I. Introduction
Traditionally, the economic torts – the unlawful means tort, the conspiracy tort, and the tort of inducing breach of contractFootnote 1 – were accepted to be unusual in shape and severely limited in scope. Their shape was unusual because it did not involve the direct infliction of harm, the norm in tort law.Footnote 2 These torts instead involved the defendant intentionally inflicting economic harm on that claimant using an intermediary, economically linked to that claimant.Footnote 3 Their shape was thus based on intermediary use, the defendant “deliberately striking at his target through a third party”.Footnote 4 Their scope was limited in part by the need for intentional harm.Footnote 5 But mere intentional economic harm could not suffice to determine the scope of the torts if competitive activity was to be allowed. Thus, the common law accepted that a further element restricting liability should be identified: in other words, an additional factor would be required to spark liability.
The shape of the tort of inducing breach of contract had to be indirect by its very nature: the claimant's contract partner (the intermediary) had to be persuaded into breach by the defendant. As for this tort's scope, though for some time obscured by uncertainty, it has now been established in the jurisdictions reviewed in this article, that its scope is limited to where the defendant has intentionally procured a breach of contract by the claimant's partner. The tort is parasitic on that breach being procured: mere interference with the contract will not suffice to spark liability.Footnote 6 And, as Lord Hoffmann made clear in OBG v Allan,Footnote 7 the shape and scope of this tort are governed by its function, namely to treat “contractual rights as a species of property which deserve special protection”.Footnote 8
The unlawful means and conspiracy torts – the focus of this article – were governed by a different function: to police rivalry in the competitive process by determining what was excessive trade conflict.Footnote 9 Thus, the early cases that herald the former tort involve an attack (literally!) on the prospective customers of the claimant.Footnote 10 In 2007, Lord Hoffmann asserted in OBG v Allan that the unlawful means tort was “designed only to enforce basic standards of civilised behaviour in economic competition”Footnote 11 while Deakin and Randall note that the economic torts “set limits to rivalrous behaviour in a market setting”.Footnote 12
But this function – to police trade conflict/rivalry – also determined that these torts, like the inducing breach tort, should have an indirect shape and a severely restricted scope.
Their indirect shape mirrors the almost inevitable use of an intermediary in an economic attack on a claimant.Footnote 13 As Weir noted, “to ruin a person financially the action you must take must be indirect, through another person, the source of his earnings or profits”.Footnote 14 And the trade conflict function was also reflected in a narrow definition of intention and by the additional liability spark chosen.
So the orthodox test for intention in these torts required “targeted” or “aimed-at” harm. This required a tight nexus between the harm effected by the defendant on the claimant through the intermediary and avoided creating liability for the inevitable economic harm that would ripple beyond the main protagonists into their wider commercial or economic links.
Caution also determined the nature of the additional liability spark for these torts – a matter debated in the late Victorian era. That debate was whether the spark should follow an interventionist or abstentionist policy. The former would require the judges to decide on whether the attack was justified; the latter would severely limit the courts' interference by requiring potentially unlawful acts to be employed by the defendant as part of that attack. In the seminal House of Lords' decision of Allen v Flood,Footnote 15 it was decided that the abstentionist policy was to be preferred. This was in line with judicial concern that the trade conflict function of these torts should not require the courts to decide upon the boundaries of fairness in competition. In essence, these economic torts were to be “parasitic” on a separate civil wrong.
Therefore, the unlawful means tort and the conspiracy tort (apart from the severely limited Quinn v Leathem version, discussed below) simply stretchedFootnote 16 existing civil liability in order to protect the claimant, the real target of the defendant's attack. What they did not do was fill gaps in the common law by making tortious behaviour that did not already involve a civil wrong.
This limited scope meant that these torts were not perceived to be of major importance where the trade competition involved commercial parties. However, where “competition in labour”Footnote 17 was involved, concern over trade union power and industrial action led some courts to seek an expansive, interventionist approach to the economic torts, despite the policy of Allen v Flood.Footnote 18 Until the 1980s, Parliament reacted by providing immunities from the economic tort liability that would almost inevitably arise in trade disputes in order to provide liberty to engage in peaceful industrial action.Footnote 19 Subsequently, of course, this policy of keeping industrial disputes out of court was reversed by the Thatcher administration. In effect, therefore, though economic tort liability still lies at the heart of industrial dispute law, statutory regulation is now the most important feature of liability. Parliament has taken over the task of delimiting “what industrial action should be lawful or unlawful”, given it is assumed that action not covered by the immunities is unlawful.Footnote 20
It was hardly surprising, therefore, that Lord Hoffmann, writing extra-judicially in 2011, accepted a modest role for the economic torts. Where regulating industrial relations was involved, he predicted “the economic torts have run their course”.Footnote 21 As for regulating other competition, he stated that the common law should be “modest in its ambitions”, confining itself to preventing “crude and obvious forms of unfair competition which seldom in practice occur”. Overall, he acknowledged that the decision in OBG (discussed below) reflected “a wish to confine the economic torts as narrowly as possible” and hoped that economic tort cases would become “rare curiosities of little practical consequence”.Footnote 22
Yet, a review of commercial litigation both in England and the major Commonwealth jurisdictions of Canada, Australia, and New Zealand reveals that claimants/plaintiffs are increasingly turning to the economic torts to seek redress in commercial disputes, pleading them in “new and creative ways”.Footnote 23 The aim is to persuade the courts that the unlawful means and conspiracy torts should no longer be seen simply as policing trade conflict and the competitive process, but rather as providing protection more generally against interference with economic interests. They wish to broaden the remit of these torts so that they are no longer simply “stretching” existing liability but are gap-filling, creating new civil liability where economic harm has been intentionally caused but where other civil liability might be problematic or lacking.Footnote 24 To do so, they have questioned both the shape and the limited scope of these torts.
