[2] In Northamber PLC v Genee World Limited [2024] EWCA Civ 428, Arnold LJ (with whom Lewison LJ and Phillips LJ agreed) said, at paragraphs 34 to 61:

'34. The tort of inducing a breach of contract was established in the famous case of Lumley v Gye (1853) 2 E & B 216. As Lord Hoffmann explained in OBG Ltd v Allan [2008] AC 1, paras 2–5, it is important to bear in mind that the decision was based on the general principle that a person who procures another to commit a wrong incurs liability as an accessory. Thus the tort amounts to accessory liability for breach of contract. Lord Nicholls of Birkenhead made the same point at paras 168–172 and 178.

35. Accordingly, as Lord Hoffmann explained at para 8, liability under Lumley v Gye “requires only the degree of participation in the breach of contract which satisfies the general requirements of accessory liability for the wrongful act of another person: for the relevant principles see CBS Songs Ltd v Amstrad Consumer Electronics plc [1988] AC 1013 and Unilever plc v Chefaro Proprietaries Ltd [1994] FSR 135”.

36. As Lord Hoffmann went on to explain at para 15, Quinn v Leathem [1901] AC 495 is nowadays regarded as a case on lawful means conspiracy, but this was not clear at that time and the case contains some discussion of both Lumley v Gye and the tort of causing loss by unlawful means. Lord Macnaghten said at p 510:

“… I have no hesitation in saying that I think [Lumley v Gye] was right, not on the ground of malicious intention - that was not, I think, the gist of the action - but on the ground that a violation of a legal right committed knowingly is a cause of action, and that it is a violation of legal right to interfere with contractual relations recognised by law if there be no sufficient justification for the interference.”

37. This formulation could be understood to suggest that a person could be liable for “interfering with contractual relations” without being accessory to any breach of contract. Moreover, Lord Lindley went further and suggested that Lumley v Gye was an example of causing loss by unlawful means. This paved the way for the “unified theory” adopted in D C Thomson & Co Ltd v Deakin [1952] Ch 646 which treated the Lumley v Gye tort as a species of a broader genus. In OBG v Allan the House of Lords rejected the unified theory and held that inducing breach of contract and causing loss by unlawful means were two separate torts, each with its own conditions for liability.

38. One of the reasons given by Lord Hoffmann for rejecting the unified theory was that it had led to a distinction being drawn between “direct” and “indirect” interference which distracted attention from the true questions which had to be asked. As Lord Hoffman explained at para 36, the real question to be asked in relation to the Lumley v Gye tort was:

“did the defendant's acts of encouragement, threat, persuasion and so forth have a sufficient causal connection with the breach by the contracting party to attract accessory liability? The court in Lumley v Gye made it clear that the principle upon which a person is liable for the act of another in breaking his contract is the same as that on which he is liable for the act of another in committing a tort. It follows, as I have said, that the relevant principles are to be found in cases such as CBS Songs Ltd v Amstrad Consumer Electronics plc … and Unilever plc v Chefaro Proprietaries Ltd …”

39. Similarly, Lord Nicholls said, in the context of discussing the mental ingredient of the Lumley v Gye tort at para 191:

“The mental ingredient is an intention by the defendant to procure or persuade (‘induce’) the third party to break his contract with the claimant. The defendant is made responsible for the third party's breach because of his intentional causative participation in that breach. Causative participation is not enough. A stranger to a contract may know nothing of the contract. Quite unknowingly and unintentionally he may procure a breach of the contract by offering an inconsistent deal to a contracting party which persuades the latter to default on his contractual obligations. The stranger is not liable in such a case. Nor is he liable if he acts carelessly.”

40. It follows that some caution is required when considering cases on inducing breach of contract decided between Quinn v Leathem and OBG v Allan, and in particular cases decided between Thomson v Deakin and OBG v Allan. It does not necessarily follow that such cases are no longer authoritative.

41. One such case is British Motor Trade Association v Salvadori [1949] Ch 556. The plaintiff was an association of which all British motor-car manufacturers and authorised dealers were members. It was the policy of the association to prevent the immediate resale of new cars, which, owing to the short supply of new cars after the Second World War, would have led to price inflation. Accordingly, every member of the public who purchased a new car was required to execute a deed of covenant with the association and with the dealer from whom they purchased it undertaking that they would not re-sell the car within a period of 12 months. The defendants were either not members of the association or were on their stop list, and accordingly were unable to acquire new cars through authorised channels. They bought cars from persons who had themselves bought the cars only shortly beforehand and who had executed the covenant. Shortly afterwards the defendants re-sold the cars at far above the original prices. There was no dispute that the defendants were well aware of the covenant.

