Skip to content

Client Update: Torts: Unlawful Interference with Economic Relations

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 unlawful means.

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 purchaser.

In summary, the issues and conclusions are as follows:

What is the scope of liability for the tort of causing loss by unlawful means?
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 otherwise liable?
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 that basis.

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 times.

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.

SHARE

Archive

Search Archive


 
 

Communication breakdown: Offensive comments can constitute cause under Canada Labour Code

January 13, 2021

Mark Tector In a recent decision, an adjudicator upheld the dismissal of an employee/complainant who made inappropriate and offensive remarks on a call with a customer (Crawford v Canadian Imperial Bank of Commerce). The complainant…

Read More

2020 Year in Review: Atlantic Canada Labour & Employment Law Developments

January 11, 2021

2020 brought us all challenges that have been unprecedented in our time. The COVID-19 global pandemic has impacted us in ways that were unimaginable. As Atlantic Canada navigated the challenges of changing worlds, and workplaces,…

Read More

New pre-boarding COVID-19 testing requirements

January 7, 2021

Kathleen Leighton On December 31, 2020, the Honourable Marc Garneau, Minister of Transport, announced new pre-boarding COVID-19 testing requirements that would be coming into effect in short order. In particular, as of January 6, 2021…

Read More

La Dolce Vita and design: Italian Court confirms copyright of concept store

January 6, 2021

Daniela Bassan, QC, has published an article in volume 36 of the Canadian Intellectual Property Review. She comments on an Italian case granting copyright protection for a retail store in the cosmetics industry, and considers…

Read More

Duty of honest performance in termination of commercial contracts – the Supreme Court of Canada elaborates in Callow v. Zollinger, 2020 SCC 45

January 4, 2021

Rob Aske In late December 2020, the Supreme Court of Canada (“SCC”) issued a key decision elaborating on the duty of honesty in relation to termination of a commercial contract. This duty was primarily established…

Read More

Ongoing flexibility for international students due to COVID-19

December 29, 2020

Included in Discovery: Atlantic Education & the Law – Issue 07 Kathleen Leighton Educational institutions and their students continue to face challenges as a result of the COVID-19 pandemic, and international students are particularly impacted…

Read More

Institutional responsibility to prepare for COVID-19 cases on campus

December 23, 2020

Included in Discovery: Atlantic Education & the Law – Issue 07 Kate Jurgens Since returning to class in September amidst the uncertainty of the COVID-19 global pandemic, students and faculty alike in classrooms, on campus,…

Read More

Increasing pay transparency for federally regulated employers under Employment Equity Regulations

December 18, 2020

Brian G. Johnston, QC, Jennifer Thompson and Daniel Roth The Government of Canada has announced the final Regulations Amending the Employment Equity Regulations (“Regulations”). The Regulations come into force on January 1, 2021 and will bring increased pay transparency to federally regulated…

Read More

Limits to government powers in the regulation of colleges and universities

December 17, 2020

Included in Discovery: Atlantic Education & the Law – Issue 07 Nicholas Russon and Kathleen Nash In December 2018, the Ontario Cabinet approved a direction for the Minister of Training, Colleges and Universities (“Minister”) to…

Read More

Beyond the border: Immigration update – December 2020

December 16, 2020

We are pleased to present the fourth installment of Beyond the border, a publication aimed at providing the latest information to clients about new programs and other immigration-related information that may be pertinent to employers of…

Read More

Search Archive


Scroll To Top