Tort of causing loss by unlawful means: A potential tactic in mass litigation?

In a decision with implications for class-action litigation, the High Court in Vanquis Bank Limited v TMS Legal Limited [2025] EWHC 1599 (KB) dismissed TMS Legal’s application for strike-out and/or summary judgment and allowed Vanquis’s claim against a law firm for the tort of causing loss by unlawful means to proceed to trial. The reasoning in the judgment potentially exposes claim intermediaries to economic tort liability where they submit mass claims without proper due diligence, and this could become a novel tactic used by defendants in mass litigation.

Background

Vanquis Bank (Vanquis) specialises in “second chance” lending to individuals with poor credit histories. TMS Legal (TMS) is a ‘no-win, no-fee’ law firm that brings “irresponsible lending claims”, typically escalating them to the Financial Ombudsman Service (FOS). From October 2022, TMS submitted around 33,000 claims against Vanquis, which the bank alleges were largely unmeritorious and submitted on a reckless, insufficiently investigated basis. Of the 12,250 complaints escalated to the FOS, 83.8% were rejected, withdrawn, or closed. Vanquis claims it incurred significant operational costs and lost profits as a result.

Vanquis brought proceedings alleging that TMS’s conduct amounted to the tort of causing loss by unlawful means. TMS sought to strike out the claim or obtain summary judgment. Although the judgment does not address the substantive merits of Vanquis’s claim, the Court determined that the case was properly arguable and had a real prospect of success.

Loss by unlawful means

The tort of causing loss by unlawful means is established by four elements:

1. unlawful acts used against, and independently actionable by, a third party;
2. interference with the actions of the third party in which the claimant has an economic interest;
3. intention (not mere foreseeability) of causing loss to the claimant by the use of unlawful means; and
4. loss in fact caused to the claimant.

With respect to the first element, Vanquis alleged that TMS breached contractual and fiduciary duties owed to its own clients and committed deceit through reckless representations about claim merits.  TMS argued that only conduct actionable by its clients should qualify, and that the regulatory framework (SRA/FCA/FOS) provides its own remedies.

Regarding interference, Vanquis advanced two theories: that TMS’s mass inducement of complaints constituted “general interference” with its customer relationships, and that, as a matter of industry practice, each complaint led to suspension of credit, amounting to “specific interference” with customers’ freedom to deal with Vanquis. TMS argued suspension was a voluntary decision by Vanquis that stemmed from Vanquis’s own policies or regulatory interpretations.

With respect to intention, Vanquis argued that TMS’s business model relied on submitting large volumes of poorly investigated complaints, knowing most would fail but still impose unavoidable costs on Vanquis (such as FOS fees which were payable regardless of the outcome). Vanquis claimed this went beyond mere indifference, making loss to Vanquis an integral part of TMS’s commercial logic (i.e. that TMS sought to obtain profits from a small success rate at minimal marginal effort). TMS argued its aim was to secure redress for clients, not to injure Vanquis, and that any losses were incidental to legitimate complaints.

As to loss, Vanquis claimed that TMS’s flood of meritless complaints caused substantial financial harm, including extra staffing, significant FOS fees, wasted management time, and lost profits. TMS challenged both the nature and causation of these losses, including that most were too remote.

Court’s analysis of key issues

1. Whether Vanquis’s pleaded “unlawful means” were tenable.

The Court, applying OBG Ltd v Allan and related authorities, reaffirmed that “unlawful means” must generally be actionable by the third party (here, TMS’s clients). However, the Court clarified that if the only reason the third party cannot sue is because they have not suffered loss, rather than because there is no legal wrong, the conduct may still qualify as “unlawful means”. Accordingly, the Court found Vanquis’s case was properly advanced on the basis of contractual and fiduciary breaches, and that the pleadings sufficiently linked general duties to specific breaches.

2. Whether the “interference” limb was satisfied

On “general interference”, the Court accepted that inducing customers to lodge serious complaints could, in principle, amount to interference with the bank-customer relationship, especially where such complaints are unfounded. Regarding “specific interference”, the Court found it clearly arguable that, as a matter of industry practice, receipt of such complaints led Vanquis to suspend credit, directly affecting customers’ ability to transact with the bank. The Court emphasised that interference need not be compelled by law; it was sufficient that suspension was an expected response.

3. Whether Vanquis pleaded a sufficiently particularised case that TMS intended to cause loss

On intention, the Court recognised the high threshold: it requires more than foreseeability of loss, demanding that loss be either the means to the defendant’s end or inseparably linked to the defendant’s gain. The Court scrutinised TMS’s business model, which was alleged to depend on submitting a high volume of poorly investigated claims, knowing most would fail but that the process itself would inevitably impose costs on Vanquis. The judge found it arguable that this model was not merely indifferent to loss, but that loss to Vanquis was an integral and virtually certain consequence of TMS’s commercial strategy. This, the Court held, could support an inference of the requisite intent, particularly as the model was designed to generate profit from a small proportion of successful claims at minimal marginal effort.

Key takeaways

This decision allowed a bank to pursue a claim against a law firm on the basis of breaches of duty to its own clients that foreseeably and intentionally imposed operational and financial losses on the bank.  This reasoning potentially exposes claim intermediaries to economic tort liability where they submit mass claims without proper due diligence. It could become a novel tactic used by defendants in mass litigation to take advantage of any lack of propriety in the behaviour of a law firm or claims management company in its relationship with individual claimants.

The decision also set out the following specific points as to the operation of this cause of action:

• Scope of “unlawful means”: breaches of contract and fiduciary duty owed to third parties (not the bank itself) can constitute “unlawful means” if actionable, even if the third party has not suffered loss.
• Interference and industry practice: the courts will consider both general disruption to customer relationships and specific consequences arising from industry practice or regulatory prudence.
• Intention threshold: a business model relying on high-volume, minimally investigated claims may support an inference of intent to cause loss, especially where the defendant’s gain and the claimant’s loss are closely linked.
• Regulatory oversight not a shield: the existence of SRA, FCA, or FOS oversight does not bar private law claims for economic torts, particularly where compensation for losses is sought.

With thanks to Amanpreet Bajwa for her assistance in preparing this post.