Tort of Interference - Good luck PDF

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Summary

Interference with Contract or BusinessA. IntroductionB. Interference with a subsisting contractC. ConspiracyD. IntimidationA. Passing-offB. Breach of confidenceChapter 3 Interference with Contract or BusinessA. IntroductionThis area discusses the unlawful interference with another person’s intangibl...

Description

Interference with Contract or Business A.

Introduction

B.

Interference with a subsisting contract

C.

Conspiracy

D.

Intimidation

A.

Passing-off

B.

Breach of confidence

Chapter 3

A.

Interference with Contract or Business

Introduction

This area discusses the unlawful interference with another person’s intangible interests rights or interests that arise due to his contract or business. Among those interference are as follows and are called emerging torts:interference with a subsisting contract intimidation conspiracy passing-off breach of confidence malicious prosecution liability for false statement (deceit)

B.

Interference with a subsisting contract

A commits a tort against C if, without lawful justification, he persuades B to break his contract with C. He also commits the tort if he uses some unlawful means to prevent the performance of B & C contract. Can be divided into:inducing breach of contract interference with the performance of the contract interference other than directly inducing breach

1.

Inducing breach of contract

(a) Definition of an inducement A commits a tort if, without lawful justification, he persuades B to break his contract with C. Lumley v Gye Facts: Miss Wagner was an opera singer at Lumley’s theatre on a three month contract. Gye and Wagner made an agreement that Wagner would break her contract and refuse to sing at Lumley’s theatre. Wagner agreed to sing at Gye’s theatre only. Held: Wagner and Gye were joint wrongdoers as they conspired together, causing loss. Where a third party interferes, either intentionally and or maliciously with the performance of the contract, they are liable for any loss (in the form of damages) that arises from the interference, either individually or jointly.

Loh Holdings Sdn Bhd v Peglin Development Sdn Bhd Definition: tort of inducement is defined as “the tort is committed when a third person deliberately interferes in the execution of a valid contract which has been concluded between two or more other parties.” (b) Elements Five conditions: ‘direct’ interference, or an ‘indirect’ interference & use of unlawful means; -

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Direct interference by unlawful means (first) Direct action by A on the person or property of B which caused B to be disable to perform his contract with C Example:A physically detains B’s specialised tools without which B cannot carry out his obligation towards C. Indirect interference by unlawful means If, instead of persuading B to break the contract or causing him to do so by direct unlawful action against him, A brings about the breach of contract between B & C by operating thru a 3rd party. Torquay Hotel Co Ltd v Cousins Facts: Cousins was part of a trade union. Members of the trade union called a strike at the Torbay Hotel and the Imperial hotel owned by the plaintiffs. Esso were contracted to deliver oil to the hotels but due to the strike, were unable to do so, requiring the plaintiffs to obtain oil from a different supplier at a higher price. The union members failed to comply with an undertaking to withdraw their strike. The plaintiffs issued a writ seeking damages against the union and individual members for its procurement of the breach of contract between Esso and the plaintiffs. Cousins and the other union members appealed. Held: There was an inducement. Inducement There must be persuasion directed at a party to the contract. Persuasion v mere advice The fact that an inducement to break a contract is couched as an irresistible embargo rather than in terms of seduction does not make it any the less an inducement: JT Stratford & Co Ltd v Lindley Facts: The respondents were the officers of a trade union and sought to unsuccessfully negotiate an agreement on behalf of their members with the appellant and the transport union. The appellant reached an agreement with the transport union without consulting the watermen’s union. Upon discovery, the watermen’s union confirmed that until further notice, they would not man or service empty barges owned by the appellants. As a result of the embargo, the appellant’s’ business was brought to a standstill. The appellants were granted an interlocutory injunction which was later discharged.

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Held: The respondents had knowingly induced breaches of their members’ employment contracts without lawful justification. Greig v Insole Facts: A private sports promoter entered into contracts with leading cricketers for a series of test matches. The international cricketing governing body (ICC) passed a resolution to the effect that any player who should play in a match disapproved by the ICC would thereafter be disqualified from playing in a test match without the express consent of the ICC. It passed another resolution banning any match arranged by the private sports promoter. Held: The Court held that the contracts with the promoter were neither void nor voidable. Since they were enforceable, and since the actions of the defendants were clearly intended to apply pressure to the contracting players, the defendants had acted, albeit in good faith, without justification and in breach of contract. The defendants had not acted reasonably in imposing a bar which was prima facie in restraint of trade.

