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OUTER HOUSE, COURT OF SESSION
[2024] CSOH 55
CA67/23
OPINION OF LORD RICHARDSON
In the cause
ROCHE DIAGNOSTICS LIMITED
Pursuer
against
GREATER GLASGOW HEALTH BOARD
First Defender
and
ABBOTT LABORATORIES LIMITED
Second Defender
Pursuer: Lord Keen of Elie KC, Breen; Addleshaw Goddard
First Defender: Lindsay KC, Blair; NHS Central Legal Office
Second Defender: Lord Davidson of Glen Clova KC, Campbell; CMS Cameron McKenna LLP
5 June 2024
Introduction
[1]
This case involves a dispute about public procurement.
[2]
On 1 August 2022, the first defender published an Invitation to Tender for a contract
to provide:
"... a Laboratory Managed Service, incorporating Biochemistry, Haematology,
Genetics, Pathology, Microbiology Virology, Collection Devices and Additional
2
Equipment, including centrifuges, incubators, medical gases, ultra-low freezers and
temperature monitoring equipment"
to NHS Greater Glasgow and Clyde. This procurement was an open procedure in terms of
Regulation 28 of the Public Contracts (Scotland) Regulations 2015. The ITT specified that the
duration of the contract was to be 7 years beginning in September 2023. The first defender's
existing contract for the provision of these services was due to expire on 12 September 2023.
[3]
The pursuer submitted a bid in response to the ITT on 3 October 2022. The only
other bidder was the second defender. The second defender was the incumbent provider to
the first defender of the services that form the subject of the procurement.
[4]
By letter dated 24 March 2023, the first defender notified the pursuer that its bid had
been successful and that, subject to satisfactory contract finalisation and the completion of
due diligence, the pursuer would be awarded the contract. On the same date, the first
defender notified the second defender that its bid had been unsuccessful.
[5]
Towards the end of April 2023, following further correspondence from the first
defender, the second defender's solicitors raised concerns in respect of the procurement
process. In these circumstances, the first defender reviewed its evaluation of both bids.
Thereafter, on 15 May 2023 the first defender wrote again to the pursuer reiterating that the
pursuer's bid had been successful and that the pursuer had been selected as the first
defender's preferred bidder.
[6]
On 23 May 2023, the second defender commenced proceedings in the Court of
Session against the first defender. The second defender sought to challenge the first
defender's decision to select the pursuer as its preferred bidder. As a result of the
allegations made by the second defender in its court proceedings, the first defender carried
out a further assurance review of the procurement process on June 2023. By letter dated
3
28 June 2023, the first defender notified the pursuer that it intended to abandon the
procurement.
[7]
On or around the date of this letter, the first and second defenders agreed in
principle that they would extend the existing contract by a period of 44 months. On
22 August 2023, the first defender issued a "Modification notice" in respect of its contract
with the second defender disclosing the extension of the second defender's contract.
[8]
At the end of July 2023, the pursuer raised the current proceedings. The pursuer's
principal contentions are: first, that the first defender's decision to abandon the
procurement procedure on 28 June 2023 was unlawful; and, secondly, that the first
defender's decision to extend the term of the existing contract with the second defender was
also unlawful. On this basis, in the present proceedings, the pursuer seeks declarator and
various orders under the 2015 Regulations. In the alternative, the pursuer seeks an award of
damages from the first defender on the basis of its alleged breaches of the 2015 Regulations.
[9]
In addition, in these proceedings, the pursuer avers that an unlawful means
conspiracy was participated in by both defenders. The pursuer also seeks damages from the
second defender on the grounds that the second defender caused the pursuer loss by
unlawful means. Both defenders challenge the relevancy of these aspects of the pursuer's
averments and I heard these arguments at debate.
[10]
The procedural background to the hearing before me was an ongoing document
recovery process whereby the pursuer sought documents relating to the procurement
process from the defenders. The disclosure to the pursuer of certain documents was resisted
by the defenders on grounds including that the documents concerned: were protected by
legal privilege; had been issued on a "without prejudice" basis; or, were otherwise
commercially confidential. In response, the pursuer sought to challenge those grounds on
4
the basis of its cases that the defenders were involved in an unlawful means conspiracy and
that the second defender had caused it loss by unlawful means. Accordingly, the parties
sought and I fixed a hearing in order to debate the relevancy of the pursuer's pleadings in
respect of unlawful means conspiracy and causing loss by unlawful means.
The pursuer's averments
[11]
The pursuer makes the following averments as to unlawful means:
"56. As hereinbefore condescended upon, on or around 28 June 2023 the first and
second defenders reached an agreement to extend the term of their existing contract
for the provision of a Laboratory Managed Service by a period of 44 months (the
Defenders' Agreement). The first defender took the Abandonment Decision in
reliance on the Defenders' Agreement. For the reasons hereinbefore condescended
upon, the first defender was not permitted to extend the term of its contract with the
second defender under Regulation 72(1)(b) of the 2015 Regulations. The purported
modification of the defenders' contract is unlawful. An object of the Defenders'
Agreement was to actuate an unlawful purpose, namely to unlawfully extend the
term of the defenders' existing contract. It was clear to both defenders that by
agreeing to act in the manner hereinbefore condescended on they would deprive the
pursuer of the award of the Laboratory Managed Service contract in terms of the
Procurement. It was clear to both defenders that by agreeing to act in such a manner
they would cause the pursuer to suffer loss. As a result of the Defenders'
Agreement, the pursuer has suffered loss. The defenders' averments in answer are
denied except insofar as coinciding herewith.
57. As hereinbefore condescended upon, prior to the Abandonment Decision the
second defender informed the first defender that it would not comply with its
obligation under Clause 18.9.1(g) of the defenders' contract to continue to provide
services after 12 September 2023, at the first defender's request. Believed and
averred that the second defender additionally informed the first defender that it
would not comply with its obligation under Clause 18.9.1(f) of the defenders'
contract to continue to provide services after 12 September 2023 to facilitate a
mobilisation period for a new contractor. In so doing, the second defender acted in
anticipatory breach of contract. Said anticipatory breach was actionable by the first
defender. As hereinbefore condescended upon, all parties to the Procurement
envisaged that there would be a mobilisation period during which the new
contractor would `wind up' its services while the second defender `wound down' its
services (in the event that the second defender was not awarded the contract
pursuant to the Procurement). An inevitable consequence of the second defender's
anticipated breach of contract was that there would be a gap in service provision
from 13 September 2023 if the pursuer were awarded the Laboratory Managed
5
Service contract because the pursuer required time to `wind up' its services. In such
circumstances, the first defender considered itself required to abandon the
Procurement and to extend the term of the second defender's contract
(notwithstanding that such decisions were unlawful) in order to ensure continued
provision of an essential health service. The first defender relied upon the second
defender's agreement to extend the term of its existing contract in order to take the
Abandonment Decision. But for the second defender's anticipatory breaches of
contract, the first defender would probably have entered into a contract with the
pursuer, as its preferred bidder, for the provision of a Laboratory Managed Service.
In refusing to comply with its contractual obligations to the first defender, the second
defender intended to cause economic harm to the pursuer by obstructing the first
defender from awarding the Procurement contract to the pursuer. As a result of the
second defender unlawfully refusing to comply with its contractual obligations to the
first defender, the pursuer has suffered loss. With reference to the second defender's
averments in answer, Schedule Part 12 of the defenders' contract is referred to for its
whole terms beyond which no admission is made. Not known and not admitted that
the second defender was not requested to provide transfer arrangements or services
during a mobilisation period pursuant to Schedule Part 12. Quoad ultra, the first
defenders' averments in answer are denied except insofar as coinciding herewith."
The first defender's arguments
[12]
Senior counsel for the first defender moved me to refuse to admit the pursuer's
averments in Article 56 of condescendence (above) relating to unlawful means conspiracy to
probation. Senior counsel also drew my attention to the fact that, if the first defender were
successful in its motion, there were also some additional averments in Article 62 of
condescendence which also related to unlawful means conspiracy and which would require
to be deleted.
[13]
Senior counsel advised that he had had the opportunity to consider the Note of
Argument submitted on behalf of the second defender and adopted the arguments made on
behalf of the second defender in respect of unlawful means conspiracy.
6
Unlawful means conspiracy
[14]
The first defender submitted that the pursuer's averments in respect of unlawful
means conspiracy were wholly irrelevant.
