Legal Briefing

The law of conspiracy: dirty tricks, corporate rivals and brand attacks

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TMT | 01 December 2011

While we’re all accustomed to accusations of ‘smear campaigns’ and underhand tactics being bandied about in the political arena, we are seeing more examples of both companies and private individuals becoming the victims of such campaigns. They are often well-organised, well-funded, multi-jurisdictional in reach and with the express aim of causing maximum damage to the target’s business.

Campaigns such as these can often 
involve the following: defamatory articles; the creation of anonymous websites to attack an individual business leader or their brand; the creation of anonymous blogs doing the same; damaging amendments to their Wikipedia page; and attacks via social networking sites such as Facebook and Twitter, on which would-be attackers can create groups specifically targeted at an organisation and do so in what they think is relative anonymity.

The speed at which material is proliferated over the internet and the plethora of social networking sites, means that companies and their directors, as well as other high-profile individuals, can face devastating damage to their reputation – often at the hands of a corporate rival/personal enemy.

There a number of things that can be done to counter such attacks, for example using the laws of defamation, confidentiality and copyright, but the focus of this article is to highlight another weapon in your arsenal – the much underused law of conspiracy.

THE ECONOMIC TORTS

The law of conspiracy is part of what are known as the ‘economic torts’. There has been a resurgence in these laws over the past few years, following a number of cases in the Court of Appeal and House of Lords, where attempts have been made to bring some coherence to what was once a rather obscure area of the common law. This growth has been championed by inventive litigators seeking new remedies where there is loss but no other cause of action.

The advantage of the economic torts is that they provide the possibility of a cause of action where there is no relationship between the claimant and the defendant, and therefore a claim based on contract or in negligence is precluded.

RISE IN THE LAW OF CONSPIRACY

There are four elements to a conspiracy claim:

  1. a combination or agreement between two or more individuals;
  2. an intent to injure;
  3. pursuant to which combination or agreement, and with that intention, certain acts were carried out;
  4. resulting loss and damage to the claimant.

There are two kinds of conspiracy, the elements of which are distinct:

  1. Unlawful means conspiracy: a conspiracy in which the participants combine to perform acts which are themselves unlawful (under either criminal or civil law); and
  2. Lawful means conspiracy: a combination to perform acts which, although not themselves per se unlawful, are done with the sole or predominant purpose of injuring the claimant – it is in the fact of the conspiracy that the unlawfulness resides1.

However, the distinction between the two was succinctly elucidated by Lord Bridge in Lonhro plc v Fayed [1992]:

‘Where conspirators act with the predominant purpose of injuring the plaintiff and in fact inflict damage on him, but do nothing which would have been actionable if done by an individual acting alone, it is the fact of their concerted action for that illegitimate purpose that the law, however anomalous it may now seem, finds a sufficient ground to condemn their action as illegal and tortious. 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 tortuous that the means used were unlawful.’

The key revitalisation to this area of law came from the decision of the House of Lords in Total Network SL v HM Revenue & Customs [2008]. This is discussed in more detail below, but essentially the court overruled the decision of the Court of Appeal in Powell v Boladz [1998] and held that the tort of conspiracy (in this case unlawful means conspiracy) does not require that the unlawful means must be independently actionable by the claimant. This decision set the tort of unlawful means conspiracy free from its previous shackles and left the legal profession wondering at the possibilities for such an action going forward.

UNLAWFUL MEANS CONSPIRACY

The elements required to bring an action for unlawful means conspiracy are as follows:

A combination or agreement 
between two or more individuals
  • It is not necessary to show that there was anything in the nature of an express agreement, whether formal or informal. The court looks at the overt acts of the conspiracy and infers from those acts that there was agreement to further the common object of the combination. It is sufficient that two or more persons combine with the necessary intention or that they deliberately co-operate, albeit tacitly, to achieve a common end (R v Siracusa [1990]).
  • Neither is it necessary that all those involved should have joined the conspiracy at the same time; but all those said to be parties to the conspiracy should be sufficiently aware of the surrounding circumstances and share the same object for it properly to be said that they are acting in concert. The question in relation to any particular scheme or enterprise in which only one or some of the alleged conspirators can be shown to have directly participated is whether that enterprise fell within the overall scope of their common design2.
  • It is possible for a conspirator to join later. However, a person is only liable for the damage that is suffered from the time that they join the conspiracy; they are not liable retrospectively for the damage that has been suffered prior to their joining (O’Keefe v Walsh [1903]).
  • Should the names of all conspirators not be known it is acceptable to plead a conspiracy between A, B and (other) persons whose names are presently unknown to the claimant (Giblan v National Amalgamated Labourers’ Union of Great Britain and Ireland [1903]).
An intention to injure
  • Where unlawful means are employed by conspirators to achieve their objective and their objective involves causing harm to the victim, the intent to cause that harm does not have to be the predominant purpose of the conspiracy.
  • It is a necessary element of the claim that the defendants knew that the means in question were unlawful, as per Miss Newman in Revenue and Customs Commissioners v Begum [2010]. This submission was based on passages in the judgments of Arden LJ and Toulson LJ in Meretz Investments NV v ACP Ltd [2008] and Briggs J in Bank of Tokyo-Mitsubishi v Baskan [2009].
Pursuant to which combination or agreement and with that intention certain acts were carried out
  • These are known as overt acts and must be set out in the particulars of claim, including details of who is alleged to have acted and what they did.
Resulting loss and damage to the claimant
  • The tort is complete only if the agreement is carried into effect so 
as to damage the claimant.

LAWFUL MEANS CONSPIRACY

The elements of this offence are the same as for unlawful means conspiracy detailed above, with the exception of the intention to injure requirement.

