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Economic Torts$

Tony Weir

Print publication date: 1997

Print ISBN-13: 9780198265931

Published to British Academy Scholarship Online: March 2012

DOI: 10.1093/acprof:oso/9780198265931.001.0001

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(p.78) (p.79) Appendix A Millar v. Bassey Court of Appeal (Ralph Gibson, Beldam, Peter Gibson LJJ) 12 July 1993 (reported in [1994] Entertainment and Media Law Reports 44)

(p.78) (p.79) Appendix A Millar v. Bassey Court of Appeal (Ralph Gibson, Beldam, Peter Gibson LJJ) 12 July 1993 (reported in [1994] Entertainment and Media Law Reports 44)

Source:
Economic Torts
Publisher:
Oxford University Press

BELDAM LJ: On 18th March 1992 His Honour Judge Micklem sitting as a judge of the Chancery Division struck out the appellants’ pleadings against the first defendant on the ground that the facts alleged by them disclosed no reasonable cause of action against her. The appellants claimed that the first defendant, respondent to the appeal, had wrongfully induced or procured the second defendant to break its contracts with them and that they had suffered damage as a result.

The respondent, Miss Shirley Bassey, is an exceptionally talented singer and recording artist of international renown. The second defendant company, ‘Dreampace’, is a producer of records and is entitled to her recording services. In the autumn of 1990 Dreampace wished to produce an album of songs performed by the respondent and for that purpose approached the first appellant, who is well-known as a producer of recorded popular music. Negotiations took place which included the projected budget, the type of songs, the selection of musicians to provide the backing and accompaniment and the amount of the fees and royalties payable to the first appellant. These negotiations continued during November and December. On 23rd November 1990 the respondent in a document described as a letter of inducement personally guaranteed the performance by her own management company, S.S.M. Productions Inc., of its agreement with Dreampace. On 4th December the respondent met the first appellant and Mr Alan Belman of Dreampace to discuss the selection of songs. On 21st December at a further meeting she selected some of the songs for the album and agreed to attend rehearsals starting on 7th January 1991. Arrangements were made to book recording studios and for the attendance of the other appellants who had been engaged to provide (p.80) the instrumental music. Between 7th and 11th January 1991 all the appellants attended at the rehearsal studios but, it is alleged, the respondent at first postponed her attendance for a week and then withdrew from the project refusing to perform her contract with Dreampace. The appellants contend that each of them had entered into a contract with Dreampace to provide their services to produce an album with the respondent whose singular talent was irreplaceable, and who knew that Dreampace had entered into contracts with them for those services, and that she was herself contractually bound to take part in making the album. Details of the respondent’s contract are not set out in the statement of claim nor the particulars delivered under it and it is not clear from the judgment whether the argument before the learned judge proceeded on the basis that the respondent had undertaken contractual obligations directly with Dreampace or whether her obligations were to S.S.M. Productions Inc. who, in turn, had agreed to provide her services to Dreampace but no point was taken in argument that the distinction was significant.

The parties had filed evidence and in an affidavit sworn on the respondent’s behalf on 3rd February 1992 Mr Cohen, an impresario who acted for her, clearly indicated that she had entered into a recording agreement with Dreampace, though the date when it was signed was very much in issue.

The application to strike out the appellants’ claims was made under Order 18, Rule 9, on four grounds:

  1. i) That on the facts pleaded and the evidence filed the appellants had failed to show that they had entered into concluded contracts with Dreampace;

  2. ii) That the appellants could not show that the respondent knew of the existence of any such contracts;

  3. iii) That at the material time the respondent had made no enforceable contract with Dreampace; and

  4. iv) Even if the appellants established all these matters, they had failed to allege or to establish that the respondent had acted with an intention to cause loss or damage to them or that her actions were directed at them.

The learned judge rejected the first three submissions but struck out the appellants’ claims against the respondent on the fourth ground.

For the purposes of this appeal the respondent accepts that the appellants have raised an arguable case on the first three grounds and accordingly it must be assumed that Dreampace had contractually engaged the first appellant to produce the album, and the other appellants to provide the instrumental music for the respondent’s (p.81) recording, and that the respondent knew the appellants were each entitled to the performance by Dreampace of its contractual obligations to them including an obligation to secure the participation of the respondent. It is also to be taken as fact that the respondent was contractually bound to Dreampace to take part in the production of the album by providing her unique talents, and that the appellants suffered loss in consequence of Dreampace’s failure to perform its contractual obligations to them. Finally to determine whether the appellants’ pleading discloses a cause of action it is to be assumed, as they assert in paragraph 26 of the statement of claim, that:

The first defendant wrongfully induced and caused the second defendant to break its contracts with the plaintiffs and each of them by refusing to make the record.

The question for the Court is whether, on these facts, the appellants establish an arguable case that the respondent has committed an actionable wrong.

In addition to his argument that it was essential to the appellants’ cause of action that the respondent had acted with an intention to invade their contractual rights or that her actions were directed at them, counsel for the respondent argued that the appellants had also to prove that the respondent acted without justification. To this additional argument the appellants contended that if and insofar as it might be a defence for the respondent to show that her refusal to perform her contract with Dreampace was reasonable in her own commercial interests and thus was justified, it was for her to set up by way of defence the matters on which she relied.

For the essential elements of the cause of action alleged against the respondent, the learned judge relied on Lord Devlin’s exposition in Rookes v. Barnard [1964] AC 1129 at page 1212:

What are the requisites for a cause of action for inducing a breach of contract? There must be, besides the act of inducement, knowledge by the defendant of the contract in question and of the fact that the act induced will be a breach of it; there must also be malice in the legal sense, that is, an intention to cause the breach and to injure the plaintiff thereby and an absence of justification; and there must be special damage, i.e., more than nominal damage, caused to the plaintiff by the breach. These three elements or requisites are the grounds on which an action for inducing a breach of contract must be based. If any one of them is missing, there is no cause of action.

(p.82) After dealing with the first three submissions of the respondent, the learned judge said:

Lastly counsel for the first defendant submits that it is plain and obvious that the first defendant acted without the necessary intention to invade the plaintiffs’ contractual rights. There is first a point of pleading. The plaintiffs did not plead that the first defendant ‘procured’ the second defendant’s breach of contract with the plaintiffs but that she caused it. It is not pleaded therefore that the first defendant caused the breach intentionally.

As I have already indicated, the allegation of the plaintiffs in paragraph 26 of the statement of claim is that:

The first defendant wrongfully induced and caused the second defendant to break its contracts with the plaintiffs and each of them by refusing to make the record. [Emphasis added.]

I interpret this paragraph as asserting that the respondent’s breach of contract was not involuntary but was voluntary in the sense that it was a deliberate refusal to fulfil her obligations under her contract with Dreampace. In the context of the averment that when she did so she knew of the agreements between the appellants and Dreampace, I find difficulty in understanding the distinction drawn between ‘inducing and causing’ Dreampace to break its contracts with the appellants and ‘procuring’ those breaches. Further, to say in these circumstances that ‘it is not pleaded that the respondent induced or caused Dreampace to break its contracts with the appellants intentionally’ is to stray into that equivocal vocabulary which has given rise to such difficulty in another branch of the law. The respondent may not have wished, nor may it have been her primary purpose, to induce or cause Dreampace to break its contracts with the appellants but unless she fulfilled her obligations to Dreampace it was inevitable (not just likely or foreseeable) that Dreampace could not fulfil its obligations to the appellants. This distinction is important and I notice that it was one drawn by Rose J in his judgment in Edwin Hill & Partners v. First National plc [1989] 1 WLR 225 at page 228. Moreover, in most cases of ‘inducing’ or ‘procuring’ a breach of contract of which Lumley v. Gye (1853) 2 E & B 216 and Bowen v. Hall & Ors. (1880) 6 QBD 333 may be regarded as examples the tortfeasors have been acting primarily to secure their own commercial advantage though they could only achieve it by causing detriment to the plaintiffs.

