“Unlawful means therefore consists of acts intended to cause loss to the claimant by interfering with the freedom of a third party in a way which is unlawful as against that third party and which is intended to cause loss to the claimant. It does not in my opinion include acts which may be unlawful against a third party but which do not affect his freedom to deal with the claimant.”
“… the whole approach of Lord Hoffmann and the express opinions of Lord Walker, Baroness Hale and Lord Brown emphasised the need to confine the tort within careful limits, and support the view that the unlawful means must affect the third party’s freedom to deal with the claimant.”
“… this would be the very opposite of confining the tort within a narrow ambit. Moreover, a patent is a creation of statute, and the statutory regime governing patents prescribes rights and remedies in a manner that reflects the legislative assessment of the policy issues involved. If those who suffered economic loss by reason of a patent being obtained by dishonest or reckless misrepresentations as to novelty or obviousness could use the unlawful means tort at common law to claim damages, that would circumvent that legislative balance, the very thing against which Jacob J (as he then was) warned in the passage of his judgment in Isaac Oren v Red Box Toy Factory Ltd, quoted with approval by Lord Hoffmann. … And as Jacob LJ indicated in his judgment concerning the 947 Patent …, any remedy should be found in the field of competition law, which of course also reflects legislative policy and is indeed the basis of the separate claim here for abuse of a dominant position …”
“Finally, on the proper interpretation and significance of the second sentence of para 51 in Lord Hoffmann’s speech in OBG, it is clear that Lord Walker, Baroness Hale and Lord Brown all understood Lord Hoffmann to be advocating an essential ‘interference with liberty to deal’ ingredient of the unlawful means tort …”
“84. … the majority of the members of the appellate committee were intending to provide a comprehensive analysis of the unlawful means tort. Lord Hoffmann undertook a painstaking and detailed analysis of the relevant case law from the beginning of the history of the tort, explaining how confusion had arisen obscuring the difference between the separate torts of causing loss by unlawful means, on the one hand, and the Lumley v Gye tort of procuring a breach of contract by a third party, on the other hand, and examining the problems created by the so-called ‘unified theory’ of treating procuring breach of contract as one species of a more general tort of actionable interference with contractual rights. … 87. … the essential ingredients of the unlawful means tort, including specifically the need for claimant to show that the defendant’s conduct interfered with the liberty of the third party to conduct dealings with the claimant, and their application to the facts were the subject of argument in OBG and were the subject of both analysis and conclusion in the speeches in the House of Lords …”
“Counsel’s submissions were wide-ranging. In particular the House is called upon to consider the ingredients of the tort of interference with a business by unlawful means and the tort of inducing breach of contract. These are much vexed subjects. Nearly 350 reported decisions and academic writings were placed before the House. There are many areas of uncertainty. Judicial observations are not always consistent, and academic consensus is noticeably absent. In the words of one commentator, the law is in a ‘terrible mess’. So the House faces a daunting task. ...”
“No secondary liability without primary liability”
“45. The most important question concerning this tort is what should count as unlawful means. It will be recalled that in Allen v Flood[1898] AC 1 , 96, Lord Watson described the tort thus: ‘when the act induced is within the right of the immediate actor, and is therefore not wrongful in so far as he is concerned, it may yet be to the detriment of a third party; and in that case ... the inducer may be held liable if he can be shewn to have procured his object by the use of illegal means directed against that third party.’ 46. The rationale of the tort was described by Lord Lindley in Quinn v Leathem[1901] AC 495 , 534-535: ‘a person’s liberty or right to deal with others is nugatory, unless they are at liberty to deal with him if they choose to do so. Any interference with their liberty to deal with him affects him. If such interference is justifiable in point of law, he has no redress. Again, if such interference is wrongful, the only person who can sue in respect of it is, as a rule, the person immediately affected by it; another who suffers by it has usually no redress; the damage to him is too remote, and it would be obviously practically impossible and highly inconvenient to give legal redress to all who suffer from such wrongs. But if the interference is wrongful and is intended to damage a third person, and he is damaged in fact - in other words, if he is wrongfully and intentionally struck at through others, and is thereby damnified - the whole aspect of the case is changed: the wrong done to others reaches him, his rights are infringed although indirectly, and damage to him is not remote or unforeseen, but is the direct consequence of what has been done.’ 47. The essence of the tort therefore appears to be (a) a wrongful interference with the actions of a third party in which the claimant has an economic interest and (b) an intention thereby to cause loss to the claimant.”
