Distinctive Wholesale Litd v Clayton Horsnell Ltd & Ors

A party cannot maintain a claim for procuring breach of contract based on its own breach of the contract. The claimant in such an action must be a party to the contract whose breach was procured by the defendant, while the breach must have been committed by the other contracting party. An allegation of unlawful interference requires an unlawful act causing the interference. Where the only alleged unlawful act is procurement of breach, and that procurement claim is unsustainable, the unlawful-interference claim also fails.

Distinctive Wholesale Limited claimed that former retail customers had infringed its copyright and database rights. Clayton Horsnell Limited brought a Part 20 claim against Essential E-Commerce Limited, alleging that Essential had procured any breach by Clayton of its contract with Distinctive Wholesale and had unlawfully interfered with Clayton’s economic interests. The application by the third parties sought strike-out of those allegations.

The court held that the issues were points of law requiring no evidence and could be dealt with under CPR 3.4(2). The central questions were whether Clayton could allege procurement of its own breach and whether the related unlawful-interference claim could survive if the procurement allegation failed.

1. Application granted. The claims for procurement of breach of contract and unlawful interference were struck out under CPR 3.4(2).
2. A claim for procuring breach of contract requires: (i) a contract between the claimant and another contracting party; (ii) breach by that other contracting party; and (iii) procurement of the breach by the defendant. The claimant cannot rely on its own breach of the contract as the breach allegedly procured.
3. Clayton’s case assumed that it was itself in breach of its contract with Distinctive Wholesale and alleged that Essential had procured that breach. That was not a sustainable cause of action. The argument that it was immaterial which contracting party committed the breach would involve a radical expansion of the law.
4. An unlawful-interference claim requires the defendant to have committed an unlawful act which led to the interference relied upon. Clayton identified Essential’s alleged procurement of Clayton’s breach as that unlawful act. Once the procurement claim failed, no unlawful act remained on which the interference claim could be based.
5. The court therefore concluded that there was no real prospect of success in either claim.