An intention to injure
  • For lawful means conspiracy, it is necessary to prove that the conspirators had the sole or predominant intention of injuring the claimantf3. As it was put in Crofter Hand Woven Harris Tweed Co Ltd v Veitch [1942]: ‘If that predominant purpose is to damage another person and damage results, that is tortious conspiracy. If the predominant purpose is the lawful protection or promotion of any lawful interest of the combiners (no illegal means being employed), it is not a tortious conspiracy, even though it causes damage to another person.’
  • The mental element of intention to injure the claimant will be satisfied where the defendant intends to injure the claimant either as an end in itself or as a means to an end such as to enrich themselves or protect or promote their own economic interests. It will not be satisfied where injury to the claimant is neither a desired end nor a means of attaining it but merely a foreseeable consequence of the defendants’ actions.
  • In Gulf Oil (Great Britain) Ltd v Page & ors [1987], P contracted to sell petrol to D for its filling stations. A dispute arose between P and D resulting in P ceasing to make deliveries to D. Scott J held that P was in breach of contract. P’s head office was in Cheltenham, but they also had a hospitality tent at Cheltenham racecourse at the Gold Cup meeting. 
D arranged for a light aircraft to fly over the racecourse towing a banner stating ‘Gulf exposed in fundamental breach’. 
P applied for an interlocutory injunction to prevent a similar occurrence on the day of the Gold Cup. P’s claim was based on conspiring to injure P’s business – not defamation. P’s application was refused at first instance, but on Appeal it was held that as the act (flying the banner) took place at a time when appeal from a judgment was pending and the relevant agreement had already been terminated, the defendants had no immediate interest of their own to protect or further against the claimants. In the circumstances it was held that there was a strong inference that the purpose of the display was simply to inflict upon P the maximum possible damage in its business by way of revenge.
The Court of Appeal therefore granted the interlocutory injunction and held that the rule to be applied in defamation cases that publication would not be restrained where pleas of justification or fair comment were raised did not apply to an action based upon conspiracy to injure (Bonnard v Perryman [1891] distinguished).
The benefit of the availability of an interlocutory injunction in situations such as these is obvious. However, the difficulty with this offence is finding sufficient evidence to show that the conspirators have acted with a predominant intention to injure.

REMEDIES

Damages

Damages are the ordinary remedy. In conspiracy they are at large and the court is not over-concerned to require a claimant to prove precise quantification of its losses.

Pecuniary loss?


A claimant is entitled to recover as 
damages for conspiracy the expense of managerial and staff time spent in the investigation and mitigation of the conspiracy, notwithstanding that no loss by way of additional expenditure or loss of revenue or profit can be shown. This is subject to the proviso that it has to be demonstrated with sufficient certainty that the wasted time was indeed spent on investigating and/or mitigating the conspiracy, ie that the expenditure was directly attributable to the tort4.

Injury to feelings? 


In Lonhro v Fayed (No 5) [1993], the Court of Appeal held that, in a lawful means conspiracy case, the plaintiffs would have to sue in defamation in order to claim damages for injury to reputation or feelings.

Injunction

It’s possible in principle to obtain an injunction even in relation to true, defamatory statements. This was established by Gulf Oil (discussed above).

That is not to say an injunction will easily be granted. As the case of Femis-Bank (Anguilla) Ltd v Lazar Times [1991] demonstrates, in which the claimant sought and was refused an interlocutory injunction against the defendant, the court will take account of factors such as freedom of expression when exercising its discretion whether to grant such an injunction.

IDENTIFYING YOUR CONSPIRATORS

The most common means of running a smear campaign is through online postings from ‘anonymous’ bloggers. There are a multitude of companies offering privacy protection to would-be secret bloggers, but there are legal and investigatory steps you can take to identify your detractors.

Discovery orders

Internet service providers (ISPs) and web hosts will hold certain information about those using their services or posting material onto a website. From this information, it may be possible to locate and identify the culprit. The legal method of applying for this information is through a Norwich Pharmacal order; this essentially unmasks the online wrongdoer by requiring the ISP or web host to reveal the identity and contact details of the poster. Such an order will allow you to identify the parties against whom you should be considering taking action.

IT investigations

Work with digital specialists who have the capability to track down who is behind an online slur campaign. It is also worth looking at who your detractors are online and whether your online brand value is being challenged by any negative comment associated with your brand search term on the first page of the search engine results. A potential solution to this is considered in ‘How to deal with online conspirators – a sticky problem’, opposite.

CONCLUSION

A well-run smear campaign can have a profound and long-lasting effect on an organisation or an individual’s reputation. A swift response to such an attack is essential before the damage proliferates too widely. Remember that the internet is not the Wild West; steps can be taken to halt the spread of defamatory material online and also to identify the culprits. Once the detractors have been identified, when you are considering the legal options that can be taken against them, remember that there is an extra weapon in your arsenal – the law of conspiracy.

Notes

  1. per Lord Watson in Allen v Flood [1898] at 108.
  2. per Moore-Bick J in Kuwait Oil Tanker Co SAK v Al Bader; R v Simmonds [1969]
  3. Crofter Hand Woven Harris Tweed Co v Veitch [1942] at 445, per Lord Simon LC; Lonrho v Fayed [1992] at 467, per Lord Bridge. See now also Revenue and Customs Commissioners v Total Network SL [2008] at paras 41 and 56.
  4. R+V Versicherung AG v Risk Insurance and Reinsurance Solutions SA [2006]; British Motor Trade Association v Salvadori [1949]; Standard Chartered Bank v Pakistan National Shipping[2001].