Economic Torts 2

Introduction 2

Problem question: 2

(a) Policy reasons for or against liability 2

(b) Making arguments based on precedent and policy 3

Inducing breach of contract 5

Lumley v Gye (1853) 118 ER 749 5

OBG Ltd v Allan [2007] UKHL 21, [2008] 1 AC 1 6

Facts 6

Elements of the tort 6

Underlying rationale and principles 9

Application to problem question 9

Causing loss by unlawful means 11

Tarleton v M’Gawley (1794) Peake 270 11

OBG v Allan (HL) 11

Elements of the tort 11

Underlying rationale/principles/policies: 13

Examples 14

Unlawful means vs inducing breach of contract 14

Lord Nicholls on unlawful means (minority) 14

Problem Question 15

Unlawful and lawful means conspiracy 16

Lawful means conspiracy (conspiracy to injure) 16

Crofter Hand Woven Harris Tweed Co Ltd v Veitch [1942] AC 435 (HL) 16

Facts 16

Issue 16

Rule 16

Application 16

Unlawful means conspiracy 17

Revenue and Customs Comrs v Total Network [2008] UKHL 19 17

Facts 17

Issue 18

Rule 18

Economic Torts

Lecture 21: (12/05/20)

Introduction

Problem question:

Mila is a hairdresser in Dunedin. Due to the Covid-19-related national lockdown, she has been unable to work for the past few weeks. The Government has now announced that, following a shift to Alert Level 2, hairdressers will be allowed to work again provided they are wearing appropriate PPE (personal protective equipment). Mila had seen this coming and had acted quickly: a few weeks ago already she had placed an order for PPE with Protective Clothing and Equipment Ltd (PCE) via TradeMe. Mila is glad she acted so quickly: the price for PPE has climbed massively since then, and in fact, stocks all over the country appear to be depleted. Unfortunately, her order has not yet been delivered and she is getting increasingly nervous. She contacts PCE, who tells her, with surprising honesty, that they had sold her PPE to Beauty First Ltd, a luxury beauty salon in Queenstown, because they had offered ten times the amount that Mila had paid. PCE said that they had told Beauty First Ltd that their last remaining set of PPE was earmarked to be delivered to a customer in Dunedin but Beauty First had explained to them that they would be stupid not to breach that contract and accept their offer instead. PCE offered to refund Mila’s payment.

Mila is distraught. Without the PPE she will not be able to return to work and will probably go out of business. A friend tells her that she would be able to sue PCE for breach of contract and claim damages for the economic loss she has suffered. But when Mila gets in touch again with PCE nobody answers the phone – the business seems to have disappeared. She is now wondering whether she can have recourse against Beauty First instead.

The partner you work for asks you to write an opinion on whether Beauty First could be held liable (addressed to the partner, not the client). Assume that PCE did, in fact, breach their contract with Mila by failing to deliver the PPE.

(a) Policy reasons for or against liability

Assume that there is no precedent. How would you argue as a matter of first principles that Beauty First Ltd did/did not commit a wrong? In other words, what are the reasons of policy or principle for/against liability?

• Court should develop a new tort holding Beauty First Ltd to account for the loss Mila has suffered as a result of Beauty First’s conduct.

• E.g. climate change tort. Court must look at relevant principles and policy supporting the creation of such a tort.

Privity of contract – Beauty First was not a party to the contract, so it should not be held liable for PCE’s breach.

• A claim for breach of contract against PCE already provides Mila with damages as a remedy.

Sanctity of contract – we should be protecting and upholding contracts. If we create liability on behalf of Beauty First, we are offering double protection of a contract.

• In practice, this is a good idea because the party which actually breached the contract (PCE) might not have any money or may have disappeared.

• This renders Mila’s right to claim damages as meaningless.

To what extent can we say that Beauty First’s conduct is blameworthy?

• They arguably convinced or encouraged PCE to breach their contract with Mila

• Wrongful – Beauty First participated in PCE’s breach of contract, they should be partly responsible for the loss that has occurred.

• E.g – criminal law on parties to offences.

• Beauty First’s conduct is morally wrong and tortuously wrong because it participated in PCE’s breach of contract.

The contract is like property – law offers protection against interferences with property.

• Performance of contract is analogous to a property right

• Beauty First’s conduct amounts to taking away a form of property right from Mila.

• The law should also offer protection against interfering with right to contractual performance?

Would the Court interfering amount to improper interference with the free market?

• The price of goods is determined by market forces such as supply and demand

• If Mila had wanted to retain her right to the PPE, she should have paid more money

• It is unhealthy for competition for a Court to say that Beauty First should not have offered what it did for the PPE.

• However, what about fair play and a fair market?

Should the matter be left to Parliament?

• This is a matter of competition and what is fair in terms of commercial practices

• This is something Parliament should regulate, Courts are not well placed to make such policy decisions.

(b) Making arguments based on precedent and policy

Assume that, after lots of digging, you find some very old cases that held that “a person who knowingly procures a servant to leave his master’s service committed a wrong”. These cases responded to a labour shortage following the Black Death in the 14^th century.

There are 4 arguments to make:

• Direct application of the rule to the facts

• Application of the rule by analogy to the facts

• Distinguishing the rule by reference to the facts

• Overruling/declining to follow...

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