Baldwin & Anor v Berryland Books

Liability for unlawful means conspiracy requires actual intention to injure, or reckless indifference consisting of a conscious decision not to inquire into a material fact. Mere foresight of possible harm, or an assumption that another person may be engaging in unspecified malpractice, is insufficient.

Where joint representation has obscured an appellant’s separate and credible defence, and the trial judge has not evaluated the evidence against that defence, findings of fact founded on the joint case may be unsafe. The appellate court may set aside consequential findings of breach of an employee’s duty of fidelity.

Berryland Books alleged that its director and employees diverted its children’s-book business to a competing company, BK Books. The trial judge held the defendants liable for unlawful means conspiracy. He also found that Sophie Baldwin, an employee, had breached her duty of fidelity, and ordered an inquiry as to damages.

Baldwin appealed on the basis that she believed BK Books to be an imprint of Berryland, not a separate competing company. Dr Ramasan Navaratnarajah appealed on the basis that his passive role in incorporating BK Books did not establish the knowledge or intention required for conspiracy. The central issue was whether the findings against each appellant were legally and evidentially sustainable.

Appeals allowed. The court set aside the findings of liability and the order for an inquiry as to damages against both appellants.

1. An unlawful means conspiracy requires loss caused by unlawful acts done pursuant to a combination or agreement to injure the claimant. The participants must share the relevant object and be sufficiently aware of the surrounding circumstances. The court applied the principles stated in Kuwait Oil Tanker Co SAK v Al Bader, [2000] 2 All ER (Comm) 271.

2. The necessary mental element is actual intention to injure or reckless indifference. Reckless indifference means a conscious decision not to inquire into a material fact. Foresight of probable harm does not suffice: OBG Ltd v Allan, [2007] UKHL 21.

3. The judge’s finding that Ramasan assumed the risk of involvement in some unspecified malpractice could not establish either the necessary knowledge or an intention to injure. There was no finding, and no evidential basis for a finding, that he consciously declined to inquire into facts that would supply that knowledge.

4. Baldwin had not been separately represented at trial. Her evidence advanced a distinct defence: she understood BK Books to be a Berryland imprint intended to market higher-value products. The judge had rejected the jointly advanced French Venture case, but did not evaluate the emails, sell-sheets, resignation and other evidence against Baldwin’s personal explanation. That failure rendered the findings of conspiracy unsafe. The same defect affected the findings that she had breached her duty of fidelity.

• Court of Appeal (Civil Division): Allowed the appeals and set aside the liability findings and inquiry as to damages against Baldwin and Navaratnarajah: [2010] EWCA Civ 1440.
• High Court, Chancery Division: On 24 July 2009, His Honour Judge Hodge QC found the defendants liable for conspiracy to injure Berryland and made related findings of breach of duty.