Suppose in the present case the respondent had received an (p.83) invitation for a lucrative engagement which, if accepted, rendered it impossible for her to continue with the production of the album and in her own interest she had deliberately decided to break her contract with Dreampace, or suppose that another producer of popular music had offered a more advantageous opportunity of producing a similar album with the same result, the respondent’s ‘intention’ would have been no different.

Consequently I am not myself prepared to attach the same significance as did the learned judge to the precise form of words used in the pleading.

Before the learned judge, counsel for the appellants had submitted that it was sufficient to aver that the respondent had caused the second defendant to break its contract with the plaintiffs intentionally and that she knew that the probable consequence would be that the second defendant would break its contract with the plaintiffs. For this proposition he relied on a passage in the judgment of Woolf LJ, as he then was, in Lonrho plc v. Fayed & Ors [1989] 2 All ER 65 in which he said:

This tort (conspiracy) is not based on any agreement, but interference, and frequently it will be fully appreciated by a defendant that a course of conduct he is embarking on will have a particular consequence to a plaintiff, and the defendant will have decided to pursue that course of conduct knowing what the consequence will be. Albeit that he may have no desire to bring about that consequence in order to achieve what he regards as his ultimate ends, from the point of view of the plaintiff, whatever the motive of the defendant, the damage which he suffers will be the same. If a defendant has deliberately embarked on a course of conduct, the probable consequence of which on the plaintiff he appreciated, I do not see why the plaintiff should not be compensated.

Of this citation the learned judge said in the present case:

…the observations made by Woolf LJ cannot be read as somehow dispensing with the normal requirement that the act complained of must be shown to have been in some sense directed at the plaintiff. It would not be enough to show at trial that the first defendant had broken her contract with the second defendant and that the natural consequence of that breach was that the second defendant broke its contract with the plaintiffs. The plaintiffs would (p.84) have to show the first defendant’s act in this case was directed against them. [Emphasis added.]

In the passage cited, Woolf LJ was in my opinion emphasising the distinction between an intention to bring about a consequence and the desire to do so and was pointing out that a person can intend a consequence if he knows that it will follow from a course of conduct on which he embarks deliberately. Nor in my view can a consequence properly be regarded as unintended or incidental if the deliberate action is taken knowing that it must inevitably bring about the consequence, desired or not. In truth in such a case the actor intends to bring about both the undesired and the desired consequence and is willing to bring about the one to achieve the other.

The learned judge also based his decision on an opinion expressed by the first appellant in his affidavit that the respondent had withdrawn from the project because she had changed her mind and was concerned about her future career. The judge then said:

It seems to me that the first plaintiff’s perception is that the action of the first defendant was dictated entirely by her concern for her own career. She was not directing her actions against any of the plaintiffs at all.

To consider whether, in the absence of an expressed or primary intention to cause harm to or to injure them, the appellants establish an arguable case of wrongful interference with their contractual relations, I think it is of assistance to have in mind the early cases in which the cause of action was first stated and how it has developed.

The first decision establishing the tort of interference by a third party with contractual relations is Lumley v. Gye (supra).

The purpose of the defendant Gye in offering Miss Wagner higher fees was to induce her to sing at the Royal Italian Opera at Covent Garden and so to obtain a commercial advantage. But he knew that he could only derive that advantage if she broke her contract with the plaintiff for whom she had agreed to sing at Her Majesty’s Theatre. (See Lumley v. Wagner 1 De G M & G 604.) It was not alleged in that case or in Lumley v. Gye that the defendant Gye had any intention to cause harm to the plaintiff beyond an intention that Miss Wagner should break her contract with him. In his judgment Crompton J said at page 224:

…it must now be considered clear law that a person who wrongfully or maliciously, or, which is the same thing with notice, interrupts the relation subsisting between master and servant by procuring the servant to depart from the master’s service…whereby the master is injured, (p.85) commits a wrongful act for which he is responsible at law. I think that rule applies wherever the wrongful interruption operates to prevent the service during the time for which the parties have contracted that the service shall continue: and I think that the relation of master and servant subsists, sufficiently for the purpose of such action, during the time for which there is in existence a contract of hiring and service between the parties…

Erie J at page 233 said:

This principle is supported by good reason. He who maliciously procures a damage to another by violation of his right ought to be made to indemnify and that whether he procures an actionable wrong or a breach of contract…

Later at page 234:

In such cases, he who procures the damage maliciously might justly be made responsible beyond the liability of the contractor.

In Bozven v. Hall & Others (supra), the defendants’ intention was to secure for themselves the services of one Pearson, a bath and brickmaker with a knowledge of a secret process known to only a few craftsmen, and who had contracted to work for the plaintiff. Brett LJ delivering a judgment with which the Lord Chancellor, Lord Selborne, agreed, said at page 337:

We were of opinion that the act of the defendants was done with knowledge of the contract between the plaintiff and Pearson, was done in order to obtain an advantage for one of the defendants at the expense of the plaintiff, was done from a wrong motive, and would therefore justify a finding that it was done in that sense maliciously.

Later at page 338 he said:

We are of opinion that the propositions deduced above from Ashby v. White are correct. If they be applied to such a case as Lutnley v. Gye, the question is whether all the conditions are by such a case fulfilled. The first is that the act of the defendants which is complained of must be an act wrongful in law and in fact. Merely to persuade a person to break his contract, may not be wrongful in law or fact as in the second case put by Coleridge J. But if the persuasion be used for the indirect purpose of injuring the (p.86) plaintiff, or of benefiting the defendant at the expense of the plaintiff, it is a malicious act which is in law and in fact a wrong act, and therefore a wrongful act, and therefore an actionable act if injury ensues from it. We think that it cannot be doubted that a malicious act, such as is above described, is a wrongful act in law and in fact. The act complained of in such a case as Lumley v. Gye, and which is complained of in the present case is therefore, because malicious, wrongful. That act is a persuasion by the defendant of a third person to break a contract existing between such third person and the plaintiff.

In Allen v. Flood [1898] AC 1 Lord Watson said that this passage refers:

…to the procuring of an illegal act, because the assumption upon which the whole passage is framed is that there has been successful persuasion to break a contract, which is an undoubted violation of the law; and in that case there would be a malicious wrong as it is defined in Lumley v. Gye. [Page 108.]

Earlier in his judgment Lord Watson referred with approval to the observations of Lord Bowen in Mogul Steamship Co. v. McGregor (1889) 23 QBD 598 at page 612 that in order to constitute legal malice the act done must, apart from bad motive, amount to a violation of law and cited his statement that:

An intent to ‘injure’ in strictness means more than an intent to harm. It connotes an attempt to do wrongful harm. ‘Maliciously’, in like manner, means an intention to do an act which is wrongful to the detriment of another. The term ‘wrongful’ imports in its term the infringement of some right.

Lord Watson added at page 94:

The root of the principle is that, in any legal question, malice depends, not on evil motive which influenced the mind of the actor, but upon the illegal character of the act which he contemplated and committed. In my opinion it is alike consistent with reason and common sense that when the act done is, apart from the feelings which prompted it, legal, the civil law ought to take no cognizance of its motive.