This quest has been successful in part. In recent years, the House of Lords in OBG,Footnote 25 the Supreme Court of Canada in A.I. Enterprises Ltd. v Bram Enterprises Ltd.,Footnote 26 and the Court of Appeal of New Zealand in Diver v Loktronic Industries Ltd. Footnote 27 have all declined to expand the shape and scope of the unlawful means tort and it is likely that the High Court of Australia will follow suit.Footnote 28 However, the House of Lords in Total Network SL v Revenue and Customs Commissioners,Footnote 29 the Supreme Court of Canada in Canada Cement LaFrage Ltd. v British Columbia Lightweight Aggregate Ltd.,Footnote 30 and the Federal Court of Australia in Dresna Pty Ltd. v Misu Nominees Ltd. Footnote 31 have determined that the conspiracy tort has its own vitality (a view which appears reflected in some of the dicta of the High Court of Australia in Williams v Hursey).Footnote 32 And Total Network has been accepted to be authority for the tort in New Zealand.Footnote 33 Thus, this tort is now accepted in all the jurisdictions to include the direct infliction of economic harm and to play a gap-filling role, imposing liability even where there is no civil liability to be “stretched”. Consequently, the shape and scope of the unlawful means and conspiracy torts now differ the one from the other in these jurisdictions.
This article seeks to review and analyse that phenomenon. What will be argued is that the different reactions to the unlawful means and conspiracy torts result from the courts attributing different modern functions to these two torts.
The unlawful means tort continues to be viewed as a tort limited to resolve the parameters of acceptable competitive conflict. For this reason, as the House of Lords in OBG accepted, it is still based on the infliction of indirect harm and simply involves stretching existing civil liability. On the other hand, the conspiracy tort has been handed a wider function: the control of intentional harm caused by commercial misbehaviour – which concept as yet has not been adequately defined or delimited but clearly extends beyond the presence of civil wrongs.Footnote 34
It will further be argued that these courts have failed to justify the acceptance of this new function for the conspiracy tort and that the ripples of uncertainty that flow from the revitalised tort of conspiracy will ultimately call into question the future function of the unlawful means tort. This last concern is compounded by the uncertainty as to the modern definition of intention in these torts.
II. Background
The traditional function of the economic torts was to protect against excessive trade competition, providing protection in certain circumstances against the indirect infliction of economic harm. Lord Watson in Allen v Flood analysed intermediary-use civil liability for intentional economic harm as contained within two torts – now recognised as the tort of inducing breach of contract and the unlawful means tort.Footnote 35 The trade competition function determined the shape – harming the claimant indirectly through the instrument of a third partyFootnote 36 – and was also ultimately crucial in determining their scope so that they would not unduly inhibit competitive activity.
Of course, this is a neat and simplified summary. The impact of Allen v Flood was not clear initially and subsequently the direction of the law became entangled with the wider debate on the emerging trade unions and labour competition. Industrial disputes inevitably involve collective labour or their representatives using the weapon of economic harm against trade dispute employers. And that harm will involve intermediary use, the trade dispute employer's economic connections.
Concern in certain judicial quarters on the rise of trade union power (and an inability to equate labour competition with commercial competition) explains the decision in Quinn v Leathem,Footnote 37 decided some three years after Allen v Flood by a differently constituted House of Lords. Though the facts were essentially the same as Allen, the Quinn court used the additional allegation of conspiracy to create a new version of the conspiracy tort. At this time, a tort of unlawful means conspiracy seemed to exist,Footnote 38 though it would be assumed that this was subject to the same abstentionist policy as for the unlawful means tort. However, the Quinn v Leathem version of conspiracy – lawful means conspiracy – favoured an interventionist role for the common law. This was based on the same indirect shape as the other economic torts and, like them, required intentional harm. However, liability in this version of the tort was sparked not by civil wrongs, but by a predominant purpose of malice or malevolence.
