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Published online by Cambridge University Press: 08 March 2013
This paper considers whether unlawful means conspiracy might have a role to play in extending liability from insolvent companies to those who stand behind them. A reason for thinking that the tort might have such a role is that, where an agreement to injure exists, liability can be found not only in those who commit unlawful acts but in any other persons who take steps to further the conspiracy. The paper argues, furthermore, that courts should accept that unlawful means conspiracy might be committed between even the smallest company and its controlling shareholder. This would strengthen the propositions that the company is a separate legal person with its own rights and responsibilities and that it is competent to deal with all comers, including its controller.
1 [2008] UKHL 19, [2008] 1 A.C. 1174.
2 See, e.g., D. Goddard, “Corporate Personality – Limited Recourse and its Limits” in R. Grantham and C. Rickett (eds.), Corporate Personality in the 20th Century (Oxford 1998), pp 17ff; R. Kraakman et al, The Anatomy of Corporate Law, 2nd ed., (Oxford 2009), ch. 1.
3 Some relevant practices are surveyed in Landers, J.M., “Another Word on Parents, Subsidiaries and Affiliates in Bankruptcy” (1976) 43 U. Chi. L.R. 527, 528Google Scholar.
4 Companies Act 2006, ss. 190–6 (substantial property transactions), 641 and 645–50 (reductions of capital); Insolvency Act 1986, ss. 238–41 (voidable transactions).
5 E.g., Insolvency Act 1986, ss., 206–8 (malpractice) and 214 (wrongful trading).
6 E.g., Gluckstein v Barnes [1900] A.C. 240 (share pump and dump case). See Payne, J., “Lifting the Corporate Veil: A Reassessment of the Fraud Exception” (1997) 56 C.L.J. 284CrossRefGoogle Scholar.
7 By analogy with the deceit case of Derry v Peek (1889) 14 App. Cas. 337.
8 This is assuming that the results of an empirical study conducted in Australia are indicative of the English position: see Ramsay, I.M. and Noakes, D.B., “Piercing the Corporate Veil in Australia” (2001) 19 Company and Securities Law Journal 250Google Scholar. A study of veil piercing in England, Mitchell, C., “Lifting the Corporate Veil in English Courts: An Empirical Study” (1999) 3 Cfil.L.R. 15Google Scholar, does not provide specific figures about success rates in relation to particular heads such as fraud.
9 Adams v Cape Industries plc [1990] Ch. 433, 540.
10 VTB Capital plc v Nutritek International Corp. [2012] EWCA Civ 808, at [68].
11 [1933] 1 Ch. 935.
12 Kershaw, D., Company Law in Context: Text and Materials (Oxford 2009), 56Google Scholar. See also Garbutt Business College Ltd. v Henderson [1934] 4 D.L.R. 151.
13 Antonio Gramsci Shipping Corp. v Stepanovs [2011] EWHC 333 (Comm), [2011] 1 Lloyd's Rep. 617, at [18] (Burton J.).
14 Inland Revenue Commissioners v Sansom [1921] 2 K.B. 492, 503 (describing the ground as ‘conceivable’, but only where the technical elements of agency are present).
15 Muscat, A., The Liability of the Holding Company for the Debts of Its Insolvent Subsidiaries (Aldershot 1996), 120Google Scholar.
16 [1897] A.C. 22.
17 In re Wragg Ltd. [1897] 1 Ch. 796, 824 (Lindley L.J.). See also discussion at pp. 198–99 below.
18 [1990] Ch. 433.
19 Kraakman, R. et al. , The Anatomy of Corporate Law, 2nd ed. (Oxford 2009), 139Google Scholar.
20 The general argument being made in this section of the paper is not new. It was made long ago – “[T]he corporate capacity is a legal fact, not a fiction. Problems of responsibility for fraud or for acts of a corporation used as an agent are to be solved not by “disregarding” the corporate personality, but by the application of the usual principles of liability for the acts of other persons or for collusion with them”: Ballantine, H.W., “Separate Entity of Parent and Subsidiary Corporations” (1925–6) 14 Cal. L.R. 12, 20Google Scholar. See also Lo, S.H.C., “Liability of directors as joint tortfeasors” [2009] J.B.L. 109Google Scholar; Tham, C.H., “Piercing the corporate veil: searching for appropriate choice of law rules” [2007] L.M.C.L.Q. 22Google Scholar; Neyers, J.W., “Canadian Corporate Law, Veil-Piercing, and the Private Law Model Corporation” (2000) 50 U.T.L.J. 173, 215ffCrossRefGoogle Scholar.
