08 January 2019 - Post by:Laurence Ridgway
In Wolff v Trinity Logistics USA, the Court of Appeal considered the elements of the tort of procuring a breach of contract.
Wolff was a director of a company that imported clothing. Shipments from the manufacturers were carried out under a contract between Trinity Europe and Trinity Bangladesh (both connected to Trinity USA). Under this contract, each shipment would only be released on presentation of an indorsed bill of lading by Wolff’s company. A bill would only be indorsed by the bank when it had paid the manufacturer on behalf of Wolff’s company. The managing director of Trinity Europe had previously agreed with Wolff to release shipments early (ie before paying the manufacturer) in return for the prompt payment of Trinity Europe’s shipping fees. When the unpaid manufacturers sought the money due to them, Trinity USA brought claims against the individuals involved.
Wolff appealed the High Court’s decision that he had procured a breach of the contract between Trinity Europe and Trinity Bangladesh. He argued that accepting Trinity Europe’s business did not amount to procurement, that he did not have the requisite knowledge of the breach and that, in any event, the relevant acts of procurement were made before Trinity Europe contracted with Trinity Bangladesh.
The Court of Appeal held that it was immaterial that Wolff had not initially proposed the early release of the shipments; his agreement to continue business on account of this breach was “an important (if not the most important) incentive” for the breach and so amounted to procurement. Furthermore, since the High Court had found Wolff was “almost certain” that his action would result in a breach of the contract, he was, at the very least, recklessly indifferent as to whether there would be a breach and therefore had the requisite level of knowledge. The court also held that the procurement occurred each time goods were improperly released, and therefore dismissed Wolff’s argument about timing.
This judgment helpfully illustrates how the courts can take a pragmatic approach to applying this economic tort to clear examples of wrongdoing.