#16157 - Economic Torts - Tort Law

Textbook 2

Markesinis and Deakin 2

McBride and Bagshaw 2

Weir, Economic Torts 3

Cases 4

General 4

Stevens, Torts and Rights (2007) 297–298. 5

Deakin & Randall, ‘Rethinking the Economic Torts’ (2009) 72 MLR 519 6

Inducing a breach of Contract (Lumley v Gye tort) 7

Lumley v Gye (1853) 3 E&B 216 9

*Hill v First National Finance [1988] 3 All ER 801 10

OBG v Allan; Douglas v Hello! [2007] UKHL 21, [2008] 1 AC 1 11

Howarth, ‘Against Lumley v Gye’ (2005) 68 MLR 195 12

Carty, The Modern Functions of the Economic Torts (2015, CLJ) 13

Intimidation (a species of the “unlawful means” tort? involving threat to commit an unlawful act?) 14

*Rookes v Barnard [1964] AC 1129 14

OBG v Allen; Douglas v Hello! [2007] UKHL 21, [2008] 1 AC 1, [7], [61] (Lord Hoffmann) 15

Revenue and Customs Commissioners v Total Network SL [2008] UKHL 19, [2008] 1 AC 1174, [99] (Lord Walker), [124] (Lord Mance). 15

Causing loss by unlawful means (“Indirect Interference” Tort) 15

Allen v Flood 16

*OBG v Allan; Douglas v Hello! [2007] UKHL 21, [2008] 1 AC 1 17

Conspiracy 19

Allen v Flood (1895) 20

Crofter Hand Woven Harris Tweed Co v Veitch [1942] AC 435 21

*Revenue and Customs Commissioners v Total Network SL [2008] UKHL 19, [2008] 1 AC 1174 22

Deceit 23

Edgington v Fitzmaurice (1885) 29 Ch D 459 23

*Derry v Peek [1899] 14 AC 337 24

Smith New Court Securities v Scrimgeour Vickers [1997] AC 254 (remoteness, damages) 24

Injurious Falsehood 25

The principle that malice against C is not a sufficient basis for liability is established in Allen v Flood largely through concern that the notion of malice was too vague to be applied consistently by the courts and (then) juries – it denotes something more than intention to hurt C, but is not the same as an illegitimate motive…

• R. Epstein: malice means more than an intention to inflict some injury (all competition and most economic activity will do that). It refers to actions done out of spite or ill will, where someone is prepared to impose costs upon himself solely to make someone else worse off.

American example: Tuttle v Buck (held that D was liable for driving C out of business by setting up a rival barber in his home town for reasons related entirely to a personal grudge).

• English law would not have followed this because the means were lawful and D acted alone.

American requirement that D should disprove an implication of malice by showing that he acted out of economic self-interest notion of prima facie tort liability (recognized in English law only in the case of conspiracy to injure):

• Quinn v Leathem - HL held that acts carried out by a combination of workers with the aim of driving out of business an employer who took on non-union labor could be tortious if the actions were motivated by ill will against C personally and not economic self-protection of Ds.

Thus, except for conspiracy, English law has adopted a formal criterion (presence of unlawfulness) and not substantive criteria:

• Lord Devlin (writing extra judicially): Allen v Flood has thereby dammed up a stream of liability which could have developed within the common law, though only a “tenuous barrier” holds it back

But Allen v Flood remains (just) good law, and most of the responsibility for deciding the limits of legitimate competition has shifted to Parliament (competition legislation).

***

Very little unity in the different economic torts – probably because of the context in which most modern caselaw arises (industrial disputes with trade unions and employers):

• Parliament gave trade unions lots of immunity (in Trade Disputes Act 1906) from acts that would otherwise be tortious

• But the HL (since Rookes v Barnard) started expending economic tort liability to “outflank” the immunities through creating new nominate torts (esp. interference with trade by unlawful means, inducing breach of contract expanded to cover interference with contractual performance…)

• This created a tension between courts and Parliament, which probably resulted in a lack of synthesis as Parliament attempted to neutralize the area of law surrounding economic torts

• There is now evidence that in non-trade-dispute contexts, the courts are rowing back from some earlier expansionary decisions

Six types of economic torts

1. Inducing a breach of contract: A encourages B to breach contract with C; will be liable to compensate C for loss

2. Intentional infliction of harm by unlawful means: A intentionally harms B by committing/threatening to commit a civil wrong (breach of contract, tort, equitable wrong) in respect of C

