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University of London International Programmes

Title: An analysis of the economic torts, Chapter 1, pp.1–16 [ISBN

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Author: H. Carty

Publisher: Oxford University Press, 2010

An Analysis of the

Economic Torts

Second Edition

HAZEL CARTY

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 1

Introduction

A. The Economic Torts

Unlike other torts,1 the economic torts, as their name suggests, have as their
primary function 2 the protection ofclaimants' economic interests, in the sense of
their existing wealth or financial expectations.3 1hey include the torts of inducing
breach of contract, the unlawful means tort, intimidation, lawful means con­
spiracy, unlawful means conspiracy,4 deceit and malicious falsehood. All ofthese
are torts ofintention. They also include passing off, one ofthe most useful of the
economic torts, which though in practice normally involving deliberate harm, is
in fact a tort ofstrict liability. Why this should be so will be explored later.
Of course, in exceptional circumstances, the tort of negligence -may perform
the function of an economic tort, so that negligent interference with economic
interests may be actionable. This has been accepted since the "decision of the
House ofLords in Hedley Byrne & Co Ltd v Heller & Partners Ltd.'
However, the traditional resistance to recovery for pure economic loss remains
the norm, the two main policy reasons for this being the fear of disproportionate
and limitless liability6 and the perceived need not to override the 'contractual
matrix' that may link the parties? And ofcourse, the rationales ofliability in the

1 Most torts have the indirect effect ofprotecting economic interests.

2 So, though eg, the tort ofintimidation can also involve physical harm as in Godwin v Uzoigwe
[1992] TLR 300, CA (see Ch 5); compensation for injury to feelings may be recoverable in the torts
of inducing breach of contract (Pratt v BMA [1919] 1 KB 244, pp 281-2); deceit (East v Maurer
[1991] 1 WLR 461), malicious falsehood (Khodapawt v Shad [2000]1 AllER 545) and probably
also in intimidation and the unlawful means tort, the protection ofeconomic interests is the prime
reason for the existence and development ofthese torts.
:J See discussion of 'economic interests' by Cane, P, Tort Law and Economic Interests, 2nd edn
(Oxford: Clarendon Press, 1996), Ch 1. -·
4 It should be noted that the nomenclature of these torts has changed following the House

of Lords' discussion in OBG Ltd v Allan [2007] UKHL 21, [2008] 1 AC 1 and Total Network
SL v Revenue and Customs Commissioners [2008] UKHL 19;.[2008] 1 AC 1174 (hereinafter 'Total
Network'). This is noted inCh 2. 5 [1964] AC 465.
6 Mirroring the fear raised by Cardozo J in Ultra mares Corp v Touche of'liability in an indeter~

ruinate amount for an indeterminate time to an indeterminate class' (1931) 255 NY 170, p 179.
7 Fleming, J G, 'Tort Law in a Contractual Matrix' 33 Osgoode Hall LJ (1995) 661. A related

