Lonrho v Shell Case Summary

Lonrho Ltd v Shell Petroleum Co Ltd [1982] AC 173

Tort – Cause of action – Foreseeable loss – Unlawful act – Whether arising from breach of statutory prohibition

Facts:

Shell operated an oil refinery in Southern Rhodesia (SR). Lonrho constructed a pipeline from a port in Mozambique where oil would be shipped to, as per the agreement between Lonrho and Shell. Shell was the principal participating company. The SR government declared independence, causing the UK to pass legislation criminalising the supply of oil to SR. The pipeline became disused and Lonrho suffered a consequential loss of revenue. Before the legislation, the participating companies had assured SR they would continue to supply oil, which had influenced the inception of independence and prolonged the disuse of the pipeline. Lonrho sought damages.

Issues:

Whether the foreseeable loss of Lonrho’s revenue caused by Shell and other participating companies could be seen as a loss by an unlawful act, or as a joint tort of conspiring to do an unlawful act which entitled Lonrho to damages.

Held:

The appeal was dismissed. The allegations that the participating companies had guaranteed the supply of oil to the government did not give Lonrho a cause of action in tort, as any breach of the prohibition of the supply was not enough to found such right. The conspiracy was held not to assume there was an intention to injure, there was only alleged actual knowledge that damage would be suffered. Where an agreement was made to protect the self-interests of the participating companies, and not for the purpose of injuring the appellants, even when the actions of the agreement to supply oil could be criminalised by legislation, there was no such right based on the tort of conspiracy. Therefore, Lonrho had no cause in action and no right to damages.