“Northamber will become the 100% exclusive source for all Genee World products in the UK effective July 1st with no sales by Genee to any reseller or other party in the UK. All enquiries generated or received by Genee will be passed to and transacted via Northamber.”
“1. Northamber will purchase stock from Genee World’s bonded warehouse. 2. Northamber will purchase stock for delivery to Northamber’s warehouse for run rate stock. 3. Northamber will order stock directly from the Genee bonded warehouse to be shipped directly to re-sellers or end-users for projects, bids, or where urgency is required and Northamber doesn’t have the item in stock.”
“… Genee World to send annual audited accounts to Northamber and Northamber retains the right to audit Genee World within working hours should it believe the exclusivity has not been upheld.”
“(b) by31 March 2018 … Genee had already supplied a substantial amount of Genee World Products to entities in the UK other than IES. It is difficult to see in those circumstances that somehow, the purchase orders sent by IES to Genee for Genee World Products in March 2018 induced or persuaded Genee to supply Genee World Products to IES in breach of the Exclusivity Agreement, when Genee had already supplied substantial quantities of Genee World Products to other entities in the UK in breach of the Exclusivity Agreement. There is no evidence that, Genee having already breached the Exclusivity Agreement by supplying to other entities in the UK, in breach of the Exclusivity Agreement, needed any inducement or persuasion to supply IES; and (c) the height of Northamber’s case, that IES induced or persuaded Genee to breach the Exclusivity Agreement, is that IES merely placing purchase orders with Genee for Genee World Products induced or persuaded Genee to breach the Exclusivity Agreement by supplying IES. Any supplier receiving a purchase order, unless contractually bound to accept it (and there is no suggestion of that here) is free to accept it or reject it. Inducement or persuasion amounts to much more than simply giving Genee the opportunity to breach the Exclusivity Agreement, which, on the evidence is all that IES’s orders did.”
“I have no hesitation in saying that I think [Lumley v Gye] was right, not on the ground of malicious intention - that was not, I think, the gist of the action - but on the ground that a violation of a legal right committed knowingly is a cause of action, and that it is a violation of legal right to interfere with contractual relations recognised by law if there be no sufficient justification for the interference.”
“… did the defendant’s acts of encouragement, threat, persuasion and so forth have a sufficient causal connection with the breach by the contracting party to attract accessory liability? The court in Lumley v Gye made it clear that the principle upon which a person is liable for the act of another in breaking his contract is the same as that on which he is liable for the act of another in committing a tort. It follows, as I have said, that the relevant principles are to be found in cases such as CBS … v Amstrad ..., and Unilever v Chefaro ….”
“… The mental ingredient is an intention by the defendant to procure or persuade (‘induce’) the third party to break his contract with the claimant. The defendant is made responsible for the third party’s breach because of his intentional causative participation in that breach. Causative participation is not enough. A stranger to a contract may know nothing of the contract. Quite unknowingly and unintentionally he may procure a breach of the contract by offering an inconsistent deal to a contracting party which persuades the latter to default on his contractual obligations. The stranger is not liable in such a case. Nor is he liable if he acts carelessly. …”
“I have already said enough about the defendants and their activities to show that if they interfere knowingly with contractual relations they have no justification for doing so, but Mr. Shelley contends that it is no tort merely to make a price with a man who is offering a car for sale in breach of covenant because a willing seller needs no inducement. The importance of the point is obvious, because if it is well founded the question whether a tort has been committed will depend on whether the buyer or the seller speaks the first word, and as the buyer and the seller may both be hostile to the plaintiffs for obvious reasons, the plaintiffs are likely to be met with unchallengeable evidence that the seller took the initiative. It is true that the tort is often spoken of as inducing or procuring breach of contract, but I shall adhere to Lord Macnaghten’s word ‘interfere’, and I shall endeavour to interpret that word in the knowledge that Lord Macnaghten in using it had Lumley v Gye in his mind.”