[15]
The essential ingredients of the delict of unlawful means conspiracy are: (1) an
agreement between the defenders; (2) an intention to injure the pursuer; (3) unlawful acts
carried out pursuant to the combination or agreement as a means of injuring the pursuer;
and (4) loss to the pursuer suffered as a consequence of those acts (see Kuwait Oil Tanker
Renewable Power Ltd v Bluefloat Energy UK Holdings Ltd 2023 SLT 623 at paragraphs 71 to 73).
[16]
The first defender submitted that the pursuer's averments failed, in two principal
respects, relevantly to aver a case of unlawful means conspiracy.
The first defender's intention
[17]
First, the pursuer had failed relevantly to aver that there was any intention on the
part of the first defender to injure the pursuer. The pursuer had not averred that there was
any subjective intention on the part of the first defender to cause harm to the pursuer. That
was, so the first defender submitted, hardly surprising. The first defender is a public body
which had the primary intention of ensuring a continuity of healthcare (including lab
services) for patients within its locale.
[18]
Senior counsel highlighted the fact that in this respect the illegality upon which the
pursuer's case focussed was the decision to extend the second defender's contract as
opposed to the decision by the first defender to abandon the procurement process referred
to by the pursuer as the "Abandonment Decision". The pursuer averred that the first
defender had required to extend the second defender's contract "in order to ensure
7
continued provision of an essential health service" (Article 57). According to the pursuer,
the first defender had been put in this position as a result of the second defender's
anticipated breach of contract in refusing to comply with its obligations in terms of
clause 18.9.1(g) and clause 18.9.1(f) of the second defender's contract (Article 46). The
pursuer averred that but for the second defender's anticipatory breaches of contract, the first
defender would "probably have entered into a contract with the pursuer, as its preferred
bidder" (Article 57).
[19]
Even if proved, these averments did not establish an intention on the part of the first
defender to injure the pursuer. Notably, the pursuer did not criticise the first defender in
Article 57. Senior counsel submitted that the first defender could not be both the victim of
the second defender's breaches of contract and, at the same time, an active conspirator.
The averments made by the pursuer in relation to intention on the part of the second
defender were irrelevant standing the pursuer's averred position that the first defender had
essentially been put in a position in which it had to agree to the extension of the second
defender's contract in order to ensure continued provision of an essential service.
[20]
The first defender accepted that the case law recognised that:
"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." (OBG Ltd v Allan [2008] 1 AC 1 at paragraph 62 per Lord Hoffman)
[21]
Senior counsel also drew attention to the fact that in OBG, Lord Hoffman had
emphasised, in relation to the tort of causing loss by unlawful means, that the common law
has been traditionally reluctant to become involved in devising rules of fair competition, and
had warned against the danger of the law being extended to provide a cause of action based
8
on acts "which are wrongful only in the irrelevant sense that a third party has a right to
complain if he chooses to do so" (at paragraph 56).
[22]
In the present case, the first defender had not intended to enrich itself on the
pursuer's own averments, its intention had been to ensure the continued provision of an
essential service. Senior counsel submitted that the final sentence of paragraph 62 in OBG
described the present case the pursuer's loss was neither a desired end nor a means of
attaining it but merely a foreseeable consequence. Once the procurement process had been
abandoned, the pursuer had no rights as against the first defender in respect of the supply of
the lab services. The only extant contract at that point was the one between the first and
second defenders. Accordingly, causing the pursuer loss was not the means by which the
first defender hoped to achieve its end.
[23]
The averred actions of the first defender could not be described as having the "high
degree of blameworthiness" referred to by Lord Nicholls in OBG (at paragraph 166) or as
"sufficiently reprehensible to justify imposing on those who have brought about the harm
liability in damages for having done so" (see Revenue and Customs Commrs v Total
[24]
In relation specifically to the question of what makes unlawful means conspiracy
actionable, senior counsel made reference to the joint judgment of Lord Sumption and
Lord Lloyd-Jones in JSC BTA Bank v Ablyazov (No 14) [2020] AC 727 at paragraphs 6, 10, 11
and 15. The concept identified in JSC was the absence of a just cause or excuse:
"A person has a right to advance his own interests by lawful means even if the
foreseeable consequence is to damage the interests of others. The existence of that
right affords a just cause or excuse. Where, on the other hand, he seeks to advance
his interests by unlawful means he has no such right. ...
Conspiracy being a tort of primary liability, the question what constitute unlawful
means cannot depend on whether their use would give rise to a different cause of
9
action independent of conspiracy. The real test is whether there is a just cause or
excuse for combining to use unlawful means. That depends on (i) the nature of the
unlawfulness, and (ii) its relationship with the resultant damage to the claimant.
This was the position reached by the House of Lords in ... Total Network SL
[above].... The Appellate Committee held that a criminal offence could be a sufficient
unlawful means for the purpose of the law of conspiracy, provided that it was
objectively directed against the claimant, even if the predominant purpose was not to
injure him." (at paragraphs 10 and 11)
[25]
Senior counsel relied upon JSC. Applying the absence of just cause or excuse
approach formulated in that case, it was important to recognise, in relation to the nature of
the alleged unlawfulness, that it had been brought about by the second defender's breaches.
Equally, it was the second defender's breaches which the pursuer averred had caused it
harm. The first defender submitted that it was precisely the averred involvement of the
second defender that provided the first defender with the just cause or excuse for its actions.
[26]
Finally, senior counsel drew attention to paragraph 15 of the judgment in JSC in
which their Lordships noted that consideration of unlawfulness in cases which, like the
present, involved a breach of a civil statutory duty gave rise to more complex problems than
those which arose when criminal acts were involved. Senior counsel did not seek to argue
that a breach of the 2015 Regulations could never constitute "unlawful conduct" for these
purposes. However, the first defender submitted that it was necessary to consider the duties
imposed by the 2015 Regulation in the context of those regulations as a whole taking into
account the other remedies provided. In that context, it was not necessary for the court to
seek to innovate. The pursuer had a remedy in terms of the 2015 Regulations for the alleged
breach of Regulation 72(1)(b).
10
The lawfulness of the first defender's actions
[27]
The first defender's second argument was that the pursuer's averments in respect of
the alleged unlawfulness of its decision to extend the first defender's contract were not
relevant. Senior counsel recognised that, although the pursuer challenged the lawfulness of
the Abandonment Decision, the pursuer did not found on that in respect of its unlawful
means conspiracy case (see above at [18]).
[28]
In respect of the decision to extend the existing contract, the pursuer's averments
alleging a breach of Regulation 19, in reliance on Regulation 72(1)(b), were irrelevant
because they were immaterial. It was implicit in the pursuer's averments that it accepted
that the existing contract would require to be extended beyond 12 September 2023. The
pursuer's position was that such an extension should have been achieved in accordance with
clause 18.9(1)(g) of the existing contract. Accordingly, as the pursuer accepted that, on any
view, it was necessary for the existing contract to be extended, it was immaterial whether
the extension was achieved by reliance on clause 18.9(1)(g) or Regulation 19. The dispute
between the parties was not whether an extension was lawful but the duration of that
extension.
[29]
In this regard, the first defender submitted that the pursuer had failed to give fair
notice of its case as it had failed to aver what duration of extension of the existing contract
would have been lawful. The pursuer's case was that a 44 month extension was too long but
the pursuer had made no averments as to what length of extension ought to have been
granted. The first defender made the same criticisms of the pursuer's averments in respect
of an "interim procurement competition" (see Article 54). These averments ought not to be
admitted to probation. It followed from this that the pursuer also made no averments as to
11
what losses arose as a result of the difference between the extension that had been granted
and what the pursuer contended ought to have happened.
The second defender's arguments
[30]
The second defender challenged the relevancy of the pursuer's averments in relation
to both the alleged unlawful means conspiracy and causing loss by unlawful means.
Unlawful means conspiracy
[31]
Senior counsel for the second defender adopted both of the arguments advanced on
behalf of the first defender in respect of this part of the pursuer's case. With regard to the
first argument, senior counsel maintained that if the first defender were correct, it would
follow that the pursuer's case based on unlawful means conspiracy must fail. It was not
possible to have a conspiracy on one's own. This result would also follow in the event that
the first defender's second argument were to be upheld.