This new tort was always seen as a damp squib, the malice spark appearing to limit the tort to extreme scenarios, rare in competitive practice.Footnote 39 However, it heralded an unsettling pattern in the twentieth-century development of these torts in England. Given industrial disputes involve economic pressure, the scope of the economic torts was explored by employers in their attempt to prevent or limit such pressure (and often to circumvent the statutory immunities). The attempt to expand these torts led to success in some notable cases. The muddle that ensued led to the boundaries between inducing breach of contract and the unlawful means tort becoming blurred, in the so-called “unified theory” of economic tort liability and to the emergence of a hybrid tort – the tort of unlawful interference with contractual relations. This hybrid tort was devised as a method of avoiding the limits placed on the established economic torts. At the same time, and more central to this article, Lord Denning, a major player in the interventionist camp, propounded in Torquay Hotel v Cousins a wide definition of unlawful means – an act which the defendant “is not at liberty to commit”.Footnote 40 Within the definition of this liability spark, he subsequently included aiding and abetting the breach of an injunctionFootnote 41 and contravention of a non-criminal competition statute.Footnote 42
What is interesting is that, despite the uncertainties that bubbled away throughout the twentieth century, the unlawful means tort and the conspiracy tort in England continued to be pleaded only where there was an indirect infliction of harm through intermediary use.Footnote 43 Their function continued to be that of policing conflict in competition. And ultimately the House of Lords in OBG, because of that function, reasserted the abstentionist policy established in Allen v Flood. Though OBG itself did not consider the unlawful means conspiracy tort, there was no reason to suspect at this time that the conspiracy tort would involve a different function, shape, or scope to the unlawful means tort. Indeed, throughout the twentieth century, the tort of conspiracy in England appeared to be an unimportant “legal backwater”,Footnote 44 adding little to economic tort liability. Thus, commentators and leading judges alike dismissed the lawful means form as of little useFootnote 45 and anomalous,Footnote 46 while largely side-lining the unlawful means form as “unnecessary”Footnote 47 or as parallel to joint tortfeasance liability. Indeed, in Lonrho v Shell, Lord Diplock appeared to reject the unlawful means form of the conspiracy tort.Footnote 48
III. The Quest for Expanded Economic Tort Protection
It has become apparent that litigants in both England and the Commonwealth seek to question the traditional function ascribed to the unlawful means and conspiracy torts. Not content to see these torts as limited to policing competitive conflict, they seek to expand these torts to counter commercial malpractice, to become in essence “the staple of commercial litigation”,Footnote 49 “resolving the boundaries of commercial ethics”.Footnote 50
To achieve this, they must persuade the courts that these torts should play a gap-filling role and no longer be limited to the indirect infliction of economic harm.
Thus, there are examples of litigants seeking to use these torts to overcome the limits of existing civil wrongs.Footnote 51 This phenomenon became apparent in the OBG litigation itself.Footnote 52 The consolidated appeals in OBG involved (inter alia) an attempt to use the economic torts to improve on the tort of conversion and protect third parties economically harmed by a breach of confidence. In A.I. Enterprises at Court of Appeal level, the court was willing to apply the unlawful means tort to activity judged akin to the tort of abuse of process.Footnote 53 The limits of contractual protection were tested using the economic torts in Barber v Vrozos,Footnote 54Hardie Finance Corp Pty Ltd. v Ahern (no3),Footnote 55Agribrands Purina Canada Ltd. v Kasamekas,Footnote 56 and Diver v Loktronic Industries Ltd.Footnote 57 Indeed, an abuse of a contractual right to first refusal was the background to the litigation in A.I. Enterprises.
There is a similar trend to plead these economic torts when seeking to achieve civil redress where a non-actionable breach of statutory provision is involved. This was the case in the seminal Canadian conspiracy case, Canada Cement LaFrage Ltd. v British Columbia Lightweight Aggregate Ltd.Footnote 58 There are more recent English High Court cases where claimants have sought to use non-actionable breaches of non-criminal statutes as unlawful means for the conspiracy tort.Footnote 59 And of course the background to Total Network was the statutory VAT rules.
More broadly, litigants have sought to use the economic torts where the defendant has rendered the claimant's exercise of an economic right more difficult. So there are cases where the economic tortsFootnote 60 have been pleaded where the allegation is that there has been asset stripping of debtor companies to cause loss to the claimant;Footnote 61 or circumvention of a charge on a loan made by the claimantFootnote 62 or the restructuring of a fund to defeat the claimant's economic interests.Footnote 63 Beyond such cases, the torts have been pleaded based on (in effect) an allegation of an abuse of power by a regulatory body and by a trade associationFootnote 64 and where misstatements to a regulatory body caused economic harm.Footnote 65
The reaction of the courts in all these jurisdictions reveals a new dichotomy between the application of the two torts. This will now be revealed.
