CONSPIRACY

Different types of conspiracy. Historically, there are two kinds of conspiracy, the elements of which are distinct:

  • an “unlawful means” conspiracy in which the participants combine together to perform activities which are themselves unlawful; and
  • a combination to perform activities which, although not themselves per se unlawful, are done with the sole of predominant purpose of injuring the claimant: “it is in the fact of the conspiracy that the unlawfulness resides”, per Lord Watson in Allen v Flood [1898] A.C. 1 at 108.

Necessary elements of an action in conspiracy. The claimant must plead and prove the following necessary elements: See Kuwait Oil Tanker Co v Al Bader [2000] 2 All E.R. Comm 271, CA, para. 108:

  • a combination or agreement between two or more individuals (required for both types of conspiracy);
  • an intent to injure (required for both types of conspiracy but must be shown as the sole or predominant purpose for type (2) above);
  • pursuant to which combination or agreement and with that intention certain activities were carried out;

  • Resulting loss and damage to the claimant.

Combination or agreement. It is not necessary to show that there was anything in the nature of an express agreement, whether formal or informal. The court looks at the overt acts of the conspiracy and infers from those activities that there was agreement to further the common object of the combination. It is sufficient that two or more persons combine with the necessary intention or that they deliberately co-operate, albeit tacitly, to achieve a common end. Neither is it necessary that all those involved should have joined the conspiracy at the same time, but all those said to be parties to the conspiracy should be sufficiently aware of the surrounding circumstances and share the same object for it properly to be said that they ar4e acting in concert. The question in relation to any particular scheme or enterprise in which only one or some of the alleged conspirators can be shown to have directly participated is whether that enterprise fell within the overall scope of their common design (Kuwait Oil Tanker Co SAK v Al Bader [2000] 2 All E.R. (Comm) 271 at paras 111-112).

It is possible for a conspirator to join later. However, a person is only liable for the damage that is suffered from the time that he joins the conspiracy; he is not liable retrospectively for the damage that has been suffered prior to his joining (O’Keefe v Walsh [1903] 2 L.R. 681).

How much of the principal fraudster’s scheme must the defendant know before incurring liability for the whole or part of the consequences? Where two or more persons combine with a view to stealing form the claimant wherever possible it is unnecessary to show that the defendant conspirators knew of or planned every specific subsequent theft: Kuwait Oil Tanger Co SAK v Al Bader [2000] 2 All E.R. (Comm) 271. However, where a bit-part player in a multifaceted fraud knows of only one aspect of the fraud and is ignorant of the others he may not be liable for anything more than the loss properly attributable to that part of the fraud of which he is aware: IS Innovative Software Ltd v Howes [2004] EWCA Civ 275. In Bank of Tokyo-Mitsubishi UFJ Ltd v Baskam [2009] EWHC 1276 (Ch) Briggs J. suggested (at para.847) the answer in each case lay in a:

“painstaking analysis of the extent to which the particular defendant shared a common objective with the primary fraudsters and the extent to which the achievement of that objective was to the particular defendant’s knowledge to be achieved by unlawful means intended to injure the claimant”.

Should the names of all conspirators not be known it is acceptable to plead a conspiracy between “A, B and [other] persons whose names are presently unknown to the claimant” (Giblan v National Amalgamated Labourers Union of Great Britain and Ireland [1903] 2 K.B. 600). An allegation of conspiracy must be properly particularised. It is essential that the facts on which reliance is to be placed in support of the existence of a conspiracy are clearly identified and that the logical connection between those facts and the substantive allegations in the pleadings is made clear. This means the claimant must both plead the primary facts on which he relies and set out clearly how they give rise to the inference that the defendants were parties to a conspiracy: Cannock Chase DC v Kelly [1978] 1 W.L.R. 1; Paragon Finance Plc v Hare, The Times, April 1, 1999.

Intention to injure. For an “unlawful means” conspiracy (type (1) above), it is not necessary to show a predominant intent to injure, but there must be alleged and proved some intention to injure (Lonrho v Fayed [1992] 1 A.C. 448, Customs and Excise Commissioners v Total Network SL [2008] 1 A.C. 1174 per Lord Scott at para. 56).