issue identified by Stapleton,] in 'Duty of Care and Economic Loss: a Wider Agenda' 107 LQR
(1991) 249 is an appreciation that the claimant could have been adequately protected by alternative
means.
2 Introduction
economic torts and the tort of negligence are different. The development of the
economic torts has been guided expressly by the issue of free competition and
the need to map out the limits of permissible behaviour in the marketplace. On
the other hand, where negligence liability is imposed for the imposition of pure
economic loss the justification has usually been that there are compelling rea­
sons why the defendant should be required to answer for his undertaking to the
claimant. So, negligence liability looks to dependency; the economic torts look ~o
unlawful acts.8 Where tort's protection is concerned, neighbours are clearly a dtf­
ferent species to competitors: 'while the rules of negligence just give people "out",
as it were, like an umpire in a cricket match; these decisions [in economic tort
litigation]lay down the rules of the game, rules as a basis for action, determining
what is permitted and what is not.' 9 And at the same time, the courts are aware
that the tort ofnegligence could undermine the limited role ofthe economic torts
and impinge on competitive practice. Thus far no liability for negligent interfer­
10
ence with contract or for negligently interfering with trade has been imposed.
Therefore, there is no willingness to create a general principle ofliability for negli­
gently inflicted economic harm. It remains the economic torts that play the more
important part in maintaining commercial links and profitability between the
daimant and {potential) customers or consumers.
The·common law having no general tort of unfair competition, the economic
torts represent its chosen method to attack excessive (rather than simply aggres­
sive) competition or economic endeavour, whether through diversion of custom
or attacks on commercial links. Although most commentators concentrate on
the tort of passing off to assess the potential for a development of a tort of unfair
competition, all the economic torts merit analysis as part of this assessment, a
fact reinforced by the three conjoined appeals in OBG Ltd vAllan,u reviewed in
Chapters 8 and 13.'2 . in that tort, 17 the need for knowledge of the contract in issue, and even the need
In this role the traditional importance of these torts is to provide protection
and redress in a three-party setting for, as Weir notes 'while you can take direct
action against a person's body or property ... to ruin a person financially the
8 Or in the case ofthe torr of passing off, rhe protection of the property right in 'goodwill'.
9 Weir, T, A Casebook on Tort, lOth edn (London: Sweet and Maxwell, 2004), p 573.
1o Note the decision of the Californian Supreme Court inj:Aire Corp v Gregory 24 Cal 3d 799
(1979) where the cafe owner/renant's business was affected by the defendant's delays in work under­
taken for the landlord. The claim for negligent economic harm succeeded. As Cane notes, though
liability for the negligent performance ofservices is now include~i~ the tort, 'we should not deduce
from [that] any general principle ofliability for negligen~ly depnvmg a per~on ofsome contractual
expectancy for such a principle would be unduly subverstve of free markets. Cane, P, Tort Law and
Economic lizterests, 2ndedn (Oxford: Clarendon Press, 1996).
n [2007] UKHL 21, [200811 AC I.
12 Involving both protection against excessive competition and~~ the case oflawful means con­
spiracy (very limited) protection against attempts to curb compeuuon through cartels an~ abus_e
ofa dominant position. Apart from these torts, the action for breach ofconfidence, prevenn?g as It
does the unacceptable use of the claimant's confidential commercial information, can certamly be
regarded as a form of protection against unfair competition. See discussion inCh 13.
Ihe Economic Torts 3
action you take must be indirect, through another person, the source ofhis earn­
ings or profits'. 13 Yet at the start of the twenty-first century the debate as to the
existence and scope oftwo-party economic torts has been set alight by the House
of Lords' decision in Tota!Network, 14 a debate which may lead to the emergence
oftwo frameworks for economic tort liability and possibly the distortion ofestab­
lished areas oftort liability.
It is usual to separate the economic torts into two categories: the general torts
and the misrepresentation torts, the latter category comprising deceit, malicious
falsehood, and passing off. This categorization is argued to mirror the fact that in
the general economic torts the defendant seeks to attack the claimant, whereas in
the misrepresentation economic torts the defendant seeks to make a gain which
~roperly belongs to the claimant. 15 And indeed this reflects the facts ofthe major­
Ity of cases and w1ll shape the structure of this book. However, as will be more
fully argued in Chapter 13, it is important to analyse all the economic torts in
order to have a coherent approach to their development.
Traditionally, this categorization into general and misrepresentation economic
torts would also be reflected in the reference to the general economic torts as the
'industrial' torts, with the misrepresentation torts being seen as the 'true' trade
competition torts. Historically, the growth and uncertainty of the general eco­
nomic torts was indeed due to the fact that they commonly arise in the course of
industrial action. 16
Judi~ial hostility to trade unions or inability to appreciate the legitimacy of
collecnve pressure has mdeed muddled these torts. New economic torts have
emerged from this approach, while the tort ofinducing breach ofcontract has, in
particular, been denied a consistent application. So case law resulting from indus­
trial disputes has led to decisions which undermine the strict intention required
to prove an actual breach of contract. 18 Such an approach is hardly legitimate in
view ofthe fact that it may deny trade unions the immunities from liability that
Parliament intended they should have. 19 This process is also to be regretted for
13
Weir, T, A Casebook on Tort, above, n 9, p 572. Weir notes in Economic Torts (Oxford:
<:Iarendon Press, 1997) that 'pure economic harm and contracts are intimately connected for the
stmple reason that ~nless you steal it, inhe_rit it or get it as a social security handout, any money you
get comes to you vta contract ... economtc harm, therefore, has to do with a person's existing and
14
expected contracts'. [2008] UKHL 19, [2008] 1 AC 1174.
15
See eg Heydon,] D, 'The Future of the Economic Torts' 12 University of Western Australia
L Rev (1975) 1 and Elias, P and Ewing, K, 'Economic Torts and Labour Law: Old Principles and
New Liabilities' 41 CLJ (1982) 321, p 327.
:: See Deakin, Sand Randall,], 'Rethinking the Economic Torts' (2009) 72 MLR 519.
eg Fakoner v NUR [1986] IRLR 331, judge Henham, Sheffield County Court. The defend­
ants argued t?at th~ had 1~te~ded to harm British Rail (through the industrial action), not the
