Jak Trude v Christopher Rajendran Hyman & Anor

The tort of inducing or procuring breach of contract requires more than conduct which merely makes contractual performance impossible. The defendant must persuade, encourage or assist the contracting party to breach the contract, with a sufficient causal connection to the breach, knowledge of the relevant effect, and an intention that the breach be an end or means to an end. A director acting bona fide and within authority ordinarily benefits from the rule in Said v Butt. A viable contrary case requires properly pleaded facts showing bad faith, conduct outside authority, or another recognised basis for personal liability. At the interlocutory stage, an amendment should proceed where the proposed case has a real, though narrow, prospect of success.

The claimant contracted with Valcura Limited to provide property project management consultancy services. The agreement provided for monthly remuneration and a share of net project profits. The first defendant was Valcura’s sole director and shareholder and arranged for a development property to be acquired by another company, Chertsey Property Limited, rather than by Valcura.

The claimant alleged that this structure prevented Valcura from performing the profit-share provision and that the first defendant induced or procured Valcura’s breach. The first defendant applied to strike out or obtain summary judgment. The claimant applied for permission to amend the particulars of claim, including allegations of bad faith, breach of section 172 of the Companies Act 2006, and breach of an alleged duty of good faith or trust and confidence.

1. Strike out and summary judgment. The court applied the pleading test under CPR Pt 3.4(2)(a) and the real-prospect test under Pt 24. A claim need not be more likely than not to succeed, but it must have some substance and be more than merely arguable.
2. Ingredients of the tort. The relevant elements included a breach by the contracting party; persuasion, encouragement or assistance by the alleged inducer; knowledge of the contract and the effect of the conduct; intention that the breach should be an end or means to an end; and the absence of lawful justification. Conduct which merely prevents performance does not ordinarily amount to inducement. There must be conduct capable of operating on the contracting party’s will and having a sufficient causal connection with the breach.
3. Directors. Under the rule in Said v Butt, a director acting bona fide and within the scope of authority will ordinarily avoid personal liability for procuring the company’s breach. The claimant had not initially pleaded facts showing lack of bona fides, conduct outside authority, personal action or separate joint participation. The original pleading was therefore defective, including its claim for contractual damages against the first defendant.
4. Amendment. The proposed case remained deficient in important respects, including knowledge, intention, the alleged section 172 breach, and any obligation requiring the property acquisition to be routed through Valcura. However, the pleaded diversion and the matters relied on could support a legitimate, non-fanciful argument that the rule in Said v Butt did not apply and that the line between prevention and inducement had been crossed. The issue of bad faith was fact-sensitive and unsuitable for summary determination.
5. The court therefore declined to strike out or summarily determine the substantive tort claim against the first defendant. The claimant was given an opportunity to submit a further re-amended pleading, with consequential matters and a possible time limit to be dealt with on the papers.