HT-2021-000363 - [2025] EWHC 532 (TCC)

There is a dispute between the parties as to whether it is necessary for a claimant to establish that the defendants had knowledge of the unlawfulness of the means to be liable for unlawful means conspiracy.

This thorny issue was considered by the Court of Appeal in Racing Partnership (above). Having carefully analysed the conflicting authorities in detail at [106]-[138], Arnold LJ stated at [139]:

“Accordingly, the conclusion I draw from the authorities is that, having regard both to the general statements of the ingredients of the tort which do not include any requirement of knowledge of unlawfulness, and to the persuasive force, even if not binding status, of Churchill v Walton and Belmont v Williams, knowledge of the unlawfulness of the means employed is not required for unlawful means conspiracy.”

It was acknowledged by Arnold LJ that there were good arguments in support of the contrary view that knowledge of unlawfulness should be required but he was not persuaded by them. In response to the argument that the tort of conspiracy to injure by unlawful means would otherwise be a tort of very broad reach, in particular because a predominant intention to injure the claimant is not required, and it is sufficient that the defendant intends to advance his own economic interests at the expense of those of the claimant, the Learned Judge indicated that he was sympathetic to the proposition that that the tort should be kept within bounds but considered that it did not necessarily follow that knowledge of unlawfulness was the means of imposing the limit. He rejected the argument that the tort of inducing breach of contract would become redundant, on the basis that almost all cases of inducing breach of contract could be reframed as conspiracy to injure by unlawful means, because OBG v Allan had established that these were separate torts with distinct elements. Finally, he considered the argument that knowledge of unlawfulness should be required if the unlawful means consists of an infringement of private law rights, even if it is not required where it consists of a crime or contravention of a regulatory provision imposed for public benefit:

“[143] This receives a degree of support from the observations of Lord Sumption and Lord Lloyd-Jones JJSC in Ablyazov at para 15 to the effect that breaches of private law rights raise different considerations to crimes. I am unable to see why this should make a difference so far as the present issue is concerned, however. As noted above, both private law and the criminal law make some acts unlawful without proof of any mental element whatever. To my mind, it would be more logical to say that knowledge of the unlawfulness should be required where the unlawfulness of the means requires knowledge.”

Arnold LJ’s conclusion at [144] was clear:

“For the reasons given above, I would respectfully conclude that the judge was wrong to conclude that knowledge that the means is unlawful is required in order for the tort of conspiring to injure by unlawful means to be established where the means is an infringement of a private right.”

Phillips LJ agreed with Arnold LJ’s conclusion that knowledge of the unlawfulness was unnecessary. Lewison LJ came to a different conclusion on this difficult issue at [265] but that was in a dissenting judgment.

A degree of support for further consideration (in a suitable case) of the argument that knowledge of the unlawfulness might be required where the unlawfulness of the means requires such knowledge can be found in the judgment of Phillips LJ in Racing Partnership at [171]:

“I agree with Arnold LJ’s conclusion at para 139, based on his analysis of the authorities, that knowledge of the unlawfulness of the means employed is not required for unlawful means conspiracy. The point was directly in issue and so decided by this court in Belmont Finance Corpn v Williams Furniture Ltd (No 2) [1980] 1 All ER 393, a decision that was not referred to by Toulson LJ in his obiter dictum in Meretz Investments NV v ACP Ltd [2008] Ch 244. The interplay between unlawful means conspiracy and inducing breach of contract (where knowledge of an unlawful breach of contract is an essential element) may merit further examination in a suitable case, but I am not convinced that many cases in which a defendant induces a breach of contract, but without knowing that he is doing so, would be capable of being reformulated as an unlawful means conspiracy.”

Such an argument would not make any difference to the result in this case. Even if knowledge of unlawfulness were required in respect of breach of the ICA by Winsopia and/or unlawful procurement of breach by LzLabs and Mr Moores, I have found that Mr Moores, and Mr Cresswell and Mr Rockmann (officers of LzLabs and Winsopia) knew, or deliberately turned a blind eye to, the essential facts which made the acts unlawful.

As regards the case against Mr Cresswell and Mr Rockmann, IBM correctly submits that a company and its directors may be co-conspirators; the rule in Said v Butt does not apply in the conspiracy context. In Lifestyle Equities (above) at [63] Lord Leggatt stated:

“The rule in Said v Butt does not apply to civil wrongs which do not depend on any contract or voluntary arrangement between the parties and where liability arises even if they are complete strangers to one another. ”

However, the pleaded case by IBM is that the unlawful means relied on are: (a) the pleaded breaches of the ICA by Winsopia; and (b) the pleaded unlawful procurement of such breaches by the other defendants. The pleaded unlawful procurement case against Mr Cresswell and Mr Rockmann is limited to their respective roles as directors and officers of Winsopia. For the reasons set out above, that claim against Mr Cresswell and Mr Rockmann for unlawful procurement fails. Therefore, there is no established unlawful means that could give rise to liability for the purpose of the conspiracy claim.

This was recognised by David Richards J (as he then was) in Lictor v MIR Steel (above) at [68]:

“The essence of the rule is that agents are not to be liable for procuring their principal to act in breach of contract, provided they acted in good faith in the course of their agency, and it should make no difference whether the claim is made for inducing a breach of contract or for an unlawful means conspiracy. The High Court of Australia so held in O’Brien v Dawson (1942) 66 CLR 18 and, in my judgment, the position is the same in English law.”

Likewise, for different reasons as set out above, the claim for unlawful procurement against LzLabs UK fails. As a result, there is no established unlawful means that could give rise to liability for the purpose of the conspiracy claim against LzLabs UK.

The fourth necessary element is causation of loss to the claimant. I am satisfied that at least some loss must have been caused to IBM, even if limited to additional management time or lost marketing opportunities. IBM has pleaded loss and damage to its mainframe business but this part of the trial is limited to issues of liability and therefore quantum has not been fully pleaded or investigated.