In nature, those creatures that are elusive – to the point that we doubt their very existence – often go by more than one name. We have, for example, "Big Foot" and "Sasquatch"; "Yeti" and "The Abominable Snowman". In law, evolving (if not altogether "elusive") concepts may also go by a variety of names. The tort of unlawful interference is a good example: it is also known as "interference with a trade or business by unlawful means", "intentional interference with economic relations", "causing loss by unlawful means", or simply, "unlawful means". Where a legal concept is in a state of flux, the variety in nomenclature is understandable – the Supreme Court of Canada may not yet have had the chance to settle the law (or the name) once and for all.
In A.I. Enterprises Ltd. v. Bram Enterprises Ltd., 2014 SCC 12 (http://canlii.ca/t/g2wn4), the Supreme Court of Canada weighed in on the substance (and the name) of the tort of unlawful interference with economic relations. The decision is of particular importance to Ontario litigators since it represents a break from Ontario jurisprudence both old and new.
Canoes and cannon balls
The tort of unlawful interference occurs where a defendant employs unlawful means against a third party so as to intentionally inflict economic injury on the plaintiff. A classic (and visceral) example of the tort can be found in the case of Tarleton v. M'Gawley (1793), Peake 270, 170 E.R. 153 (K.B.), where the defendant, the master of a trading ship, fired a cannon at the occupants of a canoe (the third party), in order to prevent those occupants from trading with the defendant's competitor (the plaintiff).
The evolution of "unlawful means" in Ontario
The Court of Appeal's decision in Reach M.D. Inc. v. Pharmaceutical Manufacturers Association of Canada, 172 OAC 202 (http://canlii.ca/t/6x2h), was one of Ontario's first appellate level cases on unlawful interference. The elements of the tort, as set out in Reach, remain good law to this day. These elements are the following: a) the intentional infliction of economic injury on the plaintiff by b) using unlawful means as against a third party, which c) causes economic loss to the plaintiff.
In Reach, the Court of Appeal had to decide between two competing views as to what constitutes "unlawful means", one broad, the other narrow. The Court ultimately adopted the broad view and held that "unlawful means" was an act that the defendant was "not at liberty to commit".
Perhaps fearing that the broad approach to "unlawful means" espoused in Reach was over-reaching and could lead to uncertainty (after all, what one is "not at liberty to commit" would seem to be an elastic concept), the Ontario Court of Appeal more recently adopted a narrower approach to "unlawful means." For example, in Alleslev-Krofchak v. Valcom Ltd., 2010 ONCA 557 (http://canlii.ca/t/2c4n5) and in Agribrands Purina Canada Inc. v. Kasamekas, 2011 ONCA 460 (http://canlii.ca/t/flxb2) the Court of Appeal stated that "unlawful means" is any act that a) is actionable as against the defendant by a third party and b) that is not actionable directly by the plaintiff. As an example of the latter, if the defendant's false representations to a third party injured the plaintiff's economic relations with that third party, the plaintiff could sue for defamation, and was therefore precluded from also suing for unlawful interference.
A.I. confirms recent Ontario jurisprudence in part
Though A.I. involved the appeal of a decision of the New Brunswick Court of Appeal, the central issue in A.I. was whether "unlawful means" for the purpose of the tort should be viewed broadly, as in Reach, or narrowly, as in subsequent Ontario jurisprudence.
The Supreme Court reasoned that the narrow view was the better one. In the Court's words, such a view accords with the common law's traditional reluctance to protect purely economic interests, to develop rules that constrain competition, and to impose a form of "commercial morality" on commercial actors. As in Alleslev-Krofchak and Agribrands, the Supreme Court held that to constitute "unlawful means", the defendant's conduct would have to be actionable by a third party. The Court referred to this as the "liability stretching" rationale – where the defendant has already committed an actionable wrong as against the third party, the tort of unlawful interference simply allows another party (namely, the plaintiff) to sue for harm caused by that actionable wrong.
While the Supreme Court affirmed the recent Ontario jurisprudence as to what constitutes "unlawful means", it also parted ways with that same jurisprudence on a different ground. Specifically, the Court rejected the notion that a plaintiff can only establish unlawful interference where the plaintiff has no direct cause of action as against the defendant. That notion, said the Court, was inconsistent with the general tort principles of concurrent liability and overlapping causes of action arising from a single act.
Clarity going forward
The decision in A.I. provides some welcome clarity to the tort of unlawful interference – instead of assessing whether or not the defendant was "at liberty to commit" the impugned act, the focus will now be on whether the impugned act was a tort actionable by the third party. This, in turn, should give commercial actors (or at least those who are properly advised) a better idea of when their actions will be legitimate competitive activities, and when their actions could attract liability in tort.
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