42. The association successfully contended that the defendants were liable for inducing breach of contract. Roxburgh J started his analysis by citing the passage from Lord Macnaghten's speech in Quinn v Leathem quoted above. He went on at pp 563–564:

“I have already said enough about the defendants and their activities to show that if they interfere knowingly with contractual relations they have no justification for doing so, but Mr Shelley contends that it is no tort merely to make a price with a man who is offering a car for sale in breach of covenant because a willing seller needs no inducement. The importance of the point is obvious, because if it is well founded the question whether a tort has been committed will depend on whether the buyer or the seller speaks the first word, and as the buyer and the seller may both be hostile to the plaintiffs for obvious reasons, the plaintiffs are likely to be met with unchallengeable evidence that the seller took the initiative.

“It is true that the tort is often spoken of as inducing or procuring breach of contract, but I shall adhere to Lord Macnaghten's word ‘interfere’, and I shall endeavour to interpret that word in the knowledge that Lord Macnaghten in using it had Lumley v Gye in his mind.”

43. After discussing Blake v Lanyon (1795) 6 Term Rep 221 and De Francesco v Barnum (1890) 63 LT 514, Roxburgh J went on at pp 565–566:

“I cannot doubt that Lord Macnaghten, in using the word ‘interference’ had such cases in mind. Indeed, it is possible that in choosing that word for his statement of general principle he intended to make some reduction in their ambit, for those cases seem to treat something akin to mere passivity as a tort and to require active dissociation from the breach of contract … Lord Macnaghten preferred the word ‘interference’ for his statement of the doctrine, and this seems to me to predicate active association of some kind with the breach. But, in my judgment, any active step taken by a defendant having knowledge of the covenant by which he facilitates a breach of that covenant is enough. If this be so, a defendant by agreeing to buy, paying for and taking delivery of a motor-car known by him to be on offer in breach of covenant, takes active steps by which he facilitates a breach of covenant … The plaintiffs will succeed even if I have construed the word ‘interference’ too broadly, because even if a further element of inducement must be present, that further element can be found. The covenantor who offers a car for sale is not unconditionally ready to break his covenant but only if the price offered is high enough and, accordingly, a defendant who offers such a price induces the seller to take the final step towards breaking his covenant by making his willingness to sell unconditional.”

44. In Thomson v Deakin [1952] Ch 646 Jenkins LJ said at p 694:

“Direct persuasion or procurement or inducement applied by the third party to the contract breaker, with knowledge of the contract and the intention of bringing about its breach, is clearly to be regarded as a wrongful act in itself, and where this is shown a case of actionable interference in its primary form is made out: Lumley v Gye 2 E & B 216.

“But the contract breaker may himself be a willing party to the breach, without any persuasion by the third party, and there seems to be no doubt that if a third party, with knowledge of a contract between the contract breaker and another, has dealings with the contract breaker which the third party knows to be inconsistent with the contract, he has committed an actionable interference: see, for example, British Industrial Plastics Ltd v Ferguson [1940] 1 All ER 479, where the necessary knowledge was held not to have been brought home to the third party; and British Motor Trade Association v Salvadori [1949] Ch 556.”

45. In Rickless v United Artists Corpn [1988] QB 40 the plaintiffs were the executors of the estate of the actor Peter Sellers, who had starred in the “Pink Panther” films. Sellers had personally contracted with a film production company to make the first film. The plaintiffs had taken assignments of any relevant causes of action from “loan-out” companies which had contracted to provide Sellers’ services to film production companies for the making of four sequels. After the death of Sellers, the defendants had made a sixth “Pink Panther” film purporting to star Sellers, but in fact making use of clips from the previous five films and out-takes from one of them. The plaintiffs successfully brought various claims against the defendants, including claims for inducing breach of contract in respect of the use of material from four of the previous films. It was held that, on the true construction of the relevant agreements, the film production companies had expressly or impliedly undertaken that Sellers’ performance would only be used for the purposes of the film to which the contract related and that those undertakings continued after Sellers’ death. Hobhouse J found that the defendants had the necessary knowledge and intention to be liable for the tort.

