Emerald Supplies Ltd & Ors v British Airways Plc & Ors

This judgment is in respect of two applications in this action:-

Those contentions in law are as follows:-

BA’s application is pursuant to CPR 3.4 (2) (a) and CPR 24 as is the Claimants’ application.

The Court has a discretion to strike out a statement of case under CPR 3.4 (2) (inter alia) if it appears to the Court:-

“That the Statement of Case discloses no reasonable grounds for bringing or defending the claim…….”

Similarly, the Court has a discretion whether to give summary judgment against a Claimant or Defendant on the whole of the claim or on a particular issue if:-

“(a)

it considers that:-

i)

That Claimant has no real prospect of succeeding on the claim or issue; or

ii)

That Defendant has no real prospect of successfully defending the claim or issue and (b) there is no other compelling reason why the case or issue should be disposed of at a trial”

Thus both parties seek to invoke the Court’s discretionary power to remove from the litigation issues at this early (for this action) stage.

The principles are well known: the Respondent to such application has to show some prospect that has a chance of success which must be real and not false, fanciful or imaginary. See the notes in the White Book paragraph 24.2.3. Particular reference should be made to the observations of Mummery LJ in The Bolton Pharmaceutical Company 100 Ltd v Doncaster Pharmaceuticals Ltd [2006] EWCA Civ 661.

Both applications involved a question of law. The consideration of a question of law at these stages of proceedings is always a difficult one. As the notes under the above mentioned paragraph of the White Book show a Court is encouraged to determine what it calls “a short point of law or construction”. Such consideration necessarily takes place before the evidence has been heard. There is authority for the proposition that a case should not go forward simply because there is a possibility of some further evidence arising (ICI Chemicals and Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725).

Against that it has long been the case that the purpose of a summary judgment procedure does not involve a mini trial. Further as Mummery LJ said in the Bolton case, a trial Judge as the decision maker will generally have a better grasp of the case as a whole because of the added benefits of hearing the evidence tested or receiving more developed submissions and having more time in which to digest and reflect on the materials provided.

These applications in my view cannot be described as giving rise to a short point of law. At the end of the hearing I intimated that I would adjourn the Defendants’ application to be relisted (if it so wished) after it and the Claimants had provided disclosure.

Having given that indication to the parties I asked them whether the Claimants’ application should be similarly adjourned. The Claimants unsurprisingly were against that. However whilst they were supported in that stance by BA and Daniel Beard QC (Cathay Pacific Airways and Singapore Airlines) together with Tom Sebastian, the Part 20 Defendants who were represented by Mr Pushpinder Saini QC (Thai Airways) and Daniel Jowell QC (Air Canada, Deutsche Lufthansa AG, Lufthansa Cargo AG, Swiss International Airlines AG, LAN Cargo SA, LATAM Airlines Group SA, Scandinavian Airlines, SAS AB, SAS Cargo Group A/S, Societe Air France, KLM NV, Martinair Holland NV, Air France-KLM, Korean Airlines Co Ltd) favoured an adjournment. The basis for the adjournment was the alternative set out in CPR 24 that there was some other reason for not acceding to the application. That in my view was the fact that the Defendants’ application should be adjourned.

The two applications in my view are inexorably linked together. Further I am unpersuaded that it is appropriate to deal with the difficult questions of law raised by the Claimants’ application at this time. This is the more so when the pleadings have not yet closed, disclosure has not taken place and evidence has not been served. As will be seen further in this judgment the whole basis for each claim is not yet fully investigated.

I have taken a similar (and more clearly defined) decision in relation to the Defendants’ application. That is more obviously a case of prematurity as the Defendants’ attack on the Claimants’ pleading and their application for summary judgment is based on an alleged insufficiency of evidence of “intention” (on the part of BA) to harm the Claimants’ interest. It is obvious to me that in a case as complicated as this the Claimants would only be in a position properly to plead the requisite intention after they have had disclosure of BA’s (and the Part 20 Defendants’) internal documentation. In addition there is the possibility of obtaining evidence from non-parties i.e. the freight forwarders who are involved in the transactions as set out below. This is not a “micawberistic” approach condemned by the Court of Appeal in the ICI Chemicals case above. It is a case where in my view the pleadings establish a claim (albeit badly pleaded) which in reality will be substantiated or not, as the case may be, after disclosure has taken place. The Particulars of Claim however in my view do disclose on their face an arguable claim for conspiracy. It is not well pleaded but (doubtless for tactical reasons) BA did not seek further clarification of the vital allegations of wrongful acts done by BA with the intention of harming the Claimants which is the thrust of BA’s application.

Equally surprisingly the question as to whether or not foreign unlawful acts could found the basis of a conspiracy within England and Wales is a discrete question of law. It is in BA’s (and the Part 20 Defendants) interest if possible to have that question of law ventilated early. A decision in BA’s and/or the Part 20 Defendants’ favour would eliminate a significant part of the claim. Yet neither chose to invoke it but as shall be seen made vague allusions to this area of law in the pleadings. This has led the Claimants to take up the cudgels by their application seeking a negative declaration as to the contentions put forward by BA and the Part 20 Defendants that such actions cannot found the basis of a conspiracy in England and Wales.

In order to understand the applications, it is necessary to deal with the actions. There are 565 Claimants located in numerous territories across the world. They all sue BA in respect of losses they allegedly incurred as a result of what is said to have been a worldwide cartel in transporting cargo by air, raising the prices of air cargo services. The Claimants are a diverse collection of enterprises ranging from Chinese fruit and vegetable packers to East African flower growers (Claimants 154-156).

The Claimants have identified 31 airlines that allegedly took part in the global cartel (Consolidated Particulars of Claim (“CPOC”) paragraph 3 and Annex A). BA has commenced Part 20 proceedings against the majority (23) of these airlines.

The Claims relate to alleged overcharges on air routes between large numbers of territories across the entire world. The EU/EEA routes i.e. those routes where one or both of the origin/destination within the EU/EEA are listed at annex E CPOC. There are some 1,362 such routes.

Separately (being the attack by BA and the debate in respect of the Claimants’ application) are the routes where neither the points of origin nor the point of destination are within the EU/EEA. There are 885 such routes. The claims extend to damages allegedly suffered by the Claimants caused by overcharges on routes as diverse as those from the Ivory Coast to Lebanon (route 195) and from India to Israel (route 276), from Mali to Albania (496), and from Panama to Venezuela (route 560). The Claimants contend around 60% of all recorded spend covered by their claims concerns these foreign routes.

The aggregate amount of the claims is summarised in CPOC annex O. It is in excess of £1bn. The overcharge claims outside the EU/EEA amount to in excess of £500m. The period covered by the alleged wrongdoing is at least 1999 – 2007. The proceedings were commenced in September 2008 by 2 Claimants alleged to be representative of others for damages for breach of EU and UK Competition Law. At that time there was no allegation of common law conspiracy.

By a ruling by the Chancellor dated 8^th April 2009 (upheld on appeal) the representative element of the claim was struck out leaving only claims by the 2 named Claimants on their behalf: Emerald Supplies Ltd v British Airways Plc [2009] EWHC Ch 741 [2010] Ch 48; [2010] EWCA Civ 1284, [2011] Ch 345. As a result of the ruling a large number of additional Claimants joined in leaving a claim which without some form of surgery will self-evidently be completely unmanageable with so many Claimants and Part 20 Defendants.

Not wishing to overstate that concern, it was revealed to me during the course of the present applications that a fresh action had been issued in May 2014 making the same allegations on behalf of no less than 65,000 Chinese Claimants. They were all represented by the same lawyers as represent the Claimants in the present action. When I pointed out in argument that if I determine the present issues they might well have an impact on those other proceedings but that my decision would not be binding because they were not party to the action, Mr Milligan QC, who, with Mr Harris QC, Mr Rayment and Ms Blackwood, appears for the Claimants, offered an undertaking that those 65,000 potential Claimants would agree to be bound by my ruling. That was a bold undertaking and I have seen such undertakings disappear after a change of Counsel and upheld by the Courts [2003] EWCA Civ 1769. The point does not arise at the moment because as this judgment will show I have not made any decision in law but merely adjourned the respective applications.

This matter has been considered by the EU Commission and it made an infringement decision on 9^th November 2010 against BA and 10 other airline groups. The Commission found the addressees of its decision had variously breached article 101 TFEU and article 53 EEA and/or article 8 of Swiss/ European Community Air Transport Agreement in relation to the level of security and fuel charges charged on the air cargo. The commission found that the addressee airlines had infringed the competition rules in summary by co-ordinating elements of price for air freight services on routes between airports within the EU/EEA and between the EU/EEA airports and those in third party countries and/or between EU airports and Swiss airports for part or all of the period between December 1999 and February 2006.

That particular head of claim is mired in its own stagnation (see my other ruling in respect of inspection of that decision).