21 See, e.g., Standard Chartered Bank v Pakistan International Shipping Corp. (No. 2) [2002] UKHL 43, [2003] 1 A.C. 959 (directors); Lo, S.H.C., “Liability of directors as joint tortfeasors” [2009] J.B.L. 109Google Scholar; MCA Records Inc. v Charly Records Ltd. [2002] B.C.C. 650, 668 (The Court) (de facto managing director); Flannigan, R., “The Personal Tort Liability of Directors” (2002) 81 Can. Bar Rev. 247, 259–61Google Scholar (shareholders).
22 This argument, as applied to company directors, is made in Lo, note 21 above, [2009] J.B.L. 109, 110.
23 As opposed to the case where the interests involve bodily integrity: see Witting, C., “Liability for Corporate Wrongs” (2009) 28 U.Q.L.J. 113Google Scholar.
24 E.g., in cases of “borrowed” employees: Viasystems (Tyneside) Ltd v Thermal Transfer (Northern) Ltd [2006] Q.B. 510.
25 [2012] EWCA Civ 525.
26 [2012] EWCA Civ 525, at [78]–[80]. See also Connelly v R.T.Z. Corporation plc [1998] A.C. 854; Lubbe v Cape plc (no. 2) [2000] UKHL 41, [2001] 1 W.L.R. 1545; McGaughey, E., “Donoghue v Salomon in the High Court” (2011) 4 J.P.I.L. 249Google Scholar.
27 See at pp. 193–94.
28 This is the minimum requirement in circumstances where, objectively construed, the act was substantially certain to result, e.g., in a contact with the body of another (this being a battery): F. Trindade, P. Cane and M. Lunney, The Law of Torts in Australia, 4th ed. (South Melbourne 2007), 38–44.
29 Smith v Stone (1647) Sty 65; J. Murphy and C. Witting, Street on Torts, 13th ed. (Oxford 2012), 316.
30 By analogy with the discussion of Standard Chartered Bank v Pakistan National Shipping Corporation (No. 2) [2002] UKHL 43, [2003] 1 A.C. 959, below at p. 194.
31 This is a typical requirement of the economic torts: see H. Carty, An Analysis of the Economic Torts, 2nd ed. (Oxford 2010).
32 See, e.g., Gutteridge, H., “Abuse of Rights” (1933) 5 C.L.J. 22Google Scholar, esp. 26. Note also the related difficulty that courts of equity have had in determinations of ‘dishonesty’: see P. Shine, “Dishonesty in civil commercial claims: a state of mind or a course of conduct?” [2012] J.B.L. 29; A. Clarke, “Claims against Professionals: Negligence, Dishonesty and Fraud” [2007] Eur. Bus. L.R. 649.
33 Paciocco, D., “Subjective and Objective Standards of Fault for Offences and Defences” (1995) 59 Sask. L.R. 271, 272Google Scholar.
34 See Meridian Global Funds Management Asia Ltd. v Securities Commission [1995] 2 A.C. 500; Ferran, E., “Corporate attribution and the directing mind and will” (2011) 127 L.Q.R. 239Google Scholar. This doctrine has rightly been seen as inconsistent with the separate personality of the company: Griffin, S., “The one-man type company and the removal of corporate personality in the context of the attribution rules” (2011) 22 I.C.C.L.R. 158Google Scholar.
35 [1924] 1 K.B. 1, 14–5; cited with approval in Wah Tat Bank Ltd. v Chan Cheng Kum [1975] A.C. 507, 514–5 (PC).
36 C. Evans & Sons Ltd. v Spritebrand Ltd. [1985] 1 W.L.R. 317, 329. Compare the test in Canada, which requires that the director or controller ‘make the tortious act his [or her] own’: Mentmore Manufacturing Co. Ltd. v National Merchandising Manufacturing Co. Inc. (1978) 89 D.L.R. (3d) 195, 203 (Le Dain J.).
37 C. Evans & Sons Ltd. v Spritebrand Ltd. [1985] 1 W.L.R. 317, 329. Note that this qualification does not appear in earlier authority: e.g. Wah Tat Bank Ltd. v Chan Cheng Kum [1975] A.C. 507, 514–5 (Lord Salmon).
38 H. Anderson, Corporate Directors' Liability to Creditors (North Ryde NSW 2006), 231.
39 C. Evans & Sons Ltd. v Spritebrand Ltd. [1985] 1 W.L.R. 317, 330. In MCA. Records v Charly [2001] EWCA Civ 1441, [2002] B.C.C. 650, at [49], Chadwick L. J. doubts that participation in the constitutional function of voting at a board meeting could suffice. It should also be noted that issues of causation could be significant: Foster, N., “Personal civil liability of company officers for company workplace torts” (2008) 16 Torts L.J. 20, 41–2Google Scholar.
