Unique Pub Properties Ltd v Beer Barrels & Minerals (Wales) Ltd

The tort of actionable interference with contractual relations requires more than a supplier’s dealing with a contracting party that happens to result in breach. Where the contract-breaker is willing, the third-party act must itself be unlawful, ordinarily because the supplier knows that the dealing is inconsistent with the contract. Actual knowledge is required; mere access to information, or failure to retrieve it, is not generally enough. Knowledge that premises were historically tied does not establish knowledge that a current order breaches the tie, particularly where the tie’s content and continued operation are uncertain. A quia timet injunction cannot be granted on summary judgment merely because the supplier could take further precautions against dishonest customer answers. Unresolved questions about the supplier’s duty and the terms of any injunction require a trial.

The respondent owned about 4,000 tenanted public houses subject to different beer, cider and alcoholic-drink ties. It alleged that the appellant wholesaler had supplied tied products to the Cavalier public house, thereby procuring or inducing breach of the tenant’s lease covenants. It sought summary judgment and injunctions restraining sales to all tied houses identified in lists sent to the wholesaler.

Mr Justice Neuberger granted final injunctions on 23 June 2003. The appeal concerned whether the earlier letters and lists established the knowledge and intention required for actionable interference, and whether blanket quia timet relief could be granted because the wholesaler did not check every order against the lists.

The Court of Appeal allowed the appeal unanimously. Chadwick LJ gave the judgment, with Brooke LJ and Scott Baker LJ agreeing. The order of 23 June 2003 was set aside, the injunctions were discharged, and the respondent’s applications for summary judgment and interim injunctions were dismissed.

1. Actionable interference with contractual relations was considered in the context of a willing contract-breaker. The formulation in D C Thomson & Co Ltd v Deakin and others [1952] Ch 646, described as authoritative in Merkur Island Shipping Corporation v Laughton and others [1983] 2 AC 570, required the third-party act to be itself unlawful. In this class of case, dealings with the contract-breaker are unlawful where the third party knows that they are inconsistent with the contract. That knowledge, together with the dealing, supplies the necessary intention to bring about the breach.

2. The respondent had not established the necessary knowledge or intention in relation to the Cavalier supplies. The lists showed only that the premises were subject to some tie when the lists were prepared. Their descriptions were imprecise, they did not state the contractual obligations, and the tie could change or cease to operate. Knowledge of a past tie was therefore not knowledge that a current order would breach the tenant’s obligations. Means of knowledge could not generally be equated with knowledge, as illustrated by British Industrial Plastics Ltd v Ferguson and others [1940] 1 All ER 479 and Bristol and West Building Society v Mothew [1998] Ch 1. The case was not one of deliberately shutting the eyes to known information, as distinguished from Emerald Construction Ltd v Lowthian [1966] 1 WLR 691.

3. The wholesaler’s instructions required its telesales staff to ask whether a public house was tied, and the evidence that the Cavalier customer had answered no was not rejected on a summary application. In the absence of bad faith, those instructions were inconsistent with an intention to interfere. The risk that a tenant might give a dishonest answer arose from the customer’s conduct and the wholesaler’s otherwise lawful business, not from established tortious conduct by the wholesaler.

4. The proposed future injunctions could not be justified on the evidence. It was not self-evident that a supplier on notice of possible ties had to do more than ask the customer whether a relevant tie was in force. Any further obligation raised unresolved questions about identifying the current tie, determining whether a proposed supply infringed it, and the extent of any duty to consult the landlord. Those questions were unsuitable for decision on assumed and incomplete facts under summary judgment procedure.

5. An injunction must make clear what the defendant must and must not do. The insertion of “knowingly” could not properly postpone difficult questions of knowledge to committal proceedings. The Court agreed with the approach in Unique Pub Properties Limited v Licensed Wholesale Company Limited [2003] EWHC 3386 (Ch) that claims of this kind should be taken to a speedy trial if pursued.

• Court of Appeal (Civil Division) — [2004] EWCA Civ 586. Allowed the appeal, set aside the High Court order, discharged the injunctions, dismissed the respondent’s applications for summary judgment and interim injunctions, and made costs orders.
• High Court of Justice, Chancery Division — On 23 June 2003, Mr Justice Neuberger granted final injunctions on the respondent’s summary-judgment application and refused permission to appeal.