Tower Hamlets v Chavda & Ors

A conspiracy to injure by unlawful means requires a combination pursuing a common intention, an intention to injure the claimant, unlawful acts, and loss caused by those acts. Injury need not be the predominant purpose. The agreement may be tacit and inferred from the parties’ conduct. Serious allegations remain subject to the civil standard of proof, but require cogent evidence commensurate with their seriousness. A person may be involved in the management of a company under section 15(4) of the Company Director’s Disqualification Act 1986 without being a registered director, where he is directly or indirectly concerned in, or takes part in, management.

The claimant local authority sought recovery of substantial sums paid for the accommodation of asylum seekers. It alleged that the first defendant, the manager responsible for asylum-seeker assessments, and the second defendant, who operated the accommodation businesses, had conspired fraudulently to impose liabilities on the authority for persons whom it was not legally responsible to support. It also alleged that the second defendant had been involved in managing a company while disqualified from acting as a director, and that the third defendant had participated in that management.

The central issues were whether the conspiracy was established, whether the payments were bribes rather than repayment of a debt, and whether the second and third defendants had the requisite involvement and knowledge under section 15 of the 1986 Act.

1. Conspiracy. The court applied the principles stated in Kuwait Oil Tanker Company SAK v Al Barder & Others [2000] 2 All ER (Comm) 271. For conspiracy to injure by unlawful means, the claimant had to prove an intention to injure, although injury need not be the predominant purpose; unlawful action pursuant to a combination; and loss resulting from that action. No express agreement was required. A tacit combination and common end could be inferred from the parties’ acts.
2. The claimant proved the conspiracy on the balance of probabilities. The defendants’ deliberate abandonment of established assessment procedures, the completion of forms by the accommodation provider, the authorisation of payments for persons already supported by NASS, and the secret payments to the responsible manager established a dishonest arrangement. The payments were bribes, not repayment of a genuine debt. The defendants’ failure to detect the arrangement did not provide a defence.
3. The seriousness of the allegations required cogent evidence commensurate with their seriousness, but the applicable standard remained the balance of probabilities. The evidence established that the two principal conspirators intended to injure the claimant by imposing liabilities which it would otherwise not have undertaken.
4. Company management. Section 15(4) of the Company Director’s Disqualification Act 1986 applied to a person concerned, directly or indirectly, or taking part, in the management of a company. The second defendant was, in substance, the directing mind of Abbey and had acted as though he controlled it. His involvement while disqualified was therefore established, making him liable for the company’s debts.
5. The third defendant was a director and was willing to act on her husband’s instructions, but the court was not satisfied that she knew of his disqualification or played any meaningful role in management. The fraud claim against the principal conspirators and the management claim against the second defendant were established. Quantum and debt were left for the parties to resolve, failing which directions would be given.