40 See, e.g., Foster, N., “Personal civil liability of company officers for company workplace torts” (2008) 16 Torts L. J. 20Google Scholar.
41 Revenue and Customs Commissioners v Total Network S.L. [2008] UKHL 19, [2008] 1 A.C. 1174.
42 (1304) 33 Edw. 1. Prior statute and common law rules provided no reliable definition of the cause of action: Leach, T.J., “Civil Conspiracy: What's the Use?” (1999) 54 U. Miami L. R. 1, 6Google Scholar.
43 E.g., Poulterer's Case (1611) 9 Coke 55b; F. B. Sayre, “Criminal Conspiracy” (1921–2) 35 Harv. L.R. 393, 400 and 403.
44 Crofter Hand-Woven Harris Tweed Co. Ltd. v Veitch [1942] A.C. 435, 443–4 (Visc. Simon L. C.).
45 Ibid., at p. 444 (Visc. Simon L. C.) (lawful means conspiracy case). See also Lonrho Ltd. v Shell Petroleum Ltd. [1982] A.C. 173, 188 (Lord Diplock) (unlawful means conspiracy case).
46 Sayre, F. B., “Criminal Conspiracy” (1921–2) 35 Harv. L. R. 393, 405–6Google Scholar (reviewing development of the English law).
47 It is to be noted that “the tort and the crime have cut loose whatever common origin they had”: W. V. H. Rogers, Winfield and Jolowicz on Tort, 18th ed. (London 2010), 884.
48 Crofter Hand Woven Harris Tweed Co. Ltd. v Veitch [1942] A.C. 435, 461 (Lord Wright); H. Carty, An Analysis of the Economic Torts, 2nd ed. (Oxford 2012), 122.
49 There is, however, debate about whether this separation is viable; there might simply be a ‘spectrum’ of liability for ‘harmful combinations’: H. Carty, An Analysis of the Economic Torts, 124.
50 Crofter Hand Woven Harris Tweed Co. Ltd. v Veitch [1942] A.C. 435, 445 (Visc. Simon L. C.); 452 (Visc. Maugham); 478 (Lord Wright); and 490 (Lord Porter).
51 Ibid. at pp., 446–7 (Visc. Simon L. C.), 456 (Visc. Maugham), 459 (Lord Thankerton) and 471 (Lord Wright); Deakin, S. and Randall, J., “Rethinking the Economic Torts” (2009) 72 M.L.R. 519Google Scholar, 552 (table 1). Indeed, the area of permissible action seems to extend beyond cases of economic self-interest to include some which cannot be measured in monetary terms: Scala Ballroom (Wolverhampton) Ltd. v Ratcliffe [1958] 1 W.L.R. 1057.
52 [1987] Ch. 327. See pp. 196–97 below.
53 See pp. 202–5 below.
54 Lonrho plc v Fayed [1992] 1 A.C. 448, 465–6 (Lord Bridge); Meretz Investments N.V. v ACP Ltd. [2007] EWCA Civ 1303, [2008] Ch. 244, 276 (Arden L.J.).
55 Lonrho plc v Fayed [1992] 1 A.C. 448, 467 (Lord Bridge); Lewis, R., “Economic Torts: Where Are We Now?” [2008] Bus. L.R. 216, 217Google Scholar.
56 [2008] UKHL 19, [2008] 1 A.C. 1174.
57 [2007] UKHL 21, [2008] 1 A.C. 1, at [159].
58 [2008] UKHL 19, [2008] 1 A.C. 1174, at [95]. This reference is potentially confusing because Lord Nicholls was, in the OGB case, discussing liability for ‘interference with the claimant's business by unlawful means’, which requires that the defendant harms the claimant ‘through the instrumentality of a third party’. Neither form of conspiracy is typified by this kind of ‘instrumentality’.
59 [2008] UKHL 19, [2008] 1 A.C. 1174, at [44].
60 Ibid. at [44].
61 Ibid. at [120].
62 Ibid. at [56].
63 Ibid. at [223] and [227].
64 [2007] UKHL 21, [2008] 1 A.C. 1, at [60] (emphasis added). It should be noted that this definition is not accepted as correct by the present author in that it seems to set the threshold too high.
65 Ibid. at [165].
66 See, e.g., [2008] UKHL 19, [2008] 1 A.C. 1174, at [216] (Lord Neuberger).
67 [2010] EWCA Civ 1440.
68 [2000] 2 All E.R. (Comm) 271, at [108].
