The law of economic torts in England provides a flexible cause of action to address all sorts of damage caused to businesses. When a person or business intentionally interferes with another party’s business and causes economic loss, that unlawful activity may be addressed by utilising a long standing action in the law of torts known as unlawful means conspiracy. It is one of the pillars of economic torts. Our London Solicitors comment.
Where the alleged liability arises as a result of prevention of performance of a contract rather than a breach of contract, the tort of causing loss through unlawful means generally applies.
In the case of Douglas v Hello! Ltd, which was heard alongside OBG Ltd v Allan and Mainstream Properties Ltd v Young in 2007, the House of Lords reconsidered the case of Lumley v Gye [1853] and decided that ‘unlawful means’ was constituted by:
‘acts intended to cause loss to the claimant by interfering with the freedom of a third party that is unlawful as against the third party, and which is intended to cause loss to the claimant’.
The unlawful act must interfere with the third party’s freedom to engage with the claimant. The conspiracy itself may include threats of physical violence and must be civilly actionable by the third party even if the loss is not suffered by them. The action, in any event must be unlawful.
Offences which are criminal or regulatory in nature do not constitute ‘unlawful means’ for so long as they are not actionable in private law; the wrongful act must be actionable under the civil (as opposed to criminal) law. This went against the view of Lord Nicholls of Birkenhead, who dissented in the Douglas case. The lawlord found that ‘unlawful means’ should extend beyond civil wrongs to include criminal wrongs as well.
There is no requirement of malice for unlawful means to apply, a point that followed from the case of Allen v Flood [1898]. However, it is not enough for the claimant’s loss to be merely foreseeable. Instead, the defendant can only be liable if the loss to the claimant is intended. To determine this intention, a subjective test is applied from Mainstream Properties Ltd v Young: if the defendant holds an honest belief that the outcome of his actions will not result in a claimant’s loss, then liability cannot be established. In addition, the defendant must have actually interfered in the claimant’s relationship with a third party and damage must have occurred.
Action can be taken under this tort in situations whereby the third party and the claimant do not have a contract between them and the defendant’s activity causes negotiations between the former two to break down. Again, the requirement of unlawful means must be fulfilled to establish liability because without it, the tort would pose a danger in impeding free competition with business, thus coming into conflict with competition law.
Our London Solicitors provide business legal advice on unlawful conspiracies which damage businesses profitability and divert trade by unlawful means. To speak to one of our litigation solicitors, call +44 20 7353 1770.
