Mainstream Properties Ltd v Young & Ors

The tort of inducing or interfering with contractual relations requires a specific, subjective intention to procure a breach or cause economic harm to the claimant. It is insufficient that the defendant acted voluntarily, that breach was a natural or foreseeable consequence, or that the defendant was reckless as to whether contractual rights would be affected.

The same mental element applies to direct and indirect interference. Intention may include harm intended as a means to another end, but requires knowledge of the harm necessarily caused by achieving that end. A genuine mistake, including a mistake of law, may show that the required intention was absent.

Mainstream alleged that Mr De Winter induced breaches of the employment contracts of two of its directors, Mr Young and Mr Broad. He had financed their acquisition and development of the Findern site, an opportunity which belonged to Mainstream.

The trial judge found that Mr De Winter knew of the potential conflict but genuinely accepted assurances that the venture did not conflict with the directors’ duties. The High Court dismissed the claim against him.

Mainstream appealed, contending that deliberate funding, knowledge of the contracts, foreseeable interference, or recklessness supplied the necessary intention. The central issue was the mental element required for the tort of inducing breach of contract.

1. Appeal dismissed. Lady Justice Arden, with whom Mr Justice Aikens and Lord Justice Sedley agreed, held that the trial judge had not misdirected himself. The findings established that Mr De Winter did not specifically intend to procure a breach of Mainstream’s employment contracts or to harm Mainstream.

2. The tort requires actual, subjective intention. It is not enough that the alleged interferer acted deliberately rather than accidentally, or that interference was a natural, probable, foreseeable or inevitable consequence of the act. This requirement applies equally to direct and indirect interference with contractual relations. The court followed the reasoning in Douglas v Hello! Ltd [2005] EWCA Civ 595, preferring the approach of Peter Gibson LJ in Millar v Bassey [1994] EMLR 44.

3. Recklessness as to whether contractual rights would be affected does not by itself satisfy the mental element. It may be evidence from which intention can be inferred, but the court could not make a finding of recklessness on the trial judge’s findings or on the limited appellate record.

4. Where harm is said to be a necessary means to an ulterior objective, the defendant must know that achieving that objective will inevitably harm the claimant. Mr De Winter’s genuine belief, induced by the assurances he received, that no conflict with Mainstream’s interests would occur meant that he lacked that knowledge and intention.

5. A mistake of law does not operate as an absolute bar to reliance on the absence of intention in this economic tort. The policy of the tort did not require such a rule, particularly after the development of the law of mistake. The court rejected the submission that the mere fact that Mr De Winter’s belief was unreasonable established liability.

Lord Justice Sedley agreed, while observing that another fact-finder might have inferred deliberate blindness. The trial judge’s findings were nevertheless decisive on the present law.

• Court of Appeal (Civil Division): dismissed Mainstream’s appeal in [2005] EWCA Civ 861 .
• High Court, Chancery Division, Birmingham District Registry: on 10 September 2004, HHJ Norris QC dismissed Mainstream’s claim against Mr De Winter for inducing breach of contract and ordered Mainstream to pay his costs. No citation was stated.