In this and subsequent cases it has been held that, when the acts of the defendants are in themselves unlawful, an intention to harm the (p.87) plaintiff is not an essential feature of the cause of action; where however the acts are lawful and are carried out for a lawful purpose but one which involves harm to the plaintiff, it is necessary to show at least that the actions are directed or aimed at him.

Equally there are many judicial statements of high authority that a breach of contract is in this context itself to be regarded as unlawful and to be a legal wrong.

In D. C. Thomson & Co. Ltd. v. Deakin [1952] 1 Ch. 646, employees of suppliers of the plaintiff company broke their contracts of service but as their breaches did not in themselves involve any breach of the suppliers’ contract with the plaintiff, the defendants were not liable. Speaking of indirect interference with contractual rights, Jenkins LJ said at page 696:

Nevertheless, I think that in principle an actionable interference with contractual relations may be committed by a third party who, with knowledge of a contract between two other persons and with the intention of causing its breach, or of preventing its performance, persuades, induces or procures the servants of one of those parties, on whose services he relies for the performance of his contract, to break their contracts of employment with him, either by leaving him without notice or by refusing to do what is necessary for the performance of his contract, provided that the breach of the contract between the two other persons intended to be brought about by the third party does in fact ensue as a necessary consequence of the third party’s wrongful interference with the contracts of employment.

I take this view because I see no distinction in principle for the present purpose between persuading a man to break his contract with another, preventing him by physical restraint from performing it, making his performance of it impossible by taking away or damaging his tools or machinery, and making his performance of it impossible by depriving him, in breach of their contracts, of the services of his employees. All these are wrongful acts, and if done with knowledge of and intention to bring about a breach of contract to which the person directly wronged is a party, and, if in fact producing that result, I fail to see why they should not all alike fall within the sphere of actionable interference with contractual relations delimited by Lords Macnaghten and Lindley in Quinn v. Leathern.

But, while admitting this form of actionable interference in principle, I would hold it strictly confined to cases where (p.88) it is clearly shown, first, that the person charged with actionable interference knew of the existence of the contract and intended to procure its breach; secondly, that the person so charged did definitely and unequivocally persuade, induce or procure the employees concerned to break their contracts of employment with the intent I have mentioned; thirdly, that the employees so persuaded, induced or procured did in fact break their contracts of employment; and, fourthly, that breach of the contract forming the alleged subject of interference ensued as a necessary consequence of the breaches by the employees concerned of their contracts of employment.

I should add that by the expression ‘necessary consequence’p used here and elsewhere in this judgment I mean that it must be shown that, by reason of the withdrawal of the services of the employees concerned, the contract breaker was unable, as a matter of practical possibility, to perform his contract; in other words, I think the continuance of the services of the particular employees concerned must be so vital to the performance of the contract alleged to have been interfered with as to make the effect of their withdrawal comparable, for practical purposes, to a direct invasion of the contractual rights of the party aggrieved under the contract alleged to have been interfered with, as, for example (in the case of a contract for personal services), the physical restraint of the person by whom such services are to be performed.

If there is no valid distinction between persuading a man to break his contract with another and making his performance of it impossible by depriving him in breach of their contracts of the services of his employees, I do not see a basis for distinguishing the deliberate refusal to perform irreplaceable services in breach of contract knowing that such refusal will inevitably make the performance of another’s contract impossible. If it is actionable to cause loss to the plaintiff by enticing or persuading another to break his contract with the plaintiff, can it be said to be unarguable that it is actionable to cause such loss by voluntarily and deliberately refusing to perform a contract knowing that such refusal will make it impossible for the other party to fulfil his obligations to the plaintiff? I do not think so.

Further, it has been held that it is no defence to an action for inducing or procuring a breach of contract that it was done without malice or ill will to the plaintiff. See South Wales Miners’ Federation v. Glamorgan Coal Company [1905] AC 239. Thus it seems to me that what is required for (p.89) the cause of action is an intention to cause breach of a contract of which the plaintiff is entitled to performance from another knowing that this will cause him loss.

We were referred to the opinion recently expressed by Stuart-Smith LJ in Edwin Hill & Partners v. First National plc (supra) rejecting a submission in that case that the necessary intention to interfere with a contract is not established unless the defendant’s conduct is aimed at the plaintiff and there is a desire to injure him. Whilst those remarks did not form part of the reasons for the court’s decision, it seems to me difficult to say that they do not form a ground for argument. Further in that case the court affirmed that absence of an intention to injure the person whose contract is broken does not amount to justification.

The respondent referred to the opinion of Hobhouse J in Rickless v. United Artists Corporation [1986] FSR 502, where at page 524 he said:

Unless the tort is to become virtually equivalent to the enforcement of contracts against third parties, it must remain an essential element of the tort that the interference occurs with the requisite actual intent (sc. to cause a breach of the plaintiff’s contract).

This objection was much discussed when the case of Rookes v. Barnard [1963] 1 QB 623 was before this court. That case concerned the concerted action of employees who threatened to break their contracts of employment in breach of a no strike agreement. This court held that a threat to break a contract was not ‘an unlawful act’ which was actionable by a third party as a tort because a breach of contract itself was not forbidden by law and could not in ordinary language be described as ‘unlawful’. It was simply a breach of an obligation which the parties had fixed for themselves and was actionable in the civil courts under the agreement and not otherwise. It could not be turned into a tort. Pearson LJ said at page 694:

The relevant cause of action can be said shortly to be by C against A for A’s intimidation of B with the object and effect of interfering with activities of C. Should this obscure, unfamiliar and peculiar cause of action, which has its roots in cases of physical violence and threats of violence, be extended to cover a case in which there was only a threat to break a contract?

If the extension were made, it would overturn or outflank some elementary principles of contract law. If A breaks his contract with B, A is liable in damages to B, but he is not liable to C for damage caused to him by that breach of contract, even if such damage was foreseeable or even (p.90) intended by A. The contract between A and B is res inter alios acta so far as C is concerned, and C has no right to enforce it in any way, he is not entitled to require the parties to perform it nor to recover damages from either of them for not performing it. A by entering into the contract with B has assumed liabilities towards B but not towards anyone else, and business is conducted on the basis of contractual liability being limited in that way and not extending to include liability to third parties. Otherwise it would be too perilous to make a contract:…

On appeal to the House of Lords, the objections expressed by Pearson LJ were in the opinion of their Lordships not applicable in a case of intimidation. In particular, Lord Devlin said at page 1208:

Then it is said that to give C a cause of action offends against the rule that one man cannot sue on another’s contract. I cannot understand this. In no circumstances does C sue on B’s contracts…

Lord Devlin went on to point out that in that case the cause of action had not arisen because B’s contract had been broken. It had not been broken because the threat was effective. Neither in fact was there any breach of contract between B and C for the appellant in that case had been dismissed in accordance with the terms of his contract.

Lord Reid also pointed to the distinction between suing a defendant on a contract to which the plaintiff was not a party and suing in respect of loss caused to the plaintiff by the defendant’s wrongful act.

So it has been said that the tort of interference with a subsisting contract is committed if, without lawful justification, a person intentionally interferes with a contract between B and C:

  1. (a) By persuading B to break his contract with C, or

  2. (b) If by some unlawful act he directly or indirectly prevents B from performing his contracts. (See Winfield & Jolowicz on Tort, 13th edn., 1989).