46. Bingham LJ, with whom Sir Nicholas Browne-Wilkinson V-C and Stephen Brown LJ agreed, upheld the judge's decision that the defendants were liable for inducing breach of contract. His reasoning at pp 58–59 merits quotation almost in full:

“Having therefore concluded that under the four relevant agreements the production companies did undertake that Peter Sellers’ performance would be used only for the purposes of the film to which each agreement related, and that such undertakings survived the death of Peter Sellers, I can turn to question (c). Where those negative covenants were all that survived of the loan-out agreements, which had otherwise been fully performed, could the defendants be held liable (if other ingredients of the tort were present) for inducing a breach of those negative covenants?

“The defendants argued that they could not. I found that contention startling, and a familiar example will show why. Take the case of an employment contract containing a valid covenant against competition for 12 months after termination. The contract comes lawfully to an end. The employee has performed all the service required of him and has received all the pay to which he is entitled. The only contractual term remaining in force is the employee's negative covenant not to compete. A third party, knowing of the covenant, induces the employee to work for him during the period of the covenant and in obvious breach of it. It is accepted that an action would lie (and an injunction in all probability be granted) against the employee. But if the defendants are right, no action would lie against the third party. They contend that it would not. I can find no basis in principle for such an anomalous result, which conflicts with both the law and the practice as I have long believed them to be.

“I hope I shall not be thought discourteous if I do not discuss the authorities cited by the defendants in support of their submission. It is, I think, enough to say that in my judgment there is no authority which does support it. By contrast, the plaintiffs do gain support from the decision of Roxburgh J. in British Motor Trade Association v Salvadori [1949] Ch 556. The plaintiff complained, among other things, that the defendants had wrongfully induced or procured breaches of a negative covenant given by buyers of new cars. They succeeded. Roxburgh J said, at p 565: [quoting part of the second passage cited above].

“This authority was referred to without disapproval by Jenkins LJ in the leading case of D C Thomson & Co Ltd v Deakin [1952] Ch 646, 694, and has never to my knowledge been doubted. I regard it as good law. If, therefore, authority to counter the defendants’ argument is needed, it exists.”

47. In Global v Mackay 2009 SLT 104 Lord Hodge discussed BMTA v Salvadori at para 8 and OBG v Allan at paras 10–12. He went on, when discussing the fourth element of the tort at para 13, to say:

“It is clear from BMTA v Salvadori and British Motor Trade Association v Gray [1951 SLT 247 ] that the tort or delict is not confined to circumstances where A has to persuade B to break his contract but can also be committed where A has dealings with B which A knows are inconsistent with the contract between B and C. In either event A induces or assists B to do something (or to refrain from doing something) which involves B breaking his contract with C.”

48. In Lictor Anstalt v Mir Steel UK Ltd [2012] 1 All ER (Comm) 592 David Richards J set out at para 48 the argument of counsel for the claimant on this issue:

“… Mr Boyle QC for the claimant submitted, by reference to a number of authorities, that entering into an inconsistent contract is capable of constituting, and indeed will normally constitute, sufficient participation by the defendant to attract liability in tort. He accepted that there could be cases where the contract breaker has independently of the defendant decided to act in breach of the contract and is able to do so without any necessary involvement by the defendant. But in circumstances where the defendant's involvement or co-operation is necessary to the breach intended by the contract breaker, then the defendant who participates in this way with the relevant knowledge is liable. He submitted that the necessary element of causative participation was satisfied if the defendant does an act which enables the contract breaker to breach his contract and without which no breach would occur. In such circumstances the defendant is sufficiently instrumental in causing the breach to be liable. Active persuasion by the defendant is not required.”

49. David Richards J went on to cite the passage from Thomson v Deakin that I have quoted, saying that nothing in OBG v Allan cast doubt on it, to refer to Rickless v United Artists and to cite the passages from BMTA v Salvadori that I have quoted. He suggested at para 51 that an example of what Roxburgh J had called “mere passivity” was Batts Combe Quarry Ltd v Ford [1942] 2 All ER 639. In that case a father had sold his quarry business and covenanted not to be engaged, concerned or interested in the business of a quarry within 75 miles for a period of ten years. Three years later the father gratuitously provided funds to his sons to enable them to purchase and operate a quarry in the immediate neighbourhood of the quarry which he had sold. The father was held liable for breach of contract, but a claim against the sons for inducing his breach of contract was dismissed. Lord Greene MR said at p 640:

“it was said that the sons, by accepting their father's bounty amounting to something over £7,000, did procure him to break his covenant—that is assuming, of course, that the finding of the money by the father was a breach of covenant … In my opinion, that argument is completely misconceived. The tort of procuring a breach of contract requires something much more than that. Mere acceptance of a proffered bounty given in breach of covenant cannot, it seems to me, be said to be in any sense a procuring of a breach of contract.”