[32]
As a starting point to his own submissions, senior counsel submitted that economic
torts such as those which were the subject of discussion before me, had been the subject of
extensive judicial discussion in recent years. However, the tide of authority had been to
restrict rather than extend the scope of these torts (Racing Partnership Ltd & Ors v Done Bros
(Cash Betting) Ltd & Ors [2021] Ch 233 (Ct of Appeal) at paragraph 246; Secretary of State for
Health v Servier Laboratories Ltd [2020] AC 959 (UKSC) at paragraph 62).
[33]
In relation to the requirements for unlawful means conspiracy, senior counsel
accepted the four elements as identified by Lord Justice Leggatt in Cuadrilla Bowland Limited
and others v Persons unknown [2020] EWCA Civ 9 at paragraph 18: (1) an unlawful act by the
defendant, (2) done with the intention of injuring the claimant, (3) pursuant to an agreement
12
(whether express or tacit) with one or more other persons, and (4) which actually does injure
the claimant. Senior counsel also adopted the approach of Lords Sumption and Lloyd-Jones
in JSC that the "real test" is whether there is an absence of just cause or excuse for combining
to use unlawful means (see above at [24]).
[34]
The second defender noted that, in respect of the extension of the term of the existing
contract, the pursuer did not aver that it was unlawful for the second defender to agree to
that extension. The pursuer averred that the first defender had acted in breach of its
obligations under the 2015 Regulations. However, the second defender owed no duties
under those regulations.
[35]
A conspiracy was an agreement between two or more persons to effect an unlawful
purpose which results in damage (Crofter Hand Woven Harris Tweed Co Lt v Veitch
[1942] AC 435 at 440). Accordingly, on the pursuer's averments, any purported unlawfulness
could only be in the actions of the first defender arising from its duties under the
2015 Regulations. In the present case, the pursuer did not aver that there was a combination
of unlawful means. The alleged unlawfulness was one-sided. Moreover, following on from
the first defender's submissions, the first defender had sought to extend the second
defender's contract in order to maintain the provision of an essential service and the second
defender acceded to this. Just as the first defender had just cause to ask, so the second
defender had just cause to agree to provide the services. The second defender was not a
party to the first defender's decision to abandon the procurement process.
[36]
Senior counsel submitted that the authorities relied upon by the pursuer to establish
the proposition that, in the context of an unlawful means conspiracy, there was no
requirement for the defender to be the one who takes the unlawful action provided that he
or she is a party to the agreement did not, in fact, go so far. Otherwise, entirely innocent
13
parties could be sued on this basis. The pursuer relied on what was said by Dame Elizabeth
paragraph 222. However, it was submitted that the facts of that case which involved the
interaction of a series of companies all controlled by a single individual were quite different
and distinguishable from the present case. The pursuer also relied on Kuwait Oil Tanker
Company SAK (see above at [15]) but what was said in this case too had to be considered in
the context of its particular facts: an alleged scheme of fraud and embezzlement perpetrated
against companies by their directors. Lord Justice Nourse was careful, when giving the
opinion of the Court of Appeal, to stress the requirement, as a starting point, for the claimant
to prove the existence and nature of agreement upon which it founded (at paragraphs 132,
133 and 136). By contrast, the present case did not involve allegations of fraud, theft or
embezzlement by the defenders. An innocent party entering into a contract did not, by that
fact alone, become party to an unlawful means conspiracy. The pursuer's averments, it was
contended, were artificial. The pursuer sought to draw an inference of conspiracy from a
wholly innocent set of circumstances.
[37]
Senior counsel also highlighted what he characterised as being an inconsistency in
the pursuer's pleadings. The starting point for the alleged unlawful means conspiracy
averred in Article 56 (see [11] above) was the first defender's decision to abandon the
procurement process. This decision was said by the pursuer to have been made in reliance
upon an agreement in principle between the defenders to extend the second defender's
contract. The pursuer averred that the first defender had notified its intention to abandon
the procurement process by letter dated 28 June 2023 (Article 20). Thereafter the pursuer
averred that the first defender indicated its intention to extend the second defender's
contract in a letter dated 4 July 2023 (Article 50). This sequence of events was not consistent
14
with the fact that the pursuer also averred, at Article 49, that the defenders agreed the
extension to the second defender's contract on 22 August 2023. The logic of the pursuer's
averments was that there was not an enforceable agreement between the defenders until
several months after the date on which the first defender abandoned the procurement
process. However that decision to abandon was said by the pursuer to have been taken in
reliance on the agreement.
Knowledge of unlawfulness
[38]
The pursuer required to aver that the second defender had knowledge of all the facts
which made that extension unlawful, which it had failed to do (cf Moray Offshore, as above at
[15], at paragraph 72). In the present case, the bases upon which the pursuer relied, in terms
of Regulation 72(1(b), for the unlawfulness of the decision to extend the contract were not
matters within the knowledge of the second defender.
[39]
Senior counsel submitted further that, as a matter of law, the pursuer ought to have
averred that the second defender knew that the extension was unlawful. Senior counsel
urged me to adopt the reasoning of Lord Justice Lewison's dissenting opinion in Racing
Partnership (as above at [32]) at paragraphs 213 to 266. This was a policy decision. There
was no clear policy reason why the second defender should be held to be liable to
compensate the pursuer for a breach of duty by the first defender. Senior counsel
highlighted what was said at paragraph 247 by Lord Justice Lewison in his assessment of the
case law:
"Ninth, a number of the cases stress the need for blameworthiness on the part of the
conspirators. In OBG [2008] AC 1, para 166 Lord Nicholls said that a `high degree of
blameworthiness is called for'. In Total [2008] AC 1174, para 56 Lord Scott of Foscote
said that the circumstances must be such as to make the conduct `sufficiently
reprehensible' to justify imposing on those who have brought about the harm
15
liability in damages for having done so. It is not immediately obvious why making a
mistake about one's legal rights is blameworthy or reprehensible. In Meretz
Investments NV v ACP Ltd [2008] Ch 244 Toulson LJ said of one alleged conspirator at
para 170: `By ordinary standards of commercial probity [he] had a perfectly
legitimate reason for acting as he did. It would therefore be wrong to classify such
conduct as founding an action for an unlawful means conspiracy.'"
Intention to injure
[40]
The second defender also submitted that the pursuer had failed relevantly to aver
that the second defender had the necessary degree of intention to injure the pursuer. Senior
counsel did so essentially by emphasising similar points to those made on behalf of the first
defender. In this regard, senior counsel referred again to Lord Justice Lewison's dissenting
judgment in Racing Partnership (at paragraphs 232 and 233). A predominant intention to
injure was not required but, equally, causation was not, in itself, sufficient (OBG at
paragraph 62 per Lord Hoffman). The second defender drew attention to what was said in
Total Network by Lord Scott of Foscote that although the intent to cause harm does not
require to be the predominant purpose of the conspiracy, the circumstances must be such as
to make the conduct sufficient reprehensible to justify imposing liability on those who have
brought about harm (above at [23] at paragraph 56). The second defender also highlighted
what was said by Lord Walker of Gestingthorpe in Total Network as to the importance, when
considering unlawful means in the context of breach of statutory duty, of stressing the part
played by "means". It was not sufficient merely that there was an element of unlawfulness
somewhere in the story (at paragraph 96).
[41]
In the present case, the alleged unlawful means were not directed at the pursuer.
Further, it was not an inevitable consequence of the contract extension that the pursuer
would be harmed. This was not a case where the "obverse side of the coin" referred to by
Lord Nicholls in OBG (at paragraph 167) was present. In this regard, the second defender
16
also referred to what was said by Mr Justice Newey (as he then was) in Constantin Medien
[42]
Against the background of these authorities, senior counsel submitted that the
pursuer's case, as averred, was very far from what was required: a contract was concluded
between the defenders which, it transpires, is in breach of a statutory duty incumbent on the
first defender. That breach of duty, it was submitted, provided no justification for
categorising the second defender's intention as carrying the necessary intention to injure the
pursuer or for classifying the actions of the second defender as part of a conspiracy to injure
the pursuer.
Irrelevancy of averments of loss
[43]
Finally, the second defender submitted that the pursuer had entirely failed to give
notice of the basis on which the contract extension would deprive the pursuer of the award
of the Laboratory Managed Service contract in terms of the procurement exercise. The
pursuer had also failed to give notice of when it contends such a contract would have been
awarded. The averments of causation and loss were thus irrelevant and ought not to be
admitted to probation.