“I cannot doubt that Lord Macnaghten, in using the word ‘interference’ had such cases in mind. Indeed, it is possible that in choosing that word for his statement of general principle he intended to make some reduction in their ambit, for those cases seem to treat something akin to mere passivity as a tort and to require active dissociation from the breach of contract…. Lord Macnaghten preferred the word ‘interference’ for his statement of the doctrine, and this seems to me to predicate active association of some kind with the breach. But, in my judgment, any active step taken by a defendant having knowledge of the covenant by which he facilitates a breach of that covenant is enough. If this be so, a defendant by agreeing to buy, paying for and taking delivery of a motor-car known by him to be on offer in breach of covenant, takes active steps by which he facilitates a breach of covenant …. The plaintiffs will succeed even if I have construed the word ‘interference’ too broadly, because even if a further element of inducement must be present, that further element can be found. The covenantor who offers a car for sale is not unconditionally ready to break his covenant but only if the price offered is high enough and, accordingly, a defendant who offers such a price induces the seller to take the final step towards breaking his covenant by making his willingness to sell unconditional.”
“Direct persuasion or procurement or inducement applied by the third party to the contract breaker, with knowledge of the contract and the intention of bringing about its breach, is clearly to be regarded as a wrongful act in itself, and where this is shown a case of actionable interference in its primary form is made out: Lumley v. Gye 2 El & Bl 216. But the contract breaker may himself be a willing party to the breach, without any persuasion by the third party, and there seems to be no doubt that if a third party, with knowledge of a contract between the contract breaker and another, has dealings with the contract breaker which the third party knows to be inconsistent with the contract, he has committed an actionable interference: see, for example, British Industrial Plastics Ld. v. Ferguson[1940] 1 All ER 479 , where the necessary knowledge was held not to have been brought home to the third party; and British Motor Trade Association v. Salvadori[1949] Ch 556 .”
“Having therefore concluded that under the four relevant agreements the production companies did undertake that Peter Sellers’ performance would be used only for the purposes of the film to which each agreement related, and that such undertakings survived the death of Peter Sellers, I can turn to question (c). Where those negative covenants were all that survived of the loan-out agreements, which had otherwise been fully performed, could the defendants be held liable (if other ingredients of the tort were present) for inducing a breach of those negative covenants? The defendants argued that they could not. I found that contention startling, and a familiar example will show why. Take the case of an employment contract containing a valid covenant against competition for 12 months after termination. The contract comes lawfully to an end. The employee has performed all the service required of him and has received all the pay to which he is entitled. The only contractual term remaining in force is the employee’s negative covenant not to compete. A third party, knowing of the covenant, induces the employee to work for him during the period of the covenant and in obvious breach of it. It is accepted that an action would lie (and an injunction in all probability be granted) against the employee. But if the defendants are right, no action would lie against the third party. They contend that it would not. I can find no basis in principle for such an anomalous result, which conflicts with both the law and the practice as I have long believed them to be. I hope I shall not be thought discourteous if I do not discuss the authorities cited by the defendants in support of their submission. It is, I think, enough to say that in my judgment there is no authority which does support it. By contrast, the plaintiffs do gain support from the decision of Roxburgh J. in British Motor Trade Association v. Salvadori[1949] Ch. 556 . The plaintiff complained, among other things, that the defendants had wrongfully induced or procured breaches of a negative covenant given by buyers of new cars. They succeeded. Roxburgh J. said, at p. 565: [quoting part of the second passage cited above]. This authority was referred to without disapproval by Jenkins L.J. in the leading case of D. C. Thomson & Co. Ltd. v. Deakin[1952] Ch. 646 , 694, and has never to my knowledge been doubted. I regard it as good law. If, therefore, authority to counter the defendants’ argument is needed, it exists.”
“It is clear from BMTA v Salvadori and BMTA v Gray that the tort or delict is not confined to circumstances where A has to persuade B to break his contract but can also be committed where A has dealings with B which A knows are inconsistent with the contract between B and C. In either event A induces or assists B to do something (or to refrain from doing something) which involves B breaking his contract with C.”
