Crofter Hand Woven Harris Tweed Company Ltd v Veitch (1941)

This English decision is persuasive only in India, but it is the classic statement of when a combination that damages another person's trade is lawful. The answer the House of Lords gave: look at the real and predominant purpose of the combiners. If it is to advance their own legitimate interests — including a union's interest in its members' wages and bargaining position — the combination is not a tortious conspiracy, even though it causes damage. That is why the case is cited in Indian labour law when courts consider strikes, union pressure and the liability of union officials, and why Lord Wright's line that "The right of workmen to strike is an essential element in the principle of collective bargaining" is so often quoted.

Note a point of scope stated in the case itself: it was conceded that no issue under the Trade Disputes Act 1906 was involved. The case was decided purely on the common law of conspiracy.

The appellants were seven producers of tweed in the Island of Lewis in the Outer Hebrides. They bought yarn — cheaper yarn from the mainland — and gave it out to crofters to weave at home. Five island spinning-mills made yarn locally; ninety per cent of their spinners belonged to the Transport and General Workers' Union, as did all the dockers at Stornoway. Cloth woven from mainland yarn could not carry the "Stamp" trade mark, though it could be sold as Harris Tweed.

The Union wanted 100 per cent membership and better wages. The mill-owners said a wage rise was impossible because of the "cut-throat competition" of independent producers using mainland yarn. After negotiations for minimum prices and exclusive use of island-spun yarn failed, the respondent Veitch (Scottish Area Secretary of the Union) instructed the respondent Mackenzie (Stornoway Branch Secretary), who passed the instruction to the dockers. From 24 January 1938 the dockers refused to handle mainland yarn consigned to the appellants and their cloth for export — the "embargo". The dockers were not in breach of their contracts.

The appellants sued Veitch and Mackenzie as individuals for an interdict, alleging conspiracy to injure. The Lord Ordinary found for the respondents; the Second Division affirmed (Lord Mackay dissenting). The producers appealed.

1. When is a combination to do an act which damages another actionable as a conspiracy to injure, where the act would not be actionable if done by one person?
2. Was the real and predominant purpose of the respondents to injure the appellants, or to advance the legitimate interests of their Union members?

The appeal was dismissed. The embargo was not an actionable conspiracy. The Lord Chancellor: "I move that this appeal be dismissed with costs." The other Law Lords reached the same result.

Purpose, not consequence

The Lord Chancellor explained the test. The question is not whether the combiners knew others would suffer, but "what is the real reason why the combiners did it ?" — or, in Lord Cave's words, "what is the real purpose of the combination ?" The test is "what is in truth the object in the minds of the combiners when they acted as they did." In short, it is consequence that does not matter; purpose does.

The predominant purpose test

Where there is more than one purpose, "liability must depend on ascertaining the predominant purpose." The Lord Chancellor stated both sides of the rule:

• "If that predominant purpose is to damage another person and damage results, that is tortious conspiracy."
• If the predominant purpose is the lawful protection or promotion of any lawful interest of the combiners, "(no illegal means being employed), it is not a tortious conspiracy, even though it causes damage to another person."

He summed up: "unless the real and predominant purpose is to advance the Defendants' lawful interests in a matter where the Defendants honestly believe that those interests would directly" suffer if the action were not taken, a combination wilfully to damage a man in his trade is unlawful. The word "directly" was chosen so that indirect gains — his example was a bribe to the union's funds by the mill-owners — "would not provide a justification."

Applied to the embargo

The predominant object of the respondents "was to benefit their trade-union members by preventing under-cutting and unregulated competition, and so helping to secure the economic stability of the Island industry." The result they aimed at "was to create a better basis for collective bargaining, and thus directly to improve wage prospects." Such a combination "is not unlawful, because the object is the legitimate promotion of the interests of the combiners".

The court does not judge union policy or proportionality

Agreeing with Lord Fleming, the Lord Chancellor said it is not for a court of law to consider the expediency of a policy adopted by a trade union. Nor can liability turn on whether the damage is disproportionately severe: that "may throw doubts on the bona fides of the avowed purpose", but once the legitimate purpose is established and no unlawful means are involved, the quantum of damage is irrelevant.

Lord Wright on the right to strike

The appellants' right to freedom in conducting their trade "is not an absolute or unconditional right." In labour matters "the rights of the employer are conditioned by the rights of the men to give or withhold their services. The right of workmen to strike is an essential element in the principle of collective bargaining." He noted that workmen's combination for higher wages was lawful at common law, and that "It is clear that this right of workmen cannot be generally exercised without interfering with the employers' free conduct of their own business."

He also rejected the objection that the dockers acted for textile workers rather than themselves: "both sections were members of the Union, and there was in my opinion a sufficient community of interest".

A combination of two or more persons which damages another in his trade is an actionable conspiracy to injure only if, no unlawful means being used, its real and predominant purpose is to injure. If its predominant purpose is the lawful protection or promotion of the combiners' own legitimate interests — including a trade union's interest in securing its members' wages and a basis for collective bargaining — it is not tortious, even though damage to the plaintiff is the inevitable result. The court does not assess the wisdom of the union's policy or weigh the damage against the benefit.

• Short note: Crofter Hand Woven Harris Tweed Co v Veitch. State plainly that it is a House of Lords decision; give the facts of the Stornoway embargo; state the predominant purpose test; conclude that the embargo was lawful.
• Right to strike: use Lord Wright's sentence that the right of workmen to strike is an essential element in the principle of collective bargaining, and that it cannot be exercised without interfering with the employer's business.
• Problem question: a union instructs its members not to handle goods of an employer who undercuts union wage rates. Apply the predominant purpose test: if the object is to protect members' wages and bargaining position and no unlawful means are used, there is no conspiracy, however heavy the loss.
• Limits to state: the test protects only combinations using lawful means, and only where the real purpose is to advance the combiners' own interests — not to injure, and not for indirect gain such as a payment to union funds.