Causing loss by unlawful means
[44]
The second defender challenged the relevance of the pursuer's averments in
Article 57 for a number of reasons.
17
Anticipatory breach of contract clauses 18.9(1)(g) and (f)
[45]
Senior counsel noted that in Article 57, the unlawful means which the pursuer
founded upon was said to be an alleged anticipatory breach of contract by the second
defender. This breach was said to consist of both: first, the second defender informing the
first defender that the second defender would not comply with its obligations in terms of
clause 18.9.1(g) to continue to provide services after 12 September 2023; and, second, the
second defender informing the first defender that it would not continue to provide services
after 12 September 2023 in order to facilitate a mobilisation period for a new contractor, in
breach of clause 18.9.1(f).
[46]
Senior counsel noted that, in respect of the alleged breach of clause 18.9.1(f), the
pursuer relied upon the formulation "believed and averred". However, senior counsel
submitted that there was no averred basis which entitled the pursuer to draw this inference.
Whatever might be the position in respect of undisclosed documentation, the pursuer was
not entitled to guess. In any event, the circumstances provided for by clause 18.9.1(f) had
simply not arisen and therefore, in that regard, the pursuer's averments were irrelevant.
[47]
In respect of the alleged breach of clause 18.9.1(g), senior counsel noted that the
pursuer admitted, in Article 52, that the second defender had maintained to the first
defender that clause 18.9.1(g) was not apt to allow for a further extension of the contract
between the first and second defender. By the logic of the pursuer's position, the first
defender as the creditor in respect of the obligation, was entitled to accept the second
defender's breach or it could await the appointed time and insist on performance. The
pursuer made no averments about either option. In these circumstances, the pursuer not
having averred that the first defender insisted on performance, it followed that the pursuer
had not established that any breach by the second defender was actionable at the instance of
18
the first defender and, therefore, there was no relevant averment of unlawfulness on the part
of the second defender. The pursuer had also not addressed the provisions of Schedule
Part 12 of the contract which made provision for transition services.
[48]
For these reasons, the pursuer's case of causing loss by unlawful means lacked the
critical foundation of relevant averments of unlawfulness on the part of the second defender.
Interference with the liberty of the first defender to deal with the pursuer
[49]
Senior counsel noted that it was clear from both the majority in OBG (at paragraph 51
per Lord Hoffman) and the subsequent decision of the UK Supreme Court in Servier (as
above at [32]), that it was a necessary element of the tort of causing loss by unlawful means
that the unlawful means used by the defendant against a third party should have affected
the third party's freedom to deal with the claimant.
[50]
Applying this approach to the present case, the second defender submitted the
pursuer's case did not disclose any interference with the first defender's liberty to deal with
the pursuer. This was particularly so when one considered Schedule Part 12 of the
defenders' contract. Senior counsel submitted that this schedule provided a distinct
contractual mechanism whereby the second defender was obliged to provide services to the
first defender. Schedule 12 provided a means for the first defender to have continued to
receive services from the second defender whilst dealing with the pursuer, if that is what the
first defender had wanted. Of course, in the event, the first defender had not in fact sought
to make use of Schedule 12.
19
Absence of necessary intention
[51]
The second defender submitted that the pursuer had failed to aver that it had the
required intention to cause loss to the pursuer. Causation was not enough to infer loss (OBG
at paragraph 62 per Lord Hoffman). The pursuer's averments relating to the second
defender's view of clause 18.9 were not sufficient to entitle the pursuer to infer intention.
The second defender also drew attention to the fact that the defenders' contract contained a
dispute resolution provision clause 21.
[52]
For loss to flow from the position of the second defender, even on the hypothesis of
the pursuer, it would be necessary (i) for the first defender to take the view that it would not
or could not timeously dispute the construction of clause 18.9.1(g); (ii) for the first defender
to then take the decision to abandon the existing procurement due to this view rather than
the view that the procurement was unlawful; and (iii) for it to be the case that, but for (i)
and (ii), the first defender would probably have entered into a contract with the pursuer.
The convoluted chain of causation pointed away from the circumstances being those in
which there could exist the necessary intention to take unlawful means to cause injury to the
pursuer.
Averments of loss
[53]
Finally, the second defender submitted that the arguments advanced in respect of the
relevancy of the pursuer's averments of loss made in respect of unlawful means conspiracy
(see [43] above) were equally applicable to the pursuer's claim for causing loss by unlawful
means.
20
The pursuer's arguments
[54]
Senior counsel for the pursuer formally moved me to repel each of the defender's
motions but to reserve all parties' pleas as to relevancy.
The pursuer's case
[55]
At the outset, senior counsel sought to place the present hearing in the broader
procedural context of the parties' dispute (see [10] above). There was, he contended,
presently an asymmetry of information between the parties and the pursuer's pleadings
required to be seen through that lens. Notwithstanding that, he was content that his
pleadings be tested against what he described as "the hard edge of relevancy", however he
submitted that it was appropriate to consider any questions of specification in the light of
the ongoing disclosure issues between the parties.
[56]
The starting point for the pursuer's case was that, as the preferred bidder in the
procurement exercise run by the first defender, had that exercise been completed, the
pursuer would have been awarded the contract. However, instead, the second defender had
challenged the first defender's procurement exercise. During the course of the second
defender's challenge, the defenders had engaged in discussions. The pursuer's case was
that, in those discussions, the second defender had essentially threatened not to perform its
obligations in terms of clause 18.9(1) of the parties' contract. That had led to the defenders
entering into an agreement in terms of which the contract was extended for 44 months. In
reliance on that agreement, the first defender took the decision to abandon its procurement
exercise and the second defender did not persist in its challenges. In this regard, senior
counsel submitted that the fact that the notice to extend the defenders' contract was not
issued until sometime later was nothing to the point.
21
[57]
Senior counsel was also keen to stress, in response to the suggestion that the first
defender had been placed in a difficult position, that, so far as the pursuer was concerned,
there had been no requirement for the first defender to agree to the extension of the
pre-existing contract. That was not the only option available to the first defender. It was
open to the first defender to counter the second defender's threat and require the second
defender to perform its obligations under clause 18.9(1)(f) to co-operate in the transfer or, if
necessary, clause 18.9(1)(g) for an extension. The pursuer submitted that there was certainly
no justification for the 44 month extension granted by the first defender to the second
defender.
[58]
In respect of the pursuer's cases based on unlawful means conspiracy (Article 56)
and, separately, on causing loss by unlawful means (Article 57), senior counsel emphasised
that these were two discrete grounds of action. As to the first, the pursuer founded upon the
agreement between the defenders and the subsequent extension of the defenders' contract.
The pursuer did not rely upon the decision to abandon the procurement process as part of
the unlawful means conspiracy. As to the second, the pursuer founded upon the second
defender's threat not to perform its obligations under its contract with the first defender.
Unlawful means conspiracy
Intention
[59]
In response to the arguments made by both defenders in respect of the pursuer's
averments of intention, senior counsel accepted that there was no suggestion that the
predominant intention of the defenders had been to harm the pursuer or that they had acted
maliciously. However, that was not necessary in order relevantly to plead a case of this
kind. Senior counsel submitted that it was clear from the judgment of Lord Sumption and
22
Lord Lloyd-Jones in JSC that in an unlawful means conspiracy which is directed towards the
claimant, it was sufficient for there to be a constructive intent derived from the fact that the
defendants should have known that injury to the claimant would ensue (see JSC at
paragraph 13 and the reference to the Canadian Supreme Court case of Cement LaFarge Ltd v
BC Lightweight Aggregate Ltd [1983] 1 SCR 452). Senior counsel submitted that the nature of
the necessary constructive intention was explained in Lord Nicholls' speech in OBG albeit in
the context of the tort of causing loss by unlawful means:
"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.
...
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."
Senior counsel submitted that the test of intention in OBG has subsequently been held to be
authoritative in respect of unlawful means conspiracy claims (see ED&F Man Capital Markets
paragraph 484 and the authorities cited there).