IV. The Modern Shape and Scope of the Unlawful Means Tort
Following the muddle that the economic torts got into in the twentieth century (noted above), in OBG,Footnote 66 Lord Hoffmann took the economic torts back to basics, and underlined the return to an abstentionist policy. He did so in order to provide a “coherent shape” to this area of tort law. With this clarification, Lord Hoffmann accepted that the unlawful means tort requires both potentially actionable civil wrongsFootnote 67 and intermediary use.Footnote 68 This narrow view of the unlawful means tort was summarised by Lord Nicholls as affording the claimant “a like remedy if the defendant intentionally damages him by committing an actionable wrong against a third party”.Footnote 69 It was confirmed that this tort stretches existing civil liability but does not act as a gap-filler – “the defendant's civil liability is expanded thus far, but no further.”Footnote 70 And the reason for this narrow approach to the tort was the perceived function: only enforcing “basic standards” where economic competition was concerned. Writing extra-judicially, Lord Hoffmann accepted that the common law should remain modest in its ambitions when regulating competition.Footnote 71
OBG's confirmation of the narrow remit of the unlawful means tort is also to be found in the recent Supreme Court of Canada decision, A.I. Enterprises Ltd. v Bram Enterprises Ltd . Footnote 72
The unlawful means tort had been bubbling away for years in Canadian case law.Footnote 73 It became accepted that this tort requires intermediary useFootnote 74 but there were conflicting approaches to the requirement for unlawful means. So crimes,Footnote 75 breaches of a court order,Footnote 76 and statutory infringementFootnote 77 had all been found to constitute the necessary unlawful means and some courts even favoured Lord Denning's “not at liberty to commit” test.Footnote 78 The most notable example of this was Reach M.D. Inc v Pharmaceutical Manufacturers Assn of Canada,Footnote 79 where the defendant trade association's ultra vires command to its members (to refrain from advertising in the plaintiff's calendar) was held to constitute unlawful means. Laskin J.A. characterised the Denning test as involving acts “without legal justification”, noting it was a test based on common sense.Footnote 80
This uncertainty as to the definition of unlawful means was compounded by a tangle of conflicting decisions, particularly in the Ontario Court of Appeal, post OBG. In Alleslev-Krofchak v Viacom Ltd., Goudge J.A. stated that the Ontario Court of Appeal “has now opted for Lord Hoffmann's side of the debate”Footnote 81 but, in Barber v Vrozos, a near-simultaneous decision, the Ontario Court of Appeal applied the Reach definition, unlawful means including an act without legal justification.Footnote 82 To add to the confusion, though the Ontario Court of Appeal in Alleslev-Krofchak and the New Brunswick Court of Appeal in A.I. Enterprises Ltd. v Bram Enterprises Ltd. Footnote 83 accepted Lord Hoffmann's narrow view, they were also prepared to accept qualifications: gap-filling was a possibility.
Against this uncertainty, the Supreme Court of Canada in A.I. Enterprises Ltd. v Bram Enterprises Ltd. Footnote 84 had its first opportunity to consider this tort in 40 years.Footnote 85
The case concerned family members who owned an apartment building. There was a syndication agreement whereby, if the majority decided to sell, the minority had the right to purchase at the appraised value. Failing this, the building could be sold to a third party. The defendants/appellants (a dissenting family member and his company) refused to offer to buy at the appraised value and pursued a campaign of blocking tactics to inhibit any other sale.Footnote 86 They did this by starting arbitration proceedings, encumbrancing the title,Footnote 87 and denying possible purchasers access to the property. Two offers higher than the appraised value were lost as a result. The plaintiffs ultimately sold the property to the defendants (after a two-year delay) for its appraised value, but sued for the difference between that and the higher of the two offers that fell through. They relied on the unlawful means tort.
Though there was no actionable wrong committed against the potential purchasers, the plaintiffs argued there should be a “broad bright line rule”Footnote 88 for establishing unlawful means. They contended that the required unlawful acts comprised the erection of legal barriers based on spurious claims, in order to prevent the sale to the interested third parties.Footnote 89 They succeeded both at first instance – the trial judge applying the lack of legal justification test – and on appeal, the New Brunswick Court of Appeal deciding that there should be principled exceptions to the OBG actionability test.
