Tort of conspiracy & confidential information

The tort of conspiracy has been well established in Australia by the High Court, however it is a fairly uncommon cause of action.  The High Court has endorsed some early UK decisions with respect to damage, including the cases of Mogul Steamship Co v McGregor Gow & Co [1892] and Sorrel v Smith [1925] AC 700.  These were summarised in the case of Williams v Hursey (1959) 103 CLR 30, whereby Menzies J stated at 122:

“If two or more persons agree to effect an unlawful purpose, whether as an end, or a means to an end, and in the carrying out of that agreement damage is caused to another, then those who have agreed are parties to a tortious conspiracy.”

In Australia, there are two (2) forms of the tort of conspiracy:

  • unlawful means conspiracy; and
  • unlawful purpose conspiracy.

The difference between them is shown in the case of Ansett Transport Industries (Operations) Pty Ltd v Australian Federation of Air Pilots [1991] 1 VR 637.    It was alleged that the defendants conspired to procure the mass resignation of pilots as a way to injure the plaintiff in an industrial action.  In this case the conspiracy was allegedly an unlawful purpose conspiracy because the pilots had a legal right to resign. Further the defendants conspired to direct the pilots to only work from 9am to 5pm, which was a breach of their employment agreement.  In this regards the alleged conspiracy was an unlawful means conspiracy because the injury arose from an unlawful act being a breach of contract.

Unlawful means conspiracy

The elements for an action for unlawful means conspiracy are:

  • a number of persons (including corporate bodies);
  • where they may not know the details of the conspiracy, they are aware of the context of the conspiracy;
  • who have an intention (which need not be a predominant intention) to injure the defendant;
  • by carrying out unlawful act as the means of effecting that injury;
  • that the conspirators know that the conduct is unlawful and that is the conduct which will bring about the conspiracy; and
  • the injury occurs in a way that causes actual loss.

Unlawful purpose conspiracy

The elements for an action for an unlawful purpose conspiracy are :

  • a number of persons acting in concert (including corporate bodies);
  • where they may not know the details of the conspiracy, they are aware of the context of the conspiracy;
  • there need be no unlawful act but there may be an unlawful act but it is not the means of the injury;
  • the intention to injure must be the predominate purpose as an end in itself;
  • the injury is not the result of a “legitimate purpose”;
  • only one of the persons need have the level of intention, never the less the others will be conspirators if they knew of that intention; and
  • the injury occurs in a way that causes actual loss.

The torts also differ in relation to the extent of the intent to cause harm.   For unlawful purpose conspiracy, the intention to injure must be the predominate purpose as an end in itself.  For unlawful means conspiracy, because the acts are in themselves unlawful there only needs to be an intent, as opposed it being the predominant intent.

Application

Unlawful means conspiracy is the easier tort to make out in relation to the intent to injure, in that it only requires intent, as opposed to being the predominant intent.  Nevertheless, it is important to consider what is required in order for the elements to be satisfied. The elements that are most commonly disputed are as follows:

  • Where they may not know the details of the conspiracy, they are aware of the context of the conspiracy.

(i) Unlawful acts include criminal acts, tortious acts, breach of confidence, and breach of statutory duty.[1]

(ii) There have been many issues with proving knowledge of unlawfulness.  To prove knowledge might also raise a host of other questions, including the standard of knowledge or suspicion required, the scope for reliance upon unrealistic legal advice and the legal burden of proof required.[2]

  • The injury occurs in a way that causes actual loss.

(i) The tort of conspiracy, like other torts require proof of actual damage.[3]  Damage occurs most commonly in the form of economic loss.

(ii) However, economic damage is not the only recognised form of damage for the purpose of establishing conspiracy.  Other types of damage include emotional, physical and reputational harm.

(iii) To constitute civil conspiracy there must be a link between the damage suffered by the plaintiff and acts done in pursuant of a combination which resulted in the harm suffered by the plaintiff. Such a combination may bring about damage by ’unlawful’ or otherwise ‘lawful’ acts.

