Litigation: What is Unlawful Means Conspiracy?

A tort is a non-contractual wrongful act or infringement of a right leading to legal liability. The tort of conspiracy is a civil wrong.  It is distinct from criminal conspiracy, not least in that it includes a requirement that the conspiracy causes actual loss. There are two sub-categories of civil conspiracy, namely ‘unlawful means conspiracy’ and ‘conspiracy to injure’. In this article we are concerned with unlawful means conspiracy.

What is Unlawful Means Conspiracy?

An economic tort in which two or more persons combine or conspire together, using unlawful means, and with a common intention of causing damage to the victim of the conspiracy who suffers a loss, which is usually a financial loss. Examples of unlawful means conspiracy cases include:

• Price-Fixing: Competitors collude to set artificially high prices for a product or service.
• Bid-Rigging: Companies conspire to manipulate the bidding process for a contract.
• Defamation: Individuals spread false and harmful information about a person or business.
• Fraud: Individuals deceive others for financial gain.

Requirements of unlawful means conspiracy:

The elements of this tort can be set out as follows:

(1) Two or more persons must ‘combine’.

This might be more simply expressed as saying that they ‘conspire’ together.  Either way, it is not necessary to show that an explicit agreement was reached, but the conspirators must be shown to have a common intention.  In most cases this will be shown by their overt acts, as a matter of implication, as those engaging in a conspiracy are rarely so foolish as to keep records!

(2) The conspirators must use ‘unlawful means’.

At one time it appeared that the requirement of ‘unlawful means’ meant that there must be a ‘primary’ tort actionable by the claimant.  This meant that the tort of unlawful means conspiracy was little used, because by definition the claimant would already be able to sue for the primary tort.  The only advantage of alleging a conspiracy in addition would be to bring in additional defendants, e.g. if the chief wrong-doer was impecunious.  However, following the judgment of the House of Lords in Total Network v HMRC [2008] UKHL 19, it has been established that ‘unlawful means’ includes any criminal act directed at the claimant, even if that act is not in itself actionable by the claimant.  Their lordships declined to clarify the position where the conspirators commit a criminal act against a third party (but so as to cause harm to the claimant), but it is suggested that there would (at least) have to be some connection between the crime and the claimant: it is not sufficient merely to point to some criminal element in the defendants’ conduct.  It is also worth noting the comments of Lord Walker that in the phrase ‘unlawful means’ “each word has an important part to play”, i.e. the unlawful act must be the means of causing harm to the claimant.

(3) The conspirators must intend to cause damage to the claimant (through the unlawful means).

However (and unlike in the case of conspiracy to injure) ‘intention’ here does not mean that damage to the claimant should be the conspirators’ sole or predominant purpose.  This means that it is no defence for the conspirators to show that their primary intention was to advance their own interests, if they understood that in doing so they would do harm to the claimant.  In many commercial cases it may be said that “There is little, if any, difference between the conspirators’ intention to make money and their intention to deprive the [claimant] of money: each is the obverse of the other” (Lord Neuberger in Total Network).

(4) The claimant must, in fact, suffer a loss as a result

Benefits to potential claimants

There are two primary reasons why a claim of unlawful means conspiracy may assist potential claimants.  Firstly (following the judgment in Total Network), this tort allows the claimant to seek compensation for criminal acts which are not do not in themselves give rise to a civil claim.  Secondly, the claimant is able to add additional defendants as well as the primary wrong-doer (and for various reasons it may be easier for the claimant to recover damages against the additional defendants).

Moreover, pursuing such a claim can provide a sense of justice and hold wrongdoers accountable. By exposing unlawful means conspiracies, victims can deter future misconduct and raise awareness of this type of illegal activity, potentially protecting others from falling victim. While the outcome of any legal case is uncertain, understanding the potential benefits and consulting with a qualified lawyer can help individuals make informed decisions about whether to pursue a claim.

