Northamber PLC v Genee World Ltd & Ors
Northamber was a trade-only distributor of information technology equipment. Genee was an importer of such equipment. Mr Singh was the sole director of Genee. Interactive supplied such equipment. In 2016 Northamber and Genee entered into a distribution agreement and an exclusive supply agreement by which Northamber was made the sole source of Genee’s products in the UK. In 2018 Northamber became aware that Genee had been supplying products directly to resellers. In August 2018, Northamber brought claims against Genee for breach of the exclusivity agreement and against Mr Singh and Interactive for inducing breach of contract and unlawful means conspiracy. In September 2018, Northamber obtained an injunction restraining Genee from supplying its goods within the UK to others. Genee went into liquidation in November 2018.
The trial judge found that Genee had breached the exclusivity agreement and that Mr Singh had induced the breaches but only between September and November 2018 and that Mr Singh had not acted bona fide within the scope of his authority as a director during that period only. The judge also found that Interactive knew and intended that Genee should breach the exclusivity agreement. However, the judge dismissed the claim against Interactive and the claims for unlawful means conspiracy. Northamber appealed the dismissal of the claim of inducing breach of contract and in relation to costs.
In relation to inducing a breach of contract, the Court of Appeal held that liability for the tort required only a degree of participation in the breach of contract which satisfied the general requirements of accessory liability for the wrongful act of another person. In this case, Interactive’s involvement in Genee’s breach was necessary because breach of an exclusivity clause required a counterparty. Genee could not have breached the clause without willing purchasers. The judge was wrong to hold that Interactive had not induced the breaches.
In relation to costs, an unreasonable refusal to participate in alternative dispute resolution constituted a form of unreasonable litigation conduct to which the court might properly respond by applying a costs sanction.