For a conspiracy of type (2) above, a “lawful means” conspiracy, in to plead and prove that the conspirators had the sole or predominant intention of injuring the claimant (Crofter Hand Woven Harris Tweed Co v Veitch [1942] A.C. 435 at 445, per Lord Simon L.C.; Lonrho v Fayed [1992] 1 A.C. 448 at 467, per Lord Bridge). See now also Customs and Excise Commissioners v Total Network SL [2008] 1 A.C. 1174 at paras 41 and 56.

The mental element of intention to injure the claimant will be satisfied where the defendant intends to injure the claimant either as an end in itself or as a means to an end such as to enrich himself or protect or promote his own economic interests. It will not be satisfied where injury to the claimant is neither a desired end nor a means of attaining it but merely a foreseeable consequence of the defendant’s actions. Where a defendant seeks to advance his own business by pursuing a course of conduct which he knows will, in the very nature of things, necessarily be injurious to the claimant, that is where loss to the claimant is “the obverse side of the coin from gain to the defendant” the defendant’s gain and the claimant’s loss are to the defendant’s knowledge inseparably linked. The defendant cannot obtain one without bringing about the other. If the defendant goes ahead in such a case in order to obtain the gain he seeks his state of mind will satisfy the mental ingredient of the tort: see OBG Ltd v Allan [2008] 1 A.C. 1 per Lord Hoffman at [62] and per Lord Nicholls at [164]-[167] regarding intent to injure within the context of the economic tort of interference with the claimant’s business by unlawful means. No distinction can be drawn between what was held in OBG about intention to cause loss by unlawful means and conspiracy: Meretz Investments NV v ACP Ltd [2008] Ch.244 at para. 146. OBG is authority that in this context what is required is actual intention or reckless indifference. The same applies to knowledge. Relevant knowledge is actual knowledge or reckless indifference. Reckless indifference in this context means a conscious decision not to inquire into the existence of a fact: Baldwin v Berryland Books [2010] EWCA Civ 1440 at para. 48.

Knowledge of unlawfulness. In Meretz Investments NV v ACP Ltd [2008] Ch. 244 the Court of Appeal held that it was a condition of liability that the defendant knows that the claimant’s loss was to be caused by the use of unlawful means: “A defendant should not be liable for conspiracy to injure by unlawful means if he believes that he has a lawful right to do what he is doing” per Toulson L.J. at para. 174. See also Digicel (St Lucia) Ltd v Cable I& Wireless Plc [2010] EWHC 774 (Ch) at Annex I, paras 86-119.

It is not a necessary ingredient of unlawful means conspiracy that the unlawful means must be actionable at the suit of the claimant against at least one of the conspirators. In Customs and Excise Commissioners v Total Network SL [2008] 1 A.C. 1174 the House of Lords held that criminal conduct at common law or by statute can constitute unlawful means in unlawful means conspiracy, provided that it is indeed the means whereby the relevant loss is intentionally inflicted upon the claimant (see per Lord Walker at paras 95-96). To this extent “unlawful means” has a wider meaning in the tort of conspiracy than it has in the tort of intentionally causing harm by unlawful means.

However, the precise scope of what constitutes an unlawful act for the purposes of unlawful means conspiracy is uncertain. It is not clear whether every crime will constitute an unlawful act for these purposes or whether the tort extends to crimes directed against third parties or even torts committed against third parties: see Total Network SL at paras 43, 96, 116-117, 124, 222-223. In Digicel (St Lucia) Ltd v Cable & Wireless Plc [2010] EWHC 774 (Ch) Morgan J. concluded that a breach of a statutory obligation which was not an actionable breach and which was not a criminal offence did not constitute “unlawful means” for the purpose of the tort of conspiracy to injure by unlawful means (see Annex I at paras 56-62).

