Conspiracy (civil) - English Law

English Law

The tort of conspiracy requires there to be knowledge of the relevant circumstances and of the agreement made. Thus, as a precondition to corporate liability, it must be possible to attribute the relevant employee's or agent's knowledge to the corporation. There are two possible legal approaches:

• as a matter of agency law, the acts and omissions constituting the alleged conspiracy must have been carried out within the actual or ostensible authority of the agent; or
• as a matter of vicarious liability the acts and omissions must have been carried out in and during the course of the employment.

There is little difficulty when the claim is that the company either conspired with a second company or with at least two natural persons. The requisite knowledge can be attributed under either head as appropriate. But there is a problem under the first heading when fraud is involved because there is a clash of authority. Lloyd v Grace, Smith & Co. AC 716 held that a Principal may be liable where the Agent commits a fraud within actual or apparent authority, whereas in In re Hampshire Land Company 2 Ch 743, it was held that the knowledge and, sometimes, the conduct of an Agent acting fraudulently so as to cause loss to the Principal will not be imputed to the Principal. In theory, vicarious liability may be of more assistance in that it is attributing the wrong done by one (natural) person to another (fictitious) but, in Belmont Finance Corporation v Williams Furniture Ltd Ch 250, the Hampshire Land agency line of authority was preferred. Belmont, a company in liquidation, sued a number of defendants, including the majority of its own directors, for conspiracy to procure Belmont to buy shares in another company at a gross overvalue. The purpose of this plan was to fund the acquisition of shares in Belmont itself by some of the defendants. Foster J. struck out the claim on the basis that Belmont was itself a party to the conspiracy. On appeal, Buckley LJ. said:

But in my view knowledge should not be imputed to the company, for the essence of the arrangements was to deprive the company improperly of a large part of its assets. As I have said, the company was a victim of the conspiracy. I think it would be irrational to treat the directors, who were allegedly parties to the conspiracy, notionally as having transmitted this knowledge to the company.

Because Belmont could only be a party to the conspiracy if knowledge was imputed, the Court of Appeal insulated it from the knowledge of its directors even though those directors, with that knowledge, made relevant decisions at board meetings and attached the company seal to the relevant documents. To that extent, liability in conspiracy is different from the standard vicarious liability situations in which, say, a company will be deemed to know that vehicles or machinery have not been properly maintained or that a service has been negligently delivered.