3. Lawful Means Conspiracy: A and B together inflict loss on C for no legitimate reason

4. Unlawful Means Conspiracy: A and B together inflict loss on C using unlawful means

5. Deceit: A intentionally lies to B to induce B to do something, and B suffers a loss by doing it

6. Malicious falsehood: A deliberately lies to B about C and C suffers a loss (liable to C)

7. (Outside syllabus) Passing off: A induces people to buy his goods by representing that they are made by B

Economic Torts

1. Termed thus because 1) usually cause PEL, 2) easiest routs to recover compensation for Vs suffering PEL, 3) thus these torts help protect Cs from suffering PEL at others’ hands

2. Shouldn’t be termed thus because:

   1. Can eg. pure distress fall within these torts or are only PEL covered?

   2. Giving them same name suggests some other similarity between them – may not exist

   3. Name suggests that these torts are only relevant to big businesses/commercial law and hide their real value in tort as shown by this case:

      1. Allen v Flood:

         1. Arguably the most important case in tort because it is about freedom, in holding that despite morality, in law one is free to beggar his neighbor as long as ne doesn’t do anything unlawful/get anyone else to do anything unlawful.

         2. Facts: Cs employed to do woodwork on a ship on day-to-day basis and D, whose employees worked on the ironwork, told Cs’ employer that if Cs came back the next day his ironworkers would not come back. Cs fired – held couldn’t claim from D because D hadn’t induced the employer to breach any contracts and though they intentionally harmed Cs they didn’t use unlawful means.

         3. 6-3 split: Lord Herschell – one cannot be called upon to justify his acts unless they are in their nature wrongful and therefore require justification

         4. Continued debate as to whether this is the right decision: Tuttle v Buck (SC Minnesota) decided the contrary – diverting customers from rival businesses by lowering prices is prima facie OK but opening a rival store for the sole purpose of undercutting rival business and planning to retire the business after the goal is accomplished is an actionable tort

         5. John Finnis (philosopher) said that this is right in that tort law should identify as tortious every act intended precisely to cause harm to another

         6. M&B think that the decision in Allen v Flood is correct because:

            1. Difficult to ascertain someone’s motives (a scenario discussed in Allen v Flood is if a cook said to the head chef that he would resign if the head chef didn’t fire the butler, and thus he fires the butler, then holding that intention can determine a tort will require exploring the cook’s motive for not wanting to work with the butler (did he just not like the butler, or did he want revenge because the butler refused his advances?)

            2. Legitimacy of reasons: controversial to decide whether someone had a good reason to harm C (if A drove B out of business because B beat up A’s son/seduced A’s wife/sold drugs to A’s daughter)

            3. Certainty

            4. Freedom: Wainwright v Home Office asked HL to consider whether they should recognize A commits a tort if he intentionally causes B distress without reason. Lord Hoffman said no – in the workplace people constantly do/say things that cause distress to others and though it’s bad manners litigation isn’t the best means of dealing with it

Arguments

1. Tortious to get X to deliberately break his contract with C, this doesn’t extend to interference with people’s contracts

2. Requirement of wrongful means is sensible, practical and correct

3. Inducing breach of contract is an instance of wrongful means tort and is not unique

No tort of interference with contracts

1. Economic justification for sanctioning inducement of breach of contract: gives inducer an incentive to negotiate which saves legal fees. But as Fifoot says “it is certainly one of the functions fo law to answer economic needs… But to express law purely in terms of economics is to betray obsession with an idee fixe”

2. Economic torts hardly taught and hasn’t received much attention: Allen v Flood described by Robert Heuston as ‘most important in the whole history of the law of torts’ but didn’t elicit as much debate as Donoghue v Stevenson

3. Priority of human interest over money interest is clear – most case of personal injury are cases where D injures C interested in only saving himself time and trouble. When contracts concern things other than money, they operate quite differently – the profitability of abortions doesn’t measure against mother’s freedom to decide so a clause in a contract won’t bind her into going through with a profitable abortion

4. A version of this can also be found in the differential treatment of physical harm and economic loss

5. In recent years unintentional economic harm has developed, but this doesn’t mean that intention economic harm should also be a tort – odd to say that one can be liable for an unintentional act but not same act done intentionally, but there are...