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‘Error of Judgment’ or Unlawful means Conspiracy

Author: Nicola Sharp  3 June 2024
2 min read

From a claimant’s perspective a claim in conspiracy can be a useful way of proceeding against multiple defendants. 

There is no requirement that all of the defendants to an unlawful means conspiracy claim have to use unlawful means, and there is no requirement that the conspirators know of the unlawfulness of the means.

In a recent case, the defendants admitted ‘errors in judgment’, but did not necessarily realise that they may be liable for unlawful means conspiracy. Etta Healthcare v Steven Aimson & Ors [2024] EWHC 1209 (Ch) shows that an action in unlawful means conspiracy can cast a wide net, and catch defendants unawares.

Brief facts

Etta Healthcare alleged that four defendants conspired together to steal its business. They say that the defendants planned to use their business for a new venture, Hive Resourcing Group Limited (now dissolved), a company of which one of the defendants (Mrs Aimson) was the sole trader and director. 

Etta Healthcare was a joint venture between Mr Torkington and Mr Goluguri on the one hand, and Mr Aimson on the other hand. The evidence suggested that Mr Aimson became dissatisfied with the way that things were going at Etta, and his relationship with Mr Torkington and Mr Goluguri. 

Hive was set up under Mrs Aimson’s ownership and control. Mr Aimson downloaded the information in Etta Healthcare’s database (which contained confidential, and crucial information about recruitment candidates) and transferred it to Hive.

Mrs Higgins and Ms Gannon were persuaded to move from Etta Healthcare, to join the new venture, Hive.

The unlawful acts carried out by Mr Aimson deprived Etta Healthcare of its business and caused it to cease to carry on business. Etta Healthcare had essentially been stripped of its business through the use made by Hive of the misapplied data from the database, and because it had lost its key employees to Hive.

Essential ingredients of unlawful means conspiracy

The essential ingredients of the tort of unlawful means conspiracy are set out in Cuadrilla Bowland Ltd v Persons Unknown [2020] 4 WLR 29. There must be:

  1. An unlawful act by a defendant;
  2. Which was done with the intention of injuring the claimant;
  3. Pursuant to an agreement or combination (whether express or tacit) with one or more other persons; and
  4. Which actually injures the claimant.

To be liable in unlawful means conspiracy, a defendant must intend to cause harm to the claimant, but that need not be the predominant purpose. 

Damages

Interestingly, in a claim for unlawful means conspiracy, the claimant does not have to prove every element of its pecuniary loss. 

Etta Healthcare relied on Lonrho plc v Fayed (No.5) (supra) as authority for the proposition that once some pecuniary loss is established, damages in conspiracy are at large. The damages are not limited to the particular loss actually proved. 

The starting point is that damages for conspiracy, as with any other tortious claim, fall to be assessed so as to put the injured party in the position that they would have been in had the tort, here the conspiracy, not occurred. 

Mr Aimson, Mrs Aimson and Mrs Higgins were found to be liable jointly and severally in the same amount for the loss occasioned by the conspiracy.

To determine loss, the court took the approach of placing a value on the lost business (as suggested by the expert witness). The court awarded damages against each of Mr Aimson, Mrs Aimson and Mrs Higgins for £275,000.

Analysis

This case highlights the serious consequences of unlawful means conspiracy and the high price to pay for being found liable. 

Given that it is not necessary that all the defendants have to use unlawful means, and there is no requirement that they know of the unlawfulness of the means, the tort can catch some defendants who simply thought they had exercised an ‘error of judgment’.

Nicola Sharp C 09983

Nicola Sharp

Partner

nicola.sharp@rahmanravelli.co.uk
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Nicola is known for her fraud, civil recovery, arbitration and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.

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