Rethinking the Economic Torts

AuthorSimon Deakin,John Randall
DOIhttp://doi.org/10.1111/j.1468-2230.2009.00756.x
Publication Date01 July 2009
THE
MODERN LAW REVIEW
Volume 72 July 2009 No 4
Rethinking the Economic Torts
Simon Deakin andJohn Randall
n
Wepropose a revised conceptual basis for the economic torts which is true to their historical role
of regulating the competitiveprocess. Claims that the economic tortsare part of a wider principle
of prima facie liability for intentional harm or that they are based on a theory of s econdary or
accessorial liability should, we argue, be rejected.Instead, we focus on a narrowera nd,we claim,
more defensible conception of these torts in terms of the economic interests whichthey protect,
the kinds of interferences which triggerliability, and the natureof the justi¢cations which should
be accepted as defences.
INTRODUCTION
The economic torts havelong resisted attempts at synthesis.It is a little over forty
years since TonyWeir, responding to the judgments in Ro okes vBarnard
1
(Rookes ),
arguedthat these torts faceda choice between‘chaos’ and‘cosmos’.
2
Rookes initiated
an expansion of liability which reached its peak in the early1980s. In recent years
few cases have reached the appellate courts. This changed with the unusual con-
junction in 2005 of three Court of Appeal rulings ^ OBG Ltd vAllan
3
,Douglas v
Hello! Ltd (No 3)
4
and Mains tream Prop erties L td vYo u n g.
5
In 2007, in OBG Ltd vAllan
(OBG),the House of Lords decided appeals in all three cases,
6
in the proces s rever-
sing,or at least appearingto reverse,many of the extensions to the tortswhich had
taken place in the period since Rook es. However, the analysis in OBG raises as
many questions as it answers, not least because Lord Ho¡manns leading judg-
ment is not easily reconcilable with several earlier House of Lords decisions,
including Rookes itself, or indeed with the approach taken in a subsequent House
of Lords decision,To t a l N e t w o r k S L vHMRC
7
(To t a l ).
n
Simon Deakin is a Professor of Law at theUniversity of Cambridge; John Randall QC is a Bencher
of Lincoln’s Inn a nd aVisiting Fellow at the University of New South Wales.We are grateful to the two
anonymous refereesfor comments on an earlier draft.
1[1964]AC1129.
2 J. A.Weir,‘Chaosor Cosmos: Rook es,Stratford,and the Economic Torts’ [1964] CLJ225.
3 [2005] EWCACiv 106, [2005] QB 762.
4 [2005] EWCACiv 595, [2006] QB 125.
5 [2005] EWCACiv 861, [2005] IRLR 964.
6OBG Ltd vAllan [2007] UKHL 21, [2008] 1 AC 1.
7 [2008] UKHL 19, [2008] 1AC 1174.
r2009 The Authors. Journal Compilation r2009 The Modern LawReview Limited.
Published by BlackwellPublishing, 9600 Garsington Road,Oxford OX4 2DQ,UK and 350 Main Street, Malden, MA 02148, USA
(2009) 72(4) 519^553
It is not our purpose in this article to provide a detailed analysis of the OBG
decisions; that has been done elsewhere.
8
Ratherour aim is to see whether, in the
post-OBG landscape, a clearer understanding of the torts can be established. Fol-
lowing Rookes, a good deal of academic discussion of the economic torts took the
view thatit would only be a matter of time before existing limits on liability were
swept away, ifonly because manyof them were essentially arbitrary. Thus propo-
sals were made to integrate the economic torts into a number of principles of
supposedly wider application within the law of obligations, such as the theory of
secondary tortious liability
9
and the notion of prima facie liability for intentional
harm.
10
Such schemes have little prospect of surviving the narrowing of the law
in OBG. But if the eco nomic torts are not to break their exist ing bounds, can a
systematic accountbe given of the area theycurrently occupy? In this article we will
suggest that a narrower conception of the economic torts couldal sobecome a more
coherent one.The way forward is to refocus on their fundamental rationale, which
is to maintain the integrity of the competitive process. From this ‘functional per-
spective the critical issues are the interests which the torts protect, the kinds of inter-
ference which the law regards as illegitimate, and the justi¢cations which t he law
regards as acceptable defences to claims. An advantage of our approach is that less
attention need be paid to the problematic issue of mental states which, following
OBG, threatens to introduce arbitrari ness into the application of the law.
We start by reviewing the rationalefor the torts, their trajectory,and the struc-
ture of liability which has emerged from OBG.Wethensetouttheelementsof
our reconceptualisation of the torts before providing a concluding assessment. In
the course of doing so a variety of di⁄cult issues must be tackled, including
whether OBG can be reconciled with three earlier decisions of the House, none
of which was expressly over-ruled, and the resultant position under staredecisis;the
continuing problem of inferring mental states, and the apparent demise, in the
context of the economic torts, of Lord Halsbury’s oft-quoted dictum that people
are presumed to intend the reasonable consequences of their acts; and the fallacy
of treating Lumley vGye as an example of accessorialor secondary liability. More
generally, we seek to address the question of whether a coherent theoretical justi-
¢cation can be given for this categoryof torts, which can also inform the task of
doctrinal exposition.
