory powers relate only to the affairs of the Society and are therefore powers of self-regulation, not of public regulation. He additionally cited the following extract from the decision of Leggatt LJ in R (Briggs) v Lloyd's of London [1993] 1 Lloyd's LR 176 at 185: "Lloyd's operates within one section of the market. Its powers are derived from a private act which does not extend to any persons in the insurance market other than those who wish to operate in the section of the market governed by Lloyd's and who, in order to do so, have to commit themselves by entering into the uniform contract prescribed by Lloyd's." Buxton LJ also referred to R(West) v Lloyd's of London [2004] EWCA Civil 506, where Brooke LJ said that "the fact that Lloyd's regulates its members' activities [partly] to avoid a more intrusive governmental regulatory regime cannot possibly convert it into a body exercising public functions itself…”

The appellant Names further argued that the statutory immunity from suit afforded to members of Lloyd's (except in the case of bad faith) is characteristic of a public regulator such as the FSA. However, Buxton LJ reasoned that since the immunity is confined to Lloyd's dealings with its own members and does not extend to suits by members of the public and in particular policyholders, it is insufficiently comprehensive to cloak Lloyd’s with the character of a public regulator.

Put shortly, Buxton LJ acknowledged the public interest in effective regulation of the Lloyd's market but noted that such an interest did not make Lloyd's the regulator, still less a public body. He concluded that Lloyd's could not be a "public officer" capable of being liable for the tort of misfeasance in public office.

Application of judicial review/human rights jurisprudence

Briggs and West (referred to above) arose in the context of applications for judicial review of Lloyd’s decisions, and Buxton LJ carefully emphasised that these authorities could not automatically be read across into the definition of "public officer" for the purposes of this tort. He noted that misfeasance in public office is a tort in private law, where the nature of the defendant is an element in the definition of liability; whereas in judicial review the nature of the defendant is an element in the jurisdiction of the public law court.

Buxton LJ also contemplated briefly whether section 6(3) (b) Human Rights Act 1998 could assist the appellants. That section defines ‘public authority’ for the purpose of section 6 to include ‘any person certain of whose functions are functions of a public nature.’ The appellants argued that because a public authority under section 6 includes a body only some of whose functions are of a public nature, therefore it is no impediment that some of Lloyd’s functions are unquestionably not public. Buxton LJ held that characterisation of a body as a public officer for the purpose of the tort of misfeasance in public office turns on the nature of the body, and not of its powers.