pass~nge,rs usmg .~nush R_atl, hke the claimant. However, this argument was rejected by the judge
as bemg both nalVe and dtvorced from reality'.
18
See discussion in Chs 3 and 8, especially the discussion ofthe decisions in OBG vAl/an.
19
Elias, P and Ewing, K. 'Economic Torts and Labour Law: Old Principles and New Liabilities'
41 CLJ (1982) 321. 'Parliament may give immunities to counter the existing common law liabilities
4 Introduction
unsettling the application of these torts when they are pleaded in other contexts.
So the uncertainty generated by the application of these torts within the context
of an industrial dispute is transferred to subsequent commercial or competition
cases in which these torts are raised. 20 To regard the so~called general economic
torrs as simply industrial torts is, therefore, not helpful. And indeed, the most
recent House of Lords, decisions on the general economic torts-OBG v Allan
and Total Network-in what were in fact four separate appeals concerning the
general economic torts-reveal that claimants are increasingly looking to exploit
the uncertainties in these torts in purely commercial disputes.
The berter approach (especially when artempring an overall analysis) is to see
all of these torts as protecting against the infliction of economic harm, against a
background of competition. They impinge on competitive practices generally.
So all of the economic torts set limits on commercial behaviour. Thus the main
'industrial' economic tort, inducing breach of contract, dates from a trade com­
petition case, Lumley v Gye,2 1 while unlawful means conspiracy is often alleged
against those who participate in commercial fraud (as indeed it was in Total
Network). 22 Moreover, the notion ofcompetition can be applied (in a loose sense)
not only to commercial endeavour but also to 'competition' in the industrial rela­
tions sphere. So Cane accepts that 'industrial action designed to improve wages
and conditions is a form of competitive activity in the sense that the aim of the
action is to achieve a redistribution of wealth from the employer to the employ­
ees, just as traders seek to divert wealth from their competitors to themselves'.23
B. The Hierarchy oflnterests at Common Law
In the hierarchy of interests that the ~ammon law is willing to protect, economic
interests come lower than physical integrity, property rights/enjoyment and
but the judges may in turn create new wrongs or reinterpret old principles and thereby frustrate
Parliament's intention' (p 321).
20 As in, eg, Millar v Bassey [1994} EMLR 44, CA, now acknowledged to be wrongly decided by
the House ofLords in OBG vA/lan (2007] UKHL 21.
21 (1853) 2 E&B 216. Again, Bowen v Hall (1881) 6 QBD 333, CA involved the defendant
enticing a skilled worker away from the defendant's trade rival. Interestingly, th~re are Fre.nch c~ses
being decided at the end of the nineteenth century with facts parallel to E~gh~h cases m~olvmg
inducing breach of contract, where such activity was found to be unla_wful wnhin_the unfatr com­
petition, Arts 1382-3 Code Civil. This development extended pro~ectton from e~uceme~t ofma_n­
ual servants to enticement ofskilled workers in the fashion indusrnes and entertamment mdusrnes
(like Miss Wagner). See Palmer, V, 'A Comparative Study (from a Common Law Perspective) ofthe
French Action for Wrongful Interference with Contract', 40 AmJ Comp L (1992) 297.
22 The allegation was ofVAT fraud in Total Network.
. representations
2 ;~ Above, n 3, p 472, n 72. Interestingly, Lord Shand inA/len v Flood [1898] AC 1 (a trade _d•_s­
pute case) categorized the issue before the court as 'one o~ competition i~ la?our, whic~ .. : ts m
all essentials analogous to competition in trade and to whtch the same pnnctples apply. Thts was
noted by Lord Nicholls in OBG vAl/an [2007] UKHL21 at 1144].
History ofthe Torts 5
24
repuration. As Lord Oliver asserted in Murphy v Brentwood DC'-' 'the infliction
of physical injury ro the person or property ofanother universally requires ro be
justified. The causing of economic loss does not.' And Lord Hoffmann noted in
OBG vAl/an: 'it is commonplace that the law has always been very wary ofimpos­
ing any kind of liability for purely economic loss'.26 This hierarchy of inrerests
ts very clear tn the tort of negligence. Even with intentionally caused economic
harm, however, the courts have (on the whole) resisted imposing liability simply
on the basis ofthe infliction ofintended harm.27 Dicta can be found in early cases,
indicating wide liability for competitive practices-in Keeble v Hickeringil/,2• for
example, it was stated that 'he that hinders another in his trade or livelihood is
liable to an action for so hindering him'. However, the House ofLords in Allen v
9
FlootP rejected such liability. There is thus no general torr governing rhe limits of
lawful_competition practice; rather there are a number of specific torts, liability
for which (the torts of passing off and simple conspiracy apart) depends on rhe
presence of unlawful acts.30
C. HistoryoftheTorts
Though most have their origins much earlier, the real development of all these
torts took place in the late nineteenth and early twentieth centuries. To under­
~tand this developmenr it is imporranr ro underline the choices made by the
Judges m th1s era. These were the result oftwo antithetical policies.
First, there.was a policy of judicial abstentionism, providing the base line of
these torrs. lr was a policy that followed from the decision of rhe majority of the
House ofLords in Allen v Flood.' 1
24
Carpenter, C, 'Interference with Contractual Relations' 41 Har L Rev (1928) 728 p 746 'in
gener~l, th~ interests. in lif~, reput~tion and propertf other than contracts are more full; protected
fro~ mvastons than IS the mterest to contract rights. 2 5 [1991] AC 398, p 487.
OBG vAllan [2007] l!KHL 21 at [99}. Indeed he contended that it would be extraordinary
t? ~~end the tort of conv~rs10n (as had also been argued by the claimants in OBG) to impose strict
h~btluy for pure economtc loss on the receivers in OBG who were appointed and acted in good
fatth.
•
27
Further, Deakin and Randall, abo_ve, n 16, rightly note that 'a hierarchy ofinterests is implicit
the ~urrent structure of the economtc torts: contractual rights are entitled to a higher level of
Ill
protection than general economic interests'. See Ch 3. 2S 11 East 574 p 575.
29 [1898] AC 1. '
Pru:si~~ off does requi~e how~ve_r a misrepresentation. The tort of malicious falsehood may
30
•
t~pose_lta~tltty where there ts a behef tn the falsehood, but the defendant is motivated by spite: see
dtscusston ~n Chs 10 and 13. The common law has never, however, accepted liability for harmful
that are truthful (though the developing tort of privacy may change this fact).
And see Mogul Steamship v Mc_G~egor _[1892] AC 25 ':""hen, in an action brought against a car­
31
t~!, ~~e J:Iouse ofLords refused to d!stmgmsh between fatr and unfair competition. There was no
habtltty m the absence of unlawful acts. At this time, of course, the US Congress was passing the
Sherman Act to outlaw conspiracies in restraint oftrade.