50. I am not sure that I agree that the sons’ conduct is properly characterised as “mere passivity” given that they not only accepted the money, but also used it to acquire and operate the new quarry. The key point, it seems to me, is that the sons’ only involvement in the father's breach of contract was that they accepted a gift from him. This does not detract from David Richards J's analysis of the BMTA v Salvadori line of cases, however. Although he did not say so in terms, it is evident that he accepted counsel for the claimant's submission as to the law. This issue did not arise on the subsequent appeal to this court: [2013] 2 All ER (Comm) 54.

51. In Kawasaki v Kemball [2021] 3 All ER 978 Popplewell LJ, with whom Henderson and David Richards LJJ agreed, having cited what Lord Hoffmann and Lord Nicholls said in OBG v Allan at paras 36 and 191 and elsewhere, drew the following conclusions:

“32. First, they make clear that conduct cannot qualify as inducement if it constitutes no more than preventing B from performing the contract with C as one of its consequences. There must be some conduct by A amounting to persuasion, encouragement or assistance of B to break the contract with C.

“33. Secondly, this participation by A in B's breach, must, in Lord Hoffmann's words, have ‘a sufficient causal connection with the breach by the contracting party to attract accessory liability’ or, in Lord Nicholls’ words, so as to amount to ‘causative participation’. It is because of the causative requirement that ‘inducement requires the defendant's conduct to have operated on the will of the contracting party’ in the words of Toulson LJ [in Meretz Investments NV v ACP Ltd [2008] Ch 244, para 177 ]. If A's conduct is not capable of influencing a choice by B whether or not to breach the contract, it is not capable of amounting to inducement; it cannot operate on the mind or will of B so as to qualify as causative participation as an accessory to his breach.”

52. He went on at para 42:

“inconsistent dealings are not some form of inducement which are detached from the principles articulated in OBG v Allan. On the contrary, they are simply an example of conduct which may be capable of fulfilling those criteria because they may constitute a form of persuasion, encouragement or assistance. This is how they were treated in Lord Hodge's summary of the ingredients in Global Resources v Mackay at para 13: [quoting the paragraph from which I have cited above].”

53. Counsel for [the 3rd defendant - an alleged 3rd party inducer called 'IES'] argued that BMTA v Salvadori was no longer good law even though it was endorsed by this court in both Thomson v Deakin and Rickless v United Artists. He expressly eschewed any submission that it had been impliedly overruled by OBG v Allan, but rather submitted that it had been impliedly overruled by Kawasaki v Kemball. This cannot be correct given that Kawasaki v Kemball approved Global v Mackay and Global v Mackay followed BMTA v Salvadori. Thus Kawasaki v Kemball represents a further, albeit indirect, endorsement of BMTA v Salvadori by this court. Moreover, it amounts to an endorsement of it as still being good law following OBG v Allan.

54. Even if counsel for IES had submitted that BMTA v Salvadori had been impliedly overruled by OBG v Allan, I would not have accepted the submission. Like David Richards J in Lictor v Mir, I see nothing in OBG v Allan which is inconsistent with BMTA v Salvadori (as approved by Jenkins LJ in Thomson v Deakin). The same goes for Rickless v United Artists. On the contrary, as counsel for Northamber pointed out, Lord Hoffmann in OBG v Allan, in common with Jenkins LJ with Thomson v Deakin, relied upon British Industrial Plastics Ltd v Ferguson [1940] 1 All ER 479. That case supports BMTA v Salvadori and Rickless v United Artists. As Lord Hoffmann explained at para 39:

“the plaintiff's former employee offered the defendant information about one of the plaintiff's secret processes which he, as an employee, had invented. The defendant knew that the employee had a contractual obligation not to reveal trade secrets but held the eccentric opinion that if the process was patentable, it would be the exclusive property of the employee. He took the information in the honest belief that the employee would not be in breach of contract. In the Court of Appeal … MacKinnon LJ observed tartly that in accepting this evidence the judge had ‘vindicated his honesty … at the expense of his intelligence’ but he and the House of Lords agreed that he could not be held liable for inducing a breach of contract.”

All the other ingredients of the cause of action were established: see Lord Russell of Killowen at p 481.

