Court of Appeal decision on inducing breach of contract case

20 January, 2021

On Monday, the Court of Appeal handed down judgment in Kawaskai Kisen Kaisha Ltd v. James Kemball Limited [2021] EWCA Civ 33.

The Claimant (“JKL”) is a road haulier. Pursuant to a contract with the First Defendant (“K-Euro”) it performed the UK road haulage operations for containers carried on the liner service provided by K-Euro’s parent company, the Second Defendant (“KKK”). The contract required K-Euro to provide JKL with a specified minimum number of jobs. When KKK merged its container liner operations with those of two other carriers, KKK’s own liner service was wound down. As a result, K-Euro no longer had KKK container jobs to give to JKL. JKL sued both K-Euro and KKK. KKK challenged jurisdiction.

The principal issue on the jurisdiction challenge was whether there was a claim against KKK that had a real prospect of success. Specifically, for the purposes of the appeal, it was accepted that (there was a real prospect of establishing that) KKK’s actions had caused K-Euro to breach its contract with JKL and that KKK had known this. The issue was whether those actions, and that knowledge, could support a claim for inducing breach of contract.

At first instance, the judge held that the claim did have a real prospect of success. The Court of Appeal disagreed. It held that it was not enough for a claim to be arguable: it had to carry some degree of conviction and be supported by evidence. In this case, KKK’s actions had “prevented” performance by K-Euro, but KKK had not “induced” the breach. Nor did KKK have the requisite intention. The Court also held that “inconsistent dealings” did not provide a basis for liability that was distinct from the principles articulated in OBG v. Allan. Passages in earlier authorities that suggested that “inconsistent dealings” could provide a distinct basis for establishing liability did not survive OBG v. Allan.

The Appellant was represented by James Collins QC and Richard Hoyle of Essex Court Chambers, instructed by Edward Gray of MFB Solicitors.

A copy of the Judgment can be found here.