6 Introduction
That case arose essentially out of a demarcation dispute. The claimants were
workers, dismissed after Allen, a trade union official, had advised their employers
oftheir colleagues' intention to walk out if they remained employed. The walkout
would not have been in breach of contract and the claimants were lawfully dis­
missed. The trial judge found no evidence of conspiracy, intimidation, or breach
of contract. No intrinsically unlawful means were employed, therefore, by the
defendant, though the intention was clearly to harm the claimants. The claim­
ants alleged a malicious interference with their livelihood. The Court of Appeal
were willing on this basis to hold the defendants liable for maliciously procur­
ing the lawful dismissal of the claimants. However, the majority of the House of
Lords32 took a policy decision: motive of itself was not a permissible mechanism
for imposing economic tort liability.33 Lord Watson stated: 'the law of England
does not ... take into account motive as constituting an element ofcivil wrong ...
the existence ofa bad motive, in the case ofan act which is not of itself illegal, will
not convert that act into a civil wrong.' For Lord Herschell, provided they did not
resort to unlawful acts, the defendants would be entitled 'to further their interests
in a manner which seems to them best and most likely to be effectual'.
. The importance of Allen v Flood is that the majority of the House of L~rds
decided on an abstentionist role for the common law in the area of mtennon~
ally inflicted economic harm. The Court of Appeal had appeared to fa~our an
interventionist role, where intentional injury causing loss should be acnonable
unless public policy, in the guise of the defence of justification, indicated other­
wise. Interestingly, it was the interventionist view that gained favour across the
Atlantic. This was revealed in the notion of prima facie tort liability (where the
intention to cause harm is in itself sufficient unless justified) and the develop~
ment of torts that could loosely be described as the unfair competition torts. So
in Tuttle v Buck' 4 the court found the defendant, a banker, liable for setting up a
barber's shop simply to ruin a rival barber's business, run by his personal enemy.
The court based liability on malicious motive. Heydon bemoans the fact that
the English courts did not adopt this approach. He contends that the decision in
32 Lord Herschell, [1898} AC 1, pp 132-3 noted that the judges who had been called on to a~~ise
the House ofLords were in favour of Keeble v Hickeringill (1707) 103 ER 1127 and the proposmon
that 'every man has a right to pursue his trade or calling without molestation or obsrr_uct.ion ~nd
that anyone who by any act, though it be not otherwise unlawful, molest or obstruct htm ts gutlty
ofa wrong unless he can show lawful justification or excuse for so doing'.
33 And note Bradford v Pickles (1895] AC 587, where th~ H?~se ofLords hel~ that the lawful u~e
of property though inspired by malice, would not lead to habthty. Bagshaw, R, Can the Economic
Torts be U~ified?' (1998) 18 OJLS 729, p 730 notes of Allen v Flood that the majority were influ­
enced by th'eir distrust ofthe concept of malice, 'in their speeches they complained ofthe difficulty
ofdefining malice and the particular risks ofleaving this matter to juries'.
34 119 NW 946 (Minn. 1909). This case was noted by Lord Nicholls, OBG v Allan [~007]
[1895] AC 154. •
UKHL 21 at [145]. This is probablythemostfamousexample ofthis approach: an approach rejected
by Weir who comments that 'disintereste~ malevolence. is so rare that it is un~ise to develop a
rule to combat it which can be used by a dtsgruntled haudresser who has lost h1s profitable local
monopoly', Weir, T, Economic Torts (Oxford: Clarendon Press, 1997), p 73.
History ofthe Torts 7
Allen v Flood d~ni~~ the e_conomic torts theoretical consistency, rejecting malice
as the focus ofhabil1ty. It !S the aim ofthis book to show otherwise.35
The absence of unlawful means in Allen v Flood meant that the defendant was
n~t liable for the intentional economic harm. This approach is ofcourse consistent
wnh the earlier recognition of the tort of inducing breach of contract in Lumley v
Gye.36 Liability in that tort resulted from rhe use 37 of unlawful means.'" Indeed
t~is. decision was referred ~o by Lord Watson in Allen v Flood when analysing th~
hm!ted grounds upon wh1ch a defendant might be liable for injuring a claimant
through a third party.39 As is noted in Chapter 2 and discussed further in Chapter 8,
he Identified what are now recognized as the tort of inducing breach of contract
~nd the unla":ful means tort. Thus after Allen v Flood a general torr of unjustified
mterference With trade was untenable. The general theme ofthe economic torts was
that i~te~tio_n.ally inflicted economic harm, even if inspired by malice, would not
result m hab1hty unless unlawful means were used40 against the claimant.
This same abstentionist approach can be seen in the torts of deceit and mali­
cious falsehood. The development of these torts has been dictated by the caution
of the _com~on law 4 ~ i~ allm.~ing competitors to control commercial misrepre~
sentatiOns. The basic Ingredients ofthese two torts were formalized around the
end of the nineteenth century in key House of Lords' decisions. With deceit­
Derry v Peek43-and malicious falsehood- White v Mellin44-the sympathy of
the House of Lords was wuh the defendants in their endeavours in the 'hard
~or~~ of com_petition for customers', leading to the 'scrupulous limitation of
~Iabihty for misstatements ... and for unfair advertising practices'.4 51he decision
m Derry v Peek, in rejecting liability for careless misrepresentations, represented
35 And suppor~ Lord !'loffmann's rejection of Heydon in OBG v Allan, see [2007] UKHL 21
at [14]. On the pnma facJe mrt theory see Oliphant, K, 'The Srrucrure of the Intentional Torts' in
~~i~~· J W, Chamberlain, E, and Pitel, S G A, Emerging Issues in Tort Law (Oxford: Hart, 2007),
36 (1853) 2E&B 2~6. ~ore, however, Lord Herschell in Allen vFlood[1898] AC 1, p 123: 'I am
not concerned now to mquue whether the decision in Lumley v Gyewas right. , . there are. , , argu­
ments the other way and I must not be understood as expressing an opinion one way or the other
whether such an action can be maintained.' '
. 37 Thougq in this tort the defendant procures such unlawful means rather than commits them
h1mself.
38 So it was acknowledged by Lord Herschell that there would be no liability for inducin
an~~he~ not to contract with the claimant: [1898] AC 1, p 121. 39 [1898] AC 1, p 96. g
. Etther by the defendan~_or through a third party. Weir, Casebook, above_, n 9, p 604 notes the
Jm~orta~ce of Allen ~Flood It holds that, whatever morality may say, in law one is free to beggar
ones ~etghbour prov1ded one neither does anything unlawful oneself nor gets anyone else to do
anythmg unlawful'.
41 Naresh, S, 'Passing-off, Goodwill and False Advertising: New Wine in Old Bordes' (1986)
CLJ 97, p 120. .
42 As Parker~ in Cundey v Lerwill & Pike (1907-8) 24 TLR 584, p 586 stressed: 'it is not ever
false representation that a firm has a right to restrain.' 4 3 (1889) 14App Ca 337 y
5
44
45 Cornish, W, and Clark, G DeN, Law and Society in England 1750-1950 (London: Sweet &
M~ell, 19~9), p 329, n 41. Lord Diplock in Advocaat [1979] AC 731 noted that 'the market in
wh1ch the actton for passing off originated was no place for the mealy-mouthed'.
 History ofthe Torts 9
Introduction
8
dicta which made dear judicial unwillingness to participate in the formula­
an instinctive focus on contract as the main mechanism for protecting financial
tion of economic policy. Thus Lord Davey asserted:54 'public policy is always
interests,46 while White v Mellin was part of a wider policy to deny responsibil­
an uns~fe and treacherous ground for legal decisions.' This, then, appears to be
ity for determining what is fair and unfair in competition. ~ord, Hersc~ell
47
the mam reason w~y. no tort of unfair competition was allowed to develop.ss
stressed in that case that the courts of law should not be turned mto a machm­ Rat.her, the co~petltlve process was protected in a negative way:S6 the judges
ery for advertising rival productions by obtaining~ judicial determ~na.tion which dectded to avOid regulating such activities and instead to react only to clearly
of the two was the better'. Thus the tort of decett was severely ltmtted by the
excessive economic behaviour.
need to prove fraud, just as the tort of malicious falsehood was emasculated by But.what of the tort of passing off? It developed in the early industrial period
the requirement of malice and special damage. Moreover, mere puffs and self­ when lt became apparent that the protection of trade names had become a com­
commendation would not render the trader liable.
mercial need. 57 Equity played a dominant role in its development as injunctions
What, then, is the reason for this abstentionist policy? Cornish notes that
were the favoured remedy in this area. The effect of this was that it was refash­
a 'complex set of justifications and underlying motives seem to have been at
ioned from a tort based on deceit into a strict liability tort, with assumed dam­
work'.48 There is of course the natural tendency of the common law 49
to develop

