Northamber plc v Genee World Limited & Others

The Court of Appeal allowed Northamber’s appeal in part. The central legal question was whether a purchaser who placed orders with a supplier in breach of an exclusivity agreement can be liable in tort for inducing breach of contract. The court held that where a third party, with knowledge of the contract and intent to bring about a breach, enters into dealings which are necessary to enable the contract breaker to breach (for example by agreeing to buy, paying for and taking delivery), that conduct can amount to inducement or causative participation and attract accessory liability under the Lumley v Gye line of authority as explained in OBG v Allan and subsequent authorities (including Kawasaki Kisen Kaisha Ltd v James Kemball Ltd and Global Resources Group v Mackay).

The judge’s contrary conclusion that mere placement of orders could not amount to inducement was reversed in respect of IES: the Court held IES’s placing of orders which were accepted, paid for and fulfilled by Genee did amount to inducement. The court also considered the rule in Said v Butt as it applies to directors and held that a director who causes his company to breach an injunction and thereby expose the company to sanctions will not be protected by the Said v Butt principle; on that basis the judge’s finding that Mr Singh acted not bona fide during the period of the injunction was upheld.

The court varied the costs consequence of refusal to engage with mediation: the judge had erred in failing to treat silence in the face of an offer to mediate, and breach of a case management direction to explain refusal, as conduct deserving of at least a modest costs adjustment. The Court increased Northamber’s costs recovery from Mr Singh from 70% to 75%. An application to challenge the judge’s 31 July 2023 amendment of the primary judgment was refused as academic.

Background and procedural posture.

• Northamber, a UK trade-only distributor, and Genee, an importer of AV displays, entered a Resellers Agreement (March 2016) and an Exclusivity Agreement (effective 1 July 2017) making Northamber the sole source of Genee products in the UK save for four named Excluded Accounts.
• Northamber alleged that Genee sold to third parties in breach of the Exclusivity Agreement. After negotiating and obtaining injunctive relief (including an injunction of 10 September 2018), and subsequent enforcement proceedings (including a contempt hearing before Lance Ashworth QC [2020] EWHC 31 (Ch)), Northamber pursued trial claims for breach of contract against Genee and for inducing breach of contract and unlawful means conspiracy against Mr Singh (Genee’s director) and IES (a purchaser associated with Mrs Kaur).
• The trial judge (His Honour Judge Rawlings) found Genee in breach and entered judgment against Genee; he found Mr Singh liable for inducement of breach for a limited period (11 September 2018 to 12 November 2018) but dismissed Northamber’s claim against IES for inducing breach and dismissed the unlawful means conspiracy claims. The judge made costs orders and later amended the principal damages figure under CPR r.40.12.
• Northamber appealed on multiple grounds and Mr Singh cross-appealed. IES lodged a respondent’s notice raising alternative defences.

Nature of the claims and relief sought.

• Primary relief sought: damages for breach of the Exclusivity Agreement, injunctive and ancillary remedies; tortious relief for inducing breach of contract and for unlawful means conspiracy against the individual and related corporate defendants; costs and enforcement relief.

Issues for determination on appeal.

1. Whether IES’s acts of ordering and accepting delivery from Genee amounted to inducing breach of the Exclusivity Agreement.
2. Whether the unlawful means conspiracy claims were made out.
3. Whether the judge erred in applying the Said v Butt rule to absolve or limit director liability for inducing breaches, in particular whether Mr Singh acted bona fide within the scope of his authority during the relevant periods and whether his conduct during the period after the injunction deprived him of protection under Said v Butt (and the Companies Act 2006 duties, notably s.172 and s.174).
4. Construction of clause 1.1 of the Exclusivity Agreement (whether exclusivity related to goods delivered into the UK or to UK-based customers) in relation to certain sales to Capital.
5. Costs consequences of defendants’ failure to engage with a mediation proposal and compliance with a case management direction to explain non-engagement.

Court’s reasoning and conclusions.

• On inducement: the Court analysed the doctrine of accessory liability for inducing breach (Lumley v Gye, OBG v Allan) and the later authorities (including Kawasaki, Global/Mackay, British Motor Trade Association v Salvadori). It concluded that conduct which goes beyond mere facilitation and which is causatively connected to the breach—such as agreeing to buy, paying and taking delivery where the seller could not have breached without such purchasers—can amount to inducing breach. The judge’s finding that mere purchase orders could not constitute inducement was reversed in so far as IES had placed orders which were accepted, paid and performed: IES induced Genee’s breaches.
• On unlawful means conspiracy: the Court considered the conspiracy claim unnecessary to decide because Northamber had succeeded on the inducing claim and the conspiracy claim would not increase recoverable quantum; the conspiracy argument was therefore largely moot.
• On the director rule (Said v Butt): the Court reviewed authorities considering whether a director acting bona fide within authority is immune from tort liability for inducing company breaches. It accepted that the rule protects directors acting within authority and bona fide, but that serious breaches of duty (notably causing the company to violate an injunction and risk sanctions) fall outside that protection. The judge’s finding that Mr Singh lacked bona fides for the period after the injunction was upheld.
• On clause construction: the judge’s interpretation that clause 1.1 restricted exclusivity to supply to UK delivery addresses (rather than being defined by the customer's place of registration) was upheld; sales to Capital were therefore not in breach of clause 1.1 because the relevant deliveries were to Vietnam.
• On costs and mediation: the Court held that silence in the face of a mediation invitation and failure to comply with a case management direction to explain refusal were unreasonable conduct. The trial judge’s refusal to adjust costs for that conduct was an error; the Court increased Northamber’s costs recovery from Mr Singh from 70% to 75% as a modest penalty for non-engagement.

Wider context. The Court emphasised that inducement remains accessory liability and that the line between mere facilitation and procuring/inducing requires careful, fact-sensitive analysis; it reaffirmed the continuing relevance of longstanding authorities such as British Motor Trade Association v Salvadori within the framework set by OBG v Allan.

The appeal was allowed in part. The Court held that IES’s entering into and completing transactions with Genee (orders accepted, paid for and fulfilled) amounted to inducement of Genee’s breaches of the Exclusivity Agreement and allowed Northamber’s ground 1. The judge’s findings that Mr Singh was not bona fide during the period after the injunction were upheld and Mr Singh’s appeal was dismissed. The judge’s interpretation of clause 1.1 (as limiting exclusivity to goods delivered into the UK) was upheld. The Court found that the trial judge erred in not treating silence to an offer to mediate and breach of a case management direction as unreasonable conduct; it increased Northamber’s costs recovery against Mr Singh from 70% to 75%. An application to challenge the judge’s 31 July 2023 amendment was refused as academic.

Appeal from His Honour Judge Rawlings sitting as a High Court Judge (Business and Property Courts in Birmingham, Business List (ChD)), judgment delivered 3 March 2023 and circulated in draft 16 January 2023; lower court judgment reported at [2022] EWHC 3562 (Ch). Earlier interlocutory orders relevant to the proceedings included an injunction of 10 September 2018 (Garnham J), a variation requiring provision of Sage data (19 October 2018, Deputy High Court Judge Charles Bourne QC), findings and sanctions for contempt by Lance Ashworth QC ([2020] EWHC 31 (Ch)), and interim payment orders by Murray J (24 January 2019) and DJ Rouine (1 December 2021). The judge later made an amendment to paragraph 1 of his order under CPR r.40.12 by order dated 31 July 2023; that amendment was challenged but the Court of Appeal refused permission to pursue that challenge as academic.