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OBG v Allan

[2007] 36 ILJ 468

Case summary last updated at 17/02/2020 20:36 by the Oxbridge Notes in-house law team.

Judgement for the case OBG v Allan

Ds were appointed administrative receivers over a company. Their appointment was invalid, however, and they had no right to take control of the company. In good faith, nevertheless, they acted as if they were validly appointed and realised the company’s assets over a period of years. The question arose as to whether the receivers were liable as claimed in damages for the value of the company’s contractual claims assessed from back on the date of their invalid appointment, due to interference with contractual relations. HL held that inducing breach of contractual relations and causing loss by unlawful means were separate torts. Inducing breach of contractual relations = intention to cause a breach of contract, knowledge of the contract (which, for the purposes of tort, included consciously failing to inquire), breach of contract by the induced party (since no secondary liability without primary liability). Causing loss by unlawful means = an act against a third party by unlawful means (unlawful means = acts intended to cause loss to P by interfering with TP’s freedom which were unlawful AND affected his ability to deal with the claimant AND were actionable by that TP). NEITHER of these torts was made out here (no secondary liability since there were no breaches of contract, and no primary liability since no loss was caused).  
Lord Hoffmann: “a breach of contract which was neither an end in itself nor a means to an end but was merely a foreseeable consequence of a person's acts did not give rise to liability” under the tort of ‘inducing breach of contractual relations’. Under the tort of ‘causing loss by unlawful means’, unlawful acts didn’t include those acts that wouldn’t interfere with TP’s ability to deal with P. In both cases, intention is necessary. The unified theory of economic torts that had been used since Thomson v Deakin was dropped, and Merkur was therefore overturned. 

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