slowly by analogy, rather than by generalized rights or liabilities. Further, a
policy of supporting competition is also apparent at tim.es ~n t~e d~velopment
of these torts.so However, as Letwin has noted, the mam JUsttficauon for the
abstentionist policy was that the judges did not wish to assume the role of con­51
trolling aspects of the economy: either by curbing aggressive competition or
52
\;>y automatically prohibiting the exclusion of competition. This is clear_ from
the middle of the nineteenth century onwards, especially in developments m the
restraint of trade doctrine53 and the tort of conspiracy. Indeed, there are famous
46 Lord Bramwell, (1889) 14 App Cas 337, p 347: 'to found an action for ~a.mages t~e~e must
be a contract and breach or fraud.' Stevens, R, 'Hedley Byrne v Heller: Judtctal Creattvtty and
Doctrinal Possibility' 27 MLR (1964) 121, p 121 notes that the case represents 'the strongest form
of nineteemh~century laissez~faire individualism'. . than the standard allegation ofdiversion ofcustom.
47 Lord Herschel! LC, [18951 A~ 154, p 164 rejected li~bilit~ for untrue ~elf~co~men~auon as
this would lead to the courts being constantly employed m trymg the relauve ments of nval pro~
ductions'. At this time Fry LJ in Mogul Steamship v McGregor (at Court ofAppeal level) ;amended:
'to draw a line between fair and unfair competition ... passes the power of the courts (1889) 28
QBD 598, pp 625-6.
48 Cornish, W, and Llewelyn, D, Intellectual Property: Patents, Copyright, Trade Marks and
AlliedRights 6th edn (London: Sweet & Maxwell, 2007), p 15.
49 See White v Mellin [1895] AC 154, p 164. And note the hierarchy ofinterests: protected by the
50 Jones, F D. 'Historical Development of the Law of Business Competitio~ 35 Yale LJ
common law, noted above. ,
(1925-6) 905; continued 36 Yale LJ (1926-7) 351. A preference asserted early m the Cas_e of
Glouster Grammar School (1410) YB 11 Hen. This policy is, however, not a~ways appa~ent espectally
in relation to cartels in the period leading up to the First World W,ar. Th~s was a penod t~at saw a
growth of trade associations and restrictive agreements such as pnc:~fixmg, market~shanng, ~nd
quota agreements. It was in this period that the House of Lords dectded that carrels, as consptra­
cies, could be justified: Mogul Steamship v McGrer.or ps89) L~23 QBD 598, p 614, w~:re Bowen
LJ acknowledged the legitimacy of a party pursumg to the bttter end a war of competttton waged
age.58 Thus unlike deceit and malicious falsehood, passing off came to focus on
the effect of the misrepresentation, rather than the fault of the defendant. The
fact that this occurred at an earlier date than the critical development of deceit
meant. that equity could .fa~hion the tort, a process that was not allowed to hap­
pen wtth the tort ofdecett Itself.59 So by the end ofthe nineteenth century when
the tort o~ passing off had established itself as a strict liability tort of great use
to rrade~s .tt was unaffected by th~ restrictive (common law) approach to deceit
and maltcwus falsehood. Indeed, this era saw its continued development.60 The
House of~or.ds in Reddaw_ay v Banham 61 acknowledged its potential to protect
even descrtpnve terms agamst customer confusion. This period also saw claim­
ants beginning to use the tort of passing off where they were not competing with
the defendants and where the basis of damage was injury to reputation,62 rather
54 ]anson vDriefontein Mines [1902] AC 484, p 500.
55 Acco.rdin~ to Cornish an~ Llewelyn, above, n 48, p 17, 'over recent decades there has been
so~~ modtfic~no~ ofthe couns approach, but when compared with developments of unfair com­
petm?n d~ctrme. m parts: of Western Eu;ope and the United States, the continuing attraction of
late Vtctonan attitudes remains apparent.
56 Flemi?g•. J, The LawoJTorts, 9th edn (Sydney: LBC Information Services, 1998), p 766 com­
ments that m tts heyday the Allen v Flood rule-that malice per se does not create an actionable
wrong even. though in.tentional economic harm is visited on the claimant-operated in a policy
ne~;ral fashiOn, sometimes promoting free competition, sometimes monopoly.
Cornish and Llewelyn, above, n 48, pp 606-8.
58 The development could have been otherwise: cf Cellular Clothing v Maxton & Murray [1899]
AC 326 where the House of Lords were not happy with the final decision in Reddawa!Y v Banham
[1896] AC 199.
5 ~ So in Derry v Peek (1~89) 14. App Cas 337: p 350, Lord Bramwell stifled earlier moves by