“56. Your Lordships were not referred to any authority in which the tort of causing loss by unlawful means has been extended beyond the description given by Lord Watson in Allen v Flood [1898] AC l, 96 and Lord Lindley in Quinn v Leathem[1901] AC 495 , 535. Nor do I think it should be. The common law has traditionally been reluctant to become involved in devising rules of fair competition, as is vividly illustrated by Mogul Steamship Co Ltd v McGregor Gow & Co[1892] AC 25 . It has largely left such rules to be laid down by Parliament. In my opinion the courts should be similarly cautious in extending a tort which was designed only to enforce basic standards of civilised behaviour in economic competition, between traders or between employers and labour. Otherwise there is a danger that it will provide a cause of action based on acts which are wrongful only in the irrelevant sense that a third party has a right to complain if he chooses to do so. … 57. Likewise, as it seems to me, in a case like Lonrho Ltd v Shell Petroleum Co Ltd (No 2)[1982] AC 173 , it is not for the courts to create a cause of action out of a regulatory or criminal statute which Parliament did not intend to be actionable in private law.”
“It is not, I think, sufficient to say that there must be a causal connection between the wrongful nature of the conduct and the loss which has been caused. If a trader secures a competitive advantage over another trader by marketing a product which infringes someone else’s patent, there is a causal relationship between the wrongful act and the loss which the rival has suffered. But there is surely no doubt that such conduct is actionable only by the patentee.”
“In both cases it is necessary to distinguish between ends, means and consequences. One intends to cause loss even though it is the means by which one achieved the end of enriching oneself. On the other hand, one is not liable for loss which is neither a desired end nor a means of attaining it but merely a foreseeable consequence of one’s actions.”
“In view of my conclusion that ‘OK!’ was entitled to sue for breach of an obligation of confidentiality to itself, it is a little artificial to discuss the alternative claim on the footing that the obligation was owed solely to the Douglases. I would have considerable difficulty in reconciling such a hypothetical claim with RCA Corpn v Pollard [l983] Ch 135 and Isaac Oren v Red Box Toy Factory Ltd[1999] FSR 785 . Neither Mr Thorpe nor ‘Hello!’ did anything to interfere with the liberty of the Douglases to deal with ‘OK!’ or perform their obligations under their contract. All they did was to make ‘OK!’s’ contractual rights less profitable than they would otherwise have been.”
“266. On the economic torts, the most important difference is in the identification of the control mechanism needed in order to stop the notion of unlawful means getting out of hand-for example, a pizza delivery business which obtains more business, to the detriment of its competitors, because its drivers regularly exceed the speed limit and jump red lights. Lord Hoffmann sees the rationale of the unlawful means tort as encapsulated in Lord Lindley’s reference (in Quinn v Leathem[1901] AC 495 , 534) to interference with ‘a person’s liberty or right to deal with others’. In his view acts against a third party count as unlawful means only if they are (or would be if they caused loss) actionable at the suit of the third party. 267. Lord Hoffmann does not question the correctness of the decisions of the Court of Appeal in RCA Corpn v Pollard[1983] Ch 135 or of Jacob J in Isaac Oren v Red Box Toy Factory Ltd[1999] FSR 785 , which show that a bootlegger’s activities, although actionable by the owner of the intellectual property rights in question, are not actionable (by statute or at common law) by a contractual licensee entitled to exploit those rights, even if the licensee’s profits are demonstrably reduced by the unlawful activities. As Oliver LJ said in RCA Corpn v Pollard[1983] Ch 135 , 153: ‘the defendant’s conduct involves no interference with the contractual relationships of the plaintiffs but merely potentially reduces the profits which they make as the result of the performance by Mr Presley’s executors of their contractual obligations.’ 268. Lord Nicholls also accepts the correctness of Isaac Oren v Red Box Toy Factory Ltd (and also, I infer, the correctness of RCA Corpn v Pollard). He proposes a wider test of unlawful means relying on the notion of instrumentality as the appropriate control mechanism.”