It has generally been assumed in a number of cases that breach of fiduciary duty and breach of contract are unlawful means for the tort of conspiracy to injure by unlawful means (e.g. Fiona Trust & Holding Corp v Privalov [2010] EWHC 3199 (Comm) at para.69 where the unlawful means included breach of fiduciary duty, bribery, dishonest assistance and knowing receipt) but the desirability of this has been questioned since there already exist accessory liability for dishonest assistance in a breach of fiduciary duty and breach of contract are unlawful means for that tort of inducing breach of contract: see the discussion in Digicel at Annex I paras 63-69 and Aerostar Maintenance International Ltd v Wilson [2010] EWHC 2032 (Ch) at paras 170-172. In Meretz Investments NV v ACP Ltd [2008] Ch. 244 the Court of Appeal held that where a party does something which he is entitled to do because of his contractual right conferred by A, the fact that it results in a breach of B’s contract with A cannot constitute unlawful means of which A can complain in an action for unlawful means conspiracy. The court has to look at the whole of the means used by the alleged tortfeaser and not simply its effect on the party rendered in breach (see paras 148, 167-170).

Damage. Damage is the gist of a civil action for conspiracy. The tort is complete only if the agreement is carried into effect so as to damage the claimant. (Marrinan v Vibart [1963] 1 Q.B. 234; Midland Bank v Green (No. 3) [1979] 1 Ch. 496, affirmed by Lord Denning M.R. in the Court of Appeal [1982] Ch. 529; Lonrho v Shell Petroleum Company Ltd (No. 2) [1982] A.C. 173).

In conspiracy damages are at large in the sense that they are not limited to a precise calculation of the amount of the actual pecuniary loss actually proved: Quinn v Leathem [1901] A.C. 495. In coming to a view as to the level of damages which a defendant ought to pay, the court will consider all the circumstances of the case, including the conduct of a defendant and the nature of his wrongdoing: Noble Resources Saturday v Gross [2009] EWHC 1435 (Comm). However, that damages are at large does not mean that it is sufficient simply to plead, without any particulars, that loss and damage has been suffered. Such a pleading has been described as grossly inadequate: Lonrho Plc v Fayed (No.5) [1993] 1 W.L.R. 1489, 1494 (Dillon L.J.).

Defences to an action in conspiracy. The defendants may deny the conspiracy generally so long as the defence makes clear that every allegation of fact in the particulars of claim is denied (John Lancester Radiators Ltd v General Motors Radiators Co Ltd [1946] All E.R. 685, CA), or the defendants may serve separate defences or join in a common defence and deal separately with the allegations made against each of them individually. Plainly it is advisable to deal specifically with the allegations if this can be done.

It is for the claimant to establish that the defendants conspired together with the object or purpose of injuring or causing damage to him and that he has thereby suffered loss (see Crofter Hand Woven Harris Tweed Co Ltd v Veitch [1942] A.C. 435).

If the defendants desire to contend, not only that this was not their object or purpose, but that the purpose of the combination between them was bona fide to promote or forward or defend their own interests or the interests of those they represent, each ground of justification or lawful excuse should be expressly pleaded, and the facts and matters relied on should be fully set out. However, such a defence of justification is not available in the case of “unlawful means” conspiracy (type (1) above): Lonrho v Fayed [1992] 1 A.C. 448; Crofter v Veitch, above.

For two or more persons to agree together to induce others not to enter into any contracts with the claimant is not an actionable tort when such advice is given justifiably and bona fide for the good of the persons advised (see South Wales MinersFederation v Glamorgan Coal Co [1905] A.C. 239 at 245, 251), or from motives of self interest in fair trade competition (Mogul Steamship Co v McGregor [1892] A.C. 25), or where the predominant purpose of the combination was the legitimate promotion of the interests of the persons combining (Crofter Hand Woven Harris Tweed Co Ltd v Veitch, above; Scala Ballroom (Wolverhampton) Ltd v Ratcliffe [1958] 1 W.L.R. 1057, CA).

Trade union objectives may be a legitimate justification. In Crofter Hand Woven Harris Tweed Co Ltd v Veitch, above, Lord Wright said (at 469) that “The true contrast is, I think, between the case where the object is the legitimate benefit of the combiners and the case where the object is deliberate damage without any such just cause”.

The following agreements have been held to be justified:

  • a campaign against a colour bar in a club: Scala Ballroom (Wolverhampton) Ltd, above;
  • the enforcement of a closed shop: Reynolds v Shipping Federation [1924] 1 Ch. 28;
  • attempts to force an employer to refuse to employ trade unionists: December Thomson & Co v Deakin [1952] Ch. 646.