in the interests oftheir own trade'.
51 As the torts of deceit and malicious falsehood gained their modern form in the latter part of
the nineteenth century, parallel to the rise ofthe distributive trades, there are dicta to the effect that
trade rivalry was to be encouraged. . , . .
52 Letwin, W, 'The English Common Law Concerning Monopoltes 21 Umv Chtc LR (1954) 3?5·
53 So in Nordenfelt v Maxim Nordenftlt Guns and Ammunition Co [1893~ Ch 630 the ?octnne
of restraint of trade (originally in essence an attack on the power of the gutlds and the kmg) was
tempered by the notion of a permissible 'reasonable' restraint. ·
~quuy to extend the protecuon agamst careless misrepresentations as the imposition ofsuch liabil­
ttywould make 'mercantile men cry out'. See discussion of Derry v Peek inCh 9.
~ 0 It may be that the severe limits placed on the tort ofmalicious falsehood might have prompted
claimants to test whether the tort of passi~g off could be made to fill a gap in liability (a suggestion
supported by Wadlow, C, 1he Law ofPassmg-ojf Unfair Competition by Misrepresentation, 3rd edn
(London' Sweet and Maxwell, 2004), p 32). " [1896] AC 199.
62 Or exposure to liability as in WaltervAshton [1902] 2 Ch 282.
 Introduction
10
Having achieved a useful role by the start of the twentieth century-as was
63
acknowledged by the House of Lords in Spalding v Gamage -it has been the
subject of expansion ever since. In particular, the 1970s witnessed a massive
4 the nineteenth century, trade unions were criminal conspiracies both at common
extension ofthe tort in Erven Warnink BV v Townend & Sons (Advocaat),6 in line
with the consumer~centred approach of Parliament at the time. From protect­
ing against source misrepresentations, the tort now also protects against product
misrepresentations. . .
Though the above explains the separate development and umque charactens­
tics of the tort of passing off within the economic torts, that tort does not under­
mine the abstentionist policy of the common law. The parameters of the tort of
passing off have been set by caution, lest the judges be drawn too deeply into the
competitive process. The hopes of some commentators who saw the potential m
Advocaat65 for the development ofa wide economic tort of misappropriation were
dashed by the Privy Council a year later in Cadbury Schweppes Pty v Pub Squash
Pty Ltd.•• This indicated that there is still judicial opposition to the creation of
wide 'competition torts'.67 Thus passing off has limits provided by the need to
show an existing customer base and a misrepresentation likely to confuse cus­
tomers when making their purchasing choice.
· This first policy has provided the general approach to the development of the
economic torts with only a limited role for the judges. 'In the main, the courts
were insisting that ... the common law would not hold activities to be wrongful
merely because they must injure others.' 68 The result was that no general prin­
ciple of unfair competition emerged. This is in marked contrast to most other
European countries and (to an extent) the USA.69
However, a separate policy also shaped these torts. This second policy arose
0
from the presence of judicial hostility to the growth of the trade unions/ even
after the decision of the House of Lords in Allen v Flood which had accepted
that industrial action could be lawful, though aimed at harming the claimant.
That hostility was replaced in the twentieth century by concern over the power
wielded by trade unions.71 In no small measure this policy has contributed to the
chaos of these torts.
63(1915) 84 LJ Ch 449, HL. 64 [1979] AC 731, HL, discussed in detail inCh 11.
" Ibid. " [1981]1 WLR 193.
67 Indeed, limits on liability for misrepresentations were acknowledged even in Advocaat itself,
Lord Diplock advising against the risk of'hampering competition. by pr?viding civil re_m~dies to
every one competing in the market who has suffered damage to h1s busm:ss or goodw1ll m co~­
_seque?ce of inaccurate statements of whatever kind that may be made by nval traders about theu
wares. , l · · •
68 Cornish and Clark, above, n 45, p 329. The authors also point out the scrupulous im1tauon
ofliability for misstatements in Derry v Peek (1889)14App Cas 337 and for unfair advertising prac­
tices in White vMellin [1895] AC 154.
69 See Cornish and Llewelyn, above, n 48, pp 14-17.
70 See generally Cornish and Clark, above, n 45, pp 309-36 (esp p 320 onwards).
71 Lloyd, D, 'The Right To Work' 10 Current Legal Problems (1957), p 41 and see DenningLJ
in Lee vShowmen's Guild [1952] 2 QB 329.
History ofthe Torts 11
Thus a stimulus towards developing new ec~nomic torts appeared to be trig­
ge-red by Parliament's growing acceptance ofthe role ofthe trade unions and their
use of collective action as a balance to managerial power. During the first part of
law and under statute.72 Moreover, their activities were subject to prosecution for
such vague offences as 'molestation' and 'obstruction'. As Parliament came to rec­
ognize the legitimacy of the trade unions and their activities, they were legalized
and the threat of criminal sanctions removed by the Trade Union Act 1871 and
the Conspiracy and Protection ofProperty Act 1875. However, the judges reacted
by transferring conspiracy liability from the criminal law into the civil law.
Thus the tort of conspiracy developed two strands: unlawful means conspir­
acy, a combination to use unlawful means (often involving another economic
tort) in order to harm the claimant and 'simple' or lawful means conspiracy,
where the presence of the combination to harm rendered the defendants poten­
tially73 liable, despite no use of unlawful means. In this way Lord Halsbury, who
had been in the minority in Allen v Flood, circumvented the logic of that case
in Quinn v Leathem?4 Here the facts of the case were similar to those in Allen v
Flood but with the additional ingredients of combination and threats. By dis­
tinguishing the fact of combination in Quinn,75 the House of Lords was able to
impose liability for intended harm, even though no unlawful means were used
and in so doing provided the 'seeds ofconfusion'76 For, as Elias and Ewing point
out 'many statements in Quinn v Leathem are simply irreconcilable with Allen v
Flood and do support the view that it is a tort deliberately to harm another with­
out justification'.77
Indeed, the report of the Royal Commission on Trade Disputes and Trade
Combinations in 190678 noted that the coexistence of Allen and Quinn had
72 For a useful summary ofthe historical background see Wedderburn, K W, The Worker and the
Law, 3rd edn (London: Penguin, 1986).
73 Where simple conspiracy is alleged liability can be avoided by showing that the predominant
purpose behind the combination was 'legitimate'. See Ch 6.
7 [1901] AC; 495. However, it has to be accepted, as Heuston, R F V, has noted in 'Judicial
~rosopogr.aphy 10~ L_QR (1986) 90 that it is something of an oversimplification to see certain
judges as mterventl~ntst and others as abstentionist. Thus though Lord Halsbury did dissent in
Allen v Flood, he gamed the concurrence of Lords Shand, Macnaghten, and Davey in Quinn v
Leathem, all ofwhom had been in the majority in Allen v Flood and all of whom in Allen did not
even go so far as to give Lumley v Gyewholehearted support. _
75 This is the accepted explanation of Quinn v Leathem: see Ware and De Preville Ltd v Motor