However, the Supreme Court (in a unanimous decision delivered by Cromwell J.) accepted Lord Hoffmann's approach in OBG and the narrow function he ascribed to the unlawful means tort. It was decided that the tort's shape remained based on intermediary use and that its scope should be kept within narrow boundsFootnote 90 acting as a type of “parasitic liability”, based on actionable wrongs.Footnote 91 So the tort applied to “three party situations in which the defendant commits an unlawful act against a third party and that act intentionally causes economic harm to the plaintiff”. They rejected the gap-filling function for the unlawful means tort – whether that function be sparked by unjustified harm or the more modest spark of “cheating”.Footnote 92 Furthermore, there was no “wriggle room” of principled exceptions which would confer “an unstructured judicial discretion to do what appears to the particular judge to be just in the particular circumstances”.Footnote 93
No new tort liability would be created. Instead, tort law would be kept “within its proper bounds”.Footnote 94 For the Supreme Court, the unlawful means tort needed to comply with tort law's approach to regulating economic and competitive activity – an approach that afforded less protection to economic than other interests – was based on a reluctance to develop rules to enforce fair competition and a concern not to undermine certainty in commercial affairs.Footnote 95
In Australia, there has been less debate over the unlawful means tort; there is as yet no authoritative determination by the High Court of Australia as to its existence in that jurisdiction. Though, in both Northern Territory v Mengel Footnote 96 and Sanders v Snell,Footnote 97 the High Court recognised the emergence of the tort in the UK, they did not decide whether it should be accepted in Australia, in part because the tort in the UK was at an embryonic stage. However, it is likely that this tort will ultimately be accepted by the High Court. Pritchard J. in Hardie Finance Corp Pty Ltd. v Ahern (no.3),Footnote 98 noted that a number of Australian decisions since Snell have acknowledged the possibility that the tort exists or may ultimately be adopted.Footnote 99 Indeed, she even opined that the reluctance of the High Court should no longer be an issue as the unlawful means tort had been identified and defined in OBG. Footnote 100 Furthermore, Refshauge J. in Canberra Data Centres Pty v Vibe Constructions (ACT) Pty Ltd. advised plaintiffs to plead the unlawful means tort in terms consistent with OBG.Footnote 101
This emerging Australian tort would seem to be framed on intermediary use. In Canberra Data Centres Pty, it was described as “wrongful interference with the actions of a third party in which the plaintiff has an economic interest”.Footnote 102 And, in Ballard v Multiplex Footnote 103 and in the cases referred to by Pritchard J. in Hardie Finance, its possible existence was debated within an intermediary-use setting. Similarly, though there are dicta otherwise, OBG would seem to be the likely guide on what constitutes unlawful means. Some years earlier, the High Court in Sanders v Snell was clearly of the view that unlawful means would not include acts that are “unauthorised in the sense that they are ultra vires or void” yet involve no “infringement of some right” of the third party.Footnote 104 Post OBG, Pritchard J. in Hardie Finance adopted Lord Hoffmann's actionability test, contending “the clarification in OBG of what is required for ‘unlawful means' is not inconsistent with aspects of the discussion of “unlawful means” by the majority in Sanders”.Footnote 105
All this indicates that the perception in Australia is that the function of this tort is protection against excessive competitive conflict and that its shape and scope are as Lord Hoffmann determined. Thus, it is not surprising that Cromwell J., in his review of other common law authorities in A.I. Enterprises, predicted “it is clear that the unlawful means tort will have at most a modest role to play in [Australia]”.Footnote 106
As for New Zealand, the Court of Appeal in Diver v Loktronic Industries Ltd. Footnote 107 applied Lord Hoffmann's OBG definition of the unlawful means tort.
V. The Modern Shape and Scope of the Conspiracy Tort
It was arguable that the House of Lords' analysis in OBG did not reveal any important role for the conspiracy tort. And this would not be surprising given that, as has been noted, throughout the twentieth century in England at least, it was perceived as unimportant. However, within 10 months of the OBG decision, a different panel of the House of Lords in Total Network breathed new life into this tort in England.
Here, the House of Lords was presented with a direct infliction of economic harm by a conspiracy using methods that did not constitute an actionable wrong but amounted to the common law crime of cheating the Revenue. Clearly, the shape and scope confirmed for the unlawful means tort in OBG were lacking.Footnote 108 However, the House of Lords agreed with the Revenue that the conspiracy tort was not subject to the narrow limits of the unlawful means tort. That was because it was not constrained by a trade conflict function, Lord Walker noting that “the claimant need not be a trader who is injured in his trade”.Footnote 109 Rather, the function of this tort was accepted to be that of gap-filling: Lord Hope expressly acknowledging this.Footnote 110 So this tort could protect against “loss directed against the claimants themselves”Footnote 111 and civil wrongs were not required to spark liability.
The legacy of Total Network is yet to be established. It is yet to be settled whether the conspiracy tort has been revitalised not only where direct harm is inflicted, but also where an intermediary is used to inflict harm and exactly what may constitute the additional liability spark for this tort is unclear. These uncertainties are debated below.
What is interesting is that a vital tort of conspiracy – with a gap-filling function – was evident in Canada and Australia before Total Network. And some of the uncertainty raised by Total Network has already been answered in those jurisdictions.
In Canada, Burns and BlomFootnote 112 note that the popularity of the tort may be accounted for by two Supreme Court decisions: Gagnon v Foundation Maritime Ltd. Footnote 113 and Canada Cement LaFrage Ltd. v British Columbia Lightweight Aggregate Ltd.,Footnote 114 the seminal Canadian conspiracy case decided as a riposte to the uncertainty generated by the Lonrho v Shell case in England.
It has been accepted to have both a direct shape and an intermediary-use shape,Footnote 115 and in neither shape is liability limited by the spark of civil wrongs. So the liability spark includes crimes and also breach of statutory prohibition. This was accepted in both Gagnon, where the defendant used means “prohibited by statute”,Footnote 116 and in Canada Cement, where the definition of unlawful means was held to include a non-actionable breach of a competition statute, “quasi-criminal conduct”.Footnote 117
But the Canadian courts have gone even further in their definition of unlawful means for the conspiracy tort. Since the decision in Total Network, both the Ontario and Alberta Courts of Appeal – in Agribrands Purina Canada Ltd. v Kasamekas Footnote 118 and HSBC Bank Canada v Fuss,Footnote 119 respectively – have proposed the test of “wrongful in law” to define unlawful acts for conspiracy liability. Though stated not to be synonymous with Lord Denning's “not at liberty to commit” test, Goudge J.A. in Agribrands appeared to take a wide view of this concept. He referred (obiter) to the decision of the Ontario Court of Appeal in Reach, a case on the unlawful means tort, discussed above. This involved an ultra vires order issued by the defendant voluntary association to its members. This conduct was identified by Goudge J.A. as “wrongful in law”,Footnote 120 as the association's members could have had the order set aside by a court.