23
[60]
Senior counsel submitted that, on the pursuer's pleadings, the present case was
precisely the type of "obverse side of the coin" case in which constructive intent was to be
inferred. There were only two horses in the procurement race the pursuer and the second
defender. The pursuer had been selected as the preferred bidder by the first defender. In
these circumstances, the unlawful extension of the second defender's contract was
necessarily going to exclude the pursuer. "Gain" as referred to by Lord Nicholls came in
many forms. In the present case, the first defender sought to maintain the provision of
services by taking what it perceived to be the path of least resistance in agreeing to extend
the second defender's contract. As to the second defender, its gain in the extension of the
contract was clear.
[61]
Senior counsel also rejected the second defender's characterisation of its pleadings as
inconsistent. The pursuer had averred a clear sequence of events in which the defenders
had reached an agreement in principle to extend the second defender's contract on or
around 28 June 2023. There was no inconsistency between this averment and the
subsequent averments relating to the execution of the 44 month extension on 22 August
2023. The pursuer's position was that the formal extension was in implement of the
agreement in principle.
Unlawful means
[62]
Senior counsel noted that the first defender accepted that breach of Regulations 19
and 72 of the 2015 Regulations could constitute "unlawful means" albeit he submitted that
the contrary view was not stateable. The issue was whether what was alleged by the
pursuer in this case was capable of constituting "unlawful means" for the purposes of a
24
claim based on unlawful means conspiracy as that concept has been developed in the case
law.
[63]
In relation to the first defender's argument that any breach of Regulation 72(1)(b)
was immaterial, senior counsel argued that this was misconceived. The pursuer did not
concede that any extension of the second defender's contract was either necessary or lawful.
The pursuer averred that extending the contract as the first defender had purported to do
was a breach of Regulation 72(1)(b) and was unlawful. Senior counsel submitted that this
raised a mixed issue of fact and law.
[64]
As to the second defender's argument that the unlawfulness upon which the pursuer
relied, being a breach of the 2015 Regulations, could not represent unlawfulness on the part
of the second defender, senior counsel submitted that this was based on a fundamental
misunderstanding of the law. Dame Elizabeth Gloster in Barclay Pharmaceuticals had made
quite clear that in a case of conspiracy there was no requirement that a defendant has to be
the one who takes the unlawful action provided that they are a party to the agreement (as
above at [36], at paragraph 222). In this regard, the pursuer also relied on the judgment of
Lord Justice Nourse in Kuwait Oil Tanker (at paragraphs 129 and 130).
Knowledge of unlawful means
[65]
The second defender also challenged the relevancy of the pursuer's pleadings on the
basis that the pursuer did not offer to prove that the second defender was aware that the
first defender's decision to extend its contract by 44 months was unlawful. The second
defender founded this part of its argument on the dissenting judgment of Lord Justice
Lewison in Racing Partnership.
25
[66]
The pursuer's response to this argument was straightforward. The court should
follow the majority decision in Racing Partnership. Lord Justice Arnold, having carefully
reviewed the authorities, had reached the conclusion that knowledge of the unlawfulness of
the means employed was not required for unlawful means conspiracy (at paragraph 139).
Lord Justice Phillips had agreed with this analysis of the authorities (at paragraph 171).
[67]
Senior counsel for the pursuer noted that, in this area of law which is so heavily
influenced by English law, the second defender was not arguing that the reasoning of the
majority should be rejected because it conflicted with an aspect of Scottish law. Instead the
second defender simply asserted that for "policy reasons" an economic operator in its
position should not be made liable for entering into a contract with a public authority which
a court later held had acted unlawfully. The pursuer submitted that there were good policy
reasons why liability should attach. Senior counsel submitted that there was no good reason
why conspirators ought to be able to thwart the 2015 Regulations: the second defender
might not be able to breach the regulations itself but there was no policy reason why its
conspiracy with the authority to do so ought not to be actionable.
[68]
Senior counsel also submitted that the question of the second defender's knowledge
had to be seen from the perspective that it was the incumbent operator. The second
defender was to be taken to be aware of the terms of its own contract. It was aware of what
it had said to the first defender as to its obligations under clause 18.9.1 of the contract.
Accordingly, it was aware of the primary facts upon which the pursuer relied to enable the
conclusion to be drawn that there was an agreement between the defenders and that acts
were carried out the extension of the second defender's contract as a means of injuring
the pursuer.
26
Averments of loss
[69]
The pursuer's case was that no extension of the second defender's contract was either
necessary or lawful in terms of Regulation 72(1)(b) of the 2015 Regulations. The pursuer
also averred that "but for" the second defender's anticipatory breach of contract, the first
defender would probably have entered into a contract with the pursuer (see Article 57). In
Articles 61 and 62, the pursuer then set out detailed averments as to the basis upon which
the losses it claimed were estimated. These averments proceeded on the basis that the
pursuer had been denied the opportunity of concluding a contract with the first defender.
These averments were relevant and ought to be admitted to probation.
Causing loss by unlawful means
Anticipatory breach of contract
[70]
In response to the second defender's criticisms of the pursuer's pleadings in respect
of anticipatory breach of contract, the pursuer's position was clear. The pursuer made
averments, in Article 46, that, prior to the end of June, the second defender had informed the
first defender that it, the second defender, would not comply with its obligations under
clause 18.9.1(g). The pursuer inferred also that the second defender had informed the first
defender that the second defender would not comply with its obligations to assist in a
transfer to a new contractor under clause 18.9.1(f). It was on this basis that the pursuer
averred, in Article 57, that as an inevitable consequence of the second defender's actions, the
first defender would suffer a gap in service provision from 13 September 2023, which led to
the first defender considering that it required to abandon the procurement exercise and
extend the second defender's contract.
27
[71]
The flaw in the second defender's argument in relation to actionability was that it
over-looked the fact that declaring that you are not going to perform your contract is a
free-standing wrong. In such circumstances, the wronged party had a number of
contractual remedies. In this case, the first defender had elected instead of exercising those
remedies to reach an agreement with the second defender to extend the contract. However,
the first defender's subsequent choice did not take away from the second defender's
wrongful act.
[72]
In relation to Schedule Part 12, the precise status of this document was not admitted
by the pursuer. It was an unsigned schedule which had been produced as part of the bundle
for the hearing.
Interference with the liberty of the first defender to deal with the pursuer
[73]
Senior counsel submitted that the second defender's argument on this point simply
did not take into account the pursuer's averments. The pursuer averred in Article 57 that
but for the second defender's anticipatory breaches of contract "the first defender would
probably have entered into a contract with the pursuer, as its preferred bidder". This
averment followed the passage of averments in which the pursuer set out its case to the
effect that, in light of the second defender's anticipatory breach, the first defender
considered itself required to abandon the procurement exercise and extend the second
defender's contract in order to avoid a gap in service provision. Accordingly, the pursuer
had clearly set out in averment that the liberty of the first defender to deal with the pursuer
had been interfered with as a consequence of the second defender's unlawful action.
28
Intention
[74]
The pursuer's response to this part of the second defender's argument was again to
point to its averments in Article 57 and, specifically:
"In refusing to comply with its contractual obligations to the first defender, the
second defender intended to cause economic harm to the pursuer by obstructing the
first defender from awarding the Procurement contract to the pursuer. As a result of
the second defender unlawfully refusing to comply with its contractual obligations to
the first defender, the pursuer has suffered loss."
[75]
As with the pursuer's case in relation to unlawful means conspiracy (see [59] and [60]
above), senior counsel submitted that the pursuer had relevantly pled a case in which
constructive intention was to be inferred: the pursuer's loss was the obverse side of the
second defender's gain.
Decision
[76]
There are two preliminary issues to address.
[77]
First, it was notable that, during the course of submissions, all three parties
proceeded on the basis that the law in Scotland in respect of both unlawful means
conspiracy and causing loss by unlawful means was as set out in the series of recent English
authorities to which reference was made during the course of submissions. None of the
parties suggested that there was any aspect of the present case, whether factual or legal,
which meant that the law as articulated in those authorities could not be applied to the
present case. Accordingly, I proceed on that basis. In this regard, I note that the same
approach has been taken in two recent Scottish cases (Moray Offshore (above at [15]) and
Kidd v Lime Rock Management LLP (Outer House) 2024 SLT 347 at paragraph 57).
[78]
Second, although senior counsel for the pursuer made something of the procedural
background to the debate I heard and to what senior counsel described as the "asymmetry
29
of information" between the parties, he accepted that it was appropriate that the pursuer's
pleadings be tested against "the hard edge of relevancy" as would be normal at a debate.
