There are two different types of conspiracy: lawful means conspiracy and unlawful means conspiracy. This note considers the elements of both, as well as the advantages and disadvantages of bringing a conspiracy claim.
Conspiracy arises where there is an agreement between two or more parties (including corporate bodies) to take action that results in financial loss or damage being caused to another person.
There are two different types of civil conspiracy:
There are certain elements that are common to both:
There must be an agreement between two or more persons to injure another: given the nature of conspiracy, it is not necessary for there to be an agreement in the contractual sense. This limb can be satisfied by something far less formal, including a tacit understanding between the conspirators.
Concerted action: unlike criminal conspiracy, the agreement to injure is not enough on its own to establish liability. There must be concerted action, i.e. the conspirators must act on their plan and carry out some deliberate act(s) and / or omission(s) to further it. The action may be active or passive.
For example: a director and minority shareholder (“A”) uses the company’s name to carry out money laundering. The co-director and majority shareholder (“B”) was aware of this, but chose not to act to prevent it. B will be liable for conspiracy, for failing to stop the activity.
Compensation for financial loss: the concerted action of the conspirators must have caused loss or damage to the Claimant, otherwise there can be no claim for conspiracy.
Lawful means conspiracy exists where:
There is no requirement for a use of unlawful means. The agreement to act in concert itself creates the unlawfulness.
However, in practice, claims for lawful means conspiracy are rare. It will only amount to lawful means conspiracy where the predominant purpose was to injure the Claimant, which can often be difficult to prove. Given the very nature of civil fraud, a Claimant will often be able to rely on some sort of unlawful means instead.
Unlawful means conspiracy is much more common. It occurs where two or more people act together unlawfully, intending to damage a third party, and do so.
The essential elements are:
Unlike lawful means conspiracy, a Claimant does not need to show that the conspirators’ predominant purpose was to injure another person. It is sufficient to show that they had an intention to do so.
This means that intention can still be established in situations where the injury to a Claimant is as a means to an end. For example, it has been held that an agreement to facilitate a company’s liquidation in order to procure its breach of contract and avoid claims, established the necessary intention to injure.
Further, a Claimant does not need to prove that the conspirators who engaged in an unlawful means conspiracy, knew that their actions were unlawful in order to establish a claim (The Racing Partnership Ltd and others v Sports Information Services Ltd  EWCA Civ 1300).
The first step in a conspiracy claim will often be preparing a formal Letter of Claim. This can be used as a strategic tool for a Claimant, to gather as much information about the case and to support any inferences that might later be drawn. The response that a Claimant receives might also be telling. If there is an element of evasiveness, this could point towards evidence of wrongdoing and could later be drawn to the attention of the Court.
In some circumstances, it might not be appropriate to prepare a Letter of Claim, particularly if the matter is urgent and there is a need to act quickly. In these circumstances, there might be other forms of interim relief available including:
There are a number of advantages of pursuing a claim for conspiracy:
However, there are also disadvantages of pursuing a claim for conspiracy:
Conspiracy claims are very hard to prove, largely due to the need for cogent evidence. For this reason, they are often used in combination with other types of civil fraud claims.
At Ashfords LLP, our commercial disputes team have experience in advising both companies and individuals in all types of civil fraud claims, including conspiracy. We have acted for Claimants and Defendants in various complex and often multi-party disputes, and are therefore best placed to advise you.
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