On 30^th July 2013 the Claimants added claims under English common law torts of unlawful means conspiracy/interference which relied to a significant part on alleged breach of foreign laws as “unlawful means”. The Claimants did not supplement their anti-competition claims with freestanding claims directly for breach of foreign laws. This BA contended in its skeleton argument (paragraph 14) would have been the “expected route”. For my part, I can see why the Claimants did not proceed in that way. There would have to be separate actions against all relevant Defendants individually. The advantage of the conspiracy allegation (if it of course can be established) is that they can sue one of the conspirators alone and seek to fasten that conspirator with joint and several liability for damages for all losses caused by all wrongful acts done in furtherance of the conspiracy. That is a far more attractive way for the Claimants to proceed as it relieves them of the burdens of individual claims for breaches of individual laws and correspondingly individual claims for losses against individual Defendants. They can all be put together as they are in the CPOC.

The multiplicity of Defendants of course is brought about by BA on a back to back basis to the claim bringing alleged co-conspirators for contribution under its Part 20 Claim. It is BA that makes the action complicated not the Claimants. In so observing I am not criticising BA; I am merely stating what is the obvious. It is equally clear that BA faced with the potential liability in excess of £1bn for damages in respect of losses allegedly sustained on routes between the Claimants and other people in which it had no involvement would bring in all the alleged co-conspirators to seek contribution as a backstop.

Significantly BA to a certain extent has admitted its participation in the cartel and infringement of the above mentioned statutory provisions.

It is necessary to examine how the Claimants plead their case against BA before considering BA’s application to strike out the action based on the common law claims. After identifying who the Claimants were and what services they purchased the Claimants alleged that the prices they paid were secretly determined and affected by an unlawful conspiracy whereby the parties to it operated worldwide to fix prices on routes between worldwide locations contrary to the statutory provisions above. Further they allege that the participants’ unlawfully concealed support gave effect to such agreement i.e. by using a variety of false or deceptive statements (“the deceit claim”). In paragraph 4 they identify 7 regulators (including the European Commission) that have successfully charged BA as wrongfully participating in the cartel in the relevant jurisdictions.

The Claimants then plead the common law claims against them in paragraphs 5, 6 and 7 as follows:-

“5 BA was caused to participate in the Cartel by its senior employees who combined:

(1)

with each other and/or with BA, with a view to taking BA into the Cartel and thereafter keeping BA within the Cartel (the “BA Conspiracy”); and

(2)

on behalf of BA, with other Cartelists in the Cartel;

in each case with the intention of causing loss to the Claimants by unlawful means, namely the wrongful implementation of the Cartel worldwide, insofar as possible.

6 For these reasons:

(1)

BA participated in the BA Conspiracy and/or the Cartel, each of which was a conspiracy to use unlawful means (namely unlawful price-fixing and deceit), and these conspiracies were entered into by BA with the intention to profit from the consequential harm caused to the Claimants and others;

(2)

further or alternatively, BA has used the same unlawful means to interfere with the Claimants’ businesses intending to profit from the harm caused to the Claimants; and

(3)

further or alternatively, BA has breached Article 101 TFEU and/or Article 53 EEA, and is accordingly liable to the Claimants for the breach of their directly effective rights or for breach of statutory duty.

7 In consequence, the Claimants claim from BA the loss and damage (together with interest) they have suffered as a result of the Cartel.”

In paragraph 24, the Claimants identify how the charges were passed on to the shippers by freight forwarders. The way in which the cartel and/or alleged conspiracy was arranged was by the creation of fuel charge surcharges. The Claimants contend that it was the usual practice for the freight forwarders to pass the fuel charge surcharges on in full to shippers without any margin. The Claimants’ solicitors have indicated (letter 8^th August 2013) that in this action all of the Claimants are shippers which almost exclusively purchased air cargo services indirectly through freight forwarders. This is relevant to one of the submissions made by BA in support of its strike out application. The Claimants’ solicitors in a separate letter (also dated 8^th August 2013) have identified the percentages of the collective value of the commerce between the airlines.

In paragraphs 47-49 the Claimants identify the nature of the BA conspiracy drawing in both BA and BA employees. Further in paragraphs 60 and 61 they identify that the IATA cargo committee (including BA) adopted amongst its members a common fuel price index and methodology for imposing fuel surcharges despite the fact that IATA had been informed by the EU Commission of complaints by shippers and freight forwarders that IATA and its members had unlawfully consulted, agreed and composed non-negotiable fuel surcharges on shippers in November 1996.

The common law claims are set out in paragraphs 137-150. The conspiracy claims are in paragraphs 137-148 and the wrongful interference claims are in paragraphs 149-150.

In the conspiracy allegations the Claimants allege that the combination with BA and its employees to take BA into and to continue its participation in implementing the cartel was such that BA is vicariously liable for the conduct of the BA employees and that they engaged in unlawful conduct as a means by which price fixing goals in the cartel were achieved and that BA and/or its employees “intended thereby to cause, and in fact caused the Claimants loss and damage” (paragraph 137 (2) (b)). Further it is alleged that BA’s employees did not believe its conduct was lawful (paragraph 137 (2) (c)).

It is said that the ultimate goal of the conspiracies was to use the cartel as a secret means to set the cartelists’ prices for services or component parts of the prices free from the effects of ordinary and lawful competition with other cartelists and thereby to increase each cartelist’s profits at the expense of its customers (“the price fixing goal”) (paragraph 141). The Claimants allege that unlawful means were used being the necessary infringement of the various worldwide anti-competition laws and regulations and the use of deceit of those purchasing the services and the regulators.

This is the area where BA mounts its most important attack. In paragraph 146 the Claimants allege “It was the intention of the participants in the BA Conspiracy and the Cartel to use such unlawful means to injure the Claimants and each of them, by causing each to pay for Air Cargo Services prices higher than those payable but for the existence of the Cartel (“Overcharges”), thereby achieving the Price-Fixing Goal”.

In paragraph 147 they set out the matters that the Claimants would rely on and concluded “the unlawful means were necessarily targeted at a class of person, namely each and every prospective end purchaser alternatively each and every purchaser of Air Cargo Services.The Claimants were on either view such purchasers”.

The Claimants repeated the same basis in respect of their allegation for wrongful interference.

The plea in paragraph 146 is crucial. It is also extremely unparticular. It is quite clear that the recipient of such a pleading would be entitled to seek full particulars of the basis upon which the Claimants established it was the intention of the alleged conspirators to use unlawful means to injure the Claimants. It is clear how it would be done i.e. by overcharging but what is by no means clear is what basis the Claimants had for suggesting that BA intended to injure the Claimants and each of them and it is not clear what are the alleged unlawful means.

However BA have not chosen to seek clarification of that paragraph. This in my view is fatal at this stage to its application. It is faced with a general pleading which sets out in a general form the requirements of a claim for conspiracy and unlawful interference. The fact that it is devoid of particulars is a matter for BA to seek to challenge if it wishes. Otherwise it faces a trial without any clear basis upon which the Claimants put their case against it. As I have said the remedy is to seek clarification.

Had it sought clarification the Claimants’ response would undoubtedly have been that no particulars can be given of the intention of BA until they have had disclosure. This is what Mr Harris QC on behalf of the Claimants submitted was their position. This he said was a self-evident and regular plea in cases such as this. Where one makes an allegation of the mental attitude of a Defendant absent any clear extraneous material (and there is none) the only way in which the basis for such allegations can be found is in the Defendants’ own documentation. That has not yet been disclosed. However the Claimants have a legitimate suggestion that such material might well also be found to substantiate its generalised plea in documentation held by the Part 20 Defendants and also possibly freight forwarders (who are not parties).

I had a similar difficulty in the case of RBS v Hicks & Ors [2012] EWHC 2699 (ch).

That case concerned claims arising out of the sale by RBS of a shareholding in a company which was the ultimate beneficial owner of Liverpool Football Club. The Defendants Messrs Hicks and Gillett made various allegations about the sale of the shares but did not give a clearly formulated claim. Further they made much more wide-ranging allegations in proceedings that they had issued in Texas. Those proceedings were issued in extraordinary circumstances as can be seen from the judgment. Those allegations were against the English Directors, serious allegations of breach of fiduciary duty and an allegation that RBS dishonestly assisted the breach. They also in those proceedings alleged all Defendants had been guilty of constructive fraud and requested temporary restraining orders (“TRO”) and damages including exemplary damages to which they might be found to be entitled. None of those allegations was replicated in the RBS proceedings.

Accordingly RBS applied for summary judgment for a negative declaration that they had not been guilty of those allegations in order to flush it out. At the first hearing of the application Counsel for Messrs Hicks and Gillett complained that as Counsel, he did not have enough information to settle such allegations in a pleading within this jurisdiction. It was suggested that matters could be made as allegations in the US Courts if the party had an honest belief that they were true whether or not they had any material to justify it. Hence it was alleged as the difference between the two actions. I had grave doubts about that but nevertheless it seemed to me that Messrs Hicks and Gillett ought to be given a fair opportunity to make good their claim in this jurisdiction. They could only do that by having disclosure of the internal documentation of RBS. Accordingly I adjourned RBS’ application on summary judgment, ordered disclosure (funded upfront by Messrs Gillett and Hicks) and directed that within a certain time limit Messrs Hicks and Gillett should serve a detailed proposed Amended Defence and Counterclaim setting out the allegations that Counsel felt able to sustain on the basis of the material obtained from that disclosure.

