Inducing breach of contract, conversion and contract as property

Oxford Journal of Legal Studies

Volumn 29, Issue 3, 2009, Pages 511-533

  Lee, Pey Woan ^a  

^a SINGAPORE MANAGEMENT UNIVERSITY   (Singapore)

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EID: 69749126742     PISSN: 01436503     EISSN: 14643820     Source Type: Journal    
DOI: 10.1093/ojls/gqp012     Document Type: Article

References (158)

1. [2008] 1 AC 1.
2. See G Chan, 'Of Unities and Disunities in Economic Torts: OBG, Douglas and Mainstream' (2008) 19 KLJ 158-68
3. J O'Sullivan, 'Intentional Economic Torts in the House of Lords' [2007] CLJ 503-7.
4. A third tortious dimension relates (perhaps more obliquely) to the need for a broader and freestanding tort of privacy, but which appears to have been curtailed by the extension of the breach of confidence action. The focus of the present article is, however, on the torts directly concerning contracts.
5. OBG v Allan (n 1) [32] (emphasis added).
6. (1853) 2 E and B 216.
7. OBG v Allan (n 1) [99].
8. Ibid [310].
9. K Gray, 'Property in Thin Air' (1991) 50 CLJ 252, 296.
10. To borrow Prof. Kevin Gray's expression: Ibid 266.
11. WN Hohfeld, 'Fundamental Legal Conceptions as Applied in Judicial Reasoning II' in W Cook (ed), Fundamental Legal Conceptions as Applied in Judicial Reasoning (Yale UP, New Haven 1919) 72.
12. Ibid 77.
13. Ibid 76.
14. Ibid 85-91.
15. See eg R Bagshaw, 'Inducing Breach of Contract' in J Horder (ed), Oxford Essays in Jurisprudence (Fourth Series OUP, Oxford 2000) 131,
16. and R Epstein, 'Inducement of Breach of Contract as a Problem of Ostensible Ownership' (1987) 16 JLS 1-41.
17. J Penner, 'The "Bundle of Rights" Picture of Property' (1995) UCLA L Rev. 711, 712
18. and T Merrill and H Smith, 'The Property/Contract Interface' (2001) 101 Colum L Rev 773, 782 - 3.
19. See Hohfeld (n 10) 96.
20. See eg T Grey, 'The Disintegration of Property' in Nomos XXII 69 (1980)
21. re-published in R Epstein (ed), Modern Understandings of Liberty and Property (Garland Publishing Inc, New York 2000) 291, 293-5.
22. See J Harris, Property and Justice (Clarendon Press, Oxford 1996) 119-61.
23. See also S Worthington, 'The Disappearing Divide between Property and Obligation: The Impact of Aligning Legal Analysis and Commercial Expectation' in S Degeling and J Edelman (eds), Equity in Commercial Law (Thomson Lawbook Co., Sydney 2005).
24. AM Honoré, 'Ownership' in AG Guest (ed), Oxford Essays in Jurisprudence (OUP, Oxford 1961) 107-47, 113. Honoré, however, departs from Hohfeld's thesis in recognizing that ownership is not to be understood entirely as a bundle of rights but an owner also stands in a 'special relation' to his property by reason of the fact that he can exclude others from interfering with his rights over the property: ibid 128-34.
25. Ibid 112.
26. Ibid 132.
27. Chan Man-sin v The Queen [1988) 1 WLR 196.
28. J Penner, The Idea of Property in Law (OUP, Oxford 2000).
29. Ibid 71.
30. Penner elaborates on the right to exclusive use as comprising the right to license, give, leave by will and abandon property but oddly argues that ownership does not entail the right to sell or exchange property: ibid 91-2.
31. The reason given by Penner - that a sale does not involve the use of the property but an extraction of value from the property - is clearly unconvincing for it has always been possible for property to be owned as 'thing' or as wealth or both: See B Rudden, 'Things as Thing and Things as Wealth' (1994) OJLS 81-97.
32. In maintaining this view, Penner may have been anxious to avoid the syllogism that because property ownership entails the right of sale (and contracts effect sales), all matters subject to contracts are therefore 'property'. It may be true indeed that contracts do not always involve property, and the concept of contract does not depend on property. However, where the subject matter of a sale is property, the sale is surely possible only because (generally speaking) the seller first owned the property. It is awkward, to say the least, to insist that the owner is not in such an instance exercising an incident of ownership.
33. Ibid 71.
34. Ibid 51 and 92.
35. Ibid 26.
36. Ibid 29.
37. Ibid 113.
38. Ibid 114.
39. Ibid 130.
40. Ibid 131.
41. See P Eleftheriadis, 'The Analysis of Property Rights' (1996) 16 OJLS 31, 39 and the literature cited therein.
42. Ibid 46.
43. Ibid 53.
