What is the Tort of Conspiracy?
 
The tort of conspiracy is a creature of common law, having developed in the late 19^th and 20^th centuries, primarily with the purpose of imputing civil liability to the individuals involved in organising strikes in the United Kingdom. In Malaysia, this tort—also known as an economic tort in the modern context—has been the subject of extensive judicial consideration.¹
 
In Mrs Kok Wee Kiat v Kuala Lumpur Stock Exchange Berhad & Ors [1979] 1 MLJ 71, the Federal Court adopted the definition of conspiracy in Clerk and Lindsell on Torts (13th Ed) p 817, viz: “A conspiracy consists … in the agreement of two or more to do an unlawful act, or to do a lawful act by unlawful means.”
 
The Legal Framework and Judicial Approaches to the Tort of Conspiracy
 
A useful starting point for understanding the modern principles governing the tort of conspiracy is the case of Cubic Electronic Sdn Bhd v MKC Corporate & Business Advisory Sdn Bhd and another appeal [2016] 3 MLJ 797 (“Cubic Electronic”), where the Court of Appeal succinctly explained that there are two kinds of conspiracy, namely: 

Cubic Electronic went on to explain the distinction between lawful and unlawful means conspiracy by referring to the locus classicus in the House of Lords decision of Lonrho plc v Fayed [1991] 3 All ER 303:
                 
That being said, notwithstanding the distinction between lawful and unlawful means conspiracy, the general elements required to prove a conspiracy claim are: 

It is essential to note that lawful and unlawful means conspiracy both require evidence of a combination or agreement between two or more individuals to take concerted action that caused injury to the claimant.³
 
Whether there was a Combination or Agreement between Two or More Individuals
 
As explained in Cubic Electronic, it is not necessary to show that there was anything in the nature of an express agreement, whether formal or informal. The Malaysian Courts look at the overt acts of the conspiracy and infer from those acts whether there was agreement to further the common object of the combination.⁴
 
For example, in Tekital Sdn Bhd v Sarina bt Kamaludin & Ors [2012] 8 MLJ 734, the plaintiff company had sued the 1^st to 3^rd defendants for conspiracy to unlawfully strip, siphon off or remove the assets, business and operations of the subject company that the plaintiff had invested in, and transfer them to the 4^th to 6^th defendants which were entities controlled by the 1^st to 3^rd defendants in their capacity as directors and/or shareholders. Nallini Pathmanathan JC (as she then was) held that the existence of an agreement or combination between the defendants can be inferred from the net result of their concerted activities over the relevant period. As the 1^st to 3^rd defendants worked closely together, and their companies functioned seamlessly as one unit, the transfer of shares to the 4^th to 6^th defendants could not have occurred without prior arrangement and consensus between them. The circumstantial evidence was therefore overwhelming for the Court to infer that the defendants had acted together and in concert in the transfer of the shares in the subject company. Her Ladyship further noted that it would be futile to search for an express agreement, as co-conspirators are unlikely to leave behind a documentary trail to enable the detection of such agreement.⁵
 
It is also not necessary to show that all conspirators have joined the conspiracy at the same time, provided that the conspirators were sufficiently aware of the surrounding circumstances and shared the same object for it properly to be said that they are acting in concert. Therefore, it is possible for a conspirator to join later, but such a conspirator will only be liable for the damage that is suffered from the time that they join the conspiracy; they are not liable retrospectively for the damage that has been suffered prior to their joining.⁶
 
Whether it was Lawful or Unlawful Means Conspiracy
 
Lawful Means Conspiracy
 
Lawful means conspiracy requires that the conspirators’ predominant or overriding intention is to cause loss or damage to the claimant. It is not necessary to show any unlawful acts perpetrated by the conspirators or the parties to the agreement or in any combination thereof.⁷
 
The salient feature to prove the predominant intention was illustrated by the Court of Appeal in Cubic Electronic, which referred to Crofter Hand Woven Harris Tweed Co Ltd v Veitch [1942] AC 435 as follows:
 