That duly happened and as a result of that disclosure Messrs Hicks and Gillett served an amended application which included some of the allegations that were made in the Texas proceedings. I considered the RBS summary judgment application in the light of that material and the evidence and concluded that whilst I had doubts about the pleading there was material which meant there was “some other reason” why the matter should go to trial and I so ordered.

Thus had RBS been successful in its premature application for summary judgment, the true pattern that arguably emerged would have never seen the light of day.

The same is equally a possibility in the present case. Absent disclosure of BA’s internal documentation, it is impossible in my judgment for the Claimants properly to be able to plead the claim based on BA’s intention to harm them. If I accede to the present application, the same opportunity might be lost as occurred in the RBS v Hicks case and a potential injustice might ensue.

It will be remembered that as I have said above the Claimants do have a boldly stated plea of conspiracy which whilst brief sets out in brief form the necessary ingredients of a conspiracy allegation against BA.

The RBS case is not unique. Mr Harris QC took me through a number of cases where courts considered an application for summary judgment and/or a strike out of a claim in advance of disclosure was inappropriate on the facts of that case. Thus he referred to KME & Ors v Toshiba Carrier UK Ltd & Ors [2012] EWCA Civ 1190 at paragraphs 10-14 as follows:-

“The judgment of the Chancellor

10 The Chancellor gave a detailed judgment. It is sufficient, however, to say that he was satisfied that the amended Particulars of Claim are apt to raise against the UK defendants both a so-called "follow-on" claim (where liability is based on the findings in the Decision), and a so called "stand-alone" claim (where, so far as is necessary to establish liability, there is reliance on allegations and facts which are not to be found in the Decision itself): for the difference see Enron Coal Services Ltd v  English Welsh and Scottish Railway Ltd [2011] EWCA Civ 2 at paragraph [8] (Lloyd LJ). The Chancellor also found that, in so far as it was necessary to prove knowledge on the part of the UK defendants as to the cartel agreement or arrangements, an initial failure to plead knowledge had been remedied in correspondence between the parties' solicitors. Bearing in mind certain observations of Aikens J in Provimi Ltd v  Roche Products Ltd [2003] EWHC 961 (Comm), [2003] 2 All ER (Comm) 683, and of Teare J in Cooper Tire & Rubber Company Europe Ltd v  Shell Chemicals UK Ltd [2009] EWHC 2609 (Comm), the Chancellor said he had no hesitation in dismissing the applications of the UK defendants insofar as they were based on CPR 3.4(2)(a).

11 So far as concerns the applications for summary judgment against the claimants, the Chancellor examined the principal witness statements on behalf of the UK defendants and noted the absence of evidence from the claimants in response to some of them. He concluded as follows:

"51.

… But there has been no disclosure. As the Court of Appeal pointed out in Cooper Tire paragraph 43 the strength of the claimants' case cannot be assessed, let alone particularised, until after disclosure of documents. The fact that the claimants do not now have evidence to refute that of Mr Weyler or Mr Herold does not enable me to conduct a mini-trial, let alone, predict the outcome of the actual trial. The fact is that these defendants too were part of the same group and were involved in the same economic activity as the undertaking found by the Commission to have infringed Article 101. In my view these defendants have not shown that the claim against them does not have a real prospect of success."

The appeal

12 The original and supplementary "skeleton" arguments of the first to fourth defendants on this appeal run in aggregate to 200 paragraphs. There was a further written skeleton argument of the ninth defendant. Substantial oral submissions were made, on behalf of the first to fourth defendants, by Mr Daniel Beard QC and Mr Romano Subiotto QC, ably supported, on behalf of Outokumpu, by Ms Kassie Smith. The oral hearing lasted one and a half days. In the final analysis, I consider that the defendants' applications and this appeal turn on a short point of interpretation of the claim form, the amended Particulars of Claim and some correspondence and a short and clear point of law.

13 Stripped to its essentials the argument of the appellants is that (1) the respondents' statements of case do not disclose an arguable cause of action against KME  UK, and (2) there is a complete lack of evidence to support key allegations against KME  UK such that the proceedings have no real prospect of success. I do not accept the first limb of that argument. I reject the assertion underlying the second limb that the Chancellor's refusal to grant summary judgment against the claimants was not a proper exercise of judicial discretion.

14 The appellants' pleading point rests upon their submission that an essential element of conduct which infringes Article 101 is a meeting of minds or concurrence of wills between rival parties to conduct themselves on the market in a specific way which gives rise to an unlawful agreement. They say that implementation of an unlawful anti-competitive agreement reached between others is not enough, even if the implementation is with knowledge of the agreement. The respondents' statements of case, they say, do not contain an allegation against KME UK of that essential element.” (per Lord Justice Etherton)

and

“20 Mr Beard complained that the allegation of KME  UK's knowledge is still insufficiently particularised to comply with CPR 16PD 8.2, but I am satisfied that it is sufficiently pleaded to constitute a valid allegation of infringement of Article 101 by KME UK and, in the particular circumstances of the present case, to withstand an application to strike out the claim or for summary judgment in favour of the appellants. ”

31 So far as concerns the appellants' reliance on the lack of evidence to support the allegations against KME  UK in paragraphs 42 and 43 of the amended Particulars of Claim, Mr Subiotto took us to various witness statements on behalf of the appellants in support of the applications to strike out or for summary judgment. I consider that the Chancellor was perfectly entitled to exercise his discretion by refusing summarily to dismiss the claim despite the current paucity of evidence to support the allegations against KME  UK.

32 In their letter dated 28 June 2011 to the solicitors for the fifth to eighth defendants the respondents' solicitors said that "in view of the elaborate steps taken to conceal and ensure the secrecy of the illegal activities of the cartel the Claimants are not in a position to further particularise their case until after the Defendants have made disclosure." If the underlying allegation is true, that is a fair point. It is clear that KME UK was for a period of time, however short, involved in the supply of the relevant goods to the first claimant. There is exhibited to the 1^st witness statement of Ronald McLean an "Agency Agreement" between KME UK and the third defendant, which is consistent with the allegation in paragraph 43.3 of the amended Particulars of Claim. There is no further direct evidence in relation to KME UK. As was stated by the Court of Appeal in Cooper Tire & Rubber Company Europe Ltd v  Dow Deutschland Inc [2010] EWCA Civ 864 at paragraph [43], however, it is in the nature of anti-competitive arrangements that they are shrouded in secrecy and so it is difficult until after disclosure of documents fairly to assess the strength or otherwise of an allegation that a defendant was a party to, or aware of, the proven anti-competitive conduct of members of the same group of companies. That same generous approach was for the same reason taken by Sales J in Nokia Corporation v AU Optronics Corporation [2012] EWHC 731 in dismissing an application to strike out or to grant summary judgment against the claimant in proceedings for damages for infringement of Article 101. That approach is appropriate in the present case prior to disclosure of documents.” (per Lord Justice Etherton)

Tomlinson and Walker LLJs agreed with that judgment.

The learned Lord Justices summary in paragraph 32 is particularly relevant. Of course each case where it necessarily involved an exercisable discretion is fact sensitive. No precedent is created by a decision to dismiss an application for summary judgment in a particular case on the grounds that disclosure has not taken place. However the theme of the cases is the same namely that the Claimant cannot complete the details of his case without obtaining disclosure as the missing part of the pleading is peculiarly within the knowledge of the Defendant. In all of these cases it is a matter of demonstrating the Defendant’s state of mind. Thus the search is for evidence of the Defendants’ intention to harm the Claimants in this case. I do not see how that can possibly take place until after the Claimants have had an opportunity to examine the documents on disclosure. As Etherton LJ said in paragraph 32 claims like this are shrouded in secrecy and it is difficult fairly to assess the strength or otherwise of an allegation that a Defendant was a party to or aware of the proven anti- competitive conduct until after disclosure. So the same will apply to the question of the intention of the Defendants’ acts.

A similar conclusion was reached in the case of Bord Na Mona Horticultural Ltd & Anr v British Polythene Industries Plc [2012] EWHC 3346 (Comm) following the above decisions as follows:-

“29 So far as the application to strike out is concerned, I accept Mr Beal's submission that Mr Lasok's submissions overlook two important qualifications, one of general application and the other specifically referable to competition claims. First, the court will not grant an application to strike out a claim unless it is certain that the claim is bound to fail: see Hughes v Colin Richards & Co[2004] EWCA Civ 266, and where any defect in a statement of case is capable of being cured by amendment, the court should refrain from striking out unless it has afforded an opportunity to the party to amend its statement of case. That is a point which becomes of relevance when considering the so-called follow on claim in paragraphs 27 and 28 of the Particulars of Claim.