44. J Waldron, The Right to Private Property (Clarendon Press, Oxford 1998) 31.
45. See C Rotherham, 'Property and Justice' in M Kramer (ed), Rights, Wrongs and Responsibilities (Palgrave, New York 2001) 148, 152.
46. [1967] 2 AC 46, 107 (Lord Hodson) and 115 (Lord Guest), discussed by Rotherham (n 37) 153.
47. On the analytical value of conceptualizing information as property, see the excellent and thorough discussion by P Kohler and N Palmer, 'Information as Property' in N Palmer and E McKendrick (eds), Interest in Goods (2nd edn LLP Limited, London 1998) ch 1.
48. [1991] AC 548.
49. Ibid 573-4 (Lord Goff).
50. [1994] 1 AC 324.
51. Ibid 331 (Lord Templeman)
52. cited by Rotherham as a classic instance in which property was ritually applied to suppress or replace cogent policy considerations (such as the rights of third party creditors in the event of insolvency): See C Rotherham, 'Restitution and Property Rites: Reason and Ritual in the Law of Proprietary Remedies' [2000] 1 Theo Inq L 205, 210
53. and by the same author, 'Proprietary Relief for Enrichment by Wrongs: Some Realism About Property Talk' (1996) 16 UNSWLJ 378, 390-7.
54. See G Samuel, 'Property Notions in the Law of Obligations' (1994) 53 CLJ 524, 533.
55. Rotherham (n 37) 159-62.
56. F Cohen, 'Transcendental Nonsense and the Functional Approach' (1935) 35 Columb L Rev 809, 816.
57. Rotherham (n 37) 163.
58. Gray (n 8) 295.
59. Ibid 268.
60. Gray cites as an illustration of such non-excludable resource the light emitted by a lighthouse: Ibid 269.
61. For example, access to a resource may be defined by binding contractual provisions, or the rules of a legal regime such as those governing intellectual property rights: Ibid 273-80.
62. Here, Gray clarifies that the reference is to public morality, ie 'social conventions or mores which promote interactive social existence': Ibid 280.
63. Ibid 294.
64. And the defensibility of the tort is still being questioned: See D Howarth, 'Against Lumley v Gye' (2005) 68 MLR 195-232.
65. See n 4, above.
66. OBG v Allan (n 1) [5], [8] and [172].
67. Ibid [5].
68. Ibid [36]
69. forcefully advocated by H Carty, An Analysis of the Economic Torts (OUP, Oxford 2001) 70-2.
70. CBS Songs v Amstrad Consumer Electronics plc [1988] AC 1013, 1058.
71. See also H Carty 'Joint Tortfeasance and Assistance Liability' (1999) 19 Legal Stud 489-514.
72. OBG v Allan (n 1) [44] and [185],
73. disagreeing with Lord Denning in Torquay Hotel Co Ltd v Cousins [1969] 2 Ch 106, 138
74. and Lord Diplock in Merkur Island Shipping Corporation v Laughton [1983] 2 AC 570, 608.
75. Drawn in DC Thomson & Co Ltd v Deakin [1952] Ch 646
76. and Torquay Hotel Co Ltd v Cousins (n 59).
77. OBG v Allan (n 1) [43],
78. overruling Millar v Bassey [1994] EMLR 44.
79. See Lumley v Gye (n 5) 232 (Erle J),
80. CBS Songs Ltd v Amstrad Plc [1988] 1 AC 1013.
81. The Koursk [1924] P 140 (CA) 155.
82. Credit Lyonnais NV v ECGD [1999] 2 WLR 540, 549.
83. See R Stevens, Torts and Rights (OUP, Oxford 2007) 256-7.
84. Ibid 275-8.
85. A point made by Coleridge J in his dissent in Lumley v Gye (n 5) 249.
86. P Sales, 'The Tort of Conspiracy and Civil Secondary Liability' (1990) 49 CLJ 491-514.
87. Ibid 503.
88. This second limb has been criticized as being too broad: See Carty (n 58) 505-13.
89. Credit Lyonnais NV v ECGD (n 64) 551.
90. An excellent exposition of the differences between the two regimes is found in the judgment of Hobhouse LJ in the Court of Appeal's decision in Credit Lyonnais v ECGD [1998] Lloyd's LR 19, 42-6.
91. See also Carty (n 58) 503-4
92. and Stevens (n 65) 256-7.
93. CBS Songs v Amstrad Consumer Electronics plc (n 58).
94. See Royal Brunei Airlines Sdn Bhd v Philip Tan Kok Ming [1998] 2 AC 378, 387 (Lord Nicholls)
95. and Twinsectra Ltd v Yardley [2002] 2 AC 164, [127]-[132] (Lord Millett, dissenting).
96. Twinsectra Ltd v Yardley, ibid.
97. Total Network SL v Her Majesty's Revenue and Customs [2008] UKHL 19, [2008] 1 AC 1174.
98. A Simester and W Chan, 'Inducing Breach of Contract: One Tort or Two?' (2004) 63 CLJ 132-65.
99. Ibid 151.
100. See also J Raz, 'Voluntary Obligations and Normative Powers' (1972) 46 (Supp) Proc Aristotelian Soc 79.
101. Raz's approach is not, however, free from difficulty: See M Pratt, 'Promises, Contracts and Voluntary Obligations' (2007) 26 Law Phil 531, 560-72, doubting whether the promise-keeping rule could be grounded on the special bonds created by promises.
102. Simester and Chan (n 77) 151
