Thursday, June 19, 2008

O.B.G. Limited Again

A while back, Andy suggested I should comment on the House of Lords' decision in OBG Limited. I did read it, but then got off on a tangent about inducing-breach-of-contract, which is as tangential to the main decision as products-liability law is to the plot of Strange Brew.

The classic common law is a very market-oriented thing. And so, in general, it does not protect against competitive injury. And If A failed to perform her contract with you, it encouraged you to sue A, not somebody else who may have caused the dealbreaking. However, there are murky exceptions in the form of the "economic torts," most of which were used to deal with the nascent British Trade Union movement, although the odd shady opera promoter was manhandled as well.

Lord Hoffman does a bang-up job of going through the cases and extracting the principle that P can sue D if D intended to harm D and did so using illegal means. Although that tedious British analytic philosophy comes in handy as his lordship sets out what "intention" means here, with much less fuss than our courts are prone to.

Lord Hoffman and Lord Nicholls of Birkenhead get into a bit of a set-to over the scope of illegal means. Lord Nicholls wants to include any violation of statute, while Lord Hoffman is only interested in common law wrongs against third parties. So if I decide to improve my share of the widget market by scaring your customers with guns, or blowing up your suppliers' widget factory, Lord Hoffman would let you sue me. But if I just violate the EU Widget Manufacturing and Distribution Directive, I won't face worse than the penalty the public law has in store for me.

The Pithlord agrees with Lord Hoffman here. If something that was legal at common law is made illegal by the will of the politicians, then it is to the will of the politicians we should look for the consequences. If they didn't think to put in a civil right of action, then there is no reason for one. In Saskatchewan Wheat Pool, our highest court (rightly, in my view) rejected the idea that breach of statute was inherently actionable. However, Sask. Wheat Pool also says that compliance/non-compliance with a regulatory standard can be presumptively persuasive evidence of whether the defendant acted "reasonably". So too, it may be that some modern statutes (at least those that have clear victims) can help give content to what is trespass, battery or assault. With that caveat, though, I'm on Lord Hoffman's side.

On the other major disagreement, on whether conversion can apply to choses in action, I have to prefer Lord Nicholls. OBG Ltd. was mistakenly put into receivership: the defendant took over all its property and all its contractual rights. The question was whether OBG could sue for damages. If someone takes your property (even innocently, but without your consent), then you can sue. What about "taking" your rights under contracts? It seems to me that these are essentially the same: they are my stuff. Only real law nerds even know whether bank deposits, for example, are contractual rights/choses in action or personal property. As Lord Nicholls points out, if intangible rights are represented in a document, and the document is appropriated, then there can be a suit in conversion. On this point, the majority of the Law Lords seem to just engage in reactionary fear of any change at all, rather than reasoned response.

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