Unlawful means conspiracy
Intention
[79]
The pursuer's case does not rely on predominant intention; rather it is that the
necessary requirement of intent on the part of the defenders is one of constructive intent, to
be derived from the fact that the defenders should have known that the means selected the
allegedly unlawful extension of the second defender's contract would cause the pursuer to
suffer loss (see Article 57). The pursuer submits that, in the particular context of a
procurement exercise in which there were only two bidders and the pursuer was the
preferred bidder, the present case was one in which the gain to the defenders was the
"obverse side of the coin" described by Lord Nicholls in OBG (at paragraph 167) of the
pursuer's loss.
[80]
The first defender challenged the relevancy of the pursuer's position on the basis that
the pursuer's averments even if proved did not establish an intention on the part of the first
defender to injure the pursuer. The pursuer's own averments particularly those in
Article 57 concerning causing loss by unlawful means did not expressly criticise the first
defender but rather recognised that it had acted in order to ensure the continued provision
of an essential health service. In essence, the first defender's argument was that what was
averred did not have the "high degree of blameworthiness" referred to by Lord Nicholls in
OBG (at paragraph 166).
[81]
I am not persuaded by the first defender's arguments.
30
[82]
First, I consider that the pursuer has pled a relevant case of constructive intent on the
basis that, in the circumstances of the procurement exercise involving the three parties, both
defenders should have known that injury to the pursuer would ensue from the allegedly
unlawful extension of the second defender's contract (JSC at paragraph 13). As such, on the
pursuer's averments, the infliction of harm on the pursuer can properly be said to have been
the means by which the defenders intended to achieve their respective ends of the extension
of the second defender's contract. On the pursuer's averments, the pursuer's loss was more
than merely a foreseeable outcome of the extension of the second defender's contract. The
pursuer's averments thus satisfy the criterion detailed in OBG by Lord Hoffman (at
paragraph 62).
[83]
Equally, the relevancy of the pursuer's averments in respect of intention can also be
tested by reference to the approach described by Lord Nicholls in OBG (at paragraphs 164
to 167). On the basis of the pursuer's averments, the pursuer's alleged loss in being
deprived of the award of the contract is the other side of the coin to both defenders'
respective gain in the second defender's contract being extended.
[84]
The first defender argues that because the pursuer avers that the first defender
sought to extend the term of the second defender's contract "in order to ensure continued
provision of an essential health service" (Article 57), the pursuer's case on the first
defender's intention is rendered irrelevant. I do not agree. Such an approach would, I
consider, involve imposing a narrower meaning on the way in which the requirement of
intent is described in OBG than was intended. In particular, although, on the pursuer's
averments, the first defender may not have been motivated by seeking to enrich itself, I am
not prepared to conclude, as a matter of relevancy, that the first defender's objective of
31
seeking to maintain the continued provision of laboratory services could not fall within the
"economic interests" described by Lord Nicholls (at paragraph 164).
[85]
Second, I do not find the first defender's arguments based on blameworthiness or
reprehensibility to be of great assistance in this regard. As I read the references cited by the
first defender, the reference to the degree of blameworthiness is made to stress the
importance of the requirement of intent as an ingredient of unlawful means conspiracy as
opposed to establishing an additional requirement. This would seem particularly true of
Lord Nicholls' reference to the "high degree of blameworthiness" at paragraph 166 of OBG.
In any event, I consider that the assessment of the degree of blameworthiness involved can
only properly be carried out after proof. Certainly, I am not prepared to conclude, at this
stage, that, were the pursuer to establish its averments to the effect that, following an
anticipatory breach of contract by the first defender, the defenders had reached an
agreement whereby the first defender unlawfully extended the term of the second
defender's contract in breach of the 2015 Regulations, it would not be possible to
characterise the actions of the first defender as sufficiently reprehensible to justify the
imposition of liability.
[86]
Finally, I also do not consider that the first defender's position is advanced by
reference to the absence of just cause or excuse analysis articulated by Lord Sumption and
Lord Lloyd-Jones in JSC (see, in particular, paragraph 10). The first defender argued that it
was the pursuer's averments about the relationship between the second defender's
anticipatory breaches of contract and the position in which those placed the first defender
which provided the just cause or excuse for its actions.
[87]
As a starting point, I do not understand Lord Sumption and Lord Lloyd-Jones in
identifying the concept of the absence of just cause or excuse to be seeking to alter or replace
32
the four ingredients of unlawful means conspiracy being (1) an unlawful act by the
defendant, (2) done with the intention of injuring the claimant, (3) pursuant to an agreement
(whether express or tacit) with one or more other persons, and (4) which actually does injure
the claimant. Certainly that is not how their judgment has been regarded by the Court of
Appeal (see Cuadrilla Bowland, above at [33], paragraph 18). Rather, I understand their
Lordships to be seeking to identify, overall, a touchstone for the actionability of the tort of
conspiracy.
[88]
In any event, I am not prepared to hold, applying the approach articulated in JSC,
that the pursuer's averments are irrelevant. That is because considering both the nature of
the alleged unlawfulness the extension of the term of the second defender's
contract together with its relationship to the resultant damage to the pursuer as set out in
Article 57, I do not consider the pursuer is bound to fail. This part of the first defender's
argument depends upon the first defender being characterised as having no alternative but
to extend the second defender's contract in order to ensure the continued provision of
laboratory services. I do not consider that, read fairly, the pursuer's averments go so far.
[89]
The material part of the pursuer's averments in Article 57 are as follows:
"An inevitable consequence of the second defender's anticipated breach of contract
was that there would be a gap in service provision from 13 September 2023 if the
pursuer were awarded the Laboratory Managed Service contract because the pursuer
required time to `wind up' its services. In such circumstances, the first defender
considered itself required to abandon the Procurement and to extend the term of the
second defender's contract (notwithstanding that such decisions were unlawful) in
order to ensure continued provision of an essential health service."
It is notable that what is said by the pursuer to inevitably arise from the second defender's
anticipated breach of contract is that there would be a gap in service provision if the pursuer
were awarded the contract. The pursuer then avers that "the first defender considered
itself" required to abandon the procurement and to extend the term of the second defender's
33
contract. I do not consider that, if proved, these averments will necessarily provide the first
defender with a just excuse for the allegedly unlawful act of extending the term of second
defender's contract. The pursuer, notably, does not aver that the first defender had no
alternative but taking the decision to extend the term of the second defender's contract.
Rather, it avers that this is what the first defender considered itself required to do. In the
circumstances, I consider that assessing the unlawfulness of that act (if any) together with its
relationship with the damage caused to the pursuer (if any) is a matter properly to be dealt
with after proof.
[90]
Essentially for the same reasons, I also reject the arguments advanced on behalf of
the second defender in respect of intention (see [40] to [42] above).
Unlawfulness
[91]
Under this heading, the first defender challenged the relevancy of the pursuer's
averments on the basis that they were "immaterial". As I understood this aspect of the first
defender's argument, it was premised on the basis that the pursuer accepted that some
extension of the pre-existing contract between the defenders would be required.
Accordingly, so argued the first defender, the pursuer's case was not about whether there
should have been an extension but only about how long that extension should have been.
On this basis, the first defender also challenged the specification of the pursuer's pleadings
(see [29] above).
[92]
I consider that the short answer to this part of the first defender's argument is that it
proceeds on a false premise and, therefore, falls to be rejected. The pursuer avers, in
Article 52, in relation to the first defender's decision to extend the second defender's contract
that there were "no economic or technical reasons which would prevent a change of
34
contractor". Similar averments are made in Article 55. Based on the pleadings together with
the submissions of senior counsel, I did not understand that any concession was made by
the pursuer that any extension of the second defender's contract was either necessary or
lawful.
[93]
The second defender advanced two related arguments in respect of this part of the
pursuer's case.
[94]
First, the second defender criticised what senior counsel characterised as the
inconsistency in the pursuer's pleadings. This was said to be the fact that the pursuer
founded on an alleged agreement between the defenders on or around June 2023 but also
averred that the extension of the contract was not actually executed until 22 August 2023.
Read fairly, I do not consider that there is any inconsistency in the pursuer's position.