69 Baldwin v Berryland Books [2010] EWCA Civ 1440, at [45] and [48]. This was the same approach to intention in unlawful means conspiracy adopted in Meretz Investments N.V. v ACP Ltd. [2007] EWCA Civ 1303, [2008] Ch. 244, the difference being that the latter case was decided before the Total Network case. For this reason, I leave Meretz to one side.
70 [2010] EWCA Civ 1440, at [48], citing OBG Ltd. v Allan [2007] UKHL 21, [2008] 1 A.C. 1, at [41] (Lord Hoffmann).
71 Revenue and Customs Commissioners v Total Network S.L. [2008] UKHL 19, [2008] 1 A.C. 1174, at [101]–[102] (Lord Walker); Credit Lyonnais Bank Nederland N.V. v Export Credit Guarantee Department [1998] 1 Lloyd's Rep. 19.
72 Baldwin v Berryland Books [2010] EWCA Civ 1440, at [46] (Etherton L.J.).
73 Credit Lyonnais v ECGD [1998] 1 Lloyd's L. R. 19; H. Carty, An Analysis of the Economic Torts, p. 129.
74 [2010] EWCA Civ 1440.
75 Ibid. at [11].
76 Ibid. at [37]–[39].
77 Ibid. at [87].
78 Crofter Hand Woven Harris Tweed Co. Ltd. v Veitch [1942] A.C. 435, 440 (Visc. Simon L. C.), 449 (Visc. Maugham), and 478 (Lord Wright) (lawful means conspiracy).
79 Digicel (St. Lucia) Ltd. v Cable & Wireless plc [2010] EWHC 774, at [295]–[299].
80 Revenue and Customs Commissioners v Total Network S.L. [2008] UKHL 19, [2008] 1 A.C. 1174, at [93] (Lord Walker); OBG Ltd. v Allen [2007] UKHL 21, [2008] 1 A.C. 1, at [159] (Lord Nicholls).
81 Edmundson, P., “Conspiracy by unlawful means: Keeping the tort untangled” (2008) 16 Torts L. J. 189, 197Google Scholar.
82 Damages are at large: Lonrho v Fayed (No. 5) [1993] 1 W.L.R. 1489. They have a “very wide theoretical range” and are not limited to the foreseeable: H. McGregor, McGregor on Damages, 18th ed. (London 2009), pp. 1646 and 1111 (including fn. 36) respectively.
83 See Banfi, C. A., “Defining the competition torts as intentional wrongs” (2011) 70 C.L.J. 83Google Scholar.
84 [2008] UKHL 19, [2008] 1 A.C. 1174. An attempt at mapping out an appropriate operation for the economic torts as a whole is made in Deakin, S. and Randall, J., “Rethinking the Economic Torts” (2009) 72 M.L.R. 519Google Scholar.
85 [2008] UKHL 19, [2008] 1 A.C. 1174, at [44]–[45] (Lord Craig), [56] (Lord Scott), [95] (Lord Walker), [120]–[121] (Lord Mance), [217] and [227] (Lord Neuberger), over-ruling Powell v Boladz [1998] Lloyd's Rep. Med. 116.
86 Note, however, “[i]t is not … in every case that the use of criminal means gives rise to unlawful means conspiracy. It is not enough that there is a crime somewhere in the story”: W. V. H. Rogers, Winfield and Jolowicz on Tort, p. 894.
87 The case has been criticised as not very closely reasoned: ibid., p. 892.
88 [2008] UKHL 19, [2008] 1 A.C. 1174, at [96] (Lord Walker). It has also been speculated that an omission may be sufficient: Reaitano v Jones [2001] NSWSC 1076, at [32] (Young J.); The Dolphina [2011] SCHC 273, at [269] (Singapore High Court, Belinda Ang Saw Ean J.). This would seem logical, especially in the case of a breach of statutory duty.
89 Brooke v Bool [1928] 2 K.B. 578. See also Leach, T. J., “Civil Conspiracy: What's the Use?” (1999) 54 U. Miami L. R. 1, 13Google Scholar.
90 [2008] UKHL 19, [2008] 1 A.C. 1174, at [96].
91 Revenue and Customs Commissioners v Total Network S.L. [2008] UKHL 19, [2008] 1 A.C. 1174, at [56]. See also ibid. at para. [119] (Lord Mance) (pizza delivery example).
92 See pp. 195 ff below for further analysis. It is interesting to note, by way of comparison that the US Supreme Court has ruled that there can be no conspiracy between a parent company and its subsidiary under Sherman Antitrust Act 15 USC § 1: Copperweld Corp. v Independence Tube Corp. 467 U.S. 752 (1984). However, Copperweld was not followed in Cedric Kushner Promotions Ltd. v King 553 U.S. 158 (2001), which held that a company and its sole shareholder/president were two different legal persons under the Racketeer Influenced and Corrupt Organizations Act 18 USC § 1961.