30 Second, that where the claim involves damages arising out of infringements of competition law by cartels which by their nature are clandestine and the court is considering an application by an alleged participant in the cartel to strike out a claim prior to disclosure and evidence, the court will tend to allow a more generous ambit for pleadings, where what is being alleged is necessarily a matter which is largely within the exclusive knowledge of defendants, than it might in other cases. I agree that a more generous approach to pleadings is appropriate and has been recognised in a number of such cases. The principles in play are well described by Sales J in Nokia Corporation v AU Optronics Corporation[2012] EWHC 731 (Ch) at [62-67]:

"62.

In a case involving an allegation that a secret cartel has operated in breach of Article 101 there is an inevitable tension in domestic procedural law between the impulse to ensure that claims are fully and clearly pleaded so that a defendant can know with some exactitude what case he has to meet (and also so that disclosure obligations can be fully understood, expert witnesses given clear instructions and so on), on the one hand, and on the other the impulse to ensure that justice is done and a claimant is not prevented by overly strict and demanding rules of pleading from introducing a claim which may prove to be properly made out at trial, but which will be shut out by the law of limitation if the claimant is to be forced to wait until he has full particulars before launching a claim. In working out how that tension is to be resolved, it is important to bear in mind the general and long established approach referred to above and the existence of other protections for defendants within the procedural regime, including the following. [He then identifies procedural protections such as requests for further information and summary judgment applications where appropriate, together with the professional obligations of counsel in relation to pleadings]

67.

In my judgment, the availability of such procedural protections for a defendant to ensure that a claim is fully and properly explained in good time before trial (as against the possible loss to a claimant of an entire, potentially meritorious claim), indicates that in resolving the tension referred to above and determining whether a cause of action has been sufficiently pleaded in a statement of case (particularly in the claim form and/or the particulars of claim when an action is commenced), the balance is to be struck by allowing a measure of generosity in favour of a claimant. Such an approach is appropriate and in the overall interests of justice and the overriding objective set out in CPR Part 1.1. It is an approach supported by the authorities cited above."

31 This generous approach to the pleadings in cartel claims has been endorsed by the Court of Appeal, not only in Cooper Tire & Rubber Company Europe Ltd v Dow Deutschland [2010] EWCA Civ 864 but most recently by Etherton LJ in KME Yorkshire Ltd v Toshiba Carrier UK Ltd[2012] EWCA Civ 1190 at [32]:

"As was stated by the Court of Appeal in Cooper Tire & Rubber Company Europe Ltd v Dow Deutschland Inc [2010] EWCA Civ 864 at paragraph [43], however, it is in the nature of anti-competitive arrangements that they are shrouded in secrecy and so it is difficult until after disclosure of documents fairly to assess the strength or otherwise of an allegation that a defendant was a party to, or aware of, the proven anti-competitive conduct of members of the same group of companies. That same generous approach was for the same reason taken by Sales J in Nokia Corporation v AU Optronics Corporation [2012] EWHC 731 in dismissing an application to strike out or to grant summary judgment against the claimant in proceedings for damages for infringement of Article 101. That approach is appropriate in the present case prior to disclosure of documents."

32 In the case of applications for summary judgment, it is well established that the court should not engage in a mini-trial where there is any conflict of evidence. The dangers of too wide a use of the summary judgment procedure were emphasised by Mummery LJ at [4-18] of his judgment in Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical[2006] EWCA Civ 661. [5] and [18] of that judgment seem to me particularly apposite to the present case:

"5.

Although the test [whether the claim has a real prospect of success] can be stated simply, its application in practice can be difficult. In my experience there can be more difficulties in applying the "no real prospect of success" test on an application for summary judgment (or on an application for permission to appeal, where a similar test is applicable) than in trying the case in its entirety (or, in the case of an appeal, hearing the substantive appeal). The decision-maker at trial will usually have a better grasp of the case as a whole, because of the added benefits of hearing the evidence tested, of receiving more developed submissions and of having more time in which to digest and reflect on the materials.

…

18.

In my judgment, the court should also hesitate about making a final decision without a trial where, even though there is no obvious conflict of fact at the time of the application, reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case."

33 The same point was made by Lewison J (as he then was) in Federal Republic of Nigeria v Santolina Investment Corporation[2007] EWHC 437 (Ch), at [4(vi)] citing the Doncaster Pharmaceticals case:

"Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case.””

BA contends that the Claimants’ action is bound to fail because it has failed to establish the requisite requirements of the law of conspiracy and unlawful interference.

Mr Harris QC took me to the CPOC and in particular paragraphs 146-150 where the following is pleaded:-

“146 It was the intention of the participants in the BA Conspiracy and the Cartel to use such unlawful means to injure the Claimants and each of them, by causing each to pay for Air Cargo Services prices higher than those payable but for the existence of the Cartel (“Overcharges”), thereby achieving the Price-Fixing Goal.

147 In support of the foregoing, the Claimants will rely on the following facts and matters, in particular:

(1)

The increased profits for BA and the other Cartelists intended by the Price-Fixing Goal could only be realised by or derived from Overcharges levied upon the purchasers of Air Cargo Services.

(2)

Furthermore, as set out at paragraphs 61 and 62(4) above, the Fuel Surcharges (and it is to be inferred the Security Surcharge) were designed in such a way that they would be passed on in full by any intermediaries (such as Freight Forwarders) to the end consumer of Air Cargo Services, as:

(a)

The Cartelists principally chose to achieve their Price Fixing Goals through Surcharges rather than by increasing Base Rates, as they could not be negotiated or discounted by Freight Forwarders.

(b)

By refusing to pay a commission on such Surcharges, the Cartelists intended to ensure there could be no competition in relation or discounting of the Surcharge component.

(c)

To this same end of preventing discounting or competition, the methodologies employed by the Cartelists specified that the Fuel Surcharges should be separately identified on AWBs and would be ineligible for commission charges by Freight Forwarders.

The unlawful means were necessarily targeted at a class of person, namely each and every prospective end purchaser, alternatively each and every purchaser of Air Cargo Services. The Claimants were on either view such purchasers.

(v)

No honest belief in the lawfulness of the conduct

148 Further, and so far as it is relevant, no participants in the Cartel or in the BA Conspiracy believed that the Cartel (or the entry of BA into the Cartel, in the case of the BA Conspiracy) was lawful. The Claimants make this plea on the basis that BA was informed:

(1)

in January 1997, that it would expose itself to anti-trust risks if it implemented Fuel Surcharges based on the IATA Methodology before government approval was granted, as set out in paragraph 59 above;

(2)

in March 1997, that the European Air Shippers’ Council had complained to the Commission that IATA and its members had unlawfully consulted, agreed and imposed non-negotiable Fuel Surcharges on Shippers, as set out at paragraph 60 above;

(3)

in March 2000, that the USDOT found Resolution 116ss to be “fundamentally flawed and unfair to Shippers” and breached US anti-trust law, as set out in paragraph 67 above;

(4)

in April 2000, by IATA that if an Air Carrier implemented a Fuel Surcharge based on the IATA Methodology and Index it could expose itself to serious anti-trust liability, as set out in paragraph 70 above.

(c)

Interference with the Claimants’ businesses by unlawful means

149 Further and alternatively, by reason of the matters set out at paragraphs 142 to 148, BA intended to interfere with the Claimants’ businesses through unlawful means and thereby to cause them loss.

150 In particular:

(1)

BA and the Cartelists’ conduct was in substantial part directed at the Shippers through their intermediaries, namely the Freight Forwarders (the “Third Parties”);

(2)

such conduct was unlawful for the reasons set out at paragraphs 142 to 145 above;

(3)

BA intended, through its participation in and implementation of the BA Conspiracy and the Cartel, to use the Third Parties as a means of interfering with the Claimants’ Businesses, for the reasons set out at paragraph 146 to 147 above.”

Accordingly, Mr Harris QC submitted that those paragraphs contain (albeit briefly) a complete allegation that BA intended by the conspiracy to use the unlawful means to injure the Claimants by causing each to pay overcharges. Paragraph 148 sets out at this stage the lack of honest belief as to the lawfulness of the conduct and finally paragraphs 149 and following make the same point in relation to interference with the Claimants’ business by unlawful means.

I agree with him. BA might not like the lack of detail but it has been open to them to seek to particularise it. Of course it is inevitable they will receive the answer that particulars cannot be given before disclosure. That would reinforce the Claimants’ position as to the premature nature of BA’s present application. It may be overly cynical to suggest that is why BA chose not to seek clarification of those paragraphs because it would demonstrate graphically before the present application was issued that its application was premature.

The Claimants say in their pleading as I have set out above, that BA’s conduct was designed to cause damage to the Claimantsas a purchaser of air cargo services. The Claimants were such purchasers. It is true that the purchase of that took place through freight forwarders but the Claimants’ case is that (certainly at this stage of the action) makes no difference. The Claimants submit that evidence that had already been disclosed shows that it is arguable that BA arranged the method of overcharging by a non-negotiable fuel surcharge so that no discounts could be obtained and that it was therefore inevitable that freight forwarders would pass on the overcharges and not absorb any of it nor seek any discounts. Thus the Claimants say the design of the conspiracy was to target the users (or purchasers) of the services at the inflated price. That inflated price would be passed via the freight forwarders who would therefore be merely conduits and were never intended to be a target of the alleged conspirators’ unlawful actions.