“269. Faced with these alternative views I am naturally hesitant. I would respectfully suggest that neither is likely to be the last word on this difficult and important area of the law. The test of instrumentality does not fit happily with cases like RCA Corpn v Pollard, since there is no doubt that the bootlegger’s acts were the direct cause of the plaintiff’s economic loss. The control mechanism must be found, it seems to me, in the nature of the disruption caused, as between the third party and the claimant, by the defendant’s wrong (and not in the closeness of the causal connection between the defendant’s wrong and the claimant’s loss). 270. I do not, for my part, see Lord Hoffmann’s proposed test as a narrow or rigid one. On the contrary, that test (set out in para 5l of his opinion) of whether the defendant’s wrong interferes with the freedom of a third party to deal with the claimant, if taken out of context, might be regarded as so flexible as to be of limited utility. But in practice it does not lack context. The authorities demonstrate its application in relation to a wide variety of economic relationships. I would favour a fairly cautious incremental approach to its extension to any category not found in the existing authorities.”
“306. … The underlying rationale of both the Lumley v Gye (1853) 2 E & B 216 and the unlawful means torts is the same: the defendant is deliberately striking at his target through a third party. But the means used to strike must be unlawful: see Allen v Flood[1898] AC 1 . They may either be a wrong committed by the third party against the target or be a wrong committed by the defendant against the third party. But the rules governing each are different: in particular, the intention is different and the damage procured is different. Nevertheless, the common thread is striking through a third party who might otherwise be doing business with your target, whether by buying his goods, hiring his barges or working for him or whatever. The refinement proposed by my noble and learned friend, Lord Hoffmann, is entirely consistent with the underlying principles to be deduced from the decided cases. It is also consistent with legal policy to limit rather than to encourage the expansion of liability in this area. In the modern age, Parliament has shown itself more than ready to legislate to draw the line between fair and unfair trade competition or between fair and unfair trade union activity. This can involve major economic and social questions which are often politically sensitive and require more complicated answers than the courts can devise. Such things are better left to Parliament. The common law need do no more than draw the lines that it might be expected to draw: procuring an actionable wrong between the third party and the target or committing an actionable (in the sense explained by Lord Hoffmann at para 49 above) wrong against the third party inhibiting his freedom to trade with the target.”
“As this court has recently emphasised, it will be ‘very circumspect before accepting an invitation to invoke the 1966 Practice Statement’: Knauer v Ministry of Justice[2016] AC 908 , para 23. It is important not to undermine the role of precedent and the certainty which it promotes. Circumstances in which it may be appropriate to do so include where previous decisions ‘were generally thought to be impeding the proper development of the law or to have led to results which were unjust or contrary to public policy’ - per Lord Reid in R v National Insurance Comr, Ex p Hudson[1972] AC 944 , 966. Even then the court needs to be satisfied that a departure from precedent ‘is the safe and appropriate way of remedying the injustice and developing the law’ - per Lord Scarman in R v Secretary of State for the Home Department, Ex p Khawaja[1984] AC 74 , 106.”
“… in many contexts the Sorrell v Smith view of intention to harm seems to come adrift from a view of intention to harm in the sense of specifically targeting the use of unlawful means against a particular person … For instance, a defendant might be broadly aware of competing against others in a limited market but have only a hazy idea who those others are or which of them might actually be harmed by that defendant’s own actions: would that create a sufficient nexus between the defendant and the (unknown) claimant competitor to give rise to liability? We suggest not. A more specific intention to use unlawful means to harm a particular person should be required, using those means as the club to hit them …”