Trade A"ociation [1921] 2 KB 40, pp 90-1 (Atkin LJ) and Sorrell v Smith [1925] AC 700, p 723
(Lord Dunedm), pp 748-9 (Lord Buckmaster). However, note that in Rookes v Barnard [1964] AC
1129, Lord Diplock (p 1216) doubted whether 'even today it is possible to say with certainty what
Quinn v Leathem decided'.
76 P~r Lord Hoffmann OBG v Allan [2007] UKHL 21 at [15). Cornish and Clark, above, n 45,
p 330: never was the law more nakedly the partisan of masters against men.' There was a double
whammy: subsequently the House of Lords deemed trade unions to have sufficient legal personal­
ity to be sued: TaffVa!e Rry vASRS [1901] AC 426.
77 Elias, P, and Ewing, K, 'Economic Torts and Labour Law: Old Principles and New Liabilities'
78
41 CLJ (1982) 321, p 324. 1906, Cmnd 2825, Sir Geoffrey Lushington.
 Introduction
12
created a situation 'which is bound to produce contradiction and uncertainty'.
So in 1903, in the case of Gib!an v NALUGBI,1 9 the Court of Appeal were still
debating whether the violation of the right to trade was a possible tort (such a
proposition had indeed found favour with the majority of the judges called in to
advise the House ofLords inA!Ien).80 Again, Lord Loreburn, commentmg dunng
the Parliamentary debates over what became the Trade Disputes Act 1906 said
revealingly of Quinn v Leathem: '[until then] there never had been any attempt
to make out any civil liability for conspiracy ... [then] came the new world and
82
the new ideas.'8 1 At the same time there was a rapid development of the tort
of inducing breach of contract. Originally believed to apply only to contracts of
service, by the early part of the twentieth century it was acknowledged to apply to
83
all contracts, posing a threat to the legality ofsecondary industrial action. And
more generally wide dicta in Quinn muddled the evolution ofwhatwere two sep­
arate economic carts viz the torts of inducing breach and unlawful means. 1lus
muddle continued throughout the twentieth century due in large part to judi­
cial interest in controlling trade union action. As Lord Hoffmann commented in
OBG v A!!an 'the close proximity of the circumstances in which [the two separate
torts] could be committed, particularly in industrial disputes, may explain why
84
rliey were often thought to be manifestations of the same principle'. This is dis­
cussed further in Chapter 2. 85
Parliament reacted to these developments by providing immllnities from the
emerging civil liability, in the Trade Disputes Act 1906. This process-the judges
extending liability and Parliament reacting by restoring (or at~erilpting to resto:e)
the status quo-is indeed the leitmotiv of this period unnl the Conservative
administration that took office in 1979. There had been interludes of non-inter­
vention by the courts, particularly around the war years, typified by Reynolds v
Shipping Federation 86 in 1924 (which accepted the legitimacy of the closed shop)
and Crofter Handwoven Harris Tweed Co Ltd v Veitch 87 in 1942 (which ~ccepted
that a combination to improve wages and extend trade umon membership could
be legitimate). However, even of these Lord Wedderburn comments: 'the excep­
tional "non-interventionist" decisions of judge-made law have tended to occur
" [1903)2 KB 600. . .
so And echoes of such a doctrine can be found in Lord Denning's JUdgments: see espec1ally Ex
parte h/and Records [19781 Ch 122. " 79 (1906) 166 Pad De~ Col693.
82 Note the comment in Cornish and Clark, above, n 45, p 329: the nouon of such a tott had
emerged in Lumley v Gye (1853) 2 E&B 216, but it had scarcely flourished ... yet in Temperton v
Russell [1893]1 QB 715, a secondary trade boycott by a t~ade union, it was.accepted withi? the
canon ofcommon law torts, whether the contracts in quesnon were commercial or for labour.
83 iewhe.re the trade union attacks the claimant trade dispute employer by means ofthe employ­
ees of his commercial partner. 84 OBG vA!lan [2007] UKH~ 21 at [21]..
85 Note that this set the scene for labour law to this day: trade umons and thetr members do not
have the right to take industrial action; rather they have immunities from liability in circumstances
86
defined by statute. [1924] 1 Ch 28.
" [1942] AC 435. HL.
History ofthe Torts 13
when the interests of a union coincide, rather than conflict, with the predomin­
ant interests ofemployers and the State.'8 8
So, in the 1960s and 1970s the further growth and development of these
torts sprang from judicial alarm at the disruption caused by trade union activ­
ity (and indeed by unofficial action).89 In 1964 the House of Lords created a
new tort of intimidation out of an obscure tort that first appeared in the seven­
teenth century,90 a tort that as a result imposed liability for threatening to break
a contract. This decision of the House ofLords in Rookes v Barnart/9 1 was accord­
ingly described by Kahn-Freund as 'a frontal attack upon the right to strike'? 2 (It
should also be noted that the abstentionist approach ofA!len was still not conclu­
sively accepted by Lord Devlin who stated in Rookes: ']do not think it is necessary
for the House to decide whether or not malicious interference by a single person
wirh trade, business or•employment is or is not a tort known to law ... I mean
Quinn v Leathem without the conspiracy'),.,
Parliament reacted by providing immunity from this tort in the Trade Disputes
Act 1965. However, as Deakin and Randall point out 'Rookes initiated an expan­
sion ofliability which reached its peak in the early 80s'? 4 So, the continued judi­
cial mistrust of trade union power and concern over the scope of their statutory
immunities led to further new economic torts being developed or suggested-in
particular the torts of inducing breach of statutory duty9 5 and interference with
contractual relations.96 Such torts were methods of circumventing the then
extensive statutory immunities that peaceful industrial action attracted. As the
various judgments ofthe Court ofAppeal judges in AssociatedPorts v TGWU (the
Docks Dispute litigation of 1989) revealed, there were still those who sought an
interventionist expansion ofthis area ofthe law.9 7
Although trade union dispute immunities still exist, the traditional role
of Parliament as restorer of the status quo disappeared with the Thatcher
Administration of 1979 onwards. A series of statutes limited the application of
88
Wedderburn, 7he Worker and the Law, above, n 72, p 94.
89 In this era the growing concern about the number of unofficial strikes led co the establish­
ment of the Donovan Commission which reported in 1968 (Royal Commission on Trade Unions
and Employers' Associations, Cmnd 3623). 90 See Ch 5.
91 [1964] AC 1129. 92 14 Federation News (1964) p 30.
93 [1964] AC 1129, pp 1215-16.
_
94
Deakin and Randall, above, n 16. They comment that Rookes marked a turning point, per­
ceived to have opened up 'new avenues ofliability'.
95 Meade v Haringey [1979] 1 WLR 637, CA; Associated British Ports v TGWU [1989] 1 WLR
939 (reversed on other grounds). This is discussed inCh 3.
Howarth, ~, 'Agains_t L_uml&J v Gye' (2005) MLR 195, p 200 notes that the main driving
96
for~e for expandm? the ~rmc1ple m Lumley was the search by employers for actions to sue trade
umons for mdustnal action beyond strikes such as boycotts and secondary action (in the latter
case, especially where force majeure clauses in the ultimate supply contract were involved, as was