In Quinn v. Leatham [1901] AC 495 at page 510, Lord Macnaghten said referring to the decision in Lumley v. Gye:

I have no hesitation in saying that I think the decision 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 a legal right to interfere (p.91) with contractual relations recognised by law if there is no sufficient justification for the interference.

In the many cases in which the question has arisen whether breach or threat of breach by A of his contract with B amounts to an unlawful act which is actionable by C, the weight of authority points clearly to the fact that it is. See per Lord Watson in Allen v. Flood [1989J AC 96, per Lord Lindley in South Wales Miners’ Federation v. Glamorgan Coal Company [1905] AC 239 at page 253 and the opinions in Rookes v. Barnard (supra).

In Sorrell v. Smith [1925] AC 700 Lord Dunedin at page 717 was tempted to lay down what he thought the law should be in the case of concerted action not in itself unlawful which caused injury to another if ‘there were a clean slate and the books held no authority on the subject’. He said:

I think I should say to a jury you must consider whether the act or acts complained of which caused loss and hurt to the plaintiff were done with the purpose of injuring the plaintiff. Was such a purpose the real root of the acts that grew from it, or was the true motive of the acts something else, such, as for instance, the furtherance of the defendant’s own business?

A similar statement of the law as it is in New Zealand in the tort of unlawful interference with business interests by wrongfully making use of confidential information is to be found in Van Camp Chocolates Ltd. v. Aulsebrooks Ltd. [1984] 1 NZLR 354 at page 360 where Cooke J giving the judgment of the Court said:

The essence of the tort is deliberate interference with the plaintiffs interests by unlawful means. If the reasons which actuate the defendant to use unlawful means are wholly independent of a wish to interfere with the plaintiffs business, such interference being no more than an incidental consequence foreseen by and gratifying to the defendant, we think that to impose liability would be to stretch the tort too far.

Later in his judgment in Sorrell v. Smith (supra) at page 718 Lord Dunedin, quoting from his judgment in the Court of Session in Mackenzie v. Iron Trades Employers’ Insurance Association (1910 Session Cases 79), summarised in three propositions the effect of the leading decisions in this branch of the law:

In the first place, everyone has the right to conduct his own business upon his own lines, and as suits him best, even (p.92) although the result may be that he interferes with other people’s business in so doing.

Secondly, an act that is legal in itself will not be made illegal because the motive for the act may be bad…

Thirdly, even although the dominating motive in a certain course of action may be the furtherance of your own business or your own interests, as you conceive those interests to lie, you are not entitled to interfere with another man’s method of gaining his living by illegal means, and illegal means may either be means that are illegal in themselves or that may become illegal because of conspiracy where they would not have been illegal if done by a single individual.

In the present case, on the facts taken to be proved, the appellants establish that the respondent voluntarily broke her agreement with Dreampace knowing of the appellants’ contracts and that the performance of those contracts would be impossible if she refused to perform the obligations under her agreement with Dreampace. Since she must have realised that her talents were essential and irreplaceable, she must have intended that Dreampace would be unable to fulfil its obligations to the appellants. In such circumstances it seems to me unnecessary to assert a specific intention to interfere with the performance of the appellants’ contracts which must necessarily follow from her own refusal to perform her obligations to Dreampace. In the absence of any explanation advanced by the respondent for her actions, the only reasonable inference is that in refusing to perform she must have had a purpose of her own to serve which she pursued at the expense of the plaintiffs’ right to contractual performance by Dreampace of its obligations.

It may well be that it is arguable by the respondent that her action was justified because it was taken reasonably to protect or advance her career as an artiste and in her own commercial interest, but I consider it is for her to make good that justification. Rose J held in Edwin Hill & Partners v. First National plc (supra) that the onus of proving justification was upon the defendants and his decision was not challenged on appeal. In my view any matters pleaded in support of such justification come within Order 18, Rule 8.1 (a) and (b) and so are to be pleaded by the respondent.

Finally, as is clear from the judgment of the learned judge, many of the facts in this case are disputed and can only be resolved at the trial. The appellants’ claims raise important questions concerning the scope of the tort of wrongful interference with contractual rights and the extent to which a party may be justified in choosing deliberately to (p.93) break his contract knowing that by doing so he will inevitably cause loss to others.

Obviously such a cause of action must be strictly confined. The significant feature in this case is that the performance of the plaintiffs’ contract was fundamental to the project on which the parties embarked and her talents were not replaceable. It seems to me undesirable that the court should be asked to decide a case which involves difficult questions of policy when the facts are not decided. For example, it may be necessary for the court to determine whether, at the time the respondent became aware of the contract between the appellants and Dreampace, she had herself entered into binding obligations with Dreampace. If she only learnt of them after concluding her agreement with Dreampace, she would not be liable in contract for damages which Dreampace might have to pay to the appellants and in such circumstances Dreampace, involuntarily in breach of contract, might be forced to pay substantial damages which it could not recover from the respondent who deliberately brought about the breach. In such a case, or indeed if Dreampace were unable to meet the appellants’ claims to damages, the objections advanced by Pearson LJ in Rookes v. Barnard to allowing the appellants a cause of action against the respondent in tort might be considerably weakened. For these reasons I would not have regarded this as a suitable case in which the court should exercise its power summarily to dismiss the appellants’ claim.

I am satisfied for the reasons stated that the appellants’ pleadings raise an arguable case and I would accordingly allow the appeals.

PETER GIBSON LJ: This appeal raises a short but important point on the tort of procuring or inducing a third party to break his contract to the damage of the other contracting party without reasonable justification or excuse. It is not in dispute that the tort requires that the act of the tortfeasor be intentional. Must the conduct of the defendant, the alleged tortfeasor, be aimed directly at the plaintiff, the contracting party who suffers damage, in the sense that the defendant intends that the plaintiffs contract should be broken, or is it sufficient that that conduct should have the natural and probable consequence that the plaintiffs contract is broken?

As this point arises on an application to strike out, the factual averments in the Statement of Claim must be taken to be correct. In short the relevant averments are as follows:

  1. (1) The first plaintiff, Mr Millar, agreed with the second defendant, Dreampace Ltd. (‘Dreampace’) which was entitled to the recording services of the first defendant, Miss Bassey, to produce a long-playing record containing songs to be sung by Miss Bassey.

  2. (p.94) (2) The other plaintiffs are musicians who agreed with Dreampace to provide their services for the rehearsal and recording of the music for that record.

  3. (3) Miss Bassey knew of those agreements.

  4. (4) Miss Bassey refused to make the record.

  5. (5) The plaintiffs made themselves available to provide their services, but Dreampace broke the agreements with them by failing to make Miss Bassey available to take part in the recording and by not paying them for their services.

The summation of the allegations against Miss Bassey is contained in paragraph 26 of the Statement of Claim: ‘the first defendant wrongfully induced and caused the second defendant to break its contract with the plaintiffs and each of them by refusing to make the record’. The plaintiffs accordingly claim damages against her.

Miss Bassey applied under RSC Order 18, Rule 19 (1) (a), (b) and (d) and under the inherent jurisdiction of the Court to strike out the plaintiffs’ claim against her. Of the four grounds on which her application was based, three were rejected by the learned Judge and the defendants do not pursue them in this Court. The fourth ground was that Miss Bassey ‘acted without the necessary intention to invade the plaintiffs’ contractual rights’. The learned Judge referred to ‘the normal requirement that the act complained of must be shown to have been in some sense directed at the plaintiff. He continued: ‘It would not be enough to show at trial that the first defendant had broken her contract with the second defendant and that the natural consequence of that breach was that the second defendant broke its contract with the plaintiffs, the plaintiffs would have to show that the first defendant’s act in this case was directed at them.’ He referred to Mr Millar’s Affidavit in which he describes what occurred in fact without any reference to the plaintiffs and their contracts with Dreampace and concluded:

It seems to me that the first plaintiff’s perception is that the action of the first defendant was dictated entirely by her concern for her own career. She was not directing her actions against any of the plaintiffs at all.

