Wolff v Trinity Logistics Usa Inc

Liability for inducing a breach of contract requires conduct having a sufficient causal connection with the breach. Encouragement or a commercial incentive can suffice, even where the contract-breaker first proposed the arrangement.

The defendant must actually realise that the conduct will breach the contract. Mere constructive knowledge is insufficient, but actual knowledge may be inferred where the defendant must have known the contractual position or was recklessly indifferent to it.

A respondent needs permission to appeal if it seeks to revive a distinct claim dismissed below. This remains so where the claim is advanced defensively and would yield the same relief as the successful claim.

A freight forwarder released imported clothing to a buyer without the bank-authorised documents required by its agency agreement. The buyer’s director encouraged that arrangement by directing business to the forwarder and ensuring prompt payment of its fees. Several consignments remained unpaid when the buyer entered administration.

The Commercial Court held the director liable for inducing breaches of the agency agreement, but dismissed claims concerning conversion, deceit and conspiracy. It ordered an indemnity for claims which suppliers might bring against the claimant.

The director appealed on the grounds that his conduct preceded the relevant contract, did not procure its breach, was accompanied by insufficient knowledge, and could not justify the indemnity ordered. By a respondent’s notice, the claimant also sought to revive its dismissed claims for procuring conversion and conspiracy.

1. The appeal was allowed only as to the form of relief. The challenges to liability for inducing breach of contract were dismissed. The indemnity was replaced by a declaration limited to supplier claims which the claimant reasonably paid.

2. The relevant contract existed when the unpaid consignments were requested and released without the required documents. The original arrangement for early release continued after the freight forwarder’s incorporation and operated whenever goods were requested without documents. It was therefore immaterial that the initial agreement between the individuals preceded the contract.

3. Inducement requires a sufficient causal connection between the defendant’s encouragement, threat, persuasion or similar conduct and the contracting party’s breach. Merely accepting a benefit offered in breach of covenant is insufficient, as illustrated by Batts Combe Quarry Ltd v Ford [1942] 2 All ER 639. Here, however, the promise of continuing business and prompt payment of fees supplied an important commercial incentive for the forwarder to breach its agreement. The director’s conduct amounted to encouragement and, if necessary, persuasion.

4. The defendant must actually realise that the induced conduct will breach a contract. Knowledge that an act is legally a breach, or that the defendant ought reasonably to have appreciated that consequence, does not suffice. Nevertheless, the finding that the director understood that the releases fell outside the contractual structure established actual knowledge. In any event, he was recklessly indifferent to whether the forwarder was breaching its contract. Once his alleged belief that the claimant had authorised early release was rejected, the requisite knowledge followed.

5. The court could grant declaratory relief for future losses, but recovery had to depend upon the reasonableness of payments made to suppliers. The director remained free to contend that a settlement was unreasonable, although the stated values of the consignments could no longer be challenged.

6. A respondent seeking to establish that the lower court wrongly dismissed a distinct cause of action is appealing that part of the decision and requires permission. This is not merely an attempt to uphold the order for different or additional reasons, even where both causes of action would produce identical relief. Permission was granted for the procuring-conversion claim but refused for conspiracy. The conversion issue was not determined because it could not affect the relief.

1. Court of Appeal (Civil Division): By [2018] EWCA Civ 2765, dismissed the first three grounds of appeal, allowed the fourth ground as to relief, and substituted a declaration for the indemnity. It held that permission was required for the respondent’s proposed appeals concerning procuring conversion and conspiracy.
2. High Court, Queen’s Bench Division, Commercial Court: Held the appellant liable for inducing breaches of contract and ordered an indemnity. It dismissed the claims against him concerning procuring conversion, deceit and conspiracy. No citation is stated in the judgment.