In Australia, like Canada, it has been accepted (well before Total Network) that unlawful means for the conspiracy tort extend beyond civilly actionable wrongs. Menzies J. in Williams v Hursey reviewed the case law on what constitutes unlawful means in the tort of conspiracy and noted that beyond torts and breaches of contract, criminal offencesFootnote 121 sufficed. There are also dicta that indicate that infringements of statutory prohibitions suffice, even if they do not provide a private right (on a par with the Canadian position).Footnote 122
However, like Canada, there are cases that indicate an even wider spark of liability, Edmundson detecting “a relatively broad and unconstrained approach to determining unlawful means” for conspiracy liability.Footnote 123 So, in Chen v Karandonis, the court accepted the lower court's view that breach of directors' duties constituted “illegal means”Footnote 124 while, in Fatimi Pty Ltd. v Bryant,Footnote 125 a voidable conveyance (inter alia) was also held capable of constituting unlawful means.Footnote 126 Further, the Full Court of the Federal Court of Australia in Dresna Pty Ltd. v Misu Nominees Ltd. Footnote 127 accepted that the breach of enforceable undertakings given to the Australian Competition and Consumer CommissionFootnote 128 and a deliberate failure to disclose relevant matters to that body were capable of constituting unlawful means in the tort.Footnote 129 Interestingly, Barker et al. contend “the action need only be independently unlawful (that is in breach of a legal standard), not independently actionable by the plaintiff”.Footnote 130 This resonates with Goudge J.A.'s remarks in Agribrands, though Barker et al. would include some “improper” or “impermissible” actions in their definition of “unlawful”. Indeed, the Full Court of the Federal Court of Australia in Dresna cited Heydon, that unlawful means could be constituted by actions which are improper, where conventional moral standards have been applied.Footnote 131
And, as in Canada, this tort can be invoked where the harm is inflicted directly or via an intermediary, it being clear that the tort's vitality also applies to the intermediary-use version of the tort.Footnote 132
In New Zealand, the Court of Appeal in Wagner v Gill Footnote 133 accepted that Total Network is now the authority for the conspiracy tort, though the court underlined the uncertainty as to the modern shape and scope of this tort flowing from Total Network, which uncertainty is debated below.Footnote 134
VI. The Modern Functions of the Economic Torts
It is apparent that the courts in England, Canada, and Australia are setting the two torts on different tracks (though the New Zealand Court of Appeal has some reservations as to the possible width of the conspiracy tort).
The approaches of the English, Canadian, Australian, and New Zealand courts now appear to have reached a consensus on the function of the unlawful means tort.Footnote 135 The unlawful means tort remains linked to its history and to the prevention of excessive competitive conflict. And it is that function that determines its shape and scope. As a result, this tort is not a gap-filler. It is a liability stretcher that helps claimants who are intentionally economically harmed by a civil wrong but who are one step beyond the normal privity rules of tort law. The same two concerns guided both Lord Hoffmann in OBG and the Supreme Court of Canada in A.I. Enterprises: the need for certainty in the legality of commercial activity and judicial reluctance to assess fairness in competition.
As for the conspiracy tort, however, it is striking that it now has a life of its own, independent of the unlawful means tort. Its function has been expanded to fill in gaps in the existing civil law,Footnote 136 thereby providing a wider common law control of commercial misbehaviour that intentionally causes economic harm to the claimant. Having been the poor relation of the economic torts, it is now revitalised as a commercial tort.
Commentators have underlined the potential of the conspiracy tort to function as a commercial tort. Burns and Blom note that, in Canada, “modern illustrations of the [conspiracy] tort … reveal it to be … a judicial device in controlling ‘unfair’ business practices in increasingly unregulated markets”Footnote 137 while, in Australia, Edmundson writes that the conspiracy tort has evolved from an industrial and competition remedy to apply in disputes concerning “commercial disputes more generally”.Footnote 138 And it should be noted that English practitioners comment on the attractiveness of this tort to “innovative litigators”,Footnote 139 one leading Q.C. suggesting that the conspiracy tort, post Total Network, may be the answer where claimants seek to find an easier route in “cutting through the jungle” to establish liability, where evidence is complex and to overcome the daunting obstacles of “impenetrable relationships and multiple duties”.Footnote 140
Of course, how wide a gap the conspiracy tort can fill depends whether its shape extends to both the direct and indirect infliction of harm and what definition of unlawful means shapes its liability spark.
