Secretary of State for Health & Anor v Servier Laboratories Ltd & Ors [2021] UKSC 24

The Secretary of State for Health claimed Servier caused loss by deceiving the EPO and courts to obtain a patent, delaying generic drug market entry and increasing NHS costs. The Supreme Court held that the unlawful means tort requires the defendant's conduct to affect a third party's freedom to deal with the claimant, confirming OBG v Allan's 'dealing requirement'.

Facts

The appellants, the Secretary of State for Health and NHS Business Services Authority, claimed damages exceeding £200 million against the respondents, Servier Laboratories and related companies. The respondents developed and marketed perindopril, a cardiovascular drug. The appellants alleged that Servier obtained a patent by practising deceit on the European Patent Office (EPO) and the English courts, making false representations about the novelty and non-obviousness of their product. This allegedly delayed generic manufacturers from entering the market, causing the NHS to pay higher prices for the drug.

Procedural History

Roth J struck out the unlawful means tort claim, holding that OBG Ltd v Allan established a ‘dealing requirement’ as an essential element of the tort—namely, that the unlawful means must affect the third party’s freedom to deal with the claimant. The Court of Appeal upheld this decision, finding the dealing requirement formed part of the ratio of OBG and was binding.

Issues

1. Whether the ‘dealing requirement’ is part of the ratio decidendi of OBG Ltd v Allan [2007] UKHL 21.

2. Whether the Supreme Court should depart from OBG on this point.

Judgment

The Supreme Court unanimously dismissed the appeal. Lord Hamblen, delivering the leading judgment, held that the dealing requirement is indeed part of the ratio of OBG. The Court declined to depart from OBG under the 1966 Practice Statement.

The Dealing Requirement as Part of the Ratio

Lord Hamblen found that Lord Hoffmann’s speech in OBG, particularly at paragraph 51, set out that unlawful means:

“consists of acts intended to cause loss to the claimant by interfering with the freedom of a third party in a way which is unlawful as against that third party and which is intended to cause loss to the claimant. It does not in my opinion include acts which may be unlawful against a third party but which do not affect his freedom to deal with the claimant.”

Lord Hamblen noted that Lord Walker, Baroness Hale, and Lord Brown all understood and endorsed this requirement. Lord Brown stated at paragraph 320 of OBG that the tort arises where the defendant:

“intentionally injures the claimant’s economic interests by unlawfully interfering with a third party’s freedom to deal with him.”

Refusal to Depart from OBG

The Court emphasised that the 1966 Practice Statement requires showing that precedent impedes proper development of the law or causes injustice. The appellants failed to demonstrate real-world difficulties caused by OBG. Lord Hamblen observed that dispensing with the dealing requirement would remove an important control mechanism against indeterminate liability. He stated:

“The dealing requirement performs the valuable function of delineating the degree of connection which is required between the unlawful means used and the damage suffered.”

The Court rejected the appellants’ alternative formulations, finding that causation alone was inadequate as a limiting factor, as expressly rejected in OBG.

Implications

This decision confirms the narrow scope of the unlawful means tort. Claimants must show that the defendant’s unlawful conduct affected a third party’s freedom to deal with them. Public bodies funding services, like the NHS, cannot claim under this tort where the third party (here, the EPO or courts) had no dealings with them. The judgment reinforces judicial reluctance to expand liability in the economic torts arena, leaving such regulation primarily to Parliament. Lord Sales noted that questions remain about the coherence between the unlawful means tort and the unlawful means conspiracy tort following Total Network, reserving this for future consideration.

Verdict: Appeal dismissed. The dealing requirement is part of the ratio of OBG Ltd v Allan and the Supreme Court declined to depart from that decision. The unlawful means tort claim was properly struck out.

Source: Secretary of State for Health & Anor v Servier Laboratories Ltd & Ors [2021] UKSC 24