Raja v. McMillan: Establishing Liability in Unlawful Means Conspiracy and Joint Tortfeasorship

Introduction

The case of Raja v. McMillan ([2021] EWCA Civ 1103) presents a significant judicial examination of liability in cases involving unlawful means conspiracy and joint tortfeasorship within the context of real estate and affordable housing obligations. The claimant, Ms. Kausa Raja, sought to recover substantial financial losses resulting from her purchase of an allegedly deceptively marketed affordable flat. The defendant, Mr. Terry McMillan, a property developer, was accused of orchestrating a scheme to circumvent affordable housing requirements, thereby misleading purchasers like Ms. Raja.

Summary of the Judgment

The High Court initially dismissed Mr. McMillan's application to strike out or obtain summary judgment against Ms. Raja's claims. Mr. McMillan appealed the decision to the Court of Appeal, challenging the viability of the conspiracy and joint tortfeasor claims. The Court of Appeal upheld the High Court's decision, dismissing all four grounds of appeal presented by Mr. McMillan. The judgment reinforced the notion that allegations of conspiracy and deceit require thorough examination of factual and legal intricacies, which are best addressed during a full trial rather than through summary judgments or strike-out motions.

Analysis

Precedents Cited

The judgment references several key precedents that influence the court’s approach to conspiracy and joint tortfeasorship:

Barclay Pharmaceuticals Ltd v Waypharm LP [2012] EWHC 306 (Comm): Discussed the complexities of establishing a conspiracy when one party controls multiple entities.
R v McDonnell [1966] 1 QB 233: A criminal case establishing that a director cannot be guilty of conspiring with their own company if no agreement exists between separate minds.
AAH Pharmaceuticals Ltd v Birdi [2011] EWHC 1625 (QB): Highlighted the difficulties in recognizing conspiracies involving alter ego companies without distinct agreements.
Lee v Lee's Air Farming Ltd [1961] AC 12: Demonstrated that contracts can be formed between a person and their company, establishing separate legal personalities.
Gloster J in Barclay Pharmaceuticals: Emphasized that controlling multiple companies does not inherently prevent the formation of a conspiracy.
Meretz Investments NV v ACP Ltd [2007] EWCA Civ 1303: Addressed the necessity for firm and on-point legal advice to rebut claims of deceit.
Meyer Development Co v The Hershey Co (1970): Not directly cited but relevant in discussions of agency and representation.

Legal Reasoning

The court delved into intricate legal reasoning to assess whether Mr. McMillan could be held liable for unconscionable conduct through conspiracy or deceit. Central to this was determining whether Mr. McMillan's actions constituted an unlawful means conspiracy, which requires an agreement to use unlawful means to achieve a legal objective, thereby causing harm to an innocent third party.

The court examined whether Mr. McMillan could conspire with his own entities, such as Neobrand Ltd and its subsidiaries, finding this notion arguable but not definitively dismissible at the summary judgment stage. Furthermore, the court assessed whether the alleged misrepresentations could be classified as deceit, especially considering Mr. McMillan's reliance on legal advice. However, the court concluded that factual disputes regarding Mr. McMillan's actual knowledge or recklessness necessitated a trial.

Impact

This judgment underscores the judiciary's commitment to thoroughly investigating complex legal schemes, particularly those attempting to manipulate affordable housing obligations. It sets a precedent for higher courts to scrutinize instances where developers might exploit legal loopholes, ensuring that purchasers are protected from deceptive practices. Additionally, it highlights the limitations of summary judgments in cases rife with factual uncertainties, thereby reinforcing the necessity for comprehensive trials in fraud-related claims.

Complex Concepts Simplified

Unlawful Means Conspiracy

This occurs when two or more parties agree to use unlawful methods to achieve a lawful or unlawful objective, resulting in harm to a third party. In this case, Mr. McMillan was alleged to have conspired to deceive purchasers by presenting flats as free from affordable housing obligations, thereby violating planning agreements.

Joint Tortfeasorship

This refers to multiple parties being liable together for committing a tort (a wrongful act leading to legal liability). Here, Mr. McMillan was accused of being a joint tortfeasor alongside entities like LDHA, meaning both were responsible for the deceitful representations made to the claimant.

Staircasing

In the context of shared ownership, staircasing refers to the process by which a tenant gradually increases their ownership share of a property until they fully own it. Mr. McMillan's scheme purportedly involved tenants staircasing to 100% ownership to remove affordable housing restrictions.

Section 106 Agreement (s. 106 agreement)

A legal agreement between a developer and a local planning authority in the UK, where the developer commits to providing certain community benefits, such as affordable housing, in exchange for planning permission.

Conclusion

The Raja v. McMillan case serves as a pivotal reference in English civil law, particularly concerning the nuances of unlawful means conspiracy and joint tortfeasorship in real estate transactions. The Court of Appeal's decision to uphold the High Court's dismissal of summary judgment against Mr. McMillan emphasizes the complexities inherent in litigating deceitful schemes intertwined with legal agreements like s. 106. It highlights the judiciary's role in ensuring that developers adhere strictly to affordable housing obligations and do not exploit legal frameworks for personal gain. For legal practitioners and property developers alike, this case reinforces the necessity of transparent and lawful practices in property transactions and the potential legal repercussions of deceptive undertakings.