Dear Colleagues;

The decision of the High Court of Australia today in Talacko v Talacko [2021] HCA 15 (12 May 2021) https://eresources.hcourt.gov.au/downloadPdf/2021/HCA/15 concerns a claim brought relying on the “economic tort” of unlawful means conspiracy. It really breaks no new ground on the elements of that tort, turning instead on the question of whether “loss” has occurred where a tort has caused the loss of possible court case (a “chose in action”) when the result of the possible case is uncertain. The decision is that loss of a chose in action does amount to actionable harm, and the court can value it based on the likelihood that the court case will succeed discounted for the possibility that the claim might be lost in other ways.

On the tort of unlawful means conspiracy, see the joint judgment at [25] (footnotes omitted, emphasis added)

 

In Williams v Hursey12, Menzies J said that "[i]f two or more persons agree to effect an unlawful purpose, whether as an end or a means to an end, and in the carrying out of that agreement damage is caused to another, then those who have agreed are parties to a tortious conspiracy". The agreement or common design between the parties is necessary for them to be jointly liable for the unlawful means13. However, if the conspiracy is merely aimed "at the public, the damage sustained by a member of the public is too remote to give a right of action"14. The agreement which is carried out must be "aimed or directed"15 at the plaintiff. 

 

Here the relevant unlawful act involved one member of the Talacko family (Jan Emil), who had obtained highly valuable family property in the Czech Republic but had been ordered to share that with his siblings Helen and Peter, agreeing to transfer his title in the property to his sons, David and Paul, in such a way that, if the transaction were valid, Helen and Peter and those represented by them would have lost the complete value of the order of the court. The High Court noted that at [27] this amounted, not merely to “equitable fraud”, but actual common law deceit. It was executed “in "brazen disregard" of affidavit assurances that "there was no risk that [Jan Emil] would take any steps to dispose of the properties" and contrary to similar representations made to the Supreme Court of Victoria which caused the first to fifth respondents to refrain from proceeding with an application for Mareva relief16”.

 

But the trial judge had ruled that, while other elements of the tort were made out, no loss had crystallised as it was not clear whether or not actions to enforce the order of the Australian court in the Czech Republic would succeed or not. This was overturned by the Victorian Court of Appeal, who held that the loss of an existing chose in action was a clear loss and could be valued. The High Court agreed on this point.

 

The judgment here draws an interesting distinction in [40] in “loss of opportunity” cases between

 

(i) instances where a defendant's tortious act deprives a plaintiff of an opportunity or chance to which the plaintiff was not entitled but where such deprivation constitutes an immediate loss; and (ii) instances where a defendant's tortious act reduces or extinguishes the value of a plaintiff's existing right, where the value might be quantified by reference to the likelihood of future events.

 

Both of these categories represent actionable loss (as opposed to the type of “loss of chance” in medical cases rejected in Tabet v Gett , noted at [41], which does not- no doubt is cast on that decision). But this case clearly fell within category (ii), as not merely being a “possible” action but where there was an “existing right” in the form of a chose in action. See [43]:

 

the existence of a loss is sufficiently shown by proving that the tort caused a permanent impairment of the value of the plaintiff's existing right. It is enough that the right is "something of value" and that its value is diminished or lost.

 

Here it was accepted that value of the action should be discounted by 25% to reflect the chance that Jan Emil may have taken some other (lawful) action to make the judgment unenforceable- see [51]. But 75% should be awarded. There were one or two other minor points taken – the court rejected the view put forward by the appellant that there was still a small chance that action under statute against the sons in the Czech Republic might succeed, saying that even if it did there could be an accounting later on.

 

(For some reason that escapes me this was a decision of the full court, all seven members; I am a bit puzzled about this as usually cases not involving constitutional claim or attempts to over-rule prior High Court authority only involve 5 members of the court. But it may be that the pleadings suggested a challenge to previous authority on loss of a chance (such as Tabet v Gett)- or perhaps it was just that B W Walker SC was appearing for the appellant! This loss illustrates that even the best counsel can’t win them all!)

 

Regards

Neil