The Claimants plead in paragraph 158 and 159 that the only possible persons who could suffer any loss were those who were the final consumers of the air cargo services. This is relevant to one of the arguments raised by BA relying on the Court of Appeal decision in WH Newson Holding Ltd & ors v IMI Plc & Ors [2013] EWCA Civ 1377 (see below).

BA’s response is that the Claimants have failed to satisfy the requisite intention required to establish the conspiracy or unlawful interference in their pleadings.

This involves the analysis of a number of decisions. The first is the decision of the House of Lords in OBG Ltd & Anr v Allan & Ors [2007] UKHL 21. The appeal was a number of conjoined appeals in different actions. The point for consideration was in the case of the economic torts the valuation of the need to show that the conduct of the Defendant had to be aimed at the Claimants with the intent to cause harm. The result of the decision was that it was necessary to show that the wrongdoers intended to cause damage to the Claimants and it was not sufficient if the conduct was neither an end in itself nor a means to an end but was merely a foreseeable consequence of a person’s acts.

It is necessary to refer to a number of paragraphs of the judgment. First in paragraphs 45-51 Lord Hoffmann set out the elements of the tort of causing loss by unlawful means as follows:-

“Causing loss by unlawful means: elements of the tort

45.

The most important question concerning this tort is what should count as unlawful means. It will be recalled that in Allen v Flood [1898] AC 1, 96, Lord Watson described

the tort thus—

"when the act induced is within the right of the immediate actor, and is therefore not wrongful in so far as he is concerned, it may yet be to the detriment of a third party; and in that case…the inducer may be held liable if he can be shewn to have procured his object by the use of illegal means directed against that third party.”

46.

The rationale of the tort was described by Lord Lindley in Quinn v Leathem [1901] AC 495, 534-535:

"a person's liberty or right to deal with others is nugatory, unless they are at liberty to deal with him if they choose to do so. Any interference with their liberty to deal with him affects him. If such interference is justifiable in point of law, he has no redress. Again, if such interference is wrongful, the only person who can sue in respect of it is, as a rule, the person immediately affected by it; another who suffers by it has usually no redress; the damage to him is too remote, and it would be obviously practically impossible and highly inconvenient to give legal redress to all who suffer from such wrongs. But if the interference is wrongful and is intended to damage a third person, and he is damaged in fact - in other words, if he is wrongfully and intentionally struck at through others, and is thereby damnified - the whole aspect of the case is changed: the wrong done to others reaches him, his rights are infringed although indirectly, and damage to him is not remote or unforeseen, but is the direct consequence of what has been done."

47.

The essence of the tort therefore appears to be (a) a wrongful interference with the actions of a third party in which the claimant has an economic interest and (b) an intention thereby to cause loss to the claimant. The old cases of interference with potential customers by threats of unlawful acts clearly fell within this description. So, for the reasons I have given, did GWK Ltd v Dunlop Rubber Co Ltd (1926) 42 TLR 376. Recent cases in which the tort has been discussed have also concerned wrongful threats or actions against employers with the intention of causing loss to an employee (as in Rookes v Barnard [1964] AC 1129) or another employer (as in J T Stratford & Son Ltd v Lindley [1965] AC 269). In the former case, the defendants conspired to threaten the employer that unless the employee was dismissed, there would be an unlawful strike. In the latter, the union committed the Lumley v Gye tort of inducing breaches of the contracts of the employees of barge hirers to prevent them from hiring the plaintiff's barges.

48.

In Stratford, at pp 329-330, Viscount Radcliffe expressed some disquiet about using the question of whether the actual or threatened strike was or would have been in breach of contract as the touchstone of whether the union or its officers were liable for causing loss by secondary action. These remarks were made in the context of industrial relations, where the use of secondary action has since been comprehensively regulated by statute. In principle, the cases establish that intentionally causing someone loss by interfering with the liberty of action of a third party in breach of a contract with him is unlawful.

49.

In my opinion, and subject to one qualification, acts against a third party count as unlawful means only if they are actionable by that third party. The qualification is that they will also be unlawful means if the only reason why they are not actionable is because the third party has suffered no loss. In the case of intimidation, for example, the threat will usually give rise to no cause of action by the third party because he will have suffered no loss. If he submits to the threat, then, as the defendant intended, the claimant will have suffered loss instead. It is nevertheless unlawful means. But the threat must be to do something which would have been actionable if the third party had suffered loss. Likewise, in National Phonograph Co Ltd v Edison-Bell Consolidated Phonograph Co Ltd [1908] 1 Ch 335 the defendant intentionally caused loss to the plaintiff by fraudulently inducing a third party to act to the plaintiff's detriment. The fraud was unlawful means because it would have been actionable if the third party had suffered any loss, even though in the event it was the plaintiff who suffered. In this respect, procuring the actions of a third party by fraud (dolus) is obviously very similar to procuring them by intimidation (metus).

50.

Lonrho plc v Fayed [1990] 2 QB 479 was arguably within the same principle as the National Phonograph Co case. The plaintiff said that the defendant had intentionally caused it loss by making fraudulent statements to the directors of the company which owned Harrods, and to the Secretary of State for Trade and Industry, which induced the directors to accept his bid for Harrods and the Secretary of State not to refer the bid to the Monopolies Commission. The defendant was thereby able to gain control of Harrods to the detriment of the plaintiff, who wanted to buy it instead. In the Court of Appeal, Dillon LJ (at p 489) referred to the National Phonograph case as authority for rejecting an argument that the means used to cause loss to the plaintiff could not be unlawful because neither the directors nor the Secretary of State had suffered any loss. That seems to me correct. The allegations were of fraudulent representations made to third parties, which would have been actionable by them if they had suffered loss, but which were intended to induce the third parties to act in a way which caused loss to the plaintiff. The Court of Appeal therefore refused to strike out the claim as unarguable and their decision was upheld by the House of Lords: see [1992] 1 AC 448.

51.

Unlawful means therefore consists of acts intended to cause loss to the claimant by interfering with the freedom of a third party in a way which is unlawful as against that third party and which is intended to cause loss to the claimant. It does not in my opinion include acts which may be unlawful against a third party but which do not affect his freedom to deal with the claimant.”

In paragraphs 62 to 64 he analysed the question of intention as follows:-

“62.

Finally, there is the question of intention. In the Lumley v Gye tort, there must be an intention to procure a breach of contract. In the unlawful means tort, there must be an intention to cause loss. The ends which must have been intended are different. South Wales Miners' Federation v Glamorgan Coal Co Ltd [1905] AC 239 shows that one may intend to procure a breach of contract without intending to cause loss. Likewise, one may intend to cause loss without intending to procure a breach of contract. But the concept of intention is in both cases the same. In both cases it is necessary to distinguish between ends, means and consequences. One intends to cause loss even though it is the means by which one achieved the end of enriching oneself. On the other hand, one is not liable for loss which is neither a desired end nor a means of attaining it but merely a foreseeable consequence of one's actions.

63.

The master of the Othello in Tarleton v M'Gawley may have had nothing against the other trader. If he had gone off to make his fortune in other waters, he would have wished him well. He simply wanted a monopoly of the local trade for himself. But he nevertheless intended to cause him loss. This, I think, is all that Woolf LJ was intending to say in a passage in Lonrho plc v Fayed [1990] 2 QB 479, 494 which has proved controversial:

"Albeit that he may have no desire to bring about that consequence in order to achieve what he regards as his ultimate ends, from the point of view of the plaintiff, whatever the motive of the defendant, the damage which he suffers will be the same."

64.

On the other hand, I think that Henry J was right in Barretts & Baird (Wholesale) Ltd v Institution of Professional Civil Servants [1987] IRLR 3 when he decided a strike by civil servants in the Ministry of Agriculture in support of a pay claim was not intended to cause damage to an abattoir which was unable to obtain the certificates necessary for exporting meat and claiming subsidies. The damage to the abattoir was neither the purpose of the strike nor the means of achieving that purpose, which was to put pressure on the government.”

Finally I should refer to paragraphs 164-167 of the judgment of Lord Nicholls as this featured extensively in the competing arguments as follows:-

“Intent to injure

164.

I turn next, and more shortly, to the other key ingredient of this tort: the defendant's intention to harm the claimant. A defendant may intend to harm the claimant's business either as an end in itself or as a means to an end. A defendant may intend to harm the claimant as an end in itself where, for instance, he has a grudge against the claimant. More usually a defendant intentionally inflicts harm on a claimant's business as a means to an end. He inflicts damage as the means whereby to protect or promote his own economic interests.

165.