Application of Unlawful Means Conspiracy in RBS GRG Claims

An interesting recent use of this tort can be seen in the case of Hockin v RBS.  This case is still at an early stage, but the Claimants sought and obtained permission for various amendments to their case, including a claim in unlawful means conspiracy.  This involved an alleged conspiracy between various RBS employees.  Allegedly, the purpose of this conspiracy was to persuade the Claimants to enter into two instruments, the effect of which was to enhance RBS’s security.  The Claimants allege that RBS employees falsely represented that if they agreed to sign these documents, the bank would “leave them alone” and support them financially in the long term.

In fact (it is alleged), as soon as the security documents had been signed, the business was transferred to Global Restructuring Group (GRG) in what the Claimants say was a prime example of the pattern of misconduct found by Lawrence Tomlinson in his report published for the Department of Business, Innovation and Skills in November 2013 (the Tomlinson Report).  As is now well known, the Tomlinson Report concluded that RBS’s GRG department, while purporting to support businesses in difficulty, actually engineered artificial or unnecessary defaults with the intention (among others) of making an easy profit from the purchase of assets at artificially low distressed valuations (in some cases acting through West Register, a legally separate entity which effectively acted as another another branch of the bank).  RBS denies all of this.  It is understood that the Financial Conduct Authority has conducted an investigation into the behaviour of RBS, GRG and West Register, but publication of the final report has been long delayed.

In Hockin the allegation is that the purpose of all of this was to benefit RBS (and indirectly RBS’s employees) by gaining control of the Claimants’ business.  This is therefore a classic example of the conspirators’ gain being the obverse of the claimants’ loss.  In addition to any direct profit from the acquisition of distressed assets, it is alleged that this behaviour formed part of ‘Project Dash for Cash’, which, since these pleadings, has now come to wider attention following media reports.

It is likely that other businesses who consider themselves to have been mistreated by RBS and GRG will be watching this case with interest. Any victims of GRG misconduct should not wait for the FCA Review and instead should take immediate legal advice to ensure their claim does not become not time-barred.

Defences to Unlawful Means Conspiracy:

While it’s challenging to defend against unlawful means conspiracy, there are a few potential defences:

• Lack of Conspiracy: The defendant may argue that there was no agreement or shared intention to harm the victim.
• Lawful Means: The defendant may claim that the actions were lawful or justified.
• No Damage: The defendant may argue that the victim suffered no actual loss.

Protecting Legal Rights Against Unlawful Means Conspiracy

Victims of unlawful means conspiracy should take immediate steps to protect their legal rights. This type of civil wrong can have significant financial and emotional consequences, and seeking legal advice is crucial.

Here’s why it’s important to act quickly:

• Statute of Limitations: There are often time limits for filing lawsuits. If you delay, you may lose your right to seek legal action.
• Preserving Evidence: Gathering and preserving evidence is essential for building a strong case. Time can diminish the availability of evidence.
• Preventing Further Harm: Seeking legal action can help prevent the conspirators from continuing their harmful behavior.

Steps to Protect Your Rights:

1. Document Everything: Keep a detailed record of all interactions, communications, and evidence related to the unlawful conspiracy. This can include emails, phone calls, documents, and witnesses.
2. Seek Legal Advice and Counsel: Consult with lawyers who specialise in civil litigation, particularly those familiar with unlawful means conspiracy cases. They can assess your situation, advise on your legal options, and guide you through the legal process.
3. Consider Filing a Lawsuit: Based on your lawyer’s advice, you may decide to file a lawsuit against the conspirators. This can involve gathering evidence, preparing legal documents, and presenting your case in court.
4. Explore Alternative Dispute Resolution: In some cases, mediation or arbitration may be a viable option to resolve the dispute without going to court. These processes can be faster and less costly.

The specific steps you should take will depend on the unique circumstances of your case. Consulting with a legal professional is essential to understand your rights and options.