OBG Ltd & Anor v Allan & Ors

OBG Ltd & Anor v Allan & Ors

The Court of Appeal (majority) held that the tort of conversion does not extend to contractual rights or intangibles, and that the tort of wrongful interference with contractual relations does not cover the mere assumption of control over contracts by invalidly appointed receivers unless there is an intention to procure a breach or hinder performance. The claimants' case in tort failed on both grounds. However, the court upheld the principle that liquidators' remuneration and expenses above a notional amount are recoverable as damages if caused by the receivership, subject to proof of causation and reasonableness.

Parties
Claimant/respondent: OBG Ltd.; Claimant/respondent: OBG (Plant & Transport Hire) Ltd.; First Defendant/first Appellant: Iain John Allan; Second Defendant/second Appellant: Michael Francis Stevenson; Third Defendant: Raymond International Ltd. (formerly Raymond Centriline Ltd.); Fourth Defendants/third Appellants: Penningtons
Jurisdiction
England and Wales
Judgment Date
09 February 2005
Procedural Posture
Civil Appeal / Appeal From High Court Judgment on Liability and Quantum
Outcome
Appeal allowed in part; cross-appeal dismissed
Legal Topics
Trespass, Conversion, Wrongful Interference With Contractual Relations, Remuneration of Liquidators, Measure of Damages, Invalid Appointment of Receivers
Tort Law Insolvency Law Company Law Trespass Conversion Wrongful Interference With Contractual Relations Remuneration of Liquidators Measure of Damages +1 more

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Parties

OBG Ltd.

Claimant/respondent

OBG (Plant & Transport Hire) Ltd.

Claimant/respondent

Iain John Allan

First Defendant/first Appellant

Michael Francis Stevenson

Second Defendant/second Appellant

Raymond International Ltd. (formerly Raymond Centriline Ltd.)

Third Defendant

Penningtons

Fourth Defendants/third Appellants

Procedural Posture

Civil Appeal / Appeal From High Court Judgment on Liability and Quantum

Legal Issues

  1. 1 Whether invalidly appointed receivers commit the tort of wrongful interference with contractual relations by assuming control of a company's contracts
  2. 2 Whether the tort of conversion extends to contractual rights or intangibles in English law
  3. 3 Whether liquidators' remuneration and expenses above a notional amount are recoverable as damages caused by the receivership

Ratio Decidendi

The Court of Appeal (majority) held that the tort of conversion does not extend to contractual rights or intangibles, and that the tort of wrongful interference with contractual relations does not cover the mere assumption of control over contracts by invalidly appointed receivers unless there is an intention to procure a breach or hinder performance. The claimants' case in tort failed on both grounds. However, the court upheld the principle that liquidators' remuneration and expenses above a notional amount are recoverable as damages if caused by the receivership, subject to proof of causation and reasonableness.

Court Disposition

Appeal allowed in part; cross-appeal dismissed

Orders

  • Damages and interest attributable to interference with contractual relations removed from the award against the receivers
  • Appeal based on ground 1 (conversion/trespass) dismissed