Canada: Stop Shooting Cannonballs At My Customers’ Canoe! Welcome Clarification On The "Unlawful Means" Tort From The Supreme Court Of Canada

Last Updated: February 10 2014
Article by Lisa Peters and Craig A. B. Ferris, QC

On January 31, 2014, the Supreme Court of Canada released its decision in A.I. Enterprises Ltd. v. Bram Enterprises Ltd., 2014 SCC 12. This is an important commercial decision as it clarifies and narrows the scope of the tort of unlawful interference in economic relations. Canadian businesses will also welcome the Court's reference to commercial certainty as one of the principal reasons to clarify and limit the scope of this tort.

As the Court noted, the tort goes by various names, including "causing loss by unlawful means", "intentional interference with economic relations" and "interference with a trade or business by unlawful means." Consistent with the decision, this article will use the short form "unlawful means tort."

The Tort is Only Available in Three-Party Situations

One of the components of the unlawful means tort that surprises or confuses students or the uninitiated is its triangular nature, or what Mr. Justice Cromwell describes the tort's creation of "parasitic" liability in a three-party situation. It is only where a defendant engages in an unlawful act that could give rise to civil liability to a third party, and that conduct is intended to cause harm to the plaintiff, that the tort arises. I have always used the example of a defendant illegally blockading a supplier's warehouse with the intention of causing economic harm to a plaintiff who relies on that warehouse for supply of goods as an illustration of how the tort may be committed.

The example plucked from historical case law by the Supreme Court is a better (and more graphic) illustration. In Tarleton v. M'Gawley (1793), Peake 270, 170 E.R. 153, the defendant, the defendant, the master of a trading ship, fired cannons at a canoe of the coast of Cameroon that was attempting to trade with the ship's competitor, seeking to deter the canoe's occupants from trading with that competitor. The plaintiff ship owners recovered damages for the economic injury resulting from the defendant's wrongful conduct towards third parties (i.e., the hapless canoe occupants, one of whom apparently was killed), which was intended by the defendant to cause economic harm to the plaintiffs.

The Court confirms what was uncontroversial, but often misunderstood – this tort is not suitable when what the plaintiff is complaining about is conduct immediately directed at him (the cannons have to be pointed at someone else). Perhaps this confirmation will eliminate pleadings in which plaintiffs allege the unlawful means tort when the conduct they are complaining about is some other tort arising in a strictly two-party situation.

Narrow Scope of the Tort and its Policy Underpinning

Mr. Justice Cromwell examined the various rationales put forward for the existence of the tort. He rejected rationales rooted in the fact that harm has been intentionally inflicted because, in his view, such a rationale would lead to an unwieldy concept of what might fall within "unlawful means" and result in commercial uncertainty. He preferred what he called the "liability stretching" rationale, which posits that tort law should extend an existing right to sue from the immediate victim of the unlawful act to another party whom the defendant intended to target with the unlawful conduct. "The focus," he states at paragraph 37 of the reasons, "is not on enlarging the basis of civil liability, but on allowing those intentionally targeted by already actionable wrongs to sue for the resulting harm."

Endorsement of this rationale allows the Court to conclude that the scope of the tort is narrow, consistent with tort law's reticence to intrude too far into the realm of competitive economic activity.

Conduct Constituting Unlawful Means

There was inconsistency in the prior jurisprudence in terms of what types of conduct constituted unlawful means. Some cases embraced a broad definition that included "any act that the defendant is not at liberty to commit", which would include criminal acts and breaches of statute. Other Canadian courts followed English authority (OBG Ltd. v. Allan, [2007] UKHL 21) and held that the plaintiff would only have a claim where the wrong to the third party would have been actionable in a civil suit at the instance of that third party (including in situations where the third party would have had an action but for the fact that they suffered no loss).

The Supreme Court of Canada's conclusion on what constitutes "unlawful means" is consistent with the approach of the House of Lords. To constitute unlawful means for this tort, the conduct must give rise to a civil cause of action by the third party or would do so if the third party had suffered loss as a result of that conduct.

Thus, pleading conduct that is not actionable by civil suit, such as breach of a regulatory statute that does not include a statutory cause of action for its breach, will not found a claim in this tort.

Note, however, that Mr. Justice Cromwell did not endorse the additional requirement imposed by the House of Lords – namely that the unlawful means employed must interfere with the third party's freedom to deal with the plaintiff. Counsel should therefore rely on the Supreme Court of Canada articulation of the tort when pleading, prosecuting and defending claims based on the unlawful means tort, rather than citing the House of Lords decision as many litigators did in the past.

Finally, the Court cautioned that the approach in Québec, under the doctrine of "abuse of rights" is fundamentally different, in that liability may be imposed on the defendant for conduct that is otherwise lawful but done with the intent to injure the plaintiff or in a manner inconsistent with the social ends of the given right.

Relationship to Other Torts Requiring Unlawful Means

In considering the unlawful means component of the tort, the Court asked itself whether it was necessary to require identical treatment of this component in relation to all the torts of which it forms an element. Mr. Justice Cromwell noted that the Court had clearly taken a different approach to "unlawful means" in the context of unlawful means conspiracy and the tort of intimidation. He concluded that there were historical and contextual reasons for the differences.

Litigators should therefore be alive to the fact that "unlawful means" means different things for different torts.

Gap-Filling Role of the Tort

In a number of cases, many of which were decided by B.C. courts, claims under the unlawful means tort failed because the plaintiff had available some other cause of action in tort, such as negligence or defamation. Judges took the view that the unlawful means tort should be conscribed by its role as a "gap-filling" tort.

Mr. Justice Cromwell held that this limitation imposed in prior cases was unnecessary to ensure that the unlawful means tort was properly limited. He noted that general principles of tort liability accept concurrent liability and overlapping causes of action. Therefore, going forward, it is not open to a defendant to argue that liability for the unlawful means tort must be rejected on the basis that his or her conduct is or was directly actionable by the plaintiff under some other tort.

Rejection of Principled Exceptions to the Unlawful Means Requirement

While the New Brunswick Court of Appeal had also adopted a narrow view of the unlawful means requirement, it held that it was subject to principled exceptions. The conduct of the defendants in this case included filing encumbrances against the real property which the plaintiff majority shareholders had a right to sell and denying entry to prospective buyers. The Court of Appeal viewed this conduct as akin to the tort of abuse of process (even thought the conduct was not actionable by third parties). Mr. Justice Robertson stated that allowing for principled exceptions would provide judges with some "wiggle room" to respond to unanticipated factual scenarios or changing circumstances.

The Supreme Court of Canada nipped this potential black hole of judicial discretion in the bud. In Cromwell J.'s view, allowing for exceptions without clear-cut principles to guide the development of the law would invite ad hoc decisions, which would be the antithesis of a principled approach.

Revisiting the Elements of the Tort

As clarified by the Supreme Court, the elements of the unlawful means tort are:

  • Conduct by the defendant that constitutes unlawful means, in that it would be actionable by the third party or parties at whom it is directed (or would be actionable if they had suffered a loss);
  • An intention by the defendant to cause economic harm to the plaintiff by engaging in this conduct; and
  • Economic loss or a related injury suffered by the plaintiff as a consequence of the conduct.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Lisa Peters
Craig A. B. Ferris, QC
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions