#15674 - Economic Torts - Tort Law

ECONOMIC TORTS

My argument on coherence: we should not see all of the economic torts as specie of a genus tort —as Bagshaw argues, each tort sets different compromises between protection and liberty for different economic interests. This approach draws strength from the following: (i) we could adopt Deakin and Randall’s ‘functional’ approach for some torts but not others (I think it works well for causing loss by unlawful means) but, as Bagshaw and McBride suggest, there is a good argument for allowing the Lumley tort to operate other than where economic interests are associated with trade / business / commerce; (ii) it recognises the clear difference in structure between causing loss by unlawful means / unlawful means conspiracy and the Lumley tort; (iii) it has benefits for understanding aspects like the justification defence, which probably doesn’t apply to the tort of causing loss by unlawful means (since it’s arguably never justifiable to commit a civil wrong against another in order to target C); (iv) it allows us to better understand the rationale’s behind each of the torts —this links in with point (i) above.

GENERAL NOTES

Bagshaw - torts as compromises between protecting valuable interests and not overly inhibiting liberty (separate torts for separate compromises).

Why are there multiple torts, rather than just one.

1. It may be appropriate to set different compromises between protection and liberty for different economic interests

2. If there are concerns about the effect of such torts on liberty, we may want to restrict different types of behaviour to different extents (e.g. threats, carrots, misleading mimic-products).

• Both reasons 1 and 2 supported by the fact that a tort of procuring breach of contract (only protects contractual entitlements) is separate from a tort of interference with trade by unlawful means (protects more than contractual entitlements —also economic prospects)

• Reason 2 is supported by the fact that different torts respond to different behaviour: tort of intimidation (behaviour = unlawful threats); torts of deceit and injurious falsehood (behaviour = lying); torts of conspiracy (behaviour = ganging up); Misfeasance in public office (behaviour = abuse of public power)

Clear preference toward narrowing the torts and seeing them as separate in OBG v Allen:

• Perhaps the Courts have realised that there is no underlying principle and, as such, are not overly concerned with finding a unified principle – useless if not connected in some way.

  • Inconsistency not, in itself, negative.

  • Can only really be grouped together under a broad notion of protecting commerce, but even this has been doubted:

    • Although Deakin and Randall suggest that they should be confined to protecting only economic interests associated with trade, business, or because the primary role of the torts is to “maintain the integrity of the competitive process” and, consequently, that the courts should focus on designing torts to achieve this goal, without the distraction of protecting interests that are not associated with it.

    • Bagshaw and McBride argue D+R don’t provide much evidence to support their suggestion that problems in delineating the scope of the torts has been caused by a failure to focus on issued raised by policing competitive markets —difficult questions regarding mental states are not easy to answer, even in cases that obviously involve business competition. Further, courts would have to define ‘trade and business and employment’.

Attempt at synthesis:

• Genus tort:

  • As Carty notes, Allen v Flood was important in two ways:

    • Made clear that, in the absence of an unlawful element, causing intentional harm to another’s trade is not tortious —note that this not the route all jurisdictions took, for example, US State of MN (Tuttle v Buck) went the other way, making it tortious to maliciously harm C’s business interests without justification. Finnis argues this is the right approach.

    • Made clear that inducing breach of contract and causing loss by unlawful means are separate torts. Former is based on secondary liability and second is based on primary liability, but under both heads liability flows from acts which are independently unlawful.

  • However, Lord Diplock in Mekur, based on Lord Lindley’s statements in Quinn v Leatham, claimed that the unlawful means tort was a ‘genus’ tort, with other torts best seen as species of it.

    • Carty: although it is defensible to see the torts of interference with contractual relations as part of this tort (now confirmed in OBG v Allan), it’s not possible to bring all economic torts under this umbrella. For example, lawful means conspiracy is clearly not covered, but more significantly, neither is inducing breach of contract. Unlike Lumley the unlawful means tort allows C, though indirectly attacked via a third party, to sue on his own behalf, based on the wrong done to that third party. Further, Total Network determined that liability for unlawful means conspiracy is not to be incorporated into this tort.

    • Davies: assimilation of Lumley within a larger species of liability was extremely awkward —not clear what constituted the unlawful means because, as in Lumley itself, the inducement of offering Lumley a higher fee was not in itself unlawful, it was the accessory role in the breach of contract that constituted the wrong. The genus tort directs attention to the wrong thing, namely the inducement, when we try to fit Lumley within it. Further, Lumley does not require D to intend to injure C. This again differentiates L from the other economic torts.

Benefits of OBG

• Rejection of the genus tort and the hybrid tort of interference with contractual relations (recognised by Denning in Torquay Hotel): Lord Hoffmann confirmed that inducing breach of contract can’t be subsumed into the tort of causing loss by unlawful means because “it makes no sense to say that the breach of contract itself has been caused by unlawful means.” Rather, the former is a tort based on “viewing contractual rights as a species of property which deserves special protection.” By contrast, causing loss by unlawful means is ‘designed only to enforce basic standards of civilised behaviour in economic competition.” Benefits:

  • Carty: the decision restored a clear framework for all the economic torts: intimidation can be seen as a variant of causing loss by unlawful means and unlawful means conspiracy fits into the category of secondary liability, given its strong similarity with joint tortfeasance. Only lawful means conspiracy is an outlier.

  • Economic torts have to strike a balance between allowing competition and preventing the use of undesirable business practices; a link with unlawful conduct is a useful point of delineation for this balance and provides clarity for commercial entities in trying to determine which actions are acceptable and which are not.

Problems with Total Network

• HL decided that crimes could count as ‘unlawful means’ for the purposes of ‘unlawful means conspiracy’. Crucially this was a two-party case and not a three-party case, giving them space to give a different definition of unlawful means than used by the majority in OBG.

• Justification: they identified the tort of unlawful means conspiracy as being closely related to lawful means conspiracy. Bagshaw: on this analysis, both torts require: (i) A to agree with other parties that action should be taken with the intention of causing loss to B; and (ii) an additional element. In the tort of lawful means conspiracy, the additional element is the absence of a just cause or excuse for the action taken. In unlawful means conspiracy, the ‘unlawful means’ is just an alternative additional element. Both torts are therefore free-standing rather than accessorial and are based on the fact that, as Neuberger put it, the law takes a particularly censorious view where conspiracy is involved.

• Consequence of this judgment is to affect a fracturing of the framework of the economic torts developed in OBG. Following OBG, lawful means conspiracy could be viewed as an anomaly in that there was no connection with unlawful conduct —i.e. D in such cases has neither procured an unlawful act, nor have they committed one against a third party.

• Following Total, unlawful means conspiracy can no longer be seen as an accessorial form of causing harm by unlawful means, rather the emphasis is removed from the unlawful act itself and the placed onto the conspiratorial aspect. Further, in stretching the definition of ‘unlawful means’ in this area, the House of Lords has further undermined the common thread throughout the economic torts established in OBG that liability arises from civil wrong ‘done to others’. If a similarly restricted view of unlawful means had been found in Total then the two-party versions of economic torts become largely unnecessary, such cases could instead by dealt with on the basis of the civil wrong done by the defendant to the claimant. It is submitted that this is a situation in which a hard case has produced bad law — there was no doubt that Total’s actions were reprehensible, but the economic torts have been stretched undesirably so as to compensate HMRC.

Problems with the mental element

• Position prior to OBG: ‘targeted at test’. Justification is based on two grounds: (i) need to keep liability within acceptable bounds, given that, in the arena of economic activity, C is likely to be part of a spider web of commercial and economic links; (ii) a high degree of blameworthiness is called for, because intention serves as the factor which...