CA-2024-001802 - [2025] EWCA Civ 1389

This conclusion means that it is unnecessary to deal at any length with the alternative claim against Mr Chang and Maître Zabaldano, i.e. that they are liable for inducement of a breach of rights existing under a judgment (the so-called Marex tort). However, there are some points which I wish to mention.

The Deputy Judge adopted the summary of the relevant principles by Mr Justice Bryan in an earlier judgment in the litigation between Lakatamia and Mr Su (Lakatamia Shipping Co Ltd v Su [2021] EWHC 1907 (Comm)), which were based upon the elements of the tort of inducing a breach of contract. This summary was in turn adopted by Mr Justice Foxton in Lakatamia Shipping Co Ltd v Tseng [2023] EWHC 3023 (Comm), paras 20 and 21. Mr Justice Bryan said:

‘126. … the elements of the Marex tort are:

(1)

The entry of a judgment in the claimant’s favour,

(2)

Breach of the rights existing under that judgment,

(3)

The procurement or inducement of that breach by the defendant,

(4)

Knowledge of the judgment on the part of the defendant, and

(5)

Realisation on the part of the defendant that the conduct being induced or procured would breach the rights owed under the judgment.

127.

I am also satisfied, again by analogy with the tort of inducing a breach of contract, that the following further principles apply to the Marex tort:-

(1)

It suffices that the defendant intended to violate the claimant’s rights under the judgment. The defendant does not need also to intend thereby to damage the claimant. As Judge Russen QC stated in Palmer at [174]:

“In order for liability to be established under the inducement tort, the result intended by the defendant must be a breach of contract. But that is both necessary and sufficient and there is no need for the claimant to go further by establishing an intention to cause damage …”

See also, in this regard, OBG Ltd v. Allan [2007] UKHL 21; [2008] 1 AC 1 per Lord Hoffmann at [8].

(2)

Just as it is unnecessary for a defendant in a claim for inducing a breach of contract to know the details of the contract provided that they had “the means of knowledge” (Emerald Construction Co Ltd v. Lowthian [1966] 1 W.L.R. 691, 700 per Lord Denning MR), it is inessential that the defendant to a claim for the Marex tort has actual knowledge of the contents of the judgment.

(3)

In this regard blind-eye knowledge is sufficient. Thus, as was said by Lord Denning in Emerald Construction at page 700, “it is unlawful for a third person to procure a breach of contract knowing, or recklessly, indifferent whether it is a breach or not”.

(4)

“[A]ny active step taken by the defendant having knowledge of the covenant by which he facilitates a breach of that covenant’ falls within the ambit of the tort: see British Motor Trade Association v. Salvadori [1949] Ch. 556, 565 per Roxburgh J.

(5)

There is no need to establish “spite, desire to injure or ill will” on the part of the defendant, see Clerk & Lindsell on Torts, at para 23.57.’

On the basis of the facts found by the Deputy Judge, Maître Zabaldano knew of the judgment debt and the freezing order, and cannot have failed to realise that transferring the proceeds of sale of the villas to UP Shipping would put those funds beyond the reach of the freezing order (see para 32 above). So it might have been thought that he would be liable for this tort.

However, the Deputy Judge went on to make two further points. The first was that Maître Zabaldano did not have the necessary intention to violate Lakatamia’s rights because, as he found, Maître Zabaldano genuinely believed that he was entitled, and indeed obliged by his professional obligations, to transfer the sale proceeds to UP Shipping. The Deputy Judge drew here on cases dealing with the tort of inducing a breach of contract (Meretz Investments NV v ACP Ltd [2007] EWCA Civ 1303, [2008] Ch 244; and Allen v Dodd [2020] EWCA Civ 258, [2020] QB 781).

Mr James Goudkamp, who made submissions as to the Marex tort for Lakatamia, submitted that the judge had misunderstood these cases and that his conclusion could not stand with the leading case of OBG Ltd v Allan [2007] UKHL 21, [2008] 1 AC 1. He submitted that OBG held that in the tort of inducing a breach of contract it is sufficient for liability that the defendant knows that they are inducing such a breach. Thus a defendant will not be liable if they honestly believe that the conduct induced will not be a breach of contract. In such a case, the mental element of the tort will be lacking. In contrast, Mr Goudkamp submitted that it will not be a defence for a defendant who knows that the conduct does amount to a breach to say that they believed they were entitled to induce the breach and that this, on the judge’s finding, was the position of Maître Zabaldano.

The judge’s second point was that the Marex tort was subject to a defence of justification, to which Maître Zabaldano was entitled because of his genuine belief that he was entitled and obliged to comply with the instructions given to him for the transfer of the funds. Mr Goudkamp submitted that justification could never be a defence to the Marex tort, in contrast to the tort of inducing a breach of contract, and referred to the obiter view of Mr Justice Bryan to that effect (Lakatamia v Su [2021] EWHC 1907 (Comm), paras 130 and 131).

It is unnecessary for us to decide whether these two further points made by the Deputy Judge were correct. In my opinion we should not do so. This is a novel and developing tort and resolution of these issues should await a case in which they are critical and there has been full argument by counsel on both sides. I would also leave open whether, on the assumption that justification can in principle be a defence, the defence would have been made out by Maître Zabaldano on the facts of this case when it was always open to him to have made an application to the English court for directions.