Canada: No More Tears (Enough Is Enough)… Ending The Debate About Unlawful Means In Conspiracy Torts

Last Updated: August 19 2016
Article by Ranjan K. Agarwal

It was 1983. The Police's Every Breath You Take was top of the charts. Return of the Jedi was tearing up the box office. And the Supreme Court of Canada released that seminal case seared into every competition litigator's brain, Canada Cement LaFarge Ltd. v B.C. Lightweight Aggregate. Canada Cement laid out the definitive test for a tort of conspiracy, including that the defendants' conduct has to be "unlawful" (sort of like the protagonist in Every Breath You Take). In that case, the plaintiff's civil claim was based on guilty pleas by the defendants to charges of conspiracy under the Combines Investigation Act (the predecessor to the Competition Act).

Fast-forward to 2014. Another sci-fi adventure, Guardians of the Galaxy, tops the box office. And a much less creepier song, Happy by Pharrell Williams, is the #1 single. Perhaps feeling somewhat rebellious given the zeitgeist , the B.C. Court of Appeal noted, in the class action Wakelam v Johnson & Johnson, that, in fact, plaintiffs likely cannot base their civil conspiracy claim on breaches of the Competition Act. Justice Newbury said that the Competition Act did not create a "right of action 'at-large'" because it was a "well-integrated scheme". To be sure, the court relied on the Supreme Court of Canada's 1989 decision in General Motors of Canada Ltd. v City National Leasing.

Perhaps sensing that the court had gotten a little ahead of itself, a different panel of the same court rejected that finding less than 18 months later, ruling that, in fact, a conviction under the Competition Act was good enough to be unlawful means for the tort. Justice Saunders re-read Justice Newbury's decision as only applying to claims for restitution.

That should have ended the debate. But no. Justice Perell of the Ontario court, perhaps goaded by well-meaning defence lawyers, took up the case, finding that Parliament intended to exclude civil claims for conspiracy based on breaches of the Competition Act.

The Ontario Court of Appeal, perhaps sensing some dysfunction in the law, has decided to end the debate. Fanshawe College of Applied Arts and Technology v AU Optronics Corporation deals with a conspiracy in the LCD industry. The plaintiff moved to add a new plaintiff and make some cosmetic amendments. The defendant opposed the amendments, in part on the basis that civil conspiracy claims can't be based on Competition Act breaches. The Court of Appeal, in probably less ink than it took to write Drake's One Dance (last week's #1), allowed the amendments, finding that Parliament never intended to take away the civil cause of action by allowing for statutory causes of action. In an arguably obiter comment, the Court of Appeal also said Justice Perell was wrong in Shah.

The Divisional Court granted the plaintiff leave to appeal the decision in Shah just three days before. This issue might still be litigated in other appellate courts and, eventually, the Supreme Court of Canada. For now though, the lesson appears to be that, at least in Ontario, the defence to a conspiracy tort claim based on Competition Act convictions cannot be that such claims are precluded by the statutory scheme.

Oh, and in case you're wondering, Finding Dory leads the 2016 box office so far.

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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Ranjan K. Agarwal
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