Lictor Anstalt (A Company) v MIR Steel UK Ltd & Ors

For the tort of inducing breach of contract, active persuasion is not essential. Entering into an inconsistent contract may amount to sufficient causative participation where the defendant knows of the contract and the breach is integral to the transaction, rather than merely a foreseeable consequence.

A company remains a separate tortfeasor even where its conduct is controlled by agents who are personally protected by the rule in Said v Butt. A purchaser dealing with an company in administration may potentially rely on justification where the interference concerns purely contractual restrictions, but the issue is fact-sensitive and unsuitable for summary judgment without proper notice and argument.

The claimant alleged that a hot strip mill sold during Alphasteel Limited’s administration remained its property. It claimed conversion against the purchasers and, alternatively, that the sale breached contractual restrictions and gave rise to inducing breach of contract and unlawful means conspiracy.

MIR Steel UK Limited applied for summary judgment dismissing the inducing breach and conspiracy claims. It also sought permission under CPR Part 20 to join Alphasteel and the administrators for contribution, breach of warranty and repayment based on mistake. The central questions were whether the claims had a real prospect of success and whether the proposed Part 20 claims were sustainable.

1. Summary judgment. The relevant test was whether the claims had a real prospect of success under CPR 24.2(a)(i). It was insufficient merely to suggest that something might emerge at trial, but the court should not decide a substantial, novel issue without adequate notice, evidence and argument.
2. Inducing breach of contract. Knowledge of the contract and knowledge that the relevant act would constitute a breach were assumed for the applications. Applying OBG Ltd v Allan, the breach could be the means by which the transfer was achieved. It was therefore not merely a foreseeable consequence. Entry into the hive-down agreement, payment of a substantial price and assumption of obligations concerning the hot strip mill were at least arguably sufficient causative participation. Active persuasion was unnecessary where the defendant’s participation facilitated a breach which otherwise could not occur, consistently with DC Thomson & Co Ltd v Deakin and British Motor Trade Association v Salvadori.
3. Separate personality and justification. Mir Steel remained a separate legal person. The fact that it was controlled by administrators who acted as agents did not itself provide a defence. The administrators were personally protected by the rule in Said v Butt, as applied to administrators under paragraph 69 of Schedule B1 to the Insolvency Act 1986. A defence of justification might be available to a purchaser where an administration sale interfered with purely contractual restrictions, but the issue was novel, important and potentially fact-sensitive. It was not appropriate for summary judgment.
4. Conspiracy. On the assumed facts, the breach was integral to the intended transfer and therefore could constitute the necessary intention to cause loss. By agreeing to become a party to the unlawful means, Mir Steel arguably became a conspirator; agreement with one conspirator was sufficient.
5. Part 20 claims. The proposed claims against the administrators had no real prospect of success because Said v Butt barred both inducing breach and conspiracy claims on the same facts. Clause 9.5 of the hive-down agreement covered any claim made by the claimant in respect of the hot strip mill, including the claims for inducing breach and conspiracy, so no contribution claim against Alphasteel was sustainable. Clause 9.4 concerned materials and details relating to the claimant’s interests in the mill, not alleged knowledge or belief about the sale. The warranty claim was also out of time. The mistake claim failed because the payment fulfilled an obligation already undertaken and the administrators’ knowledge was attributable to Mir Steel.
6. The summary judgment application and the application to join Alphasteel and the administrators as Part 20 defendants were dismissed.