THE ILLOGICALITY AND OBSCURITY OF THE ECONOMIC TORTS

• Date: 01 December 1997
• Author: LEE ENG BENG
• Published date: 01 December 1997

Quah Kay Tee v Ong & Co Pte Ltd 1

The respondents were owed moneys by the debtor in respect of certain share transactions. After commencing proceedings, the respondents obtained an interim injunction against the debtor restraining him from disposing of or otherwise dealing with his assets. Though the injunction was not personally served on the debtor as he was outside the jurisdiction, he knew of it and, in breach of the injunction, he transferred certain shares to his father, the appellant. No consideration passed between the appellant and the debtor and the Court held that the transfer was made by the debtor with an intent to defraud his creditors. The transfer was consequently void by virtue of an old Elizabethan Statute enacted for the protection of creditors,2 a more modern form of which has since been enacted as s 73B of the Conveyancing and Law of Property Act (‘CLPA’).3

Another cause of action relied on by the respondents against the appellant was the tort of conspiracy and it is this aspect of the decision which interests this commentator. The Court of Appeal stated the position as follows:4

The tort of conspiracy comprises two types: conspiracy by unlawful means and conspiracy by lawful means. A conspiracy by unlawful means is constituted when two or more persons combine to commit an unlawful act with the intention of injuring or damaging the plaintiff, and the act is carried out and the intention achieved. In a conspiracy by lawful means, there need not be an unlawful act committed by the conspirators. But there is the additional requirement of proving a ‘predominant purpose’ by all the conspirators to cause injury to damage to the plaintiff, and the act is carried out and the purpose achieved.

While this is an admirably lucid statement of the law which is in harmony with the position in all the major common law jurisdictions,5 one cannot help feeling slightly disappointed that an opportunity to rationalise or, at least, to highlight the difficult juridical foundations of the tort of conspiracy has been missed. The critical problem is the impossibility of true reconciliation of the tort of conspiracy by lawful means with the principle6 that a lawful act cannot become unlawful simply because it is actuated by malice, ill-will or, in the language of the tort, a predominant intention to injure. It cannot be that a lawful act committed by one person becomes tortious when the very same act is committed by a combination of persons; there is no ‘magic in plurality’,7 especially in an age where huge corporations and powerful individuals rule the day. The true principle should be that, subject to a wide and flexible defence of justification, a person bears tortious liability for intentionally causing economic harm to another, and that the presence of a predominant intention to injure is one of the instances in which the defence of justification will usually not succeed.8 The crux of the tort of conspiracy by lawful means should therefore rest on the presence of a predominant intention to injure, not on the element of combination. Indeed, the element of combination should not be required at all; a rational system of law should impose liability on a single person who, out of spite, malice and disinterested malevolence,9 causes economic injury to another.10 If, on facts similar to those in Quah Kay Tee, the debtor had transferred his shares to the appellant without any predominant intention to injure the respondent but merely to protect his own assets, but the appellant participated in the scheme purely out of the ill-will he felt for the respondent, should the appellant not be made liable simply because his motivations were not shared by the debtor?

Further, the juxtaposition of the two apparent species of conspiracy should no longer be permissible in the light of other developments in the economic torts. The tort of conspiracy by unlawful means has ceased to have any identity as an independent tort, since it should be considered as having been subsumed under the larger tort of unlawful interference with trade or business. It is now a tort to intentionally use unlawful means to cause injury to or interfere with another person’s financial interests,11 whether it is the act of a single entity or a combination of persons. In other words, the element of combination is no longer required for tortious liability for intentionally-caused harm if unlawful means have been used. As such, the tort of conspiracy by unlawful means should nowadays be nothing more than an anachronistic label. Juxtaposing it with the tort of conspiracy by lawful means not only serves to give it undue prominence but also creates the false impression that there is some similarity in rationale between the two torts. It ignores the illogicality of aligning two causes of action with nothing significant in common.

Returning to the decision in Quah Kay Tee...