Mr Englehart QC did not challenge the learned judge’s description of Miss Bassey’s actions as not being directed against any of the plaintiffs. He did not suggest that the pleaded facts amounted to action directed by Miss Bassey against the plaintiffs nor did he suggest that any defect in the pleadings could be cured by amendment. The sole point of challenge was the legal premise on which the decision below was based. In his submission it is sufficient if at the trial the plaintiffs establish (i) that Miss Bassey’s actions were deliberate, and (ii) that she (p.95) knew that the probable consequence would be that Dreampace would break its contracts with the plaintiffs.

Mr Englehart referred us to four authorities in support of his submission. First he referred us to the statement by Slade J in Greig v. Insole [1978] 1 WLR 302 at page 331 of the five conditions to be fulfilled for the tort. They included that the defendant must be shown to have had the intent to interfere with the plaintiffs contract. There is no quarrel with that condition. He then referred us to South Wales Miners’ Federation v. Glamorgan Coal Company [1905] AC 239 at page 244 where the Earl of Halsbury LC said, in the context of a case of procuring a breach of contract:

It is…a principle of the law, applicable even to the criminal law, that people are presumed to intend the reasonable consequences of their acts.

However, in the next sentence the Lord Chancellor said it was not necessary to have recourse to that presumption in that case, and there are other authorities, as I shall mention later, which suggest that it is not enough for the tort that the defendant’s conduct should have the natural and probable consequence of a breach of the plaintiffs contract unless the requisite intention can be shown.

Third, he referred us to Lonrho v. Fayed [1990] 2 QB 479. This was a case on the tort of unlawful interference with the trade or business of another. He relied on the remarks of Woolf LJ at page 494:

This tort is not based on any agreement, but interference, and frequently it will be fully appreciated by a defendant that a course of conduct that he is embarking upon will have a particular consequence to a plaintiff, and the defendant will have decided to pursue that course of conduct knowing what the consequence will be. Albeit that he may have no desire to bring about that consequence in order to achieve what he regards as his ultimate ends, from the point of view of the plaintiff, whatever the motive of the defendant, the damage which he suffers will be the same. If a defendant has deliberately embarked upon a course of conduct, the probable consequences of which to the plaintiff he appreciated, I do not see why the plaintiff should not be compensated.

The view expressed in the last sentence cited does not echo anything said by the other members of this Court. Dillon LJ at page 489 said:

It also has to be proved by a plaintiff who seeks to rely on this tort…that the unlawful act was in some sense (p.96) directed against the plaintiff or intended to harm the plaintiff.

Although this was conceded in that case, it is clear that Dillon LJ was stating that in his view that was indeed the law to be applied. Similarly, Ralph Gibson LJ in agreeing referred (at page 492) to ‘the requirement that the conduct be “directed against” the plaintiffs’. Woolf LJ started his judgment by saying that he agreed as well, but insofar as he was suggesting in the passage cited that the conduct need not be so directed, his view was a dissenting one.

The fourth authority to which Mr Englehart referred us was Edwin Hill and Partners v. First National Finance Corp. plc [1989] 1 WLR 225. That was a decision of this Court in an action for damages for procuring a breach of contract. The appeal was dismissed on the ground that the defendant’s interference with the plaintiff’s contract was justified and therefore not actionable; but at page 234 Stuart-Smith LJ (with whom Nourse LJ and Sir Nicholas Brown-Wilkinson V-C agreed) expressed certain obiter views that are relevant. It had been submitted that the necessary intention to interfere with the plaintiff’s contract is not established unless the defendant’s conduct is aimed at the plaintiff and there is a desire to injure him. Stuart-Smith LJ rejected that submission. He said that it played no part in the formulation of the tort propounded by Jenkins LJ in D. C.Thomson & Co. Ltd. v. Deakin [1952] Ch. 646, at pages 696, 697, which was endorsed by the House of Lords in Merkur Island Shipping Corp. v. Laughton [1983] 2 AC 570 at page 608. I shall come back shortly to the Deakin case, but I venture to suggest that deliberate interference with the plaintiff’s contract with a view to bringing about its breach is conduct ‘aimed at’ or ‘directed against’ the plaintiff in the sense in which those terms have been used in the authorities and is to be contrasted with interference which is merely the incidental consequence of the defendant’s conduct. Stuart-Smith LJ also referred to Smithies v. National Association of Operative Plasterers [1909] 1 KB 310 as binding authority of this Court that an intention to injure the plaintiff is not a necessary condition of the tort. He referred to a finding of fact in the Court below in the Smithies case that the defendants did not intend to injure the plaintiff. However there is no reference to that fact in the judgments of the Court of Appeal and the appeal was decided on other points not relevant to the issue before us.

I am not persuaded that the authorities cited by Mr Englehart establish the proposition for which he contends, particularly when set against the authorities to the contrary, to many of which Mr Sheridan QC for Miss Bassey referred.

The tort in question is a species of the genus of economic torts whereby the common law protects against the intentional violation of (p.97) economic interests. Throughout that genus the law requires that the tortfeasor should intend the violation of those interests though the intention need not necessarily be the predominant intention. But it is necessary that his conduct must have been directed against the plaintiff in the sense that the breach of his contract or the interference with his interests was intended, rather than being merely what probably would result from his conduct.

The tort originated in Lumley v. Gye (1853) 2 E & B 216, a case relating to an inducement to breach a contract of services. But in approving that decision Lord Lindley in Quinn v. Leathern [1901] AC 495 at page 535 said:

Further, the principle involved in it cannot be confined to inducements to break contracts of service, nor indeed to inducements to break any contracts. The principle which underlies the decision reaches all wrongful acts done intentionally to damage a particular individual and actually damaging him.

In D. C. Thomson & Co. Ltd. v. Deakin [1952] Ch. 646 at pages 693–7 Jenkins LJ after reviewing the earlier authorities stated his views on what are the necessary ingredients of an actionable interference with contractual rights. In so doing he distinguished between such interferences in its primary form and other forms of such actionable interference. He cited Lumley v. Gye as authority for the following proposition:

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 cause of actionable interference in its primary form is made out.

Other forms of the tort he identified as including direct intervention in the contract, such as by interfering with the contract performance, and indirect intervention, such as by secondary industrial action. The latter was the form of the tort alleged to be relevant to the Deakin case, which was concerned with whether the defendant was liable, not for inducing a breach of contract between an employer and his employees, but for inducing the employees to break their contracts with their employer with the intent that the employer’s contract with another should thereby be broken. The essential elements of the tort in that form included, Jenkins LJ said (at page 697):

(p.98) First that the person charged with actionable interference knew of the existence of the contract and intended to procure its breach; secondly, that the person so charged did definitely and unequivocally persuade, induce or procure the employees concerned to break their contracts of employment with the intent I have mentioned.

