Secretary of State for Health and another v Servier Laboratories Ltd and others

The tort of causing loss by unlawful means requires the defendant’s unlawful conduct to affect a third party’s freedom to deal with the claimant. This dealing requirement is an essential control on liability for pure economic loss. Factual causation through a third party, without affected dealings, is insufficient.

A departure from binding precedent requires more than academic criticism or hypothetical hard cases. The court must be satisfied that the precedent impedes the proper development of the law, produces injustice or conflicts with public policy, and that departure is a safe and appropriate remedy. The interdependent controls governing unlawful means and intention cannot sensibly be altered selectively.

The appellants funded medicines supplied by the NHS. They alleged that the respondents had procured, defended and enforced a pharmaceutical patent through deceit practised on the European Patent Office and the English courts. This allegedly delayed generic competition and caused the appellants to pay higher prices.

Roth J struck out the claim in the tort of causing loss by unlawful means: [2017] EWHC 2006 (Ch); [2017] 5 CMLR 17. The Court of Appeal dismissed the appeal: [2019] EWCA Civ 1160; [2020] Ch 717.

The appellants had no dealings with the bodies allegedly deceived. The central questions were whether the dealing requirement formed part of the ratio of OBG Ltd v Allan and, if so, whether the Supreme Court should depart from that precedent under the 1966 Practice Statement.

1. Appeal dismissed. Lord Hamblen, with whom Lord Reed, Lord Hodge, Lord Lloyd-Jones, Lord Briggs and Lord Kitchin agreed, held that the dealing requirement formed part of the ratio of OBG Ltd v Allan [2007] UKHL 21. Lord Sales agreed and gave additional reasons.

2. The majority in OBG intended to define the essential elements of the unlawful means tort. Lord Hoffmann’s formulation required unlawful interference with a third party’s freedom to deal with the claimant. Its second sentence could not be separated from the accompanying definition. The other members of the majority understood and endorsed that requirement. Their treatment of earlier authorities and their concern to keep the tort within reasonable bounds confirmed its decisional character.

3. The dealing requirement delineates the necessary connection between the unlawful means and the claimant’s loss. This is particularly important because the tort permits recovery for pure economic loss by someone other than the immediate victim of the wrong. It also reduces the risk of indeterminate liability. Factual causation or the use of the third party as an instrument is too weak and uncertain to perform that limiting function.

4. The conditions for departing from precedent under the 1966 Practice Statement were not satisfied. Academic criticism and hypothetical examples did not show that OBG had caused injustice, uncertainty or impeded legal development. Nor did the proposed alternatives provide a safe and appropriate reform. The dealing requirement counterbalances OBG’s comparatively broad conception of intention, under which harm intended as a means to an end is sufficient.

5. The appellants could not remove the dealing requirement while retaining the remaining elements of OBG. Any future reconsideration of the restrictions concerning dealings and independently actionable unlawful means would also require examination of the test of intention. The present claim depended on the existing broad test and was not a suitable vehicle for comprehensive reform.

6. Because the European Patent Office and the English courts had no dealings with the appellants, the pleaded claim lacked an essential element of the tort and had been properly struck out.

1. United Kingdom Supreme Court: Dismissed the appeal and affirmed that the dealing requirement formed part of the ratio of OBG Ltd v Allan.
2. Court of Appeal: Dismissed the appeal from Roth J, holding that OBG imposed an essential interference-with-dealings requirement: [2019] EWCA Civ 1160; [2020] Ch 717.
3. High Court, Chancery Division: Roth J struck out the unlawful means tort claim because the alleged conduct did not affect any third party’s freedom to deal with the appellants: [2017] EWHC 2006 (Ch); [2017] 5 CMLR 17.