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Breach It is not necessary that an inducement must lead to a breach of the contract. The interference must be sufficiently proven where the pf must show that there is a contract existing between himself and the third party and the df’s act has induced the third party which leads to the breach. The persuasion must have produced a breach of contract. Actual breach is not required; it is sufficient if the performance of the contract is interfered with: Torquay Hotel Co v Cousins D had knowledge of the relevant contract; Knowledge and intent of the defendant (Second) Knowledge of the contract and intent to bring about its breach are inherent in the concept of inducement. Recklessness is sufficient intent. Emerald Construction Co Ltd v Lowthian Facts: The defendant union officials threatened a building contractor with a strike unless he terminated a sub-contract for the supply of labour. They obviously knew that there was a contract, since they wanted it terminated, but did not know its terms and, in particular, how soon it could be terminated. Held: Lord Denning MR said: ‘Even if they did not know the actual terms of the contract, but had the means of knowledge – which they deliberately disregarded – that would be enough.

The exact nature of the breach need not be known. Merkur Island Corporation v Laughton Facts: The shipowner claimants were party to a contract under which their obligation to prosecute their voyages with the utmost despatch was qualified by clauses providing for the vessel to go off hire and for charterers to have a right after 10 days to cancel, in the event of a labour blockade/boycott of the type which the defendants were pursuing. An allegation was made of interference by unlawful means with the performance of the contract. Held: No damages were recoverable for that non-performance. -

D had the intention to interfere with the contract; (third) Tribune Investment Trust Inc v Soosan Trading Co Ltd Facts: The defendants, Soosan Trading Co Ltd (“Soosan”), were a Korean company interested in purchasing a floating dock. Soosan came to hear of a Russian company, Dalzavod, intending to sell such a dock . The plaintiffs, Tribune Investment Trust Inc (“Tribune”) claimed that it had intended to purchase the dock from Dalzavod and thereafter on-sell it to Soosan. Tribune alleged that it had a contract with Dalzavod for purchase of the vessel and that Soosan induced Dalzavod to breach this contract. Soosan denied knowledge of that alleged contract and claimed that it had intended to purchase the dock directly from Dalzavod. After Soosan purchased the dock from Dalzavod and whilst the dock was in Singapore, Tribune sued Soosan for inducement of breach of contract, conspiring with Dalzavod to injure them and for breach of contract. Held: Again, since the evidence was that Soosan did not even know of any valid contract between Tribune and Dalzavod, there could not be any such conspiracy or predominant purpose to cause injury or damage to Tribune.

-In an action other than for a quia timet injunction – P must show special damage which is above the nominal damages; In any quia timet action - likelihood of damage resulting from the interference and Resulting damage (fourth) Damage is the gist of the action. Where the breach is such as must in the ordinary course of business inflict damage on the P, he may succeed without proof of any particular damage: Goldsoll v Goldman Facts: The plaintiff and the defendant carried out similar business as dealers of imitation jewellery. The defendant sold his business to the plaintiff and covenanted that, for two years, he would not: “… be engaged concerned or interested in or render services (gratuitously or otherwise) to the business of a vendor of or dealer in real or imitation jewellery in the county of London or any part of the United Kingdom of Great Britain and Ireland and the Isle of Man or in France, the United States, Russia, or Spain, or within twenty-five miles of Potsdamerstrasse, Berlin, or St. Stefans Kirche, Vienna.” The plaintiff sought an injunction against the defendant for an alleged breach of this covenant. Held: The Court of Appeal upheld the decision of Neville J. The covenant must be limited to what is reasonable necessary for the protection of the plaintiff’s business. Therefore, the covenant was only good to the extent that it restrained the defendant from carrying on business in imitation jewellery. Where loss of a pecuniary nature is inferred or proved, it is possible that the P may also recover damages for non-pecuniary losses such as injured feelings. -