It is correct that Jenkins LJ did not expressly refer to there being any requirement that the defendant’s conduct should be directed against or intended to injure the plaintiff. But that he envisaged that a breach of contract which was merely the probable consequence of the interference was not sufficient for the tort can be seen from his approval (at page 698) of what Upjohn J had said to that effect at first instance (at page 663) and the insistence by Jenkins LJ in the passage I have cited that the actionable interference had to be not only with knowledge of the contract but with a view to bringing about its breach.

In Rookes v. Barnard [1964] AC 1129 at page 1212 Lord Devlin stated the requisites for a cause of action for inducing a breach of contract thus:

There must be, besides the act of inducement, knowledge by the defendant of the contract in question and of the fact that the act induced will be a breach of it; there must also be malice in the legal sense, that is, an intention to cause the breach and to injure the plaintiff thereby and an absence of justification; and there must be special damage, i.e., more than nominal damage, caused to the plaintiff by this breach.

In the cognate tort of unlawful interference with the trade or business of another, there must similarly be action directed against the plaintiff. Thus in Van Camp Chocolates Ltd. v. Aulsebrooks Ltd. [1984] 1 NZLR 354 at page 360 Cooke J, giving the judgment of the New Zealand Court of Appeal, said:

The essence of the tort is deliberate interference with the plaintiffs interests by unlawful means. If the reasons which actuate the defendant to use unlawful means are wholly independent of a wish to interfere with the plaintiffs business, such interference being no more than an incidental consequence foreseen by and gratifying to the defendant, we think that to impose liability would be to stretch the tort too far.

This was relied on by Henry J in Barretts & Baird (Wholesale) Ltd. v. I.P.C.S. [1987] IRLR 3 in which he held that persons inevitably harmed by a (p.99) strike could not show intentional harm to injure them, and so could not succeed on their claims based on the tort of interference with the trade or business of another.

I have already referred to Lonhro plc v. Fayed [1990] 2 QB 479 in which the majority of this Court held that the conduct complained of must be directed against the plaintiff. Nothing was said by the House of Lords in the further appeal in that case to cast doubt on this ([1992] 1 AC 448).

In Clerk & Lindsell on Torts (16th edn. 1989) paragraph 15-03 it is said of the tort of procuring a breach of contract:

The plaintiff must show that there was an intentional invasion of his contractual rights and not merely that the breach of contract was the natural consequence of the defendant’s conduct

(see also paragraph 15–19 and the illuminating article by Hazel Carty: ‘Intentional Violation of Economic Interests’ (1988) 104 LQR 250).

There are strong policy reasons why the law should restrict the ambit of the tort in this way. The tort gives a plaintiff a right of action in respect of a failure to comply with the terms of a contract against a person who is not a party to the contract. This is inconsistent with contractual principles, in particular in breaching the privity rule (see Cane: Tort Law and Economic Interests (1991) 122–5). As Hobhouse J said in Rickless v. United Artists Corporation [1986] FSR 502 at page 524 of the tort of wrongful interference with contractual relations:

Unless the tort is to become virtually equivalent to the enforcement of contracts against third parties, it must remain an essential element of the tort that the interference occurs with the requisite actual intent (sc. to cause a breach of the plaintiff’s contract).

Further, without the limiting of the scope of the tort by the requirement of actual intention, freedom of action would be unduly restricted by liability for incidental consequences (see Fleming: The Law of Torts (7th edn. (1987) 656). Interference with contracts may flow from competition and is the normal and expected consequence of industrial action. It would not be right for the law to discourage competition by encouraging actions by unsuccessful competitors or to allow tort actions by those who suffer only incidentally from another person’s activities.

In my judgment therefore it is a requirement of the tort that it should be established that the defendant by his conduct intended to break or (p.100) otherwise interfere with and, with that intention, did break or otherwise interfere with a contract to which the plaintiff was a party. It being common ground that this has not been pleaded, subject only to Mr Englehart’s alternative ground of appeal, I think that the learned judge was quite right to strike out the claim against Miss Bassey.

That alternative ground of appeal was that the law on the point was unclear and that the point should not be decided until trial when all the material facts are before the Court. I cannot accept that submission. The law seems to me clearly settled, and it would not be right to defer a decision until trial in the hope that facts which have not been pleaded might emerge to make good the plaintiffs’ case.

I would dismiss this appeal.

RALPH GIBSON LJ: Beldam LJ has stated the facts as pleaded in this case. The learned judge has ruled that the facts alleged by the plaintiffs disclose no reasonable cause of action against Miss Shirley Bassey the first defendant. I have found the case difficult. I think there is much to be said in favour of the law being in accordance with the judge’s ruling, but the principle which he applied is, in my judgment, not clearly covered by previous authority. I regard it as inappropriate to pronounce upon the correctness of the principle applied by him in an application to strike out: see Dillon LJ in Lonrho plc v. Fayed [1990] 2 QB 479. The action should proceed to trial.

The judge proceeded on the basis that, for this tort, ‘the normal requirement [is] that the act complained of must be shown to have been in some sense directed at the plaintiff’: therefore ‘it would not be enough to show at trial that the first defendant had broken her contract with the second defendant and that the natural consequence of that breach was that the second defendant broke its contract with the plaintiffs—the plaintiffs would have to show that the first defendant’s act in this case was directed against them’. After reference to the pleading, the judge concluded that it was plain and obvious that the case against the first defendant would fail on intention.

The defendants have submitted in this court that the decision of the judge was right for the reasons which he gave. Their argument, in summary, was that the requirement of the law as to intention is proof of intention on the part of the defendant to cause the breach of contract in question and to injure the plaintiff. That meant, it was said, that the plaintiffs must allege that the deliberate act of the defendant was directed in some way towards the plaintiff. For that proposition the defendant relied upon a number of authorities including Lonrho plc v. Fayed per Dillon LJ page 489D–E; Allen v. Flood [1898] AC 1 per Lord Watson at page 96; Stott v. Gamble [1916] 2 KB 504 per Horridge J at 508–9; Rickless v. United Artists Corp. [1986] FSR 502, 518–21, 523–4, per (p.101) Hobhouse J; and Thomson v. Deakin [1952] Ch. 646: per Upjohn J at 663; per Jenkins LJ at 696.

In my judgment, the authorities cited to this Court do not provide a clear decision upon the point here under consideration. In the Lonrho case, the defendants rely upon the passage from the judgment of Dillon LJ at page 489: where he said:

It also has to be proved by a plaintiff who seeks to rely on this tort, as was conceded for Lonrho, that the unlawful act was in some sense directed against the plaintiff or intended to harm the plaintiff. The origin of those phrases is the oft quoted passage in the speech of Lord Watson in Allen v. Flood 1898 AC 1, 96, which was applied by the majority of this Court (Buckley and Kenney LJJ) in National Phonograph Company Limited v. Edison Bell [1908] 1 Ch. 335. In that case the fraud was clearly directed against the plaintiff.