93 By contrast, the rule in Said v Butt [1920] 2 K.B. 497 prevents actions in conspiracy against corporate agents acting bona fide within the scope of their authority for inducing breach of contract between the company and a third party. See Imperial Oil Ltd. v C & G Holdings Ltd. (1989) 62 D.L.R. (4th) 261; Lee, P. Y., “The Company and Its Directors as Co-Conspirators” (2009) 21 Singapore Academy of Law Journal 409Google Scholar.
94 [2010] EWCA Civ 1440.
95 This scenario has an analogy in Chew Kong Huat v Ricwil (Singapore) Pte. Ltd. [1999] 3 S.L.R.(R) 1167.
96 (1998) 37 O.R. (3d) 97.
97 Ibid. at [19].
98 [1998] 1 W.L.R. 829.
99 [1998] 1 W.L.R. 829, 838.
100 Ibid. p. 835. See also Trevor Ivory Ltd. v Anderson [1992] 2 N.Z.L.R. 517 (doubted in Body Corporate 202254 v Taylor [2009] 2 N.Z.L.R. 17, at [44] (The Court)); D. Goddard, “Corporate Personality – Limited Recourse and its Limits” in R. Grantham and C. Rickett (eds.), Corporate Personality in the 20 thCentury (Oxford 1998), 45–55.
101 The term “device” comes from Body Corporate 202254 v Taylor [2009] 2 N.Z.L.R. 17, at [144] (Chambers J.).
102 The term “immunise” (and cognates) has long been used in association with the Williams case: e.g,. Reynolds, F., “Personal Liability of Company Directors in Tort” (2003) 33 H.K.L.J. 51Google Scholar, 63; Flannigan, R., “The Personal Tort Liability of Directors” (2002) 81 Can. Bar Rev. 247, 248 and 264Google Scholar (directors being subject to “special treatment”).
103 Liability arises only in “rare” cases: Freedman, J., “Limited Liability: Large Company Theory and Small Firms” (2000) 63 M.L.R. 317Google Scholar, 348. This is not only an English practice; it is one found in other jurisdictions as well: B. Fisse and J. Braithwaite, Corporations, Crime and Accountability (Melbourne 1993), 14; Lo, S. H. C., “The liability of directors as joint tortfeasors” [2009] J.B.L. 109, 109Google Scholar.
104 E.g., Barker, K., “Unreliable Assumptions in the Modern Law of Negligence” (1993) 109 L.Q.R. 461Google Scholar.
105 See, e.g., Smith v Eric S. Bush [1990] 1 A.C. 831 (attempted exclusion of liability).
106 Standard Chartered Bank v Pakistan Shipping Corporation [2002] UKHL 43, [2003] 1 A.C. 959, 968 (Lord Hoffmann, all of their Lordships agreeing) and 974 (Lord Rodger). For fuller argument, see H. Anderson, Corporate Directors' Liability to Creditors (North Ryde NSW 2006), ch. 7; Lo, S.H.C., “Liability of directors as joint tortfeasors” [2009] J.B.L. 109, 127–30 and 138Google Scholar.
107 Managerialist theory assumes shareholder passivity. But this belies a more variegated reality: see, e.g., J. Hill, “Changes in the Role of the Shareholder” in R. Grantham and C. Rickett (eds.), Corporate Personality in the 20 thCentury (Oxford 1998), ch. 10.
108 Flannigan, R., “The Personal Tort Liability of Directors” (2002) 81 Can. Bar Rev. 247, 248Google Scholar.
109 H. Anderson, Corporate Directors' Liability to Creditors (North Ryde NSW 2006), 242.
110 [2006] UKHL 28, [2007] 1 A.C. 181.
111 See ibid. at [5] (Lord Bingham), [35] (Lord Hoffmann) and [73] (Lord Walker). See J. Murphy and C. Witting, Street on Torts, 13th ed. (Oxford 2012), 52. Consistently with this, the Court of Appeal in Chandler v Cape plc [2012] EWCA Civ 525, at [64] accepted that the “word ‘assumption’ is [ ] something of a misnomer. The phrase “attachment” of responsibility might be more accurate”.
112 The policy arguments in favour of a zone of immunity for directors are considered and rejected in Flannigan, R., “The Personal Tort Liability of Directors” (2002) 81 Can. Bar Rev. 247, 310–21Google Scholar. Compare Petrin, M., “The Curious Case of Directors' and Officers' Liability for Supervision and Management: Exploring the Intersection of Corporate and Tort Law” (2010) 59 Am. U.L.R. 1661Google Scholar.