“... Mr Boyle QC for the claimant submitted, by reference to a number of authorities, that entering into an inconsistent contract is capable of constituting, and indeed will normally constitute, sufficient participation by the defendant to attract liability in tort. He accepted that there could be cases where the contract breaker has independently of the defendant decided to act in breach of the contract and is able to do so without any necessary involvement by the defendant. But in circumstances where the defendant’s involvement or cooperation is necessary to the breach intended by the contract breaker, then the defendant who participates in this way with the relevant knowledge is liable. He submitted that the necessary element of causative participation was satisfied if the defendant does an act which enables the contract breaker to breach his contract and without which no breach would occur. In such circumstances the defendant is sufficiently instrumental in causing the breach to be liable. Active persuasion by the defendant is not required.”
“… it was said that the sons, by accepting their father’s bounty amounting to something over£7,000 , did procure him to break his covenant - that is assuming, of course, that the finding of the money by the father was a breach of covenant. … In my opinion, that argument is completely misconceived. The tort of procuring a breach of contract requires something much more than that. Mere acceptance of a proffered bounty given in breach of covenant cannot, it seems to me, be said to be in any sense a procuring of a breach of contract.”
“32. First, they make clear that conduct cannot qualify as inducement if it constitutes no more than preventing B from performing the contract with C as one of its consequences. There must be some conduct by A amounting to persuasion, encouragement or assistance of B to break the contract with C. 33. Secondly, this participation by A in B's breach, must, in Lord Hoffmann’s words, have ‘a sufficient causal connection with the breach by the contracting party to attract accessory liability’ or, in Lord Nicholls’ words, so as to amount to ‘causative participation’. It is because of the causative requirement that ‘inducement requires the defendant's conduct to have operated on the will of the contracting party’ in the words of Toulson LJ [in Meretz Investments NV v ACP Ltd[2007] EWCA Civ 1303 ,[2008] Ch 244 at [177]]. If A’s conduct is not capable of influencing a choice by B whether or not to breach the contract, it is not capable of amounting to inducement; it cannot operate on the mind or will of B so as qualify as causative participation as an accessory to his breach.”
“… inconsistent dealings are not some form of inducement which are detached from the principles articulated in OBG v Allan. On the contrary, they are simply an example of conduct which may be capable of fulfilling those criteria because they may constitute a form of persuasion, encouragement or assistance. This is how they were treated in Lord Hodge’s summary of the ingredients in Global Resources v Mackay at paragraph 13: [quoting the paragraph from which I have cited above].”
“… the plaintiff’s former employee offered the defendant information about one of the plaintiff's secret processes which he, as an employee, had invented. The defendant knew that the employee had a contractual obligation not to reveal trade secrets but held the eccentric opinion that if the process was patentable, it would be the exclusive property of the employee. He took the information in the honest belief that the employee would not be in breach of contract. In the Court of Appeal ... MacKinnon LJ observed tartly that in accepting this evidence the judge had ‘vindicated his honesty … at the expense of his intelligence’ but he and the House of Lords agreed that he could not be held liable for inducing a breach of contract.”
“Facilitating the doing of an act is obviously different from procuring the doing of the act”
“302. As for IES, Mrs Kaur says that IES needed to obtain Genee World Products to supply to its customers and Northamber was unwilling to supply Genee World Products to IES on credit. Unlike in Edwin & Partners [v First National Finance Corp plc[1989] 1 WLR 225 ], IES was not seeking to uphold its own contractual rights but rather (at best) to avoid breaching contracts with its customers. I do not consider that avoiding breaching contracts with its own customers could be a lawful justification for IES inducing Genee to breach the Exclusivity Agreement (had I found that it did induce Genee to breach the Exclusivity Agreement, which I have not). Even if it could be, I am not satisfied, merely because IES has produced some orders dated around March 2018, addressed to it for Genee World Products, that IES has proved that it would have breached contracts with its customers if Genee had not supplied it with Genee World Products after23 February 2018 . In any event, it appears that Northamber was willing to supply Genee World Products to IES without credit or to supply customers direct, on credit (with the profit accruing to IES) which Mrs Kaur refused. Further IES never went back to Mr Hall after he sent his email on23 February 2018 to challenge his assertion that IES owed Northamber£169,278.44 and that, of that total amount,£137,332.32 was overdue for payment. It is not clear therefore that, had it been pointed out to Mr Hall that IES only owed£31,945.82 on 23 February, none of which was overdue for payment, that Mr Hall would have maintained Northamber's refusal to supply Genee World Products on credit to IES. 303. In my judgement, the placing of orders for Genee World Products, by IES directly with Genee was again predominantly aimed at the pursuit by IES of its own economic interests in obtaining Genee World Products to supply to its customers at a profit, which would not be, in my judgement, a lawful justification, had I have found that the placing orders by IES with Genee for Genee World Products did amount to IES inducing Genee to breach the Exclusivity Agreement (which I found it did not).”