In Australia and Canada, it is accepted that this tort has both a direct and an intermediary-use shape and that the same definition of unlawful means applies regardless of that shapeFootnote 141 (the New Zealand the Court of Appeal in Wagner was not prepared to decide this issue).Footnote 142 However, it is not clear what the position is in England. One of the reasons the House of Lords in Total Network felt able to distinguish OBG was that, in Total Network, direct harm was involved, unlike the context of intermediary-use harm that formed the basis for Lord Hoffmann's discussion in OBG.
However, it is more than arguable that, even in England, the conspiracy tort will be revitalised in its intermediary-use form as well as its direct form. In Total Network, the conspiracy cases cited in support of the decision were in fact ones involving intermediary use by the defendant.Footnote 143 Thus, McBride and Bagshaw believe it unlikely that courts in the future will apply Lord Hoffmann's narrow view of function to intermediary-use conspiracy cases. Rather, they suggest that “an independent set of rules” on what amounts to unlawful means for the conspiracy tort will be established, the same rules applying to both direct and indirect infliction of harm.Footnote 144
Of course, the definition of unlawful means – the additional liability spark – is of crucial importance in determining the usefulness of this revitalised tort to commercial claimants. On the one hand, it might be argued that Total Network only added common law and statutory crimes to the list of unlawful means that attract liability (and only where the purpose behind creating criminal liability is the protection of the particular claimant).Footnote 145 This was certainly the view of Lord Hoffmann writing extra-judiciallyFootnote 146 and his view is mirrored in some of the discussion of the New Zealand Court of Appeal in Wagner. Footnote 147
However, both Canada and Australia do not seem to limit unlawful means in this narrow way – “wrongful in law” or “breach of a legal standard” being suggestedFootnote 148 – while, in Total Network itself, indications can be found of a liberal definition of unlawfulness. So Lord Scott refers to “sufficiently reprehensible” behaviour,Footnote 149 while stressing “the essential flexibility of the action on the case”.Footnote 150 And Lord Neuberger, in his analysis of this tort, seemed to break down the distinction between the lawful means and the unlawful means versions of the conspiracy tort.Footnote 151 As can be seen in Digicel (St. Lucia) Ltd. v Cable & Wireless Plc and Concept Oil Services v En-Gin Group LLP,Footnote 152 English claimants are already arguing that contravention of regulatory statutory provisions (non-actionable breaches of non-criminal statutes) should constitute unlawful means in the conspiracy tort.Footnote 153 Indeed, though not necessary on the facts to decide this matter, Flaux J. in the latter case saw “no reason in principle why it should not be”.
It is hardly surprising that the Ontario Court of Appeal in Laurence v Peel Regional Police Force remarked that “the tort of … conspiracy [is] still developing and [its] outer limits have not been defined”.Footnote 154 Claimants will seek to explore the outer limits against the real uncertainty that has been created. In order to guide the judicial reaction, three key issues are now raised. Unless these are resolved, incoherence will result.
A. What Is the Justification for the New Function Ascribed to the Conspiracy Tort?
Thus far, the courts have failed to provide persuasive reasons why the function, and therefore the shape and scope, of the conspiracy tort should be different to that of the unlawful means tort. To simply state that they were “different in their nature”Footnote 155 or that “there is no need for consistency in the unlawful means component of unlawful means conspiracy and of the tort of causing loss by unlawful means”Footnote 156 or that they are “altogether different torts”Footnote 157 hardly suffices. And, though Cromwell J. in A.I. Enterprises stressed their “distinct historical roots”,Footnote 158 the House of Lords earlier in Total Network had decided that the issue was one of policy and that they could work with a clean slate.Footnote 159
In Total Network itself, which Edmondson believes “confirmed the potential potency of the tort and left it ready to evolve”,Footnote 160 we are provided in essence with two unconvincing justifications, namely that it was “in the fact of the conspiracy that the unlawfulness resides”Footnote 161 and “the intense focus, in the tort of conspiracy, on intention”.Footnote 162 Cromwell J. in A.I. Enterprises echoed the former justification: “… it may well be that the presence of an agreement in the tort of conspiracy justifies a different and broader definition of ‘unlawful means' for the tort of ‘unlawful means' conspiracy than is appropriate for the unlawful means tort.”Footnote 163
However, neither justification explains what sets conspiracy apart from the unlawful means tort. To propose “the law of tort takes a particularly censorious view where conspiracy is involved”Footnote 164 per se is mere affirmation, not justification. As for the second reason – that of an intense focus on intention – this, too, is debatable, as is discussed below.Footnote 165 Without a clear justification, the scope of unlawful means will remain unclear.
B. Can a Different Function for the Unlawful Means Tort Be Sustained?
Can the courts continue to apply a different, narrow function to the unlawful means tort if it has abandoned this for the conspiracy tort? As Pritchard J. in Hardie Finance noted, “it remains to be seen” what effect Total Network would have on the unlawful means tort.Footnote 166
So the tort of conspiracy may be used to circumvent the OBG requirements of intermediary use and actionability in the unlawful means tort.Footnote 167 Proving a conspiracy element may not be too difficult where the claimant can place the intentional economic harm in a corporate context,Footnote 168 given a company having a separate legal status can conspire with its directors and shareholdersFootnote 169 and given the background to a commercial dispute may involve complex commercial arrangements. This will indirectly undermine the narrow function of the unlawful means tort.
