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


 
 

The precariat, bargaining and union advocacy

December 15, 2020

Included in Discovery: Atlantic Education & the Law – Issue 07 Stephen Penney and Tyler Callahan Universities continue to work creatively to meet market demands despite consistent declines in public funding. Consequently, untenured term appointments…

Read More

Confidentiality clauses can be worth more than the paper they’re written on

December 11, 2020

Included in Discovery: Atlantic Education & the Law – Issue 07 Sacha Morisset Confidentiality regarding the terms of the settlement of a legal dispute is a key consideration for many parties. Most accept that the…

Read More

Federal Work Place Harassment and Violence Prevention Regulations – a Guideline

December 8, 2020

Chad Sullivan and Kathleen Nash In June 2020, the Federal Government released the new Work Place Harassment and Violence Prevention Regulations (“Regulations”) along with Bill C-65, An Act to amend the Canada Labour Code (“Code”).…

Read More

Privacy practice tune-up – getting ready for the Consumer Privacy Protection Act

December 7, 2020

Rob Aske As we wrote about earlier, Canada’s federal government has proposed a replacement to our national privacy law for commercial transactions known as the Personal Information Protection and Electronic Documents Act (“PIPEDA”). The new…

Read More

The bubble has burst: New restrictions announced for Nova Scotia

November 27, 2020

Katharine Mack After a relatively carefree Atlantic summer, the bubble has officially burst: as COVID-19 cases begin to rise, New Brunswick, Prince Edward Island and Newfoundland and Labrador have all announced that they will be…

Read More

Discovery: Atlantic Education & the Law – Issue 07

November 24, 2020

We are pleased to present the seventh issue of Discovery, our very own legal publication targeted to educational institutions in Atlantic Canada. While ‘back to school’ may look a little different this year, Stewart McKelvey is…

Read More

New trust reporting and disclosure requirements under the Income Tax Act

November 24, 2020

2021: The Year of the Overshare   Richard Niedermayer, TEP, Sarah Almon and Madeleine Coats Governments around the world are taking steps to increase transparency at the expense of privacy. In Canada, federal government strategies to…

Read More

Digital Charter Implementation Act, 2020: The long-awaited overhaul of private sector privacy legislation in Canada

November 20, 2020

Koren Thomson and Sarah Byrne On November 17, 2020, the Digital Charter Implementation Act, 2020 (“Act”) was introduced as Bill C-11. This is the first major update to the federal private sector privacy regime in…

Read More

Federal Pay Equity Regulations published in draft – key takeaways

November 20, 2020

Jennifer Thompson The Federal Government has released draft Regulations under the Pay Equity Act (“the Act”), almost 11 months after the Act received Royal Assent. The Act, which is not yet in force, makes significant…

Read More

What steps must employers take to hire a foreign worker?

November 16, 2020

Kathleen Leighton Employers often wonder what steps they need to take to hire international talent, including what support they must provide to enable a foreign worker to obtain proper work authorization in Canada. This is…

Read More

Search Archive


Scroll To Top