“if a servant acting bona fide within the scope of his authority procures or causes the breach of a contract between his employer and a third person, he does not thereby become liable to an action of tort at the suit of the person whose contract has thereby been broken.”
“… At the start of the trial, Mr Brown [counsel then acting for Mr Singh] drew attention to the failure to plead that Mr Singh had acted outside the scope of his authority or in breach of any duty that he owed to Genee and suggested that Northamber’s claim against Genee should be struck out for that reason. I said that I would not consider an application to strike out Northamber’s claim at that stage, because there was no application before the court and Northamber had not been given notice of Mr Singh’s intention to make such an application. I told Mr Brown that he could renew his application at the end of the trial but he chose not to do so. It remains the case however that Northamber has not set out in its pleading or in its evidence any basis upon which it says that Mr Singh did act outside the scope of his authority or in breach of his duties as sole shareholder of Genee, nor was this a point that was dealt with in Mr Falkowski’s [counsel for Northamber’s] skeleton argument or closing argument.”
“Insofar as Mr Singh procured that Genee breached the Exclusivity Agreement by causing Genee to supply Genee World Products to entities in the UK other than Northamber and the Excluded Accounts after10 September 2018 that would not, in my judgment, be consistent with his duty under Section 172 to act in the way that he considered, acting in good faith, would be most likely to promote the success of Genee for the benefit of its members as a whole. The reason is that, Mr Singh would, by causing Genee to breach the Exclusivity Agreement by making those supplies also cause it to breach the Injunction and thereby be in contempt of court and at risk of having a fine imposed upon it, having its assets sequestrated, and would suffer reputational damage, if found out.”
“… In our judgment, the Said v Butt principle should be interpreted to exempt directors from personal liability for the contractual breaches of their company (whether through the tort of inducement of breach of contract or unlawful means conspiracy) if their acts, in their capacity as directors, are not in themselves in breach of any fiduciary or other personal legal duties owed to the company.”
“In my judgment, it would be contrary to the principle of limited liability if, in the circumstances postulated in Said v Butt, namely that an employee director is acting within his authority and bona fide in the interests of his company, could be liable in such circumstances for inducing a breach of contract on the part of the company in circumstances absent, additional features, such as conspiracy or dishonesty.”
“… In my judgement, and applying Lane J’s analysis, the matter has to be approached on the basis that the question of whether a director acted bona fide and within the scope of his or her authority will be very dependent on the circumstances of the particular case. Regard is to be had to the director’s duties to the company. The director will not have been acting bona fide if he or she was in breach of the duties set out in section 172. However, the question must be considered in the round remembering that liability is to be seen as an exception to the general rule that a director will not be liable in tort for inducing the company of which he or she is a director to breach a contract. It follows that not every instance of causing a company to breach a contract or a legal obligation will involve a director in a breach of the section 172 duties nor will every such instance cause him or her to be characterised as acting in bad faith for the purposes of the rule in Said v Butt. The key will be whether the director was properly acting to promote the success of the company taking account of the matters to which he or she is required by section 172 to have regard. In that exercise it will be necessary to consider the circumstances as a whole. Those will include the motivation of the director and the nature of the duties said to be broken but in addition the nature of the obligations being broken by the company and the consequences of the company’s breach can be relevant to the question of whether the director can properly have been said to have been acting in the interests of the company.”