In Article 46, the pursuer avers that on or around 28 June 2023, the defenders "agreed in
principle" that they would extend the second defender's contract. There is no inconsistency
in the fact that the pursuer avers that the defenders did not actually execute the extension
until 22 August 2023. Also, standing what was said in Kuwait Oil by Lord Justice Nourse (at
paragraph 111), I do not consider that anything turns on the fact that the pursuer founds its
case of conspiracy on an agreement in principle as opposed to an express, formal agreement.
[95]
Secondly, the second defender challenges the pursuer's case on the basis that the
unlawfulness relied on by the pursuer the alleged breach of the 2015 Regulations in
extending the second defender's contract was one-sided in that those regulations imposed
no obligations on the second defender.
[96]
I do not consider that the "one-sided" unlawfulness pled by the pursuer renders its
case of unlawful means conspiracy irrelevant. In JSC, Lords Sumption and Lloyd-Jones
emphasised that, in English law, the unlawful means conspiracy was, in itself, actionable as
35
a distinct tort it was not merely a form of secondary liability (at paragraph 9). By reference
to the speech of Lord Wright in Crofter Hand Woven Harris Tweed Co Ltd v Veitch
[1942] AC 435 at 462, their Lordships made the point that it is in the fact of the conspiracy that the
unlawfulness resides. When analysed in this way, it is apparent why Dame Elizabeth
Gloster emphasised in Barclay Pharmaceuticals that, provided a claimant can establish a
combination or agreement between the defendants, it is not necessary for each defendant to
have taken the allegedly unlawful action provided that they were parties to the agreement
(at paragraph 222). The same point is made by Lord Justice Nourse in Kuwait Oil (at
paragraph 133).
[97]
I am not persuaded by the second defender's argument that these statements made
in Barclay Pharmaceuticals and Kuwait Oil are in some way inapplicable to the present case
because of the different factual circumstances in those cases. To begin with, it seems to me
that these statements are based on the nature of the tort as opposed to the particular facts of
the cases concerned. Furthermore, the second defender's argument conflates two separate
elements of the tort, namely: first, the nature of the agreement founded upon; and
secondly, the unlawful means alleged. Although it is clear that in order successfully to
prove a case of unlawful means conspiracy, it is necessary to establish that each of the
defenders was a party to the agreement founded upon, it does not follow that each of the
defenders requires to have taken part in the unlawful acts carried out pursuant to that
agreement.
[98]
Finally, I do not accept the second defender's characterisation of the set of
circumstances in the present case, certainly as pled by the pursuer, as being "wholly
innocent". As I have noted above (at [85], in the context of the pursuer's averments of
intention), I am not prepared to conclude, as a matter of relevancy, that the pursuer is bound
36
to fail at this stage. Rather, I consider that after evidence has been heard it will be necessary
to see what part, if any, each of the defenders played in the circumstances then established.
Knowledge of unlawfulness
[99]
The second defender makes two arguments under this heading.
[100]
First, the second defender argues that the pursuer has not averred the second
defender had knowledge of all the facts which rendered the extension of the contract
allegedly unlawful. Secondly, more fundamentally, the second defender argues, as a matter
of law, that the pursuer's claim is irrelevant because the pursuer has not averred that the
second defender was aware that the extension of the contract was unlawful.
[101]
I reject both of these arguments.
[102]
In respect of the first, the pursuer's case in Article 46 is:
"On or around 27 June and 28 June 2023, the first and second defender engaged in
negotiations about the prospect of extending their existing contract should the first
defender elect to abandon the Procurement. Prior to said negotiations, the second
defender had informed the first defender that it would not comply with its obligation
under Clause 18.9.1(g).... The second defender was contractually obliged to comply
with Clause 18.9.1(g). Believed and averred that the second defender was also
contractually obliged to provide services to the first defender at the first defender's
request after the expiry of the defenders' contract under Clause 18.9.1(f). Believed
and averred that the second defender informed the first defender that it would not
comply with that provision. On or around 28 June 2023, the first defender and the
second defender agreed in principle that they would extend their existing contract by
a period of 44 months notwithstanding that such an extension was not permitted by
the 2015 Regulations."
In essence, it is the pursuer's averred case that the reason that the extension was not lawful
in terms of Regulation 72(1)(b) was precisely because that extension was made in the context
of what the pursuer avers took place in the negotiations towards the end of June 2023. As
the second defender was a party to these discussions, I consider that the pursuer has made
averments, which if proved, would entitle the court to conclude that the second defender
37
knew or ought to have known all the facts which rendered the decision to extend the
contract unlawful.
[103]
As senior counsel frankly acknowledged, in order to succeed with its second
argument under this head, I required to be persuaded that the majority, Lords Justice
Arnold and Phillips, had erred in Racing Partnership. In short, I am not so persuaded.
I reach this conclusion principally because, although it is apparent that the delimitation of
the so-called four economic torts is one which raises difficult issues of policy, the difference
in opinion between Lord Justice Lewison and the majority in Racing Partnership was
decisively informed by a detailed analysis of prior precedent. In particular, the learned
Lords Justice reached differing views on what was to be taken from British Industrial Plastics
Limited v Ferguson [1938] 4 All ER 504, on the one hand, and Belmont Finance Corpn v Williams
Furniture Ltd (No 2) [1980] 1 All ER 393, on the other. In these circumstances, absent any
issue of Scots law or factual circumstance in the present case which would point to another
conclusion, I see no reason not to follow the majority in its decision that:
"Accordingly, the conclusion I draw from the authorities is that, having regard both
to the general statements of the ingredients of the tort which do not include any
requirement of knowledge of unlawfulness, and to the persuasive force, even if not
binding status, of Churchill v Walton and Belmont v Williams, knowledge of the
unlawfulness of the means employed is not required for unlawful means
conspiracy." (at paragraph 139 per Arnold LJ see also paragraph 171 per Phillips
LJ)
[104]
For completeness, I note that it is not clear to me that even if, contrary to the views of
the majority, Lord Justice Lewison were to be taken to have correctly stated the law of
England and Wales as to the requirement for knowledge of unlawfulness in a claim based
on unlawful means conspiracy, it would necessarily assist the second defender's argument.
This is because the alleged unlawfulness which the pursuer's case of unlawful means
38
conspiracy founds upon is breach of the 2015 Regulations not breach of private right.
Lord Justice Lewison's conclusion is that:
"... where the unlawful means consist of a violation of some private right,
knowledge of unlawfulness is an ingredient of the tort of intention to injure by
unlawful means; and of conspiracy to commit that tort." (at paragraph 265,
emphasis added)
As this conclusion illustrates, in his reasoning Lord Justice Lewison is careful to distinguish
between situations in which the alleged unlawfulness concerns a breach of private right as
opposed to breaches of, for example, criminal law or other types of statutory duty (see, for
example, paragraph 234, 235, 239 and 240).
Averments of loss
[105]
The final argument advanced by the second defender in respect of the pursuer's case
of unlawful means conspiracy was to criticise the pursuer's averments of causation and, as a
result, loss. The pursuer had failed, it was contended, to give notice of the basis upon which
it was said that the extension of the second defender's contract had deprived the pursuer of
the award of the Laboratory Managed Service contract. The second defender also raised this
point in the context of the pursuer's case of causing loss by unlawful means.
[106]
As raising an issue of relevancy, I struggled to understand this part of the second
defender's argument. The pursuer's averred case is that, but for the second defender's
anticipatory breaches of contract, the first defender would probably have entered into a
contract with the pursuer as the preferred bidder for the provision of the Laboratory
Managed Service (Article 57). Also in Article 57, the pursuer avers that the basis for this
conclusion is that it arose because, as a result of the second defender's alleged anticipatory
breaches of contract, the first defender considered itself required both to abandon the
39
procurement exercise and to extend the second defender's contract. The pursuer then
pleads the loss it contends arose from being deprived of the Laboratory Managed Service
contract in Articles 61 and 62 of condescendence.
[107]
On this basis, I consider that the pursuer has set out a relevant case on causation and
loss and I reject the second defender's argument.
Causing loss by unlawful means
Anticipatory breach of contract
[108]
The second defender challenged the relevancy of the pursuer's case in two respects.
[109]
First, as a matter of pleading, the second defender maintained that, in respect of the
pursuer's case regarding the alleged anticipatory breach of clause 18.9.1(f), there was no
proper basis for the use of the formulation "believed and averred". Further and in any
event, the circumstances provided for in clause 18.9.1(f) had simply not arisen and,
therefore, these averments were irrelevant.
