Tortious interference with contract – injunctive relief

The wrongful or “tortious” interference with a contract occurs when a third party intentionally causes a contracting party to commit a breach of contract.  The third party will be liable if they intentionally induced or disrupted a party’s ability to perform the terms of a binding contract.  Remedies for tortious interference are available to ensure that parties have freedom to contract with one another and meet contractual obligations, without the interference of third parties.

Elements to establish tortious interference

The elements to establish tortious interference with a contract are found in the case of Daebo Shipping Co Ltd v The Ship Go Star [2012] FCAFC 156, when Keane CJ, Rares and Besanko JJ stated:

• “there must be a contract between the plaintiff (or applicant) and a third party;
• the defendant (or respondent) must know that such a contract exists;
• the defendant must know that if the third party does, or fails to do, a particular act, that conduct of the third party would be a breach of the contract;
• the defendant must intend to induce or procure the third party to breach the contract by doing or failing to do that particular act;
• the breach must cause loss or damage to the plaintiff.”^[1]

Remedies for tortious interference with contract

If the above elements of tortious interference with contractual obligations are established, the plaintiff may seek damages for actual financial loss.  Such damages may cover loss of profits, income, and other costs associated to the effects of the defendant’s actions.  In addition, the Court may grant aggravated or exemplary damages.  Lastly, where appropriate, the plaintiff may seek an injunction preventing the defendant from further or continuing interference with the relevant contractual obligations.  This article will focus on case law in which the plaintiff sought injunctive relief to restrain the tortfeasor.

Injunctive relief

In Emerald Construction Co Ltd v Lowthian [1966] 1 WLR 691, the Court considered whether to grant an injunction and Lord Diplock believed the decision went to the question of:

“whether the plaintiffs have established on the evidence before us a prima facie case that the steps taken by the defendants which they threaten to continue constitute unlawful acts likely to cause damage to the plaintiffs which would be recoverable in an action by the plaintiffs.”^[2]

In the case of Independent Oil Industries Ltd v The Shell Co of Australia Ltd [1937] NSWStRp 43, the parties involved were wholesale sellers of petrol.  Independent Oil Industries Ltd (Independent Oil) had conditions attached in their sales to retailers such as the condition that dealers must resell the petrol at retail selling price that it fixed.

The Shell Company of Australia Ltd (Shell) and Vacuum Oil Company Pty Ltd (Vacuum Oil) imposed conditions that meant they would sell its petrol at a certain discount rate only if the dealer sold all corresponding grades of petrol, including Independent Oil’s, at the same price at which they sold Shell’s and Vacuum Oil’s.

Consequently, when Shell and Vacuum Oil increased their prices, the retail selling price of Independent Oil’s petrol remained lower.  Dealers then increased the selling price of Independent Oil’s petrol to satisfy the conditions laid down in their contract with Shell and Vacuum Oil.  However, not selling the petrol at the fixed retail selling price resulted in a breach of contract with Independent Oil.  In response, Nicholas J granted Independent Oil an interlocutory injunction to restrain Shell and Vacuum Oil from “inducing or procuring or attempting to induce or procure retail dealers to commit breaches of their contracts with Independent Oil”.^[3]

In the case of Jaddcal Pty Ltd v Minson [2011] WASC 28, Le Miere J stated that:

“a contract may be enforced by an order for specific performance or an injunction which are remedies which seek to place the parties in the positions actually contemplated by contract performance.”^[4]

In this case, all three (3) plaintiffs sought to enforce a restraint of trade clause in response to interferences with contractual relations and inducement to commit breach of contract.  The first plaintiff, Jaddcal, sought an award of damages or, alternatively, an injunction to restrain the first to fourth defendants, Mr and Mrs Minson and Mr and Mrs Bruske (Defendants), from engaging in conduct that is in breach of the clause.  Similarly, the second and third plaintiffs, Mr and Mrs Anuriw, sought restitution of an amount paid for breach of the restraint clause and an injunction to restrain the Defendants actions.^[5]

Jaddcal’s claim for an injunction restraining the Defendants from breaching the clause was to be considered “in the event that no other remedy was available”.  It was held that Jaddcal was entitled to $48,000 in damages.  However, Le Miere J went on to state that he found the restraint period unreasonable and would not have granted the injunction because:

• “it is now more than two years since the Deed was entered into; and
• an injunction should only be granted if a restraint for three years is reasonable.”^[6]

Regarding Mr and Mrs Anuriw’s claim, Le Miere J declined to grant an injunction for the same reasons identified above.^[7]

Links and further references

Cases

Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd [1995] FCA 1368

Carlton and United Breweries Ltd v Tooth and Co Ltd (1986) 7 IPR 581

Daebo Shipping Co Ltd v The Ship Go Star [2012] FCAFC 156

Daily Mirror Newspapers Ltd v Gardner (1968) 2 QB 762

Emerald Construction Co Ltd v Lowthian [1966] 1 WLR 691

Independent Oil Industries Ltd v The Shell Co of Australia Ltd [1937] NSWStRp 43

Jaddcal Pty Ltd v Minson [2011] WASC 28

LED Technologies Pty Ltd v Roadvision Pty Ltd [2012] FCAFC 3

Spotwire Pty Limited v Visa International Service Association (No 2) [2004] FCA 571 (7 May 2004)

Woolley v Dunford (1972) 3 SASR 243

Further information about tortious interference with contracts

If you need advice on obtaining an injunction for tortious interference with a contract, contact us for a confidential and obligation-free discussion:

Disclaimer

This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.

[1]  Daebo Shipping Co Ltd v The Ship Go Star [2012] FCAFC 156 [88].

[2]  Spotwire Pty Limited v Visa International Service Association (No 2) [2004] FCA 571 (7 May 2004) [69], citing Emerald Construction Co Ltd v Lowthian [1966] 1 WLR 691.

[3]  Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd [1995] FCA 1368 [60], citing Independent Oil Industries Ltd v The Shell Co of Australia Ltd [1937] NSWStRp 43.

[4]  Jaddcal Pty Ltd v Minson [2011] WASC 28 [171].

[5]  Ibid [64].

[6]  Ibid [234].

[7]  Ibid [234].

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