the case in Torquay Hotel v Cousins [1969] 2 Ch 106 and Merkur Island Shipping v Laughton [1983]
AC570).
97 See both the Court of Appeal and House of Lords' decisions in Associated British Ports v
TGWUl1989] ICR557.
 Introduction
14
the immunities. The result was that the general economic torts and their applica­
tion to industrial disputes became a critical matter for judicial debate, given that
untill980 it would be assumed that even if economic torts arose in a dispute, the
wide statutory immunities that then existed under the Trade Union and Labour
Relations Act 1974 would apply. It was in this new era that the courts accepted
the economic tort of unlawful interference with trade (now called the unlaw­
ful means tort), though as will be seen in Chapters 2 and 3, with inadequate
analysis. . . . .
This twentieth-century resurgence of an mrervenuomst pohcy, therefore,
accepted the torts of simple conspiracy (now termed lawful means conspiracy)
.and intimidation; unsettled the development of the tort of inducing breach
of contract and was content to leave imprecise what was (wrongly) termed the
'genus' tort of unlawful interference with trade.98 Of course, the power of ~he
trade unions waned towards the end of that century, so that the development of
the economic torts was no longer a vital issue in the struggle between the indus­
trial partners.99 But inevitably, the 'muddled' state _of t~e economic torts • ':as
100
seized upon by aggrieved parties in purely commercial disputes. So the begmnmg
of the twenty-first century saw the House of Lords confronted twice in the spa~e
Ofl8 months by claimants demanding an interventionist application ofeconomic
. f h ,. d . 'IOI
torts in exotic claims, makmg use o t ese torts m new an creative ways·
As O'Sullivan comments: 'these torts have recently experienced something of a
resurgence, finding a new role in resolving the boundaries of commercial ethics,
of what can and cannot be done to further one's own economic interests at the
expense ofcompetitors'. 102 •.
Remarkably, in a parallel with the tension between the policies apparent
in Allen v Flood and Quinn v Leathern, the two different panels in these recent
cases-OBG v Allani 0 3 and Total Networki 04-also revealed different policy
agendas for these torts. So in OBG v Allan (broadly)I 05 an abstentionist policy
98 For a fuller discussion see Ch 4. , .
99 However, on the implications of OBG vAllan for labour disputes see Simp~on, ~: Ec.onomtc
Ton Liability in Labour Disputes: the poten_tial impact of t~e ~ous~ of Lords dectston m O,BG
vAllan', ILJ (2007) 468. Noting the restrictive sweep oflegtslatton smce 1980 he concludes t~e
result [is] that the risk ofindustrial action attracting civil liability on the part ofthose who organtse
it has steadily increased over the last three decades' (p 468). .
100 So referred to by Lord Hoffmann in OBG vA!lan [2007] UKHL 21 at [22], havmgalready
noted that the 'seeds of confusion' were sown by Quinn v Leathem {at [15]);
tot Matthews, M H, Morgan, J and Cinneide, C, Hepple and Matthews Tort Cases andMatertals,
6th edn {Oxford: Oxford University Press, 2008), p 864.
102 O'Sullivan, J, 'Intentional economic torts, commercial transactions and personal habtltty,
24journal.OfProfessional Negligence (2008) 164.
103 Lords Hoffmann, Nicholls, Walker, Brown and Baroness Hale.
104 Lords Walker, Neuberger, Scott, Mance and Hop7. .. .
pic v One In A Million [1999] FSR 1; Arsenal FC Pic v Reed and Laddie J in Irvine v Talksport Ltd
105 Lord Nicholls clearly had some reservations, nottng the cnttcs of thts approach and com­
menting 'these criticisms have some force' OBG v Allan [2007] UKHL 21 at [145]-[148]. And
though he states that the courts are not writing on ~~lean sla~e ('En~lish _courts have long recog­
nised they are not best equipped to regulate compenttve pracuces ... ) thts lack of whole-hearted
Conclusion 15
was followed, Lord Hoffmann noting that though some regret the failure of
English law to accept bad motive as a ground for liability, 'we are better off with­
out it', underlining the traditional reluctance to become involved in 'devising
rules offair competition'.IOG While in Total Network (again, broadly) an interven­
tionist agenda was supported-indeed taking these economic torts even beyond
the Quinn framework into the uncharted (and radical) concept oftwo-party eco­
nomic torts. This development (discussed more fully in Chapters 7 and 8) has
enormous potential consequences for tort law generally.
D. Conclusion
Interesting though the history and development of the economic torts may
be, the real issue for academics and practitioners alike must- be their rationale
and potential. The economic torts play only a residual role in the regulation of
competition 107 but it is a role that claimants seek constantly to increase. The
tension in the House of Lords, revealed in the conflicting policies apparent in
OBG v Allan and Total Network, means it is more vital than ever before to pro­
vide clarification. Moreover, though the torts ofmalicious falsehood and deceit
appear limited, claimants have elicited some support for the extension of the
tort of pas~ing off,.including in such developments tantalizing dicta equating
that tort directly to an action for unfair competition. 108 Such uncertainty can
only lead to further chaos in this area-where litigation often starts and ends at
the interim stage-unless the courts clarify and adhere to a clear rationale for
economic tort liability generally. For at the heart of the uncertainty surround­
ing these torts is the possibility of uncontrolled judicial expansion of such
liability, at odds with the caution of the past with its recognition of 'the eco­
nomic advantages of competition'. 109 1he ultimate question is as to how far we
should move in the direction of a policy to protect against unfair competition
and excessive economic behaviour. We need a clear answer to the question Lord
Nicholls posited in OBG v Allan, namely: what 'goes' in the field of economic
rivalry? 110
support for the abstentionist policy is, it is submitted, reflected in his view as to what should be
. capable ofconstituting 'unlawful means'. For a fuller discussion see Ch 8.
"' [20071 UKHL 21 at [14] and [56], respectively.
. .. , 107
To paraphrase Weir, T, 'Chaos ~r Cosmos? Rookes, Stratford and the Economic Torts' CLJ
(1964) 225, p 236, they define the forbtdden short cuts in the economic rat race.
• ~ From intellectual property judi<:ial heavyweights such as Laddie J and Aldous LJ when they
1 8
mdtcate the need to embrace the evoluuon ofthe action. See Aldous LJ in British Tekcommunications
[2002] EWHC 367. See discussion inCh 12.
"' Lord Nicholls, OBG vAl/an [2007] UKHL 21 at [142].
"' OBG vAl/an [2007] UKHL21 at [143].
16 Introduction

The aim of this book is to provide a blueprint for understanding this area of
the common law. In order to suggest a framework for these torts, an analysis
ofeach ofthe established torts is necessary. In addition the possible application of
the economic torts to the infliction of two~ parry harm will be examined. It will
be seen that this analysis is not without its difficulty as a complex knot of issues
needs resolving. Indeed, Heydon cautions, 'there cannot be any account of the
economic torts which is comprehensible without effort'. However, it is hoped that
the following will prove both comprehensible and satisfactory.