In a decision released by the Supreme Court of Canada ("the
Court") on January 31, 2014, the Court clarified the law with
respect to the tort of interference with economic relations by
Joyce, a corporation, owned an apartment building in Moncton,
New Brunswick. Corporate entities Bram and Jamb together owned a
majority of Joyce while a minority interest was held by corporation
A.I., whose owner and sole director was Alan Schelew. A syndication
agreement between Joyce, Bram, Jamb and A.I. contained a sale
mechanism giving a majority of investors the right to sell the
building subject to a right of first refusal of any dissenting
investor to purchase it at a professionally appraised value. In
2000, Bram and Jamb wanted to sell the property but A.I. and Alan
did not. Notice was given to A.I. under the syndication agreement
and the building was appraised at $2.2 million. A.I. did not
purchase the property and thus it was listed for sale. While the
property was listed, A.I. and Alan attempted to invoke the
arbitration process under the syndication agreement, filed
encumbrances against the property, and denied entry to the property
to prospective buyers. Potential sale to third party purchaser for
$2.58 million failed, and A.I. ultimately bought the building for
the appraised value of $2.2 million.
Subsequently, Bram and Jamb brought an action against A.I. and
Alan claiming that, as a result of A.I. and Alan's wrongful
conduct, the sale had been substantially delayed and was for less
money than they could have obtained from a third party
In summary, the issues and conclusions are as follows:
What is the scope of liability for the tort of causing loss by
The Supreme Court ruled the tort should be kept within narrow
bounds. It will be available in three party situations in which the
defendant commits an unlawful act against a third party and that
act intentionally causes economic harm to the plaintiff.
What sorts of conduct are considered "unlawful" for
the purposes of this tort?
Conduct is unlawful if it would be actionable by the third party
or would have been actionable if the third party had suffered loss
as a result of it. In this case, the Court ruled on the evidence
A.I. and Alan had not committed the tort.
If the unlawful means tort is not available, are A.I. and Alan
The trial judge made strong findings that the dissenting family
member, Alan Schelew, breached his fiduciary obligations as a
director of the family companies and the trial judge's award
should be upheld on that basis.
The respondents submitted that if Alan Schelew breached his
fiduciary duty and these breaches were sufficient for the trial
judge to have issued judgment on that basis, then it was open to
the Supreme Court to affirm the judgment against Alan Schelew on
What this case means for you?
Although the tort does not prevent fair competition amongst
business people, no business person can use unlawful means intended
to harm the business interest of another person by causing an
actionable harm to a third party with whom the innocent business
person is dealing. Moreover, the decision affirms the
well–established principle that no director of a business can
ignore or breach the obligations owed to that company to act in
good faith and in the best interests of that company at all
Charles LeBlond, QC, assisted by
Josie Marks of our Moncton office successfully represented the
respondents. They were assisted by Ottawa agents Eugene Meehan and
Marie-France Major of Supreme Advocacy.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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In Irwin v. Alberta Veterinary Medical Association, 2015 ABCA 396, the Alberta Court of Appeal found that the "ABVMA" failed to afford procedural fairness to a veterinarian undergoing an incapacity assessment.
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