8 As to the economic torts aspect see H. Carty,‘OBG Ltd vAllan: The House of Lords Shapes the
Economic Torts and Explores Commercial Con¢dences and Image Rights’ (2007) 15 Torts Law
Journa l 283, and ‘The Economic Torts in the Twenty-First Century’ (2008) 124 LQR 641 (also
discussing To t a l ); J. O’Sullivan,‘Intentional Economic Torts in the House of Lords’ [2007] CLJ
503;B. Simpson,‘EconomicTort Liability in LabourDispute s:the Potential Impact of the House
of Lords’ Decision in OBG vAllan’ (2007) 36 ILJ 468; R. Bagshaw,‘OBG Ltd vAllan,Douglas v
Hello! Ltd (No 3),Mainstream Properties vYo u n g ’ on the companion website to Bagshaw and
McBride, Tort Law (London: Pearson, 3rd ed, 2008) http://media.pearsoncmg.com/intl/ema/
ema_uk_he_mcbride_tortlaw_3/case_notes/obg_ltd_v_allan.doc (last accessed 2 February 2009). As to
the conversion aspect see S. Green,‘ToHave and to Hold? Conversion and Intangible Property’
(2008) 71MLR 118; S. Douglas,‘Converting Contractual Rights’ [2008] LMCLQ129.
9 P. Sales,‘TheTort of Conspiracya ndCivil Secondary Liability’ [1990]CLJ 491.
10 D.Stil itz and P. Sales,‘Intentional In£iction of Harm byUnlawful Means’ (1999) 115LQR 411, at
435.
Rethinking the EconomicTorts
520 r2009 The Authors. Journal Compilation r2009 The Modern Law ReviewLimited.
(2009) 72(4) 519^553
THE TRAJECTORY, STRUCTURE AND RATIONALE OF THE
ECONOMIC TORTS
Trajectory and structure
The modern structure o ft he economic torts cannot be understo odwit hout refer-
ence to their history. The ¢rst critical stage in their evolution occurred just over a
hundred years ago when the great cases of Mog ul Ste ams hip vMcGregor, Gow and
Co
11
(Mogul )andAllen vFlood
12
were decided. In Mogul, a case i n which the plain-
ti¡ was put out of business by the concerted e¡orts of his competitors in a rival
shipping conference’, liability was denied because, as Bowen LJ put it,
[A trader’s] rightto trade freely is a right that the law recognises and encouragesbut
it is one which places him at no special advantage as compared with others. Noman,
whether trader or not, can, however, justify damaging another in his commercial
business by fraud or misrepresentation. Intimidation, obstruction and molestation
are forbidden; so is the intentional procurement or violation of individual rights,
contractual or other, assuming always that there is no just cause for it . . . [but] the
defendants have been guilty of none of these acts. They have done nothing more
against the plainti¡s than pursue to the bitter end a war of competition waged in
the interest of their own trade.
13
Allen vFlood involved an inter-uniondispute in which the defendant, who was an
o⁄cial of one union, persuaded the employer of the two plainti¡s, who were
membersof a di¡erent union, todismiss them. Because all the workers concerned
were employed on so-called ‘minute’ contracts, which could be terminated on
minimal notice, neither the threat of a strike northe termination of the plainti¡’s
contract involved a breach or threatened breach of contract, nor was there any
inducement to breach of contract.Thus this was, as Lord Shand put it, the same
case as Mogul, transposed to the labour market: the case was‘one ofcompetition i n
labour, which . . . is in all essentials analogous to competition in trade, and to
which the same principles apply’.
14
Lord Davey, using similar reasoning, said:
The rightwhich a man has topursue his trade orcalling is quali¢ed by the equalright
of others to do the same and compete with hi m, though to his damage. And it is
obvious that a general abstractright of this character stands on a di¡erent footingfrom
such aprivate particular rightas the right to performance ofa contract intowhich one
has entered. A man has no right to be employed byany particular employer, and no
right to anyparticular employment if it depends on the will of another.
15
This nevertheless left the law in anu ncertain state. Lumley vGye
16
had established
half a centuryearlier that the knowingand direct inducement of a breach of con-
11 [18 92 ] AC 25.
13 (1889) LR23 QBD 598, 614.
14 n 12 ab o v e, 164 .
15 ibid,173.
Simon Deakin and John Randall
521
r2009 The Authors. Journal Compilationr20 09 The Modern LawReview Limited.
(2009) 72(4) 519^553

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