In Lonrho the plaintiff alleged that the first three defendants had, by fraudulent misrepresentations as to their financial ability persuaded the Secretary of State not to refer their bid to the Monopolies and Mergers Commission, thereby tortiously depriving the plaintiff of its right to bid for the company’s share capital; and that the defendants had practised the unlawful act of deceit on the Secretary of State with the intention and purpose of causing the Secretary of State to act so that the plaintiff would be deprived of its opportunity to bid. The defendants there argued that, in the tort of wrongful interference with trade or business, the illegal means employed had to be directed specifically against the plaintiff, and they were not, because the alleged fraud was directed against the Secretary of State. It was argued in this Court in that case that a wrong perpetrated against one person (i.e. the fraud practised on the Secretary of State) but directed against another (i.e. the plaintiffs) was only actionable, if at all, if the predominant intention of the wrongdoer was to injure that other person rather than to advance his own interests: see page 481F. This Court rejected that argument and held that it was not a requirement of the tort of interfering with business that the wrongdoer have the predominant purpose of injuring the plaintiff. It did not address the question as to the precise nature of the intention which is required to satisfy the requirement that the conduct be ‘directed against’ the plaintiff: that requirement was, beyond doubt, sufficiently alleged by the plaintiffs. In the passage cited from the judgment of Dillon LJ, he referred to the requirement of intention in language no more precise than that it was necessary to prove that ‘the unlawful act was in some sense directed against the plaintiff or intended to harm the plaintiff’.

(p.102) Dillon LJ derived those phrases from the speech of Lord Watson in Allen v. Flood [1898] AC 1, 96, and they were applied in National Phonograph Company Limited [1908] 1 Ch. 335. Lord Watson said:

There are, in my opinion, two grounds only upon which a person who procures the act of another can be made legally responsible for its consequences. In the first place, he will incur liability if he knowingly for his own ends induces that other person to commit an actionable wrong. In the second place, when the act induced is within the right of the immediate actor, and is therefore not wrongful insofar as he is concerned, it may yet be to the detriment of a third party; and in that case, according to the law laid down by the majority in Lumley v. Gye the inducer may be held liable if he can be shown to have procured his object by the use of illegal means directed against that third party.

The words do not specify the nature of the intention towards the victim of the actionable wrong which is required to be proved for the imposition of liability upon the person who ‘knowingly for his own ends induces another person to commit an actionable wrong’. The contention of the plaintiffs, of course, is that the defendant did knowingly cause the second defendant to commit the actionable wrong of breach of contract against the plaintiffs.

I take the reference ‘to the act induced [being] within the right of the immediate actor’ as directed to the defendant in Lumley v. Gye who was entitled to employ Miss Wagner to sing at his theatre; and the use of illegal means by him was the procuring of Miss Wagner to break her contract with the plaintiff of which contract the defendant was aware. In this case, of course, the defendant was not acting within her rights in refusing to make the recording because she had contracted to make it. She had the power to refuse to make it, and the law cannot by injunction compel her to perform her contract, but, insofar as her act or omission caused the second defendant, Dreampace, to break its contract with the plaintiffs, the defendant did not have the right so to act or to refuse to act.

The passages in National Phonograph do not, I think, carry the matter any further. The fraud there was, as Dillon LJ observed, clearly directed against the plaintiff and that sufficed. There was, I think, no clear holding that the deliberate decision by A not to perform his contract with B, when the non-performance of that contract will to the knowledge of A inevitably cause B to be unable to perform his contract of C with C, could not satisfy the requirement that the wrongful conduct be directed against C. In Stott v. Gamble, the plaintiffs had the (p.103) sole right of letting out on hire a cinematograph film. The defendants were the justices of the county borough to whom the council had delegated powers under the Cinematograph Act 1909 of granting licences for cinematograph exhibitions. The defendants granted a licence to proprietors of a cinema for the use of it for exhibiting films in which licence a condition forbade exhibition of any film to which the justices objected. The proprietors agreed to pay to the plaintiffs sums for hire of the film. The justices gave notice of objection. The plaintiffs claimed that the condition was unreasonable; that the defendants were not justified in giving the notice of objection; and that, by so doing, they had interfered with the contractual rights of the plaintiffs. It was argued for the plaintiffs that the giving of the notice was a wrongful act and such as might, as a natural and probable consequence of it, produce injury to another and which did in fact produce injury to the plaintiffs. Horridge J held that the condition was reasonable. He went on to hold that, if he was wrong about that, the passage from the speech of Lord Watson in Allen v. Flood, cited above as applied in the National Phonograph Company case, showed that the defendants were not liable. The act of the justices in giving notice of objection (even if unreasonable) clearly did not fall within the second class referred to by Lord Watson where the object has been procured by illegal means directed against the third party and it did not fall within the first class because there was no evidence that the justices knowingly or for their own ends induced a person to commit an actionable wrong. This case is consistent with the contentions made for the defendant in this court but is, in my view, of small assistance. It was neither alleged nor proved that the justices knew of the contract between the proprietors of the cinema and the plaintiffs and there was nothing to suggest, even if the condition was not reasonable, that the decision of the justices to give the notice was not bona fide, or that it was given for their own ends.

Next, as to Rickless v. United Artists, in the Court of Appeal the decision of Hobhouse J was upheld. The issue, with reference to the tort of inducing a breach of contract, was whether the defendants could be held liable for inducing a breach of a purely negative obligation under ‘a loan out’ agreement which in all other respects had long since been performed. It was held that they could be so liable. Bingham LJ referred to the decision of Roxburgh J in British Motor Trade Association v. Salvadori, [1949] Ch. 556, which was referred to without disapproval by Jenkins LJ in Thomson v. Deakin [1952] Ch. 646 at 694. The passage from Roxburgh J’s judgment cited by Bingham LJ was as follows:

But, in my judgment, any active step taken by a defendant having knowledge of the covenant by which he facilitates a (p.104) 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 and it is not seriously contended that in any of the cases with which I am concerned the defendant did not know of the existence of the covenant or thought the covenantor had obtained a release.

Roxburgh J used those words after reference to the case of Lumley v. Gye and to earlier cases for the purpose of examining what Lord Macnaghten meant by the words ‘interference with contractual relations’ in his speech in Quinn v. Leathern [1901] AC 495, 510, where he said:

Speaking for myself I have no hesitation in saying that [the decision in 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 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.

Roxburgh J referred to cases in which a defendant had been held liable under the doctrine of enticement where he had retained in his employment a servant, employed by another, after notice of that previous contract although the defendant had not had knowledge of it at the time that he employed the servant. Roxburgh J continued:

I cannot doubt that Lord Macnaghten 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 disassociation from the breach of contract, and they are still an unimpaired authority in the circumstances to which they apply…

Roxburgh J then continued in the passage cited by Bingham LJ and set out above.

That passage raises for consideration the question whether the act of refusing to perform a contract, in the circumstances of this case, can be regarded as the equivalent of ‘an active step’ or whether the mere refusal to perform a contract with a co-defendant, even with knowledge that such refusal will cause the co-defendant to be unable to perform (p.105) his contracts with the plaintiffs, cannot be regarded as ‘interference with the contractual relations’ of the plaintiffs with the co-defendant. That, in my judgment, is a separate question from the nature of the necessary intention. There was no doubt in British Motor Trade Association v. Salvadori that the defendants had the intention, in the sense of purpose, to bring about the breach of the covenant, but it was not suggested that it was necessary to prove that the defendants were aiming their conduct at the plaintiffs as contrasted with pursuing their own ends in obtaining the motor vehicle in breach of the covenant.

