Tethys Petroleum Limited v The Rt Hon The Lord Lilley & Anor
[2023] EWHC 725 (Ch)
Jak Trude v Christopher Rajendran Hyman & Anor
7 July 2023
[2023] EWHC 1703 (Ch)
High Court
A guy sued a company and its boss. The company broke a contract, and the guy said the boss made the company do it. The judge said the guy's case wasn't perfect but was good enough to continue, and let him fix his case.
Key Facts
- •Agreement between claimant and Valcura Limited (Company) for property project management services (April 2018)
- •First defendant was sole director and shareholder of the Company.
- •Claimant instrumental in acquiring a property for Chertsey Property Limited (CPL), a special purpose vehicle solely owned and directed by the first defendant.
- •Company terminated the agreement (October 2019). Claimant argued this was unlawful.
- •Claim against Company for breach of contract; claim against first defendant for inducing or procuring the Company's breach of contract.
- •First defendant sold his shareholding in CPL and resigned as director.
- •Claimant's Particulars of Claim (POC) alleged that the first defendant rendered it impossible for the Company to comply with the agreement by diverting the property to CPL.
Legal Principles
A statement of case may be struck out if it discloses no reasonable grounds for bringing a claim.
CPR Pt 3.4(2)(a)
Summary judgment may be granted if the claimant has no real prospect of succeeding and there is no other compelling reason for a trial.
CPR Pt 24
Elements of the tort of procuring or inducing a breach of contract.
OBG Ltd v Allan [2007] UKHL 21; Global Resources Group v Mackay [2008] CSOH 148; Kawasaki Kisen Kaisha Ltd v James Kemball Ltd [2021] EWCA Civ 33
Rule in Said v Butt: a servant acting bona fide within the scope of their authority is not liable for procuring a breach of contract between their employer and a third party.
Said v Butt [1920] 3 KB 497
A director acting bona fide and within their authority is generally not personally liable for procuring their company to breach a contract.
Crystalens Ltd v White [2006] EWHC 3356 (Comm)
The focus of the 'bona fide' enquiry in Said v Butt is on the director's conduct and intention in relation to their duties towards the company, not the third party.
Antuzis & others v DJ Houghton Catching Services Ltd & others [2019] EWHC 843 (QB)
Conduct amounts to inducement, not just prevention, when it goes beyond depriving the contract-breaker of funding to dissipating assets.
Palmer Birch v Lloyd [2018] 4 WLR 164
Section 172 of the Companies Act 2006: Directors must act in a way they consider, in good faith, would promote the success of the company.
Companies Act 2006, s. 172
Outcomes
Application to strike out the claim against the first defendant dismissed.
The claimant's amended pleading, while deficient, has a real (though narrow) prospect of success in showing the first defendant acted in bad faith and outside his authority, potentially breaching his section 172 duties and inducing the company's breach of contract. The court allowed amendment to properly plead these points.
Application for summary judgment against the claimant dismissed.
Same as above. The court found a real prospect of success, albeit narrowly.
Claimant granted permission to amend their Particulars of Claim.
To address identified deficiencies in pleading the tort of inducing or procuring a breach of contract and to properly plead the alleged breach of section 172 of the Companies Act 2006.