 
Unlawful Means Conspiracy
 
In contrast, the distinct element of unlawful means conspiracy is that the conspirators had employed unlawful means in pursuit of their objective.⁸
 
According to the Court of Appeal in Tay Keong Kok & Ors v Eastmont Sdn Bhd and another appeal [2024] 5 MLJ 683 (“Tay Keong Kok”), there are two additional elements for an unlawful means conspiracy: 

The Court of Appeal in Tay Keong Kok further illustrated the scope of “unlawful means” with reference to the House of Lords decision in OBG Ltd and another v Allan and others; Douglas and another v Hello! Ltd and others (No 3); Mainstream Properties Ltd v Young and others [2007] 4 All ER 545; [2007] UKHL 21 as follows:
 
 
The Tay Keong Kok case involved a claim for fraudulent trading under the Companies Act 2016, as well as tort of conspiracy, after the claimant, who had completed substructure works for Company A, was left unpaid for RM12,331,667.29. When attempting to recover the debt, the claimant discovered that Company A had been wound up by Company B. Company A and Company B were related companies and had common directors and shareholders. The claimant thus filed a claim in the High Court alleging that the defendants had orchestrated the winding up of Company A through Company B to evade repayment of Company A’s debt to the claimant.
 
Both the High Court and the Court of Appeal found that there was an intent to defraud by the defendants, and Company A and Company B were used as a mechanism or a sham to injure and deprive the claimant of its rightful payment. However, the Court of Appeal held, contrary to the finding of the High Court, that the facts in Tay Keong Kok show lawful means conspiracy (and not unlawful means conspiracy) in that whilst the primary aim was undoubtedly to deny recovery of the debt otherwise due to the claimant, the means used by the defendants — such as pursuing the action to wind up Company A — were steps or courses of action which are features of court proceedings that cannot be construed, at least on the face of it, as unlawful. The Court of Appeal further held that the claimant had clearly suffered loss and damage, as it remained unpaid for the completed works and was forced to pursue action against the conspirators/ defendants.
 
An example of a case involving unlawful means conspiracy is WT Development Sdn Bhd v Chow Cho Tai & Ors [2019] MLJU 1691, where the claimant in the counterclaim put forward a case that the defendants had participated in a fraudulent scheme to transfer the land from Company X (which was facing liquidation) to Company Y, and included using the claimant’s name, identity and personal particulars without her knowledge and consent. Faizah Binti Jamaludin J (as she then was) held that the defendants’ conspiracy to transfer the land to Company Y for purposes of keeping the land away from the liquidators and for the onward sale to Company Z in order to raise sufficient sums to repay some of the defendants and other creditors of Company X was unlawful and in breach of the Companies Act 1965.⁹
 
Practical Takeaways  
 
In summary, the elements that have to be proven differ depending on whether the claim is a lawful means conspiracy or an unlawful means conspiracy:
 
Lawful Means Conspiracy 

Unlawful Means Conspiracy 

Conclusion
 
The tort of conspiracy is an important mechanism in Malaysia for addressing coordinated wrongdoing, particularly in commercial and economic disputes. It is a versatile economic tort that captures both lawful means conspiracy (combination or agreement between two or more individuals with a predominant or overriding intention to cause loss or damage to the claimant) and unlawful means conspiracy (combination or agreement between two or more individuals to carry out unlawful means with an intent to injure the claimant).
 
Despite these conceptual distinctions, both lawful and unlawful means conspiracy share essential common elements: combination or agreement between two or more individuals, an intention to injure the claimant, acts carried out pursuant to that intention, and resulting damage to the claimant. Ultimately, the burden of proof rests squarely on the claimant, who must establish, on a balance of probabilities, that either lawful or unlawful means conspiracy is made out on the facts of the case.
 
 
Article by Loo Peh Fern (Partner) and Tan Yng Yiin (Associate) of the Dispute Resolution Practice of Skrine.
 
 

---