Kuwait Oil Tanker Company SAK & Anor v Al Bader & Ors

An unlawful-means conspiracy is actionable where loss results from unlawful action taken under a combination or agreement intended to injure the claimant. Injury need not be the conspirators’ predominant purpose. Agreement, participation and intention may be inferred from conduct, but every loss claimed must result from an act within the proved common design.

A conspiracy to commit torts remains independently actionable and does not merge into the underlying torts. Under the former double-actionability rule, the foreign law need only impose civil liability for the underlying facts; it need not recognise a cause of action called conspiracy.

Directors and others controlling company funds are treated as actual trustees of those funds. Fraudulent or fiduciary misapplication may justify compound interest as a substantive restitutionary remedy.

The claimants alleged that senior officers and an employee had combined to misappropriate company funds through four fraudulent schemes. Moore-Bick J found a single unlawful-means conspiracy, breaches of fiduciary duty and liability to account, and awarded very substantial sums with compound interest.

The defendants appealed on conspiracy, double actionability, fiduciary liability and interest. New banking evidence also prompted extensive challenges to the factual findings. The central questions were whether each defendant participated in the proved conspiracy and for what period, whether Kuwaiti civil liability satisfied double actionability, and whether the fiduciary and compound-interest awards were sustainable.

1. Disposition. The appeals of Mr Al Bader and Mr Qabazard were dismissed. Captain Stafford’s appeal was allowed in part because he was not liable for losses incurred after he left Kuwait in September 1989. The sums payable by him were to be reduced accordingly.
2. Unlawful-means conspiracy. The tort requires loss caused by unlawful action taken pursuant to a combination or agreement intended to injure the claimant. The injury need not be the conspirators’ predominant purpose. By contrast, predominant purpose is required where the means are lawful. Civil conspiracy consists of concerted action causing damage, rather than the unexecuted agreement alone.
3. An agreement may be express or tacit. Participation and intention may be inferred from overt acts, including deliberate conduct undertaken with knowledge of its consequences. Each conspirator need not perform every act. The claimant must nevertheless prove the agreement’s scope, each material unlawful act, and that the act was performed pursuant to the common design.
4. The judge was entitled to find that Mr Al Bader and Mr Qabazard participated in all four fraudulent schemes. Captain Stafford joined the conspiracy in 1986 and was liable for schemes within its scope while employed by the claimants. The evidence did not establish an agreement by him to participate after retirement. His later silence and assistance in a cover-up did not, without participation in or benefit from later misappropriations, make him liable for subsequent losses.
5. Merger and double actionability. A conspiracy to commit torts does not merge into the underlying torts. Both causes of action may be pleaded, although there can be no double recovery. Under the former common-law rule, the underlying facts needed to be actionable in England and civilly actionable under the foreign law. Kuwaiti law imposed materially corresponding civil liability despite having no cause of action bearing the name conspiracy.
6. Fiduciary liability and interest. Persons controlling company funds and owing fiduciary duties are treated as actual trustees, not constructive trustees. Misapplication established their liability without separate proof of dishonesty. Kuwaiti restitutionary duties could be characterised by an English court as fiduciary. Compound interest was a substantive adjunct of restitution for fraudulent or fiduciary misapplication. Article 267 of the Kuwait Civil Code 1980 supplied a corresponding substantive right, so the award was upheld.

1. Court of Appeal (Civil Division). In Kuwait Oil Tanker Company SAK & Anor v Al Bader & Ors [2000] EWCA Civ 160, the appeals of Mr Al Bader and Mr Qabazard were dismissed. Captain Stafford’s appeal was allowed to the extent of excluding losses incurred after September 1989.
2. High Court, Commercial Court. Moore-Bick J gave judgment on 15 December 1998 against all three defendants for conspiracy and breach of fiduciary duty, with compound interest. No citation for that judgment is stated.