103. citing from J Raz, 'Promises and Obligations' in P Hacker and J Raz (eds) Law, Morality and Society (OUP, Oxford 1977) 228.
104. Simester and Chan (n 77) 151 (emphasis in original).
105. Ibid. Because the promisee's entitlement to the promisor's peremptory reasoning is distinct from the entitlement to performance, Simester and Chan further contend (ibid 152) that a promisor may wrong a promisee even if she chooses, independently of any third party inducement, to disregard the peremptory force of her promise. But this wrong does not, in the present writer's view, precipitate a loss that is distinct from that arising from the breach of contract.
106. Ibid 152.
107. See nn 47-52, above.
108. Simester and Chan (n 77) 149.
109. See nn 34-52, above.
110. For this reason, the promisee's entitlement to the peremptory status of the promise cannot, as against the promisor, properly be described as 'proprietary'.
111. See eg Epstein (n 14).
112. This produces a poor fit with the stricter requirement for active participation as clarified by the House of Lords in OBG v Allan: see no 59-60, above. Also, to describe the inducer as 'taking' or 'misappropriating' property (the promised performance) from the promisee appears odd because liability is not dependent on proof that the inducer has been enriched.
113. See n 4, above.
114. See Kuwait Airways Corp'n v Iraqi Airways Co (Nos 4 & 5) (2002] 2 AC 883, 1084.
115. See also W Prosser, 'The Nature of Conversion' (1957) 42 Cornell LQ 168-84.
116. A Dugdale and M Jones (eds), Clerk & Lindsell on Torts (19th edn Sweet & Maxwell, London 2006) [17-06].
117. Defined by Michael Bridge as 'instruments and documents that are so much identified with the obligation embodied in them that the appropriate way to perform or transfer the obligation is through the medium of the document': See M Bridge, Personal Property Law (3rd edn OUP, Oxford 2002) 8.
118. Marfani & Co Ltd v Midland Bank Ltd [1968] 1 WLR 956, 970-1 (Lord Diplock).
119. Ibid 970.
120. See Smith v Lloyds TSB Group plc [2001] QB 541, 551 and 557 (P ill LJ and Potter LJ),
121. and OBG Ltd v Allan [2005] QB 762, [76] (Mance LJ), cited by Lord Nicholls in OBG v Allan (n 1) [227].
122. [2005] 1 QB 762.
123. OBG v Allan (n 1) [95]-[97].
124. Ibid [100].
125. Ibid [99].
126. Ibid [103] and [106].
127. Ibid [321] (Lord Brown).
128. Ibid [230].
129. Ibid [230] and [232].
130. Ibid [310].
131. Ibid [321].
132. See nn 20 to 23, above.
133. OBG v Allan (n 1) [309] (emphasis added).
134. Ibid [310].
135. See K Gray and S Gray, Elements of Land Law (5th edn OUP, Oxford 2009) (1.5.28].
136. See Gray (n 8) 293.
137. J A Pye (Oxford) Ltd v Graham [2003] 1 AC 419, 435.
138. F Pollock and RS Wright, An Essay on Possession in the Common Law (Clarendon Press, Oxford 1888) 25.
139. See Bridge (n 91) 17.
140. See also D Fox, 'Relativity of Title at Law and in Equity' (2006) 65 CLJ 330-65, 362.
141. See on 47-52, above.
142. See S Green, 'To Have and to Hold? Conversion and Intangible Property' (2008) 71 MLR 114, 116.
143. Apart from the Canadian decisions cited in Baroness Hale's judgment (see OBG v Allan (n 1) [316]),
144. another (arguably more controversial) instance of an extension of conversion liability to intangibles (confidential information) is found in the Malaysian decision Electro Cad Australia Pty Ltd v Mejati RCS Sdn Bhd [1998] 3 MLJ 422, where it was said (at 451) that a broader view of property had to be taken in keeping with the rapid and volatile nature of technological advancements. I am indebted to my colleague George Wei for alerting me to this decision.
145. See nn 47-52, above.
146. See Green (n 115) 117.
147. OBG v Allan (n 1) [271] and [322].
148. Similarly, Peter Gibson LJ in the Court of Appeal described the proposed extension as an 'invention' of a new tort:
149. see OBG v Allan (n 95) [57].
150. See A Tettenborn, 'Liability for Interfering with Intangibles: Invalidly-appointed Receivers, Conversion, and the Economic Torts' (2006) 122 LQR 31, 33.
151. OBG v Allan (n 1) [271].
152. Ibid [99].
153. Ibid [233].
154. As alluded to by Lord Nicholls, see ibid [240].
155. Ibid [221] and [311].
156. For an insightful account of the nature of dematerialized shares, see M Ooi, Shares and Other Securities in the Conflict of Laws (OUP, Oxford 2003) ch 6.
157. See T Weir, A Casebook on Tort (10th edn Sweet & Maxwell, London 2004) 502.
158. OBG v Allan (n 1) [107].