A.I. Enterprises and Schelew v. Bram Enterprises and Jamb Enterprises, 2012 NBCA 33

In this case, the New Brunswick Court of Appeal clarified the jurisprudence around the unlawful means tort. This appeal examines whether Canadian courts should adopt the narrow definition of “unlawful means” set out by the majority in OBG v. Allan [2007] UKHL 21 [“OGB”], a case which clarifies the tort in English law. Until this point, Canadian courts had adopted a broad and vague articulation which at times blurred the distinction between inducement torts and unlawful means torts. By building on the narrow definition of “unlawful means” set out by the majority in OGB, Robertson J.A. offers a general model that isolates the essential tenets of the unlawful means tort. In the proposed model, the claimant must establish the following:

1) the existence of a valid business relationship between the claimant and the third party;

2) the defendant knew or ought to have known of the relationship;

3) the defendant’s interference prevented the formation of a contract or its performance  in circumstances where there is no breach of the contract;

4) the defendant’s impugned conduct must qualify as unlawful means or as warranting exceptional treatment;

5) the unlawful means must not be directly actionable by the claimant;

6) the defendant must have intended to cause the plaintiff harm;  and

7) the defendant’s conduct must have been the proximate cause of the claimant’s loss.

This framework should also allow for the defendant to provide a defense of justification.

The issue in this case arose from a clause in a syndication agreement, which states that if the majority decides to sell the property, the minority has the right of first refusal for fifteen days, after which the majority will then have the right to seek out and sell the property to a third party. The minority shareholders did not want to sell the property and refused to exercise their right of first refusal. They proceeded to interfere with the sale of the property under the guise of the syndicate agreement. In reviewing the evidence, Robertson J.A. upheld the decision of the trial judge and found that the tort of unlawful means had been established.

The crux of the issue here was whether the independently actionable requirement should be flexible and allow for some categorical exceptions, bearing in mind that the tort is meant to fill in a gap in the law and be turned to when there is no other legal remedy for a wrong. Robertson J.A. found that the facts of the case at hand warranted exceptional treatment and, even if the requirement of not being independently actionable was not satisfied, the other independent causes of action were not sufficiently strong to support a finding of liability on their own.

Link to Decision

Megan Strachan

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