No defence of justification. The pf must successfully rebut the presumption. (v) Defence of justification (fifth) Self-interest or altruistic motives is not justification. Possession of an equal or superior right to the P Edwin Hill v First National Finance Facts: Edwin Hills (EHP) was an a rchitecture firm contracted by L. Co, who owned a property that was heavily mortgaged to First National Finance (FNF). The development was taking a long time, so FNF decided to provide L. Co with more money to progress the project. T Held: The appeal was dismissed. Although FNF was found to be aware of the fact that their condition on further advances would interfere with a binding contract between L Co. and EHP when FNF intended to bring the contract to an end, EHP were unable to demonstrate that FNF’s conduct was unjustified. FNF had interfered for a superior right, which was to receive principal and interest from L Co. Effectively, the contract between FNF and L Co, superseded the contract between L Co and EHP. It was considered undesirable

if the law were to insist that FNF, in their position, should exercise their strict legal rights where they were justified in interference with contracts between L Co. and EHP, the third party. FNF had reached a sensible and reasonable accommodation which benefited themselves and L Co, the parties to the original contract. It was also noted that if L Co. had defaulted in their loan or if FNF had exercised their powers of sale , EHP would be in the same position and without a cause of action. Brimelow v Casson Facts: Brimelow was a theatrical manager and Casson was a member of the Joint Protection Committee, effectively a trade union of sorts. The minimum wage for chorus girls was at a set weekly rate. Brimelow paid his chorus girls around half of the minimum wage and had a clause in the contract which meant the girls did not get paid for weeks they were rehearsing. Many girls were forced to supplement their income with prostitution. Casson intended to stop chorus girls resorting to prostitution by inducing theatre proprietors not to allow Brimelow the use of their theatres by breaking or refusing contracts. Held: Casson was found to be justified in his actions as the union owed a duty of care to their members and a duty to take all necessary steps to compel Brimelow to pay his employees a fair living wage, so they should not be driven to prostitution to supplement their income Smithies v National Association of Operative Plasterers Facts: It was no defence to a claim for inducing breach of contract brought by employers against a trade union for sanctioning a strike that the defendant trade union had acted in the honest belief that the employers against whom action was taken were not intending to comply with a collective agreement. Their good faith was no defence.

Irrelevant factors: D may have acted in good faith and without malice. D has acted under a mistaken understanding as to his legal rights. Thus, P should be able to prove:1) the procurer acted with the requisite knowledge of the existence of the contract 2) the procurer intended to interfere with the performance of the contract Intention is to be determined objectively. 2. Interference with the performance of the contract An extension to the principle of Lumley v Gye (facts above) – to deliberate and direct interference with the execution of a contract without that causing any breach.

Eg: 3rd persons prevents or hinders one party from performing his contract, even though there is no breach. 3. Interference other than directly inducing breach A incurs liability in tort if he interferes in the performance of a contract between B and C otherwise than by direct persuasion of B, provided he uses unlawful means (for example a tort against B) to strike at C. DC Thomson & Co Ltd v Deakin The defendant Trades Union was alleged to have indirectly prevented a supplier from performing its contract to supply paper to the plaintiffs by inducing its members to withdraw their services from the supplier. Held: It is a tort at common law knowingly to have contractual dealings which are inconsistent with a prior contract. It is also a tort for a third party directly to do an act, with knowledge of the contract, which, if done by one of the parties to the contract, would have been a breach of contract. Lord Evershed MR considered the tort of directly inducing a breach of contract, saying that it was conceded that the defendant must have acted with the intention of doing damage to the person damaged and that he must have succeeded in his efforts. So far as indirectly procuring a breach of contract was concerned, the same intention had to be proved, but the tort would only be committed if the acts indirectly inducing the breach of contract involved wrongful conduct. C.