55. Perhaps more importantly, counsel for IES also argued that Roxburgh J had been wrong to say that facilitating a breach of contract was enough. In support of this argument he relied upon, although he did not actually cite, the well-known case of CBS Songs Ltd v Amstrad Consumer Electronics plc [1988] AC 1013 referred to by Lord Hoffmann in OBG v Allan and upon the judgment of Lord Toulson JSC in Fish & Fish Ltd v Sea Shepherd UK [2015] AC 1229, para 21 (to which I would add the judgment of Lord Sumption JSC at para 39 and the judgment of Lord Neuberger of Abbotsbury PSC at para 58).

56. CBS v Amstrad and Fish & Fish have to be treated with a little care in this context for two reasons. The first is that neither is a case about inducing breach of contract. In CBS v Amstrad the claimants relied upon a number of causes of action, including joint tortfeasance, but not inducing breach of contract. In Fish & Fish the claimant relied upon joint tortfeasance. Although both inducing breach of contract and joint tortfeasance are forms of accessory liability and are based on the same underlying principle, it does not necessarily follow that statements concerning joint tortfeasance can be directly translated to cases of inducing breach of contract.

57. The second reason requires more explanation. In CBS v Amstrad one of the claimants’ claims was that Amstrad had procured infringements of copyright by purchasers of its double-headed tape recorders and thus was liable as a joint tortfeasor. This claim was, at its root, based upon the same general principle that had been invoked in Lumley v Gye, as can be seen from the passage from Buckley LJ's judgment in Belegging-en Exploitatiemaatschappij Lavender BV v Witten Industrial Diamonds Ltd [1979] FSR 59, 66 cited by Lord Templeman at p 1058. In rejecting this claim Lord Templeman went on to quote with approval, and to apply, Buckley LJ's statement in the same case at p 65: “Facilitating the doing of an act is obviously different from procuring the doing of the act”. That statement must be understood in context.

58. In Belegging the plaintiff owned a patent for a grinding material comprising metal-coated diamond grit embedded in a resin bond. The defendant sold metal-coated diamond grit to a third party which re-sold it to a fourth party. The plaintiff alleged that the defendant was liable for procuring infringement of the patent by the fourth party because the grit was sold “for the sole purpose of” making grinding material in which the grit was embedded in a resin bond. The Court of Appeal held that this allegation did not disclose a viable claim for procuring infringement. It was not alleged that defendant procured or induced the third party to purchase or re-sell the grit. Nor was it was alleged that there was any nexus of any kind between the defendant and the fourth party. It was not even alleged that the fourth party had in fact made grinding material falling within the claims of the patent. At most, therefore, the defendant had sold goods which might subsequently have been used by the fourth party to infringe the patent.

59. In CBS v Amstrad itself Amstrad's recorders could be used by purchasers to copy sound recordings the copyright in which was owned by the claimants, but they could also be used for lawful purposes. The decision as to what purpose to use them for was entirely a matter for each purchaser acting independently of Amstrad. Thus Amstrad enabled purchasers to infringe the claimants’ copyrights, and was well aware that many purchasers were likely to commit infringements, but it did not procure the infringing acts.

60. The dividing line between mere facilitation of an infringing act and procuring an infringing act (or being party to a common design to infringe) is one that had caused some difficulty in subsequent cases on joint tortfeasance: see for example Dramatico Entertainment Ltd v British Sky Broadcasting Ltd [2012] RPC 27 referred to by Lord Sumption JSC in Fish & Fish at para 38. It is not necessary to consider that line of cases for present purposes, however.

61. This is because it is plain that IES, like the defendants in BMTA v Salvadori and Rickless v United Artists, went beyond merely facilitating the relevant breaches of contract. Its involvement was necessary for the breaches to occur, because breach of an exclusivity clause requires a counterparty. [First defendant / contract breaker - Genee] could not have breached clause 1.1 of the Exclusivity Agreement without willing purchasers of its goods other than Northamber (or the Excluded Accounts). Just as in BMTA v Salvadori, IES did not merely place orders with Genee, it was willing to pay (and did pay) the price charged by Genee. Thus IES induced Genee to commit the relevant breaches of Exclusivity Agreement. In the language of Lord Hoffmann in OBG v Allan, IES had a sufficient causal connection with Genee's breaches; and in the language of Lord Nicholls, there was causative participation by IES in Genee's breaches. In the language of Toulson LJ in Meretz Investments NV v ACP Ltd adopted by Popplewell LJ in Kawasaki v Kemball, IES operated on the will of Genee. It follows, given that IES had the requisite knowledge and intention, that IES is liable as an accessory for Genee's breaches. It would have been different if IES had had no knowledge of the Exclusivity Agreement.'