113 Freedman, J., “Limited Liability: Large Company Theory and Small Firms” (2000) 63 M.L.R. 317, 321–2Google Scholar and 334.
114 H. Anderson, Corporate Directors' Liability to Creditors (North Ryde NSW 2006), 248.
115 Against this is the distinct possibility that the controlling shareholder of a wrongdoing and insolvent small company is likely to have put most of his or her assets into it and not be worth suing: see R. Kraakman et al, The Anatomy of Corporate Law, 2nd ed. (Oxford 2009), 135. In such cases, disqualification proceedings are more apposite than a suit for damages: ibid. at p. 137.
116 [2002] UKHL 43, [2003] 1 A.C. 959.
117 Lo, S. H. C., “The liability of directors as joint tortfeasors” [2009] J.B.L. 109, 111Google Scholar. See also Foster, N., “Personal civil liability of company officers for company workplace torts” (2008) 16 Torts L. J. 20Google Scholar, esp. 34.
118 P. Cane, Responsibility in Law and Morality (Oxford 2002), 159; M. Dan-Cohen, Rights, Persons, and Organizations (Berkeley 1986), 36.
119 P. Cane, Responsibility in Law and Morality (Oxford 2002), 159.
120 [1972] A.C. 153, 170.
121 [1995] 2 A.C. 500, 511. See, also, to this effect St Regis Paper Co. Ltd. v R. [2011] EWCA Crim 2527, at [11] (The Court); Attorney-General's Reference (No. 2 of 1999) [2000] 2 Cr. App. Rep. 207, 216 (Rose L. J.).
122 El Ajou v Dollar Land Holdings plc [1994] B.C.C. 143, 154 (Rose L. J.).
123 St Regis Paper Co. Ltd. v R. [2011] EWCA Crim 2527, at [11].
124 [1995] 2 A.C. 500, 507. Lord Hoffmann gives the example of a statute-based rule but clearly intends this as but one possible instance in which a rule of attribution is necessary.
125 The Dolphina [2011] SCHC 273, at [254] (Singapore High Court, Belinda Ang Saw Ean J.)
126 [1966] 1 Q.B. 233.
127 [1985] 1 S.C.R. 662, at [20] (The Court); Leigh, L., “The Criminal Liability of Corporations and Other Groups” (1971) 9 U. Ottawa L. R. 247, 247–302Google Scholar. See to like effect Union Pacific Coal Co. v United States 173 F. 737 (8th Cir., 1909), esp. p. 745.
128 Stone & Rolls Ltd. v Moore Stephens [2009] UKHL 39, [2009] 1 A.C. 1391, at [159], citing R. v McDonnell [1966] 1 Q.B. 233, 245.
129 P. Cane, Responsibility in Law and Morality (Oxford 2002), 162.
130 Lister v Hesley Hall Ltd. [2002] UKHL 22, [2002] 1 A.C. 215.
131 Lo, S. H. C., “The liability of directors as joint tortfeasors” [2009] J.B.L. 109, 127Google Scholar. See also Campbell, N. and Armour, J., “Demystifying the Civil Liability of Corporate Agents” [2003] C.L.J. 290CrossRefGoogle Scholar, esp. 293; Lee, P. Y., “The Company and Its Directors as Co-Conspirators” (2009) 21 Singapore Academy of Law Journal 409, 413Google Scholar.
132 [1987] Ch. 327.
133 This has been a reason for finding, subsequently, that there can be no action in lawful means conspiracy for intention to injure through the making of true statements where the loss is to reputation: Lonrho plc v Fayed (No. 5) [1993] 1 W.L.R. 1489. This has been challenged in Chan, G. K. Y., “Never Say ‘Never’ for the Truth Can Hurt: Defamatory but True Statements in the Tort of Simple Conspiracy” (2007) 31 M.U.L.R. 321Google Scholar. Note, however, that the specific application to reputation of the holding in the Gulf Oil case is not important for the purposes of general argument made in this paper.
134 [1991] 1 I.R. 142.
135 Ibid., p. 163.
136 [1991] 1 I.R. 142, 165.
137 [1999] 3 S.L.R.(R) 1167.
138 The other 50% of the shares were owned by his wife.
139 This company was a joint venture vehicle.
140 [1999] 3 S.L.R.(R) 1167, 1182.
