## Facts

- Sidney Taylor sued Philip Smyth and three companies Smyth controlled: Kape Investments Ltd. (Kape), Calla Associates Ltd. (Calla), and Calder (together with Smyth, the defendants).
- Taylor alleged the defendants acted in concert to breach contractual obligations owed to him, and that the coordinated breaches amounted to a civil conspiracy that caused him loss.
- The High Court (Lardner J.) heard the action and found in Taylor’s favour, including a finding of conspiracy and an award of damages against Smyth and the corporate defendants.
- Smyth appealed to the Supreme Court.
- On appeal, Smyth argued that he could not, as a matter of law, conspire with Kape, Calla, or Calder because he controlled those companies and therefore could not “conspire with himself.”
- Smyth also objected to the reputational consequences he said followed from being held liable for “conspiracy,” separate from the financial consequences of the judgment.

## Issues

1. Whether an individual who controls one or more companies is legally capable of conspiring with those companies for purposes of the tort of conspiracy.
2. Whether the High Court was entitled to impose liability in damages for conspiracy on both the controlling individual and the controlled corporate defendants.
3. Whether the asserted reputational stigma associated with a conspiracy finding is relevant to the availability or framing of civil relief.

## Decision

- The Supreme Court rejected Smyth’s argument that control of the companies meant there was no legally sufficient “plurality” of actors for conspiracy.
- The Court held that each company is a separate legal person, distinct from its shareholder or controller, even where control is complete; accordingly, a controlling individual and his companies are capable in law of forming the combination required for civil conspiracy.
- The Court upheld the substance of the High Court’s judgment, including the finding of conspiracy and the award of damages against Smyth and the corporate defendants.
- The Court treated the claimed reputational disadvantage of a conspiracy label as not affecting the legal analysis where the elements of the tort were otherwise made out on the facts found at trial.

## Legal Principles

- Incorporation creates a legal person separate from the individuals who own or control the company.
- The requirement of “two or more persons” for civil conspiracy may be satisfied by an agreement or concerted action between an individual and a company he controls, because they are distinct legal persons.
- A controller cannot avoid conspiracy liability by characterising coordinated conduct carried out through controlled companies as merely the controller acting alone.
- Where a conspiracy is established on the facts, both the individual participant and the corporate participants may be liable in damages.
- Civil liability does not turn on whether a particular cause of action is viewed as carrying reputational consequences; the focus is on whether the legal elements of the tort are satisfied.

## Conclusion

The Supreme Court affirmed that a controlling shareholder and the companies he controls remain separate legal persons and therefore can combine to commit the tort of conspiracy; it upheld the High Court’s finding of conspiracy and damages against both Smyth and the corporate defendants, and did not treat claimed reputational stigma as a basis to deny relief.


Taylor v. Smyth, 1981 No. 4617P and S.C. Nos. 172/173/174 of 1989, [1991] IR 158, 1990 WJSC-SC 1317 (1990)