Lastly, as to Thomson v. Deakin [1952] Ch. 646, that case was not directed to the question of what state of mind of the wrongdoer satisfied the requirement that his act be ‘directed at’ the plaintiff. Upjohn J, in the passage upon which reliance is placed by the defendants, was considering allegations that three officers of a trade union, by sending out circulars and making speeches, which called upon the employees of Bowaters to refuse to carry paper to the plaintiffs, had committed the tort of knowingly procuring a breach of contract between the plaintiffs and Bowaters. It was, he said, important to distinguish between motive and intention: it was not disputed that the motive of the defendants was that supplies of paper to the plaintiffs should be stopped. Upjohn J further assumed that the natural and probable consequence of the acts of the three officers was that supplies to the plaintiffs of paper would be stopped and even that a further natural and probable consequence would be that Bowaters would thereby be compelled to commit a breach of contract with the plaintiffs. Those facts, however, did not constitute the tort. There never was any direct action between the three officers and Bowaters with the object of persuading or causing Bowater to break their existing contract with the plaintiffs. Upjohn J continued:

The defendants chose another path, and, by circulars and speeches addressed through trade union channels to the employees of Bowaters, influenced the latter to take the course of breaking their contracts of employment with Bowaters to this extent: that they refused to handle supplies intended for the plaintiffs. Whether in those circumstances the employees who broke their contracts of employment with Bowaters also committed the tort of procuring a breach of contract is not a matter with which I am concerned. Putting it at its highest against them, the defendants procured a breach of contract between Bowaters and their own employees. That was an act made lawful by Section 3 of the Trade Disputes Act 1906.

In my judgment, the fact that the nature and probable (p.106) consequences of that act is that Bowaters may be compelled to break their contracts with the plaintiffs is not sufficient to constitute the tort alleged…

I rest my decision as regard these defendants on this proposition: that they never procured Bowaters to break their contract with the plaintiffs. They exhorted Bowaters employees to break their contracts of employment, but there never was any direct chain of causation at all between these defendants and Bowaters.

On appeal to this Court, the decision of Upjohn J was upheld on the facts. This Court ruled that the tort of procuring a breach of contract was not confined to direct intervention. The intervener, knowing of the existence of a contract between A and B, and acting with the object of procuring its breach by A to the damage of B will be liable not only (i) if he directly intervenes by persuading A to break it but also (ii) if he intervenes by the commission of some act, wrongful in itself, so as to prevent A from in fact performing his contract and also (iii) if he persuades a third party to do an act in itself wrongful or not legitimate (as committing a breach of contract of service with A) so as to render, as was intended, impossible A’s performance of his contract with B. Jenkins LJ, with whose judgment Morris LJ agreed, stated the necessary ingredients of an actionable interference with contractual rights as follows:

The breach of contract complained of must be brought about by some act of a third party (whether alone or in concert with the contract breaker), which is in itself unlawful, but that act need not necessarily take the form of persuasion or procurement or inducement of the contract breaker in the sense above indicated.

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.

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…British (p.107) Motor Trade Association v. Salvadori. The inconsistent dealing between the third party and the contract breaker may, indeed, be commenced without knowledge by the third party of the contract thus broken: but, if it is continued after the third party has notice of the contract, an actionable interference has been committed by him: see for example De Francesco v. Barnum [1945] Ch. 430.

Again, so far from persuading or inducing or procuring one of the parties to the contract to break it the third party may commit an actionable interference with the contract, against the will of both and without the knowledge of either, if, with knowledge of the contract, he does an act which, if done by one of the parties to it, would have been a breach. Of this type of interference the case of GWK Limited v. Dunlop Rubber Company Limited affords a striking example.

Further, I apprehend that an actionable interference would undoubtedly be committed if a third party, with knowledge of a contract and intent to bring about its breach, placed physical restraint upon one of the parties to the contract so as to prevent him from carrying it out.

It is to be observed in all these cases there is something amounting to a direct invasion by the third party of the rights of one of the parties to the contract, by prevailing upon the other party to do, or doing in concert with him, or doing without reference to either party, that which is inconsistent with the contract; or by preventing, by means of actual physical restraint, one of the parties from being where he should be, or doing what he should do, under the contract.

But here the acts complained of as constituting the actionable interference do not amount to a direct invasion of the plaintiffs’ contractual rights…

In that case it was sufficient to note the requirement of ‘intention of bringing about its breach’ without enquiring further whether the breach must be the purpose of the act or whether it was sufficient if it was known to be the inevitable consequence of the act.

For these reasons I do not accept that the authorities upon which the defendants relied demonstrate that the point has been clearly decided.

Next in Edwin Hill v. FNFC [1988] 3 All ER 801, the claim of plaintiff architects was dismissed at trial on the ground that the act of the defendant finance company, in procuring breach by a property developer of his contract with the plaintiffs, was justified. Having given (p.108) reasons for upholding the judge’s decision on that ground, Stuart-Smith LJ, with whose judgment Nourse LJ and Sir Nicholas Browne-Wilkinson V-C agreed said:

In these circumstances it is not necessary to deal with the cross appeal on the issue of intent. But, since I have reached a clear conclusion on this matter, in deference to counsel’s argument I propose to state it shortly. The submission of counsel for the defendants was that the necessary intention to interfere with the plaintiffs contract is not established unless the defendant’s conduct is aimed at the plaintiff and there is a desire to injure him. In support of this proposition he relied on the dictum of Evershed MR in Thomson v. Deakin [1952] Ch. 646 at 676–7.1 cannot accept this submission. It plays no part in the formulation of the tort propounded by Jenkins or Morris LJ [1952] Ch. 646 at 696–7, 702. Jenkins LJ’s statement of the tort was endorsed by the House of Lords in Merkur Island Shipping Corp. v. Laughton [1983] 2 AC 570 at 608 per Lord Diplock. Moreover it seems to me to be directly contrary to the binding authority of the Court of Appeal in Smithies v. National Association of Operative Plasterers [1909] 1 KB 318 at 316 where there was an express finding of fact that the defendants did not intend to injure the plaintiff or the dismissed workman Gibbs; yet nevertheless the claim succeeded.

That part of the decision was obiter. It was, however, the considered opinion of all three members of this Court in that case and is of strong persuasive authority.

For my part, I incline to the view that the law ought to be settled in accordance with the ruling of Cooke J in Van Camp Chocolates Limited cited by Peter Gibson LJ. The policy reasons to which Peter Gibson LJ has referred in his judgment are, in my judgment, compelling. Further, there is, as I think, a relevant distinction between ‘an active step taken by a defendant having knowledge of the covenant by which he facilitates a breach of that covenant’, which may be enough to constitute the tort and the non-performance of contractual obligations which may be regarded as mere passivity: see Roxburgh J in BMTA v. Salvadori cited above. In a case where the defendant has done nothing more than refuse to perform her positive obligations under the contract with the co-defendant, the requirement as to intention may indeed be more than mere knowledge that her refusal will render her co-defendant incapable of performing its contract with the plaintiffs.

(p.109) Nevertheless, I would apply to this case that long established principle which this Court applied in Lonrho v. Fayed and which was stated by Slade LJ in Union Carbide Corporation v. Natuline Limited 15th May [1987] CA transcript number 531 where he said:

A long line of authority, of which examples are to be found in the notes at 18/19/3 in the Supreme Court Practice 1985, shows that the jurisdiction to strike out will be exercised only in plain and obvious cases. There is at least one good reason why in particular, in my judgment, the court hearing a striking out application should be slow to commit itself to stating principles of law which are not clearly covered by previous authority. Ex hypothesi it has to deal with the application on assumed facts. General statements of legal principle made on assumed facts are, in my experience, a perilous exercise since they may well require addition or qualification when applied to the facts as actually found on the evidence in a particular case.

The tort under consideration remains a comparatively new tort of which the precise boundaries should be established from case to case. One of those boundaries is concerned with the nature of the intention which is required to satisfy the requirement that the conduct be ‘directed against’ the plaintiffs. I would therefore allow this appeal and direct that the claim of the plaintiffs should proceed to trial.