141 Two later Singapore cases have determined that there can be an unlawful means conspiracy between a company and its director(s): Lim Leong Huat v Chip Hup Hup Kee Construction Pte. Ltd. [2009] 2 S.L.R.(R) 318 and Nagase Singapore Pte. Ltd. v Ching Kai Huat [2008] 1 S.L.R.(R) 80. However, both involved actions inducing breach of contract, which arguably should have been decided by application of Said v Butt [1920] 2 K.B. 497. See Lee, P. Y., “The Company and Its Directors as Co-Conspirators” (2009) 21 Singapore Academy of Law Journal 409Google Scholar.
142 Indeed, it has been said that “[t]here nowhere exists a convincing defence of identification either as a theory or in terms of its practical effects”: Sullivan, G. R., “The Attribution of Culpability to Limited Companies” [1996] C.L.J. 515, 540Google Scholar. It has also been said that “[i]n a theory of corporate transgression, concepts other than intentionality must assume greater importance”: Lee, I. B., “Corporate Criminal Responsibility as Team Member Responsibility” (2011) 31 O.J.L.S. 755, 761Google Scholar.
143 Ferran, E., “Corporate attribution and the directing mind and will” (2011) 127 L.Q.R. 239, 246Google Scholar.
145 Clarkson, C. M. V., “Kicking Corporate Bodies and Damning Their Souls” (1996) 59 M.L.R. 557Google Scholar, 561.
146 Ibid., p. 568.
147 El Ajou v Dollar Land Holdings plc [1994] B.C.C. 143, 151 (Nourse L. J.).
148 The Dolphina [2011] SCHC 273, at [231] (Singapore High Court, Belinda Ang Saw Ean J.).
149 [1897] A.C. 22.
150 Ibid., p. 51.
151 [1897] A.C. 22, 58.
152 [1961] A.C. 12, 26. See also Lim Leong Huat v Chip Hup Hup Kee Construction Pte. Ltd. [2009] 2 S.L.R.(R) 318, 329 (noting that contractual competence denotes competence to conspire). Compare Cane, P., Responsibility in Law and Morality (Oxford 2002), 151Google Scholar (capacity condition of responsibility cannot be satisfied by companies).
153 [1942] A.C. 435, 453.
154 Ibid., p. 468.
155 C. Kutz, Complicity: Ethics and Law for a Collective Age (Cambridge 2000), 226.
156 Ibid., p. 206.
157 Ibid., p. 226.
158 See principles discussed in In re Hampshire Land Co. [1896] 2 Ch. 743, as interpreted in Stone & Rolls Ltd. v Moore Stephens [2009] UKHL 39, [2009] 1 A.C. 1391, [145] (Lord Walker). This interpretation is criticised in P. Watts, ‘Stone & Rolls (In Liq.) v Moore Stephens (A Firm): audit contracts and turpitude’ (2010) 126 L.Q.R. 14, 19. See also J. C. Houghton & Co. v Nothard Lowe & Wills Ltd. [1928] A.C. 1, 19 (Visc. Sumner affirming principles in Hampshire Land case).
159 Royal Brunei Airlines Sdn. Bhd. v Tan [1995] 2 A.C. 378. See also Stone & Rolls Ltd. v Moore Stephens [2009] UKHL 39, [2009] 1 A.C. 1391.
160 [1979] Ch. 250.
161 Ibid., p. 259.
162 [1979] Ch. 250, 261.
163 Ibid., pp. 261–2.
164 Ibid., pp. 270 (Orr L. J.) and 270–1 (Goff L. J.).
165 Ibid., p. 264.
166 [2009] UKHL 39, [2009] 1 A.C. 1391.
167 [1896] 2 Ch. 743.
168 [2009] UKHL 39, [2009] 1 A.C. 1391, at [43] (Lord Phillips' summary).
169 J. C. Houghton & Co. v Nothard, Lowe and Wills Ltd. [1928] A.C. 1, 19 (Lord Sumner).
170 The case has been said to have left ‘a series of unsightly dents in some aspects of company law and agency law’: P. Watts, note 158 above, 126 L.Q.R. at p. 14.
171 [2009] UKHL 39, [2009] 1 A.C. 1391, at [134].
172 Ibid. at [136]. See also Davies, P. S., “Auditors' liability: no need to detect fraud?” [2009] C.L.J. 505Google Scholar. But there might not have been any need for this step in the reasoning: P. Watts, note 158 above, 126 L.Q.R. at p. 20.
173 [2009] UKHL 39, [2009] 1 A.C. 1391, at [161].
174 Ibid., at [184].
175 Ibid.
176 E.g., M. Dan-Cohen, Rights, Persons, and Organizations (Berkeley 1986), 61, noting that organisations “are not equal members in the Kantian kingdom of ends”. This is because only natural persons – and not organisations – have interests in autonomy and dignity that inherently deserve protection. These conceptions of the company may well be right. However, for this author, they are also largely irrelevant when considering the position of an entity which has full legal personhood.
