OBG v Allan [2007] UKHL 21
Tort – Cause of Action – Inducing breach of contract – wrongful interference
Facts:
OBC got into financial difficulties. The defendants were appointed as joint receivers. The receivers took control of the business and terminated all contracts between OBC and their subcontractors and settled claims under the contracts which OBC had made. The receivers were later found to have been invalidly appointed, causing OBC to suffer loss as a result of the receivers’ wrongful interference with their contractual relations. The judge found that but for the receivers’ interference, OBC would have obtained better settlements.
Issues:
Whether the receivers’ actions constituted interference causing economic loss.
Held:
Allowing the appeal, the receivers’ actions lacked the intention to procure a breach of contract causing loss. An intention to procure or cause loss was found to be an essential requirement of a tort of wrongful interference with contractual relations. Lumley v Gye (1853) 2 E & B 216 was distinguished, holding that there had been a confusion of the law where causing loss by unlawful means warranted an extension of tort for inducing a breach. The two were separate torts, each with its own conditions for liability. Inducing a breach of contract was a tort of accessory liability and showed an intention to cause a breach and was a necessary and sufficient requirement for liability. In order to be liable, a person had to knowingly induce a contract even if he was not motivated by malice, but could be motivated by economic gain. The receivers had acted in good faith and had not employed unlawful means nor intended to cause any loss to OBG. There had been no breach or non-performance of any contract by the receivers, thus, no wrong to which accessory liability for procuring a breach of contract could attach.
Updated 20 March 2026
This case summary remains accurate as a statement of the law established by the House of Lords in OBG Ltd v Allan [2007] UKHL 21. The decision’s core holdings — that inducing breach of contract and causing loss by unlawful means are two distinct torts, each with separate requirements, and that intentional inducement of a breach is a necessary element of the former — continue to represent good law in England and Wales.
The principles have been affirmed and applied in subsequent case law, including by the Supreme Court in Emerald Supplies Ltd v British Airways plc and, most significantly, in JSC BTA Bank v Ablyazov [2018] UKSC 19, where the Supreme Court confirmed the OBG framework for the unlawful means tort. Students should note that the boundaries of the unlawful means tort — particularly what constitutes “unlawful means” — have attracted further judicial consideration since 2007, and the law in that area remains somewhat unsettled at its edges. The summary does not address this aspect in detail, but the core principles as described are not affected. No statutory changes have altered the tortious framework set out in OBG.