Conspiracy

1. Definition The agreement of two or more persons to do an unlawful act or a lawful act by unlawful means: Mulcay v R Facts: The defendants appealed sentences of 7.5 and 3 years for conspiracy to facilitate illegal immigration. They had hired lorries with a view to bringing people in It was submitted that the sentences were outside the powers under the Act. Crofter Hand-Woven Harris Tweed Co Ltd v Veitch Facts: The appellants produced cloth, obtaining their yarn from the mainland – unlike other yarn spun in the mills of Stornoway. The respondents worked for the Transport and General Workers’ Union (TGWU) to which most of Stornoway dockers belonged. The respondents, in combination with each other and mill owners, asked the dockers not to handle yarn that was consigned to and cloth made by the appellants. The embargo as against the cloth was soon lifted, but the one against the yarn remained. The appellants asked for an interdict against the respondents with the view to stopping the embargo. Held: The Lords dismissed the appeal, holding that the embargo was not tortious in nature. This was due to the fact that the respondents’ purpose was to protect their own interests and not to injure those of the appellants.

To make out a case of conspiracy, the plaintiff must establish:(a) (b) (c) (d)

an agreement between two persons, an agreement for the purpose of injuring the plaintiff, that acts done in execution of that agreement resulted in damage to the plaintiff, the acts done which resulted in the damage must be without lawful justification or excuse.

Yap JH v Tan Sri Loh Boon Siew & Ors Facts: The plaintiff claimed damages for conspiracy, wrongful arrest, false imprisonment and trespass to the person against the defendants. The arrest and detention arose out of the death of LKK, the son of first defendant. Held: The plaintiff's action can properly be founded only on the tort of conspiracy and false imprisonment since wrongful arrest comes with false imprisonment and false imprisonment is one of the kinds of trespass to the person. Therefore the Court need only address itself to the questions of conspiracy and false imprisonment. 2.

Types

(a) Conspiracy to injure Conspiracy to injure or simply conspiracy, or conspiracy by lawful means: arises where a combination of two or more persons agree to wilfully injure a man in his trade, resulting in damage to him. Thiruchelvasegaram a/l Manickavasegar v Mahadevi a/p Nadchatiram Facts: The plaintiff filed a suit for defamation for RM30m for libel and an injunction to restrain the defendant from further publishing the said or any similar libel and slander . The defendant in turn counterclaimed for RM100m for libel and similar injunctive relief. The parties were both advocates and solicitors and related through marriage, the plaintiff having married the defendant's sister. (conspired to defame) (b) Conspiracy by unlawful means Conspiracy by unlawful means: an agreement between two or more persons to carry out an unlawful act or acts, or to carry out a lawful act by unlawful means. Lonrho Ltd v Fayed Facts: Lonrho issued a writ, claiming the defendants had made false statements about their financial capacity leading to their bid being approved and that the defendants had tortiously interfered with the plaintiff’s right to bid for the shares and or conspired against Lonrho, causing loss. -This form of tort does not require a predominant purpose to injure the P but still requires an intention to injure. 3 essential ingredients of the tort:

(i)Agreement/combination between 2 or more persons The essence of conspiracy lies in there being an agreement (or at least an arrangement) between D and other third parties, to cause injury to P: Seagate Technology Pte Ltd v Goh Han Kim Facts: The trial judge found that no agreement existed between the respondent and Heng to defraud the first appellants and accordingly, the first appellants’ claim against the respondent for conspiracy to defraud failed. -The word “combination” is generally preferred over ‘agreement” to describe a conspiracy. The word ‘agreement’ does not mean any existed written agreement. It means any common intention, understanding, conjoint effort to injure plaintiff.

(ii)Purpose The court must also consider the predominant purpose for which the act or acts are carried out – to injure P. If the pf alleges conspiracy by lawful means or conspiracy, there is no need for the predominant purpose, if it is by unlawful means. The predominant purpose must be to injure P or to cause damage to P: Iskandar Gayo v Dautk Joseph Pairin Kitingan & Ors Facts: Conspiracy to injure is a species of tort. One of the elements of a cause of action in conspiracy is the need for the Plaintiff to show an intent to injure the Plaintiff. It need not be the predominant motive , but there has to be an intention to injure. The Plaintiffs assert in paragraph 21 that the Trust were injured, and that therefore the Plaintiffs as persons having an interest in the Trust, also suffered loss and damage. In an action for conspiracy to injure, once the predominant purpose is established, it IS irrelevant that D also has a subsidiary purpose of furthering his ...