177 P. L. Davies, Gower and Davies' Principles of Modern Company Law, 8th ed. (London 2008), 183.
178 It has been said that the law concerning the company's knowledge of the acts of a fraudulent agent has been (for nearly two hundred years) ‘at sixes and sevens’: P. Watts, note 158 above, 126 L.Q.R. 14, 18.
179 [1895] A.C. 587. See also Allen v Flood [1898] A.C. 1.
180 “Perceived” because the point seems to have been exaggerated: E. Reid, “The Doctrine of Abuse of Rights: Perspective from a Mixed Jurisdiction” (2004) 8 E.J.C.L. available at http://www.ejcl.org (last accessed 15 November 2012).
181 [1942] A.C. 435, 462.
182 [1982] A.C. 173, 188.
183 E.g., H. Carty, An Analysis of the Economic Torts, 2nd ed. (Oxford 2010), 140; R. Stevens, Torts and Rights (Oxford 2007), 250; and F. Pollock, Note (1925) 41 L.Q.R. 25, 25.
184 [1942] A.C. 435, 468. See also Lonrho Ltd. v Shell Petroleum Co. Ltd. (No. 2) [1982] A.C. 173, 188–9 (Lord Diplock); Deakin, S. and Randall, J., “Rethinking the Economic Torts” (2009) 72 M.L.R. 519, 550–1Google Scholar.
185 Katyal, N. K., “Conspiracy Theory” (2003) 112 Yale L. J. 1307, 1312Google Scholar. See also B. Fisse and J. Braithwaite, Corporations, Crime and Accountability (Melbourne 1993), 22; Leach, T. J., “Civil Conspiracy: What's the Use?” (1999) 54 U. Miami L. R. 1, 28–9Google Scholar.
186 Katyal, N. K., “Conspiracy Theory” (2003) 112 Yale L. J. 1307, 1327Google Scholar. This practice can also work against the achievement of the common end because of the bounded knowledge of individuals about the overall nature of the enterprise: ibid at p. 1353.
187 Katyal, N. K., “Conspiracy Theory” (2003) 112 Yale L. J. 1307, 1335Google Scholar.
188 Simester, A., “The mental element in complicity” (2006) 122 L.Q.R. 578, 599–600Google Scholar.
189 Expressed, e.g., in Public Order Act 1986, s. 1 (offence of riot). See also Revenue and Customs Commissioners v Total Network S.L. [2008] UKHL 19, [2008] 1 A.C. 1174, at [78] (Lord Walker hypothesising an underlying concern in Allen v Flood [1898] A.C. 1 about “potential threats to the constitution and the framework of society”).
190 Revenue and Customs Commissioners v Total Network S.L. [2008] UKHL 19, [2008] 1 A.C. 1174, at [221] (Lord Neuberger).
191 Crofter Hand Woven Harris Tweed Co. Ltd. v Veitch [1942] A.C. 435, 439–40 (Visc. Simon L. C.), citing Mogul Steamship Co. v McGregor, Gow & Co. (1888) 21 Q.B.D. 544, 549 (Lord Coleridge C. J.).
192 Revenue and Customs Commissioners v Total Network S.L. [2008] UKHL 19, [2008] 1 A.C. 1174, at [41], citing Sorrell v Smith [1942] A.C. 435, 462 (Lord Wright).
193 Revenue and Customs Commissioners v Total Network S.L. [2008] UKHL 19, [2008] 1 A.C. 1174, at [56]. See also ibid. at para. [100] (Lord Walker), citing Crofter Hand Woven Harris Tweed Co. Ltd. v Veitch [1942] A.C. 435, 444 (Visc Simon L. C.).
194 Sullivan, G. R., “The Attribution of Culpability to Limited Companies” (1996) 55 C.L.J. 515Google Scholar, 539.
195 Consistently with this point, Carty finds that the rationale for lawful means conspiracy resides in the ‘gross abuse of power’: H. Carty, An Analysis of the Economic Torts, p. 144. ”What the common law appears to have done, mistrusting group power, is use conspiracy/combination as a crude (and arbitrary) method of attacking an abuse of market power (in its widest sense)”: ibid at p. 147.
196 Rapakko, T., Unlimited Shareholder Liability in Multinationals (Boston 1997), 166Google Scholar.
197 Ibid., pp. 172, 348 and 351–2. This explains the enactment of a provision such as Insolvency Act 1986, s. 214 (wrongful trading).
198 See p. 194 above.