Alleslev-Krofchak et al. v. Valcom Ltd. et al.,

• Jurisdiction: Ontario
• Judge: Goudge, MacFarland and LaForme, JJ.A.
• Neutral Citation: 2010 ONCA 557
• Citation: (2010), 266 O.A.C. 356 (CA),2010 ONCA 557,322 DLR (4th) 193,76 CCLT (3d) 163,[2010] CarswellOnt 6085,[2010] OJ No 3548 (QL),266 OAC 356,266 O.A.C. 356,322 D.L.R. (4th) 193,[2010] O.J. No 3548 (QL),(2010), 266 OAC 356 (CA)
• Date: 24 August 2010
• Court: Court of Appeal (Ontario)

Alleslev-Krofchak v. Valcom Ltd. (2010), 266 O.A.C. 356 (CA)

MLB headnote and full text

Temp. Cite: [2010] O.A.C. TBEd. SE.019

Leona Alleslev-Krofchak and Temagami Outfitting Company Canada Inc. (plaintiffs/respondents) v. Valcom Limited, Brian Lewis and Greg Poulin (defendants/appellants)

(C50673; 2010 ONCA 557)

Indexed As: Alleslev-Krofchak et al. v. Valcom Ltd. et al.

Ontario Court of Appeal

Goudge, MacFarland and LaForme, JJ.A.

August 24, 2010.

Summary:

Alleslev-Krofchak (AK) and her company Temagami Outfitting Company Canada Inc. (Temagami) sued Valcom Ltd. and two of its employees, Lewis and Poulin (the defendants). Claims were made for defamation, intentional interference with economic relations and inducing breach of contract.

The Ontario Superior Court, in a decision reported at [2009] O.T.C. Uned. D66, found all three defendants jointly and severally liable for defamation of AK and intentionally interfering with her economic relations, and Poulin and Valcom jointly and severally liable to Temagami for intentionally interfering with its economic relations and inducing breach of contract. The court awarded damages. The defendants appealed the trial judge's findings, apart from the finding of defamation.

The Ontario Court of Appeal dismissed the appeal, although its reasons differed from those of the trial judge in part.

Damage Awards - Topic 632

Torts - Injury to the person - Libel and slander - Valcom procured an aerospace contract with the Department of National Defence - AK and her company Temagami provided services to Valcom on the contract through Valcom's subcontractor ARINC - Valcom needed AK and ARINC to win the bid - Subsequently, AK and her company Temagami sued Valcom and two of its employees, Lewis and Poulin - The trial