“(a) the general rule or starting point is that a director will not be liable for the tort of inducing the company of which they are a director to breach a contract; (b) Mr Singh will not be liable for inducing Genee to breach the Exclusivity Agreement if in doing so he was acting bona fide within the scope of his authority as sole director of Genee; (c) whether Mr Singh was acting bona fide and within the scope of his authority has to be decided after taking into account all the relevant circumstances, including his motivation for inducing Genee to breach the Exclusivity Agreement and the nature of the duties owed by Mr Singh to Genee which he is said to have breached, the focus being on Mr Singh’s duties to Genee as its director and not on matters related to the other party to the contract (Northamber); and (d) Mr Singh will not be acting bona fide, if he acts in breach of his duties under the 2006 Act (including Sections 172 and 174).”
“… there is no bright dividing line [between cases where a director will and will not be found to be liable for inducing their company to breach a contract] and all depends, as Eyre J said in IBM, upon all the circumstances of the case and a consideration of whether in all those circumstances the director has breached the duties that he or she owes to their company and in particular the duty under Section 172.”
“323. Clause 5 provides for two means by which Genee will supply Genee World Products to Northamber and Northamber will supply Genee World Products to its customers: (i) Genee would supply to Northamber for it to hold in its warehouse based in the UK to deliver to customers and Northamber agreed to endeavour to hold at least 10 days stock at run rate levels at its warehouse; and (ii) Northamber could ask Genee to arrange for Genee World Products to be delivered direct from the bonded warehouse in the UK (where they were held, until released, to the order of Hitevision, the Chinese manufacturer, in the circumstances set out in clause 5.3). 324. On the available evidence Northamber only ever delivered to addresses in the UK from its warehouse and Genee World Products could only be delivered to addresses in the UK from the bonded warehouse, because, in that case, those goods had to be cleared through customs, for release out of the bonded warehouse for deliver to addresses in the UK. 325. The four telesales heads who were to be jointly funded by Genee and Northamber and were based at Northamber's premises, in accordance with clause 3.2 of the Exclusivity agreement, on the evidence, only marketed to resellers for supply to end-users based in the UK. 326. Clause 1 of the Exclusivity Agreement, whatever its precise meaning, restricted Northamber’s exclusivity to the UK and given what I have said in paragraphs 322 - 325 above I consider that the likely intention of Genee and Northamber, when the Exclusivity Agreement was entered into, was that Northamber would have exclusivity for the supply of Genee World Products to addresses of resellers and end users in the UK, rather than its exclusivity being determined by where the customer was based. In coming to that conclusion, I consider that neither party could have intended that Genee would be entitled to deliver goods to a customer outside the UK who then exported them back into the UK to their reseller customer based in the UK.”
“At all stages the parties must consider settling this litigation by means of alternative dispute resolution. Any party not engaging in any such means proposed by another must serve a witness statement giving reasons within 21 days of that proposal; such witness statement must not be shown to the trial judge until questions of costs arise.”
“Whilst the Claimant remains committed to pursuing the action it also remains open to mediation as a method of resolving the dispute. We would ask you to take instructions from your clients and for an indication, by return, as to their willingness to mediate. You will be aware of the consequences if a party refuses to mediate. Please note we are willing to mediate separately or jointly.”
“25. … I have no evidence before me that the claimant ever chased either the second or third defendant’s solicitors for a reply. I would describe the letter of16 February 2022 appearing as it did after very considerable costs had been incurred and a long way through the litigation as a half-hearted attempt – if indeed it was an attempt at all – by the claimant to suggest a mediation, enabling the claimant to say at the end of the trial, as it does, that it had suggested mediation but without any expectation that there would be a mediation, but it did not follow it up at all when the second [and third] defendant’s solicitors did not reply. 26. I do take into account the fact that no witness statement has been provided which explains why the second [and third] defendant did not engage in mediation and that there was a direction of DJ Rouine that they should do so.”