Canada: Claims Against Competitors For Business Interference Must Meet Strict New Supreme Court Test To Succeed

Last Updated: April 8 2014
Article by Bradley Phillips

If you are thinking about suing a competitor for interfering with your business because of its improper dealings with a third party, your case will have to pass a more exacting test if it is to have any chance of success.

The test is set out in the Supreme Court of Canada's recent decision in A.I. Enterprises Ltd. v. Bram Enterprises Ltd.

A.I. Enterprises focuses on a tort (a wrongful act leading to legal liability) that has been referred to by a number of different names -- "Unlawful interference with economic relations," "interference with a trade or business by unlawful means," "intentional interference with economic relations" and, as adopted by the Supreme Court in A.I. Enterprises, the "unlawful means" tort.

The unlawful means tort allows a plaintiff to sue a defendant for economic loss resulting from the defendant's unlawful act against a third party. In A.I. Enterprises, the Court used an example from the case Tarleton v. M'Gawley (1793), Peake 270, 170 E.R. 153 to demonstrate how the tort operates.

In Tarleton, the defendant, the master of a trading ship, fired its cannons at a canoe that was attempting to trade with the defendant's competitor, the plaintiff. The plaintiff was able to recover damages for the economic injury resulting from the defendant's wrongful conduct towards third parties (the occupants of the canoe).

A more modern example of how the tort could apply would be where Competitor A approaches a supplier and makes intentional misrepresentations to the supplier regarding Competitor B, resulting in the supplier electing to cut off the supply of inventory to Competitor B. The resulting loss may give rise to the unlawful means tort.

The Supreme Court of Canada, in A.I. Enterprises, has defined what sort of conduct constitutes "unlawfulness" and when the "unlawful means" tort can be pursued in an action.

What Does "Unlawful Means" Mean?

The Supreme Court concluded that "unlawful means" must be interpreted narrowly and should apply only to conduct that would give rise to a civil cause of action by the third party (the canoeists in the Tarleton case), or would do so if the third party had suffered loss as a result of that conduct.

The Court also stated that "Mere foreseeability of economic harm does not meet the requirement for intention in the unlawful means tort. The defendant must have the intention to cause economic harm to the plaintiff as an end in itself or the intention to cause economic harm to the plaintiff because it is a necessary means of achieving an end that serves some ulterior motive  ... It is not sufficient that the harm to the plaintiff be an incidental consequence of the defendant's conduct, even where the defendant realizes that it is extremely likely that harm to the plaintiff may result."

In adopting a narrower definition, the Court expressly rejected arguments seeking to leave open a broader definition of "unlawful means" and/or allowing a judge to find "principled exceptions" to the rule in certain circumstances.

The Court rejected both these arguments, finding that a broader definition of "unlawful" would be inconsistent with the common law historically providing less protection to purely economic interests and that it could undermine (legitimate) commercial competition in Canada.

In short, the Court found that a broad interpretation of "unlawfulness" would result in the courts making assessments of "commercial morality" and could impose liability for malicious conduct alone and that this would not promote legal or commercial certainty.

The Court similarly found that allowing "principled exceptions" to the unlawfulness requirement would invite the danger of too many ad hoc decisions being made by judges, which is precisely what the Supreme Court is attempting to avoid by its decision.

Of note, the Supreme Court also found that establishing that the defendant had knowledge of a valid business relationship between the plaintiff and third party was not an essential element of the unlawful means tort. Rather, it found that the issue to be focussed upon was whether unlawful conduct intentionally harmed the plaintiff's economic interests. This seems to be consistent with the Supreme Court's comment that to establish intention under the tort a plaintiff may demonstrate that a defendant caused economic harm as a necessary means of achieving an end that serves some ulterior motive. We query, however, how one can establish that a defendant intentionally harmed the plaintiff's economic interests without the plaintiff having to show that the defendant knew about the business relationship.

When Can the Tort of "Unlawful Means" Be Pursued by a Plaintiff?

The Supreme Court of Canada expressly rejected the approach taken recently by the Court of Appeal of Ontario in Alleslev-Krofchak v. Valcom Limited, 2010 ONCA 557, where the Court of Appeal concluded that the tort of "unlawful means" could be pleaded only where there was no other cause of action open to the plaintiff.

The Supreme Court instead found that general principles of tort liability accept concurrent liability and overlapping causes of action in respect of the same incident. The Court noted, however, that based on the narrower definition of "unlawful" that it had established, pleading the tort would rarely, if ever, be more advantageous to a plaintiff rather than pursuing another available cause of action.

Application of New Definition of "Unlawful Means"

In A.I. Enterprises, a group of family members, through their companies, owned an apartment building. The majority of them wanted to sell it, but one of them did not. The dissenting family member took a series of actions to thwart the sale, including attempting to invoke an arbitration process under a syndication agreement, registering encumbrances against the property, and denying entry to the property to prospective purchasers. The result was that the ultimate sale price was nearly $400,000 less than it otherwise might have been. The majority (successfully) sued the dissenting family member to recover this loss, with the trial judge finding that the dissenting family member and his company were liable under the tort of unlawful interference with economic relations.

On appeal, the New Brunswick Court of Appeal upheld the trial judge's decision. However, it concluded that while none of the conduct against third parties was actionable as a civil claim, it applied a "principled exception" to find liability under the tort in any event.

The Supreme Court of Canada, applying the Court's new, narrower test, concluded that because the dissenting family member's conduct towards third parties could not result in a civil claim by them, and that no "principled exception" was permitted under the tort, the test for the "unlawful means" tort was not met. The Supreme Court did, however, find alternative, concurrent grounds (breach of fiduciary duty) to justify upholding a finding of liability against the dissenting family member and his company.

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

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

Bradley Phillips
In association with
Related Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.