[110]
The second argument was more fundamental. The second defender contended that
the pursuer had not averred an actionable wrong in respect of the alleged breach of
clause 18.9.1(g). This argument was advanced on the basis that, following on from an
anticipatory breach of contract, a creditor in the position of the first defender could either
accept the breach or it could wait for the appointed time and insist on performance. The
pursuer had not made averments about either of these options. Accordingly, as I
understood it, the second defender's point was that the pursuer had not set up the
actionability of the alleged unlawfulness upon which it founded.
[111]
I am not persuaded by either of these arguments.
40
[112]
In respect of the first, the pursuer's averred case is that the actions of the second
defender's anticipatory breaches of contract were communicated to the first defender prior
to the defenders engaging in negotiations about the prospect of extending the second
defender's contract at the end of June 2023 (Article 46). The pursuer goes on to aver that the
defenders concluded an agreement in principle to extend the second defender's contract and
that the first defender abandoned the procurement process in reliance on that agreement.
The pursuer then avers, in Article 57, that:
"An inevitable consequence of the second defender's anticipated breach of contract
was that there would be a gap in service provision from 13 September 2023 if the
pursuer were awarded the Laboratory Managed Service contract because the pursuer
required time to `wind up' its services. In such circumstances, the first defender
considered itself required to abandon the Procurement and to extend the term of the
second defender's contract (notwithstanding that such decisions were unlawful) in
order to ensure continued provision of an essential health service."
On the basis of these averments, I consider that the pursuer has established a reasonable
basis for inferring that, at or before the negotiations, the second defender had informed the
first defender that it would not comply with its obligations in terms of clause 18.9.1(f)
because that is what led the first defender to consider that it required to abandon the
procurement and extend the second defender's contract.
[113]
In respect of the second argument, the second defender's argument takes an
unjustifiably restrictive approach to the concept of actionability in this context. In OBG, the
majority of their Lordships were of the view that acts against a third party counted as
unlawful means only if they were actionable by that third party if he or she suffered loss.
In developing the concept of actionability, Lord Hoffman said:
"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
41
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." (at paragraph 49)
I consider that the pursuer's case, as averred, sets out unlawfulness falling within the
qualification described by Lord Hoffman. The alleged anticipatory breach of contract was,
on the pursuer's case, a threat by the second defender that it would not perform its
obligations under the contract. The pursuer contends that, in the face of the second
defender's actions, the first defender submitted to the threat and the defenders concluded an
agreement.
[114]
I do not consider that the second defender's argument is assisted by its reference to
Schedule Part 12. This is for two reasons. First, the precise status of this document is not
clear. The second defender pleads that the defenders agreed to add this schedule to the
contract in April 2016 (Answer 46). However, these averments are not admitted by the
pursuer and thus remain matters for proof. Second, and in any event, I am not prepared to
conclude that the provisions of Schedule Part 12 represented obligations which were so
distinct from those contained in clause 18.9.1 as to render the pursuer's averments
concerning the second defender's anticipatory breach of clause 18.9.1(f) irrelevant.
[115]
Accordingly, I do not consider that the pursuer's averments in respect of the alleged
anticipatory breach of contract by the second defender are irrelevant.
Interference
[116]
As I understood it, the second defender's argument under this heading was
essentially a re-statement of its argument concerning the pursuer's averments in respect of
anticipatory breach. The second defender's contention is that the pursuer has failed to aver
42
that the alleged unlawful means used by the second defender affected the first defender's
freedom to deal with the pursuer. This was because the pursuer had made no averment to
the effect that the first defender's freedom to contract with the pursuer had been interfered
with. The second defender again referred to and relied upon Schedule Part 12 in this regard.
As such, the second defender contends that the pursuer has failed to aver one of the
necessary elements of a claim based upon an allegation of causing loss by unlawful means as
explained by the UK Supreme Court in Servier.
[117]
I consider that the passage from Lord Hoffman's speech in OBG which I have quoted
above (at [113]) demonstrates that the second defender's argument is not, in fact, supported
by Servier.
[118]
In that case, Lord Hamblen, effectively giving the judgment of the court, refers to the
"dealing requirement" as being the requirement that, in a claim for causing loss by unlawful
means, the unlawful means "should have affected the third party's freedom to deal with the
claimant" (at paragraph 2). In his judgment, Lord Hamblen principally considered two
questions: first, whether the dealing requirement formed part of the ratio of the earlier case
of OBG; and, second, whether OBG ought to be departed from. Lord Hamblen's answer to
the first question involved a detailed analysis of the relevant parts of Lord Hoffman's speech
in OBG (which included paragraph 49 quoted above). Lord Hamblen concluded that
Lord Hoffman did incorporate the dealing requirement as an essential requirement of a
claim for causing loss by unlawful means (at paragraph 63 of Servier and following).
Thereafter, Lord Hamblen concluded that there was no good or sufficient reason for
departing from OBG (at paragraph 100).
[119]
Accordingly, I do not consider that Lord Hamblen's judgment in Servier can be read
as suggesting that the example given in paragraph 49 of Lord Hoffman's speech of a
43
relevant claim of causing loss by unlawful means through the making of threats was, in
some way, insufficient.
[120]
In any event, the second defender's argument depends upon glossing the
requirement that the third party's freedom to deal with the claimant is "affected" such that
the interference which is averred by the pursuer is not sufficient. The second defender
appears to contend that because, on the pursuer's case, the first defender was not formally
prevented from contracting with the pursuer, the dealing requirement was not satisfied.
I do not consider that the second defender's approach is consistent with Lord Hoffman's
judgment in OBG. Applying the second defender's approach it is difficult to see on what
basis the cases of fraudulent inducement referred to by Lord Hoffman as examples (at
paragraphs 49 and 50) would satisfy the dealing requirement. On the second defender's
logic, merely being induced to act in a particular way does not restrict one's freedom to
ignore the inducement. Yet Lord Hoffman clearly considers that these examples, together
with the use of threats referred to in paragraph 49 of his speech, do constitute unlawful
means for this purpose.
[121]
Insofar as the second defender relied upon Schedule Part 12 in support of this part of
its argument, I have dealt with this above at [114] and consider that the same reasoning
applies here mutatis mutandis.
Intention
[122]
Finally, the second defender sought to challenge the pursuer's averments in respect
of causing loss by unlawful means on the basis that they did not disclose the necessary
intention on the part of the second defender. Essentially, the argument was that the causal
chain relied upon by the pursuer to link the alleged unlawfulness to the purported loss to
44
the pursuer was so convoluted as to make it impossible to infer the necessary intention on
the part of the second defender.
[123]
I have addressed the question of intention in the context of the pursuer's claim of
unlawful means conspiracy (above at [79] to [90]). In particular, I concluded that, on the
pursuer's averments, in the circumstances of the procurement exercise involving the three
parties, the infliction of harm on the pursuer could properly be said to have been the means
by which the defenders intended to achieve their respective ends (at [82]).
[124]
For similar reasons, I consider that the pursuer has pled a relevant case of intention
in respect of its claim of causing loss by unlawful means. In the context of the first
defender's procurement exercise which involved only the pursuer and the second defender,
the pursuer has averred that the second defender pursued a course of action informing the
first defender that it did not intend to comply with its obligations in respect of continuing
provision of services after 12 September 2023 which was intended to cause harm to the
pursuer by obstructing the award of a contract by the first defender to the pursuer.
I consider these averments establish a situation in which the pursuer's loss is, in
Lord Nicholl's words, "the obverse side" of the second defender's gain (OBG at
paragraph 167).
[125]
In argument, the second defender raised questions which, it was contended,
undermined the pursuer's case: why had the first defender not challenged the second
defender's alleged breach of contract? How was the pursuer's case in respect of the
abandonment of the procurement exercise consistent with the first defender's view that that
exercise was unlawful? On what basis could it be said that the first defender would
probably otherwise have entered into a contract with the pursuer? I do not gainsay these
questions but I am not persuaded that they can be resolved without the hearing of evidence.
45
Disposal
[126]
In light of the foregoing, I will repel the defenders' motions.
[127]
At debate, the parties were agreed that, following my decision on the arguments
which I heard, the case should be put out by order so that I could be addressed on further
procedure in light of my decision. Accordingly, I will proceed on this basis.
[128]
I will reserve all questions of expenses meantime.
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