Intentional harm inflicted against a claimant in either of these circumstances satisfies the mental ingredient of this tort. This is so even if the defendant does not wish to harm the claimant, in the sense that he would prefer that the claimant were not standing in his way.

166.

Lesser states of mind do not suffice. A high degree of blameworthiness is called for, because intention serves as the factor which justifies imposing liability on the defendant for loss caused by a wrong otherwise not actionable by the claimant against the defendant. The defendant's conduct in relation to the loss must be deliberate. In particular, a defendant's foresight that his unlawful conduct may or will probably damage the claimant cannot be equated with intention for this purpose. The defendant must intend to injure the claimant. This intent must be a cause of the defendant's conduct, in the words of Cooke J in Van Camp Chocolates Ltd v Aulsebrooks Ltd [1984] 1 NZLR 354, 360. The majority of the Court of Appeal fell into error on this point in the interlocutory case of Miller v Bassey [1994] EMLR 44. Miss Bassey did not breach her recording contract with the intention of thereby injuring any of the plaintiffs.

167.

I add one explanatory gloss to the above. Take a case where a defendant seeks to advance his own business by pursuing a course of conduct which he knows will, in the very nature of things, necessarily be injurious to the claimant. In other words, a case where loss to the claimant is the obverse side of the coin from gain to the defendant. The defendant's gain and the claimant's loss are, to the defendant's knowledge, inseparably linked. The defendant cannot obtain the one without bringing about the other. If the defendant goes ahead in such a case in order to obtain the gain he seeks, his state of mind will satisfy the mental ingredient of the unlawful interference tort. This accords with the approach adopted by Lord Sumner in Sorrell v Smith [1925] AC 700, 742:”

Based on this judgment, BA submits that the requisite intention to harm the Claimants is not established because it was not an inevitable consequence of its conduct because it could not be said with certainty at the time that the alleged conspiracy was formed which particular entity in the chain would be its target. It is true that BA and the other alleged conspirators intended to increase the fuel surcharge but the reasoning is that it is not merely from that fact that these Claimants were necessarily going to suffer harm. Thus it could be said that these Claimants might have passed on the extra charges to the purchaser of the goods that they were having transported. Equally it could have been said that the freight forwarders might have absorbed it (for present purposes that latter point is in my view clearly arguable for the reasons I have set out above).

The important point from BA’s point of view is the analysis in Lord Nicholls’ judgment. In paragraph 164, a Defendant must intend to harm the Claimant. Lord Nicholls suggests that a Defendant might intend to harm a Claimant’s business either as an end in itself or as a means to an end. Thus he says that the former of those might usually be a grudge. I am not sure that is necessarily the case. Where two businesses are competing the wrongdoer might simply remove the competitor by intentional harm to that competitor’s business. Nevertheless Lord Nicholls says in paragraph 164 that more usually a Defendant intentionally inflicts harm on a Claimant’s business as a means to an end usually to protect or promote its own economic interests. The important comparison is in paragraph 165 when compared with paragraph 166. There is required under either of the above means of harm intention to do it. As is set out in paragraph 166 it is clear that a lesser state of mind is not sufficient. Thus it is said a Defendant’s foresight that unlawful conduct may or will probably damage the Claimant cannot be equated with intent for this purpose. Lord Nicholls gives emphasis “the Defendant must intend to injure the Claimant”.

It is this point which is the platform for BA’s argument that it cannot be said that the Claimants will be the ones necessarily suffering the loss because it cannot be said with certainty how the surcharges were satisfied. As I have indicated above there may be an absorption by one or other of the organisations in the chain. At the moment, the Claimants’ plea is that they paid the extra charges but there may be an issue (which will only be clarified in disclosure) as to whether the fuel surcharges were passed on to their customers.

What is clear is that the Claimants’ pleading as set out above contains an allegation they suffered the loss. This is of course another unparticularised allegation which BA has not sought clarification of.

Lord Nicholls added a gloss in paragraph 167. This was where he says that the Defendants gain is the Claimants’ loss. The Defendant cannot obtain one without bringing about the other. The argument of BA is that looking at the second sentence of that paragraph an alleged wrongdoer when doing actions like this must necessarily know that his conduct will injure the Claimants. As paragraph 166 sets out a probability or possibility of injury is not enough. Fastening on this BA’s argument is once again based on the chain of supply the loss cannot necessarily be the obverse side of the coin to that of the Defendants’ gain because it is not clear which of the organisations in the chain will suffer the loss.

BA bolstered this argument by reference to the Newson decision. This was an appeal against a decision of Roth J when he determined that it was possible in the case for the Claimants to bring a claim for conspiracy based upon findings of the European Commission of infringement of competition law.

Roth J held that they could. The Court of Appeal where Arden LJ gave judgment with which the other two members agreed held that the Claimants could not because the findings of the EC did not include the essential ingredient of the tort in its findings namely the requirement for intent to injure.

The key parts of the judgment are the analysis of the tort of unlawful means conspiracy in paragraphs 32-36 and the part of the judgment dealing with whether or not the EC’s findings included a finding that the Defendant had the requisite intent to injure.

In the first part of the judgment Arden LJ said this:-

“(2)

An essential ingredient of the tort of unlawful means conspiracy is an intent to injure.

Paragraph 24(b) and (c) of the particulars of claim constitute claims that IMI group were parties to an unlawful means conspiracy. Like the judge, I set out the description of the tort from Clerk & Lindsell on Torts at paragraph.24-95:

"This form of the tort is committed where two or more persons combine and take action which is unlawful in itself with the intention of causing damage to a third party who does incur the intended damage. It is not necessary for the injured party to prove that causing him damage was the main or predominant purpose of the combination but that purpose must be part of the combiners' intentions."

33 So, to establish liability for this tort, Newson group must show that, when IMI group agreed to act in the cartel, it did so with a relevant intent to injure. There is of course no issue about unlawful means in view of the infringement findings. There is considerable debate over the meaning of intent to injure in general, but I can pass over this as the dispute in this case falls within a narrow compass.

34 The parties disagree about what intent to injure relevantly involves. IMI group submit that there must be an agreement to cause harm by unlawful means with intent to injure Newson group. Newson group rely on the "obverse side of the coin" argument. They contend that intent to injure is satisfied by the findings in the Decision that IMI group intended to cause higher prices and obtain higher margins than would otherwise occur through free competition. Newson  group argue that it matters not if IMI group were simply indifferent whether the victims were the direct or the indirect purchasers of tubes. On their submission it is sufficient that IMI group intended to make a profit at the expense of a class of persons to whom the wrongful acts were targeted.

35 In some circumstances the court will infer an intent to injure from acts which a conspirator does to promote his own objectives. In accepting the "obverse side of the coin argument", the judge relied on a passage from the speech of Lord Nicholls in OBG Ltd v Allan [2008] AC 1 at 57. In his speech Lord Nicholls held:

"Intent to injure

164 I turn next, and more shortly, to the other key ingredient of this tort: the defendant's intention to harm the claimant. A defendant may intend to harm the claimant's business either as an end in itself or as a means to an end. A defendant may intend to harm the claimant as an end in itself where, for instance, he has a grudge against the claimant. More usually a defendant intentionally inflicts harm on a claimant's business as a means to an end. He inflicts damage as the means whereby to protect or promote his own economic interests.

165 Intentional harm inflicted against a claimant in either of these circumstances satisfies the mental ingredient of this tort. This is so even if the defendant does not wish to harm the claimant, in the sense that he would prefer that the claimant were not standing in his way.

166 Lesser states of mind do not suffice. A high degree of blameworthiness is called for, because intention serves as the factor which justifies imposing liability on the defendant for loss caused by a wrong otherwise not actionable by the claimant against the defendant. The defendant's conduct in relation to the loss must be deliberate. In particular, a defendant's foresight that his unlawful conduct may or will probably damage the claimant cannot be equated with intention for this purpose. The defendant must intend to injure the claimant. This intent must be a cause of the defendant's conduct, in the words of Cooke J in Van Camp Chocolates Ltd v Aulsebrooks Ltd [1984] 1 NZLR 354, 360. The majority of the Court of Appeal fell into error on this point in the interlocutory case of Miller v Bassey [1994] EMLR 44. Miss Bassey did not breach her recording contract with the intention of thereby injuring any of the plaintiffs.

167 I add one explanatory gloss to the above. Take a case where a defendant seeks to advance his own business by pursuing a course of conduct which he knows will, in the very nature of things, necessarily be injurious to the claimant. In other words, a case where loss to the claimant is the obverse side of the coin from gain to the defendant. The defendant's gain and the claimant's loss are, to the defendant's knowledge, inseparably linked. The defendant cannot obtain the one without bringing about the other. If the defendant goes ahead in such a case in order to obtain the gain he seeks, his state of mind will satisfy the mental ingredient of the unlawful interference tort. This accords with the approach adopted by Lord Sumner in Sorrell v Smith [1925] AC 700, 742:

'When the whole object of the defendants' action is to capture the plaintiff's business, their gain must be his loss. How stands the matter then? The difference disappears. The defendants' success is the plaintiff's extinction, and they cannot seek the one without ensuing the other.'"

