Allen t/a David Allen Chartered Accountants v Dodd & Co Ltd [2020] EWCA Civ 258

Appeal against the High Court’s decision that the Respondent was not liable in tort for inducing a breach of contract. Appeal dismissed.

An employee of the Appellant, whose contract of employment contained restrictive covenants, started work with the Respondent, a competitor of the Appellant; the Respondent had obtained legal advice to the effect that it was more likely than not that the covenants were ineffective and unenforceable. A contested hearing concluded that the covenants were, in fact, enforceable, but the High Court ruled that the Respondent did not have sufficient knowledge to expose it to liability in tort for procuring a breach of contract; it stated that the Respondent did not turn a blind eye to the employee's contractual obligations, nor was it indifferent to them, because it went to the trouble of obtaining early legal advice on which it honestly relied – the fact that the legal advice turned out to be wrong was not enough. The Appellant appealed.

The Court of Appeal, in rejecting the appeal, held that, if a defendant honestly believes that the act that he procures will not amount to a breach of contract, he is not liable in tort even if his belief is mistaken in law; it does not matter whether the defendant's erroneous belief is caused by his own ignorance or by the incorrect advice that he receives from his lawyers.

Published: 10/03/2020 12:38

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