  • Intention to injure

(i) The definition of intention to injure has been debated substantially in the case law and is not immediately obvious.  There is no requirement that the intention to injure the defendant be the predominant intention.

(ii) If a claim of unlawful means conspiracy was to be actionable one of the purposes of the conspiracy must have been to injure the plaintiff.[4]

(iii) If the conspiracy and the unlawful means were aimed at the plaintiff and damage to the plaintiff that was foreseen or foreseeable, or was necessarily caused in carrying out the conspiracy, it will satisfy the requirements for this branch of the tort[5]

(iv) In Lonrho Plc v Fayed Lord Bridge quoted Lord Denning:

“I would suggest that a conspiracy to do an unlawful act – when there is no intent to injure the plaintiff and it is not aimed or directed at him – is not actionable, even though he is damaged thereby.  But if there is an intent to injure him then it is actionable.  The intent to injure may not be the predominant motive.  It may be mixed with other motives.”[6]

(v) In relation to intention to injure, the High Court of Australia stated in McKernan v Fraser (1931) 46 CLR 343 that:

“If the common object or motive be the satisfaction of a personal hatred or grudge by means of the ruin or impoverishment of the plaintiff, liability is clear.”

“If it be the protection or advancement of trading, professional or economic interests common to the defendants, there is no liability.”

“If it be the carrying out of some religious, social or political object, the law prefers to examine the motive or object in each case before pronouncing an opinion.”

(vi) As such if the conspirators were acting out of malice there is intention to injure and acting for their pure economic interest there is no intention to injure.

(vii) “But when conspirators intentionally injure the plaintiff and use unlawful means to do so, it is no defence for them to show that their primary purpose was to further or protect their own interests; it is sufficient to make their action tortious that the means used were unlawful.”[7]

(viii) As such acting in one’s economic interests may still meet the necessary intention to injure if the conspirators were attempting to ruin or impoverish their victim as a means of actioning their economic interests.

Takeaways on conspiracy and confidential information

While uncommon in Australia, the High Court has accepted various UK case law and has adopted key elements that must be made out to establish the tort of conspiracy.  However, challenges may arise surrounding the elements of knowledge, damage and intent to injure.

Further references

Cases

Ansett Transport Industries (Operations) Pty Ltd v Australian Federation of Air Pilots [1991] 1 VR 637. 

Australian Wool Innovation Ltd v Newkirk [2005] FCA 290

Crofter Handwoven Harris Tweed Co Ltd v Veitch [1942] AC 435

Fatimi Pty Ltd v Bryant (2004) 59 NSWLR 678

Jarman & Platt Pty Ltd v I Barget Ltd [1977] FSR 260

Lantham v Singelton [1981] 2 NSWLR 843

Lonrho Plc v Fayed [1992] 1 AC 448

McKernan v Fraser (1931) 46 CLR 343

Stobart Group v Tinkler [2019] EWHC 258

Williams v Hursey (1959) 103 CLR 30

Related articles by Dundas Lawyers

Is your confidential information really confidential?
Injunctions for breach of confidence

Further information

If you are concerned that your business is or has been damaged as a result of others conspiring against it, please telephone me for an obligation free and confidential discussion.

Malcolm Burrows B.Bus.,MBA.,LL.B.,LL.M.,MQLS.
Legal Practice Director
Telephone: (07) 3221 0013 | Mobile: 0419 726 535
e: mburrows@dundaslawyers.com.au

 

Disclaimer

This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.

[1] Lantham v Singelton [1981] 2 NSWLR 843.

[2] Stobart Group v Tinkler [2019] EWHC 258.

[3] Crofter Handwoven Harris Tweed Co Ltd v Veitch [1942] AC 435.

[4] Fatimi Pty Ltd v Bryant [2004] NSWCA 140.

[5] Fatimi Pty Ltd v Bryant [2004] NSWCA 140.

[6] Lonrho Plc v Fayed [1992] 1 AC 448 at 467.

[7] Lonrho Plc v Fayed [1992] 1 AC 448.

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