Pleading a Case in Unlawful Means Conspiracy: High Court Guidance

Nicola Sharp of Rahman Ravelli outlines the main issues in a case that arose from an unlawful means conspiracy claim being brought.

In Robert David Mackenzie v (1) Rosenblatt Solicitors (a firm) and (2) Rosenblatt Limited [2023] EWHC 331 (Ch), Mr Justice Fancourt gave guidance on pleading a case in unlawful means conspiracy.

This case stemmed from the August 2017 sacking of Bob Mackenzie, who had been the chairman and chief executive of the motoring organisation, the AA.

Mr Mackenzie was dismissed for gross misconduct for assaulting another director during an away day – an event that was captured on CCTV. He was, therefore, a “bad leaver” under his service contract, and stood to lose between £80 million and £220 million in the shares he held in the company under a management value participation scheme.

Following his dismissal, Mr Mackenzie brought a claim against the AA for unlawful means conspiracy, alleging that the true reason he was asked to leave was so that the remaining directors could benefit financially by compelling him to transfer his shares for minimal value. A personal friend of Mr Mackenzie instructed Rosenblatt Solicitors to fight the case.

Mr Mackenzie eventually dropped his claim for unlawful means conspiracy. He then brought to the High Court a claim against Rosenblatt Solicitors for negligent advice in relation to bringing and continuing the conspiracy claim against the AA. But the former AA chief executive was unsuccessful in the professional negligence claim he brought against the law firm. It was in this second case that Mr Justice Fancourt gave the guidance regarding unlawful means conspiracy.

The Claim for Unlawful Means Conspiracy

Mr Mackenzie’s decision to plead conspiracy had initially been a tactical one. It was a way to bring the individual directors into the litigation, drive a wedge between the directors and the company, and create a conflict for the directors in taking decisions on behalf of the company.

To make out a case for unlawful means conspiracy, a claimant must show:

• An agreement between a defendant and one or more others.
• Intention to injure the claimant.
• Unlawful acts carried out pursuant to the agreement as a means of injuring the claimant.
• Loss to the claimant suffered as a consequence of those acts.

Those are the elements summarised in the authority on the tort, Kuwait Oil Tanker v Al Bader [2000] 2 All E.R (Comm) 271

In Mr Mackenzie’s scenario, the claim was dropped because the position on loss was weak, and there was no hard evidence to support the share conspiracy. Everything would depend on disclosure - and the claim was abandoned before the stage of disclosure was reached.

The Evidential Threshold

Rosenblatt Solicitors explained to Mr Mackenzie that the conspiracy claim required proof and the evidence they had was circumstantial. The circumstantial evidence to support a conspiracy allegation was:

1. the existence of the shares
2. the terms of Mr Mackenzie’s service agreement
3. the medical opinion on Mr Mackenzie’s mental health that the board had seen and apparently rejected
4. the absence of due process regarding Mr Mackenzie’s dismissal

Mr Justice Fancourt recognised that these facts may contribute to proving the conspiracy. He gave some indication of the evidential threshold:

In my judgment, although the claim as pleaded was an optimistic one, lacking in hard evidence to support the factual allegations, it was not so hopeless that it should never have been pleaded. Nor was it fatally flawed for want of particularity.

In the judge’s view, it was a good claim in the sense that it was justified and, based on Mr Mackenzie’s subjective belief of what had happened, it would be proved upon disclosure. In disclosure, the claimant would expect to find hard evidence in the form of board minutes and emails to prove that the directors were conspiring.

Ethical Considerations in Pleading Conspiracy

Mr Justice Fancourt observed that the solicitors who acted for Mr Mackenzie in the unlawful means conspiracy claim were “not aware of recent cases in which pleading an allegation of unlawful means conspiracy has been treated as akin to making an allegation of fraud.” He said they were “unaware that pleading an allegation of unlawful means conspiracy came with any regulatory or procedural constraint.”

Throughout the judgment, Mr Justice Fancourt gave reminders of the ethical considerations in pleading unlawful means conspiracy:

• The allegation broadly equates to an allegation of fraud.
• The Indicative Behaviours 5.7 and 5.8 in the Code of Conduct (2011 version) apply to an allegation of unlawful means conspiracy. The allegation must be properly arguable and supported by reasonable grounds.
• You cannot plead a serious allegation until there is reasonable and sufficient material to support it.
• You can plead a weak case, so long as the claim is not “so hopelessly weak as not to be properly arguable”.

Key Takeaways

In this scenario, unlawful means conspiracy was pleaded primarily for the benefit of a tactical advantage. The seriousness of the allegation was perhaps under-emphasised by the solicitors in favour of an aggressive litigation strategy. While that strategy was designed to encourage settlement, it unravelled as more substantial evidence came to light.

Allegations of unlawful means conspiracy should be considered within the context of professional ethics. While the facts do not need to be fully made out with hard evidence at the outset, there should be sufficient circumstantial evidence to make it properly arguable.