However, there is also the possibility that, once the courts become used to dealing with the economic tort of conspiracy in a very different setting to trade conflict, claimants will demand a wider function be ascribed to the unlawful means tort. In short, they will argue that it too should be used for gap-filling, by abandoning the need for civil wrongs and intermediary use.Footnote 170
It may well be, therefore, that the revitalisation process that started with the conspiracy tort will insinuate itself into the application of the unlawful means tort. If it does so, that will mean, rather than Lord Hoffmann's view, it was Lord Nicholls's (minority) view of the unlawful means tort in OBG that revealed the future function of that tort.Footnote 171 Lord Hoffmann's narrow analysis of the unlawful means tort was rejected by Lord Nicholls, who saw the function of the unlawful means tort as curbing “clearly excessive behaviour”.Footnote 172 For this reason, he disagreed with Lord Hoffmann both as to the scope of the tort – favouring doing what the defendant has “no legal right to do” or what he is “not permitted to do” – and as to the shape of this tort – accepting that it could apply both where there was intermediary use and a direct application of harm.Footnote 173 Thus, he favoured a wider, gap-filling function for this tort (though he saw the need for the control mechanism of instrumentality). It should be further noted that Total Network contains undertones of approval for Lord Nicholls's version of the unlawful means tort.Footnote 174
C. What Is the Modern Definition of Intention and Is It the Same for the Two Torts?
For the moment, it would appear that the unlawful means conspiracy tort has a wider function than the unlawful means tort. This raises a further question as to the intention required for these two torts: what is it and is it the same for them both? At the moment, the position is unclear.
The orthodoxy at least in England had been that the same intention applied to the unlawful means conspiracy tort as to the unlawful means tort. (Of course, the lawful means conspiracy tort required intention and an illegitimate predominant purpose.)Footnote 175 And the traditional test for intention in both economic torts had been that of “targeted” or “aimed-at” harm.
However, in OBG, a wider definition of intention was adopted by Lords Hoffmann and Nicholls. They preferred the test of “desired end or means of achieving a desired end”. This has been applied to the unlawful means tort by the Supreme Court in Canada (A.I. Enterprises),Footnote 176 by Pritchard J. in Australia (Hardie),Footnote 177 and by the New Zealand Court of Appeal (Diver).Footnote 178
Acknowledged as a wider definition of intention by Lord Hoffmann himself in OBG,Footnote 179 the ends/means test might mean that inevitable harm could suffice for liability. Yet this expanded view of intention sits badly with the narrow function that in theory continues to apply to the unlawful means tort.Footnote 180 The traditional definition of intention in the economic torts, equating intention to an attack, flows from their traditional function of policing competitive conflict. However, an ends/means test for intention is more coherent where the function of the tort is not limited to preventing attacks on the claimant, but rather extends to preventing commercial misbehaviour that inevitably causes economic harm.Footnote 181
And should this ends/means test apply to the conspiracy tort? Subsequently to OBG, the Court of Appeal has confirmed that the same intention applies to the conspiracy tort as to the unlawful means tort.Footnote 182 Yet, in Total Network, part of the suggested rationale for conspiracy as a vital tort was the “intense focus on intention” which, according to Lord Walker, “sets conspiracy apart from other torts”.Footnote 183 So it is arguable that the definition of intention must be narrower in the conspiracy tort compared to the unlawful means tort, though the function of the conspiracy tort is wider.Footnote 184
VII. Conclusion
Throughout the Commonwealth, the function of the economic torts has been widened where the conspiracy tort is concerned. However, the justification for this remains obscure. It is argued that the function for the conspiracy and unlawful means torts should be the same, unless a clear difference in underlying rationales can be identified.
As for what that function should be, the courts here and in the Commonwealth need to consider the rationale that “best reflects the modern role that the tort[s] should play in the broader scheme of civil liability”.Footnote 185 The answer to that essential question is whether the courts should be happy to expand these torts (to whatever extent) so that they set standards for commercial behaviour and fill gaps in the civil law. To do so, of course, they potentially encroach onto other areas of the civil law where a different policy has been set for liability. There are indications that the judiciary are aware of the perils of making that choice. Pritchard J. in Hardie Finance cautioned “it remains open to argument whether it is necessary or appropriate for the courts to venture into this field via the development of the common law, if the purpose in so doing is the regulation of commercial behaviour”Footnote 186 while Carnwath L.J. in OBG at Court of Appeal level warned that “the boundaries of the economic torts are a sensitive area in which it is difficult to anticipate the consequences of re-definition”.Footnote 187 The cautious alternative, as this author has argued elsewhere,Footnote 188 is to accept that these torts should remain a modest common law contribution to policing excessive competitive behaviour and no more.