36 I shall consider the application of this passage to the present case under my third reason.”

As can be seen from that part of the judgment Arden LJ referred to and relied upon in particular the above part of the judgment of Lord Nicholls.

In the second part of the judgment, she then went on to consider whether that requirement was capable of being found in the Commission’s findings. Thus she said:-

“3)

The Commission's findings do not include a finding that IMI group had the requisite intent to injure

37 The Commission made no finding that IMI group had any intent to injure. Following Enron 1, it would be impermissible for the CAT to make any such finding. Mr Harris submits that intent to injure is not a relevant question for the Commission because a cartel under EU law does not require any subjective intent. This clearly makes it unlikely that the Commission will make the findings necessary to enable a conspiracy claim to be brought under section 47A, but does not rule out that as a possibility.

38 Essentially what the judge did was to infer intent to injure flowing from the fact that the cartelists intended to benefit their own businesses. He held

"36.

In my judgment, although the Defendants' purpose in entering into the cartel was to promote their own economic interests, it is wholly unrealistic to regard this as divorced from the causation of loss to purchasers of copper plumbing tubes, even if the loss caused to the Claimants might not correspond to the Defendants' gain. On the basis of OBG, I consider that this element of the tort can be established on the basis of the finding of infringement in the Decision alone."

39 However, in my judgment, the court cannot draw that inference since it does not necessarily follow. IMI group may have absolutely no intent as regards Newson group. They may have expected Newson group to pass the price increase on. It may well be that all purchasers of copper tubes would have been in the same position, so that they were able to pass the extra prices on.

40 In my judgment, the passage which Lord Nicholls cites from Lord Sumner in Sorrell v Smith (see paragraph 35 above), and on which the judge must have relied, does not on analysis support the judge's approach. It uses the word "ensuing" in the sense of a transitive verb (meaning "following"), which is now obsolete. However the sense is clear. Lord Sumner is taking the situation where loss to the plaintiff must follow from the object of the conspiracy. He was taking the case where the proved facts exclude every other inference. As Lord Nicholls puts it, the gain and the loss are inseparably linked. But it does not follow in this case that Newson group would inevitably suffer loss. That would not be so if they were able to pass on the price increases to their customers. They might even have made a profit if they were able to raise their prices in advance of becoming liable to pay price increases to IMI group.

41 Mr de la Mare seeks to meet this difficulty by submitting that it matters not if IMI group were simply indifferent whether the victims were the direct or the indirect purchasers of pipes and that it is sufficient that IMI group intended to make a profit at the expense of a class of persons to whom the wrongful acts were targeted. I would reject this argument. It deprives the requirement of intent to injure of any substantial content. It is tantamount to saying that it is sufficient that the conspirators must have intended to injure anyone who might suffer loss from their agreement. If I might say so, the submission is reminiscent of the circularity of the words in The Gondoliers that "when everyone is somebody, then no-one's anybody".

42 As a further argument, Mr De la Mare submits that it was enough that Newson group paid the higher prices before they passed them on. But that is speculation: Newson group may have raised its prices enough to compensate for this. It does not follow from the fact that Newson group expended cash to pay IMI group's inflated prices that IMI group thereby intended them to make a loss.

43 IMI group submit that the Commission made no finding that the cartel involved an agreement or combination for conspiracy purposes as opposed to an arrangement or concerted practice for competition law purposes. I accept that a cartel need not involve an agreement. The parties, for example, may simply participate in a meeting at which anti-competitive arrangements are agreed without distancing themselves from them. In this case, however, the parties were found to have gone further than this and to have made arrangements, for example as to the allocation of market shares (see the Decision at paragraph 452 and recitals 335 to 340). The crucial point was that, even here, no intent to injure was found.

44 Accordingly, in disagreement with the judge, I would hold that the Commission's findings do not satisfy the requirement for Newson group's conspiracy claim of an intent to injure.”

It seems to me that the decision is fact-based in the sense that the requisite intent is not found in the EC’s decision because it did not investigate the intention as that was not necessary for the anti-competition liability to be established.

BA relies heavily on paragraph 40, where Arden LJ says that it does not inevitably lead to the conclusion that the Claimants would suffer a loss. In so considering that point she amplifies it in paragraph 41 to the argument put forward by the Claimants that the Claimants were a class of potential victims and were direct or indirect purchasers and it was sufficient that they intended to make a profit at the expense of the class of persons to whom the wrongful acts were targeted.

Arden LJ dismissed that argument in the following words:-

“it deprives the requirement of intent to injure of any substantial content. It is tantamount to saying it is sufficient that the conspirators must have intended to injure anyone who might suffer loss from their agreement. If I might say so, the submission is reminiscent of the circularity of words in the Gondoliers that “when everyone is somebody, then nobody is anybody””.

I have read that part of paragraph 41 a number of times and with respect to Arden LJ I find it difficult to follow.

It may be my lack of knowledge of Gilbert & Sullivan operettas (save the song “I am an Englishman”) that inhibits my understanding of this paragraph.

If she is saying that Mr de la Mare’s argument is anyone who might suffer a loss I do not think that does justice with respect to Mr de la Mare’s argument. It seems to me he has in mind a particular class who might suffer a loss not anybody. Thus it is difficult to see why there cannot be a class as in the Newson case. Equally there could be a class in the present case namely all of those organisations or entities in the chain which ultimately used the Defendants’ service but only those within that chain who actually suffered a loss by paying would have a claim. Alternatively it could be said that the class is those who pay and no more. I do not see how either of those has the effect of depriving the requirement of intent to injure of any substantial content. This is unnecessary gloss on what Lord Nicholls said which is clear in my view.

On the basis of the limited information that is currently available about the arrangements the Claimants’ case is that BA intended to harm the shippers. It did not intend to harm the freight forwarders and it did not intend to harm those whose goods were shipped or to whom the goods were shipped by the shippers. The Claimants say that they are in the category of shippers, and that they were the target and suffered the loss. It is arguable on that basis in my view that Newson has nothing to do with the potential factual scenario as it is.

Further, it is arguable that those observations of Arden LJ are obiter. The section of the judgment deals with intent to injure and simply acknowledged that the Commission made no finding of any intent to injure. That was confirmed by her in paragraphs 37, 43 and her conclusion simply in paragraph 44. On that analysis paragraphs 40 and 41 are not a necessary ingredient of her decision relating to what the Commission’s findings did or did not decide. Those paragraphs deal with an analysis of intent to injure which the Commission did not embark on because it did not embark on any investigation as to intent in coming to its decision. I would therefore be of the view that that part of the judgment is obiter and I would be of the view that it is arguable that it is possible to find a class of potential victims and if the wrongdoers intend to harm any requisite members of that class if such a member suffers loss that member has a cause of action. If other members of the class do not suffer any loss then they do not have a cause of action because the second requirement of the tort namely loss is not made out. It is important to separate the loss suffered by the Claimants from the intent to injure as the requirement of the tort. It is arguable that BA intended to harm people in this class. If some evaded the loss because they did not pay it, it does not arguably mean that there is no claim at the behest of those members of the class who did suffer the loss.

The Claimants of course do not say that the class is limited to potential victims; their case is that all Claimants were actual victims and that is what their pleading currently says.

If on disclosure it turns out that some of the Claimants have not actually suffered the loss they will be struck out but it does not to my mind at least at this stage of the proceedings mean that those who actually have suffered a loss will lose their claim because others who did not suffer a loss are no longer part of the action.

I was referred to the decision of Newey J in Constantin Medien AG v Bernard Ecclestone & Ors [2014] EWHC 387 (Ch). In the course of a careful judgment, Newey J summarised what he understood to be the law on intention to injure in paragraph 336 of his judgment as follows:-

“336 It is apparent, I think, from the OBG and WH Newson cases that a relevant intention to injure will exist if a person desires to cause loss to a particular person or desires a result that he knows will cause that person loss. If the loss is, to a defendant's knowledge, inseparably linked to his own gain, a desire to achieve the gain will suffice. On the other hand, it is not enough for a claimant to show that loss to him was reasonably foreseeable or even that the defendant realised that there was a chance that such loss would be caused: "a defendant's foresight that his unlawful conduct may or will probably damage the claimant cannot be equated with intention for this purpose". Nor will it do merely to demonstrate that a defendant must have appreciated that someone (whether or not the claimant or members of a specific class including the claimant) would suffer loss. The law demands that a claimant must be able to say more than that "the conspirators must have intended to injure anyone who might suffer loss from their agreement".”

I do not necessarily accept, for the reasons I have already set out above, that that is the correct conclusion to draw from the Newson decision when compared with OBG. I cannot see why if a Defendant intended to harm people in a particular class those who suffer loss should lose a claim because in fact the Defendant was unsuccessful in his intention to injure other members of the same class. However, for the reasons I have set out above, I am not deciding that issue either.

Finally in this analysis I should refer to Mr Harris QC’s ingenious attempt to find not two ways of proving intention but three from those paragraphs of Lord Nicholls’ judgment. He submits that there are two potential ways of proving intention in paragraph 164 and a third in paragraph 167. It is only in the third category that it is necessary for the conduct to cause injury to the Claimants. This is ingenious but I am not aware of any such analysis in any other decisions. That does not mean that he is incorrect. On that analysis it means that he falls within his second category when a Defendant intentionally inflicts harm on a Claimant’s business as a means to an end. There is no requirement, he says, of the Defendant necessarily knowing the precise identity of the relevant Claimant that will suffer the loss in a chain of dealing such as occurred in the Newson case and in this one.

These arguments for and against are to my mind heavily fact-based and I do not believe that the factual platform for these legal arguments is clearly established at this stage in the proceedings. Even if it were it seems to me that this is a difficult question of law as it involves careful analysis of OBG in the light of Newson. I do not think that it is appropriate to consider these difficult points at this stage. I am of the view that the matter will become more clear at disclosure on this point also when the Claimants provide disclosure of the incidents of the extra charges. That is likely to be a difficult exercise because charges might not have been merely passed on; a party might have absorbed the costs and given the impression that carriage was free when it was hidden away in the purchase price or it might have been apportioned. None of this is yet revealed.

I am therefore of the opinion that it is not appropriate to decide this issue at this stage and it should also be part of the adjournment. Whilst the above arguments are interesting, it would in my view be quite wrong given my decision that the matter should be adjourned to attempt to come to any concluded view on these matters. When a Judge decides that a case has to go to trial or has to go to determination of issues at a later stage it is incumbent on him not to attempt to pre-empt any of those matters at the interlocutory stage. That is a trap which the above cases on these proceedings show should be avoided.

Further, it is not in the interest of the parties to decide something at this stage on these issues. Inevitably, given the size of the claims the loser will appeal and that will add to the delay of this already long delayed action when the matters can be dealt with more expeditiously and clearly at a later stage. I do not believe that there will be a significant increase in costs as the action will continue in a major way whatever the result of this application. There will still be the competition claims and there might well be claims where there is no issue of these surcharges being passed on down the line.

I therefore conclude that the Defendants’ application should be adjourned until at the earliest after disclosure has taken place. I do not think it is appropriate to dismiss the application because after that disclosure has taken place it is possible that the Claimants are not in a position to provide any particulars to substantiate their claim that BA intended to harm the Claimants.

That might be a matter of form because even if I dismiss BA’s application now, if, in the light of disclosure it was shown that there was no material put forward by the Claimants, it could in my view make a fresh application to dismiss the claim under CPR 3 or 24.

That disposes of BA’s application.

The Claimants’ application is for a negative declaration. The subject matter of the Claimants’ application was that the torts can be founded on foreign unlawful means. BA denies that and indeed argued that foreign unlawful means cannot be relied upon and that there is no case which says it can. Given BA’s stance it was surprising it did not feature in its own Part 24 Application and that it was so tentatively pleaded in its Defence see paragraphs 121, 127 and 129 (6).

Those pleadings give rise to two contentions. First that breaches of foreign law do not constitute unlawful means for the purpose of the tort of unlawful means conspiracy. That has a subsidiary argument that reliance on a breach of foreign law as unlawful means cannot be used to circumvent any limitations that would apply to the actionability of breach of the relevant foreign law if relied upon as a free-standing action. This is to deal with the Claimants’ contention that they only need to establish the substantive breach of foreign law and defences such as limitation are not to be taken into account in establishing unlawful means. The reasoning behind that is that you look at the actions at the time of the alleged unlawful conspiracy and do not take into account subsequent events namely, for example, a claim being time barred. The reasoning for that is of course because the claim is concerned with the unlawful actions at this point and not with the fact that for technical reasons the claim cannot survive.

The second basis of argument is that under section 129 (6) a Claimant cannot rely upon an alleged breach of statute in country A in support of a claim for damages based on losses sustained in country B.

It was suggested by BA that the decision of HHJ Seymour QC in Irish Response v Direct Beauty [2011] EWHC 37 concluded that wrongs outside the jurisdiction of England and Wales could not be used as a basis for a conspiracy claim or effectively an unlawful intent to injure claim in England and Wales. However, I do not accept that that is what the decision was. I agree with Mr Milligan QC in his submissions on behalf of the Claimants that the learned Judge decided that it would be contrary to English policy to permit a claim for conspiracy to commit perjury when English law holds that a witness has immunity from prosecution. This can be seen from paragraphs 151-153 of the judgment as follows:-

“151 The Conspiracy Claim is presently pleaded simply as an English conspiracy. No element of Danish law is pleaded. As an English conspiracy it must fail because of the decision of the Court of Appeal in Marrinan v. Vibart.

152 The suggested amendment does not cure the deficiency. It was proposed only to plead that there was no witness immunity rule in Danish law. That plea is simply immaterial. As it seems to me, a viable conspiracy claim could only be pleaded on the basis that Danish law applied to all elements. That is to say, it would have to plead whatever is the Danish law of conspiracy, assuming that there is such a civil wrong recognised in Danish law, and then the facts relied upon as making out each necessary element. If that were done, technically there would be a viable claim, based on Danish law. Such claim would be vulnerable to the objection that it was a collateral attack on the Danish Judgment, but at least, apart from that, it would disclose a cause of action.

153 What Miss Brown seems to have been trying to do is to produce a hybrid Anglo-Danish cause of action, in which English law supplied the conspiracy and Danish law supplied the crime. The simple answer to that hybrid tort is that it is not a crime in England to commit an offence in Denmark.”

The judgment does not, it seems to me, address whether an unlawful means conspiracy could be founded on foreign unlawful means. Had the Judge been asked to answer that question, the judgment would have been very different and a conclusion along the lines suggested by BA would have led to a somewhat shorter decision and would have obviated the need to analyse the status of witness immunity.

I therefore derive no assistance from that decision.

I was referred to a number of other authorities where there was no decision that foreign unlawful means could or could not be relied upon. In none of them was the point argued, see for example Revenue & Customs Commissioners v Total Network SL [2007] EWCA Civ 39; [2008] UKHL 19 and Grupo Torras [1999] CLC 1469.

In both cases had the law been as BA contends it would have led to different results. There are other examples. For example my decision in the Attorney General of Zambia v Meer Care & Desai [2007] EWHC 952 (Ch) included a conspiracy to defraud the Zambian government where the wrongs in question took place in several different jurisdictions. It was never argued or submitted that that had any impact on the conspiracy. It was not suggested that the English law of conspiracy was not applicable; indeed, there were significant submissions on it but not on this point.

Thus the Claimants submit that is strongly supportive of their contention that the actions if done outwith the jurisdiction can still form the subject matter of a conspiracy at common law in England and Wales.

I agree that it is surprising that if that was the law none of the extremely learned Judges adverted to it in some way in the various decisions. However it is not definitive. The common law is an evolving jurisdiction and it is regularly not unheard of for new ideas to be thought of or new arguments to be made that challenge assumptions or matters which were never thought to be arguable in the past.

In my view, this question falls to be decided on the basis that no clear decision has been made after the point has been argued.

This is an important decision in relation to the law of conspiracy and of course it has potentially a very significant impact on the Claimants’ case. With due deference to the arguments that were put forward to me (including other Counsel to which I have not made reference on this point) I do not think it is appropriate to decide this important point of principle at a summary judgment stage. For that reason I would adjourn the Claimants’ application to trial. It must be appreciated that will not lead to any costs being increased. This point if it is anything provides BA with a defence. It was content for that matter to be left for trial. Therefore refusing the summary judgment application does not increase any costs on its part. From the Claimants’ point of view it will lead to costs but those are costs which the Claimants are anxious to incur because it supports their claim. What one will have however is a trial where the Judge is fully seized of all the issues and is better equipped to deal with all of the arguments. It is not appropriate to deal with it summarily at this stage. That of course is in addition to my decision that this application should be adjourned because of the linkage (summarised above) to BA’s application. No benefit accrues by the parties being locked in to unnecessary interlocutory skirmishes which delay matters and increase costs. The Claimants’ case is based on winning this point at trial. The converse applies to BA but, as I have said, it does not suggest this point should be dealt with summarily; it was content to leave it in the pleadings and no more.

That conclusion is equally applicable to the second question as to whether or not damages can be recovered in respect of a loss in country B where the law infringed is that of country A. Equally I can see no basis for objecting at this stage to the Claimants’ proposed amendment in paragraph 144 of CPOC in the light of my decision.

Tempting though it is to decide this issue I am firmly of the view for the reasons I have set out above, that it would not be appropriate so to do. I therefore adjourn the Claimants’ application with liberty to restore at an appropriate time. I suspect that appropriate time is trial but I do not exclude the Claimants seeking to justify restoration at some other stage.

That also leaves open the argument as to whether or not foreign law bars to claim in respect of the alleged wrong have to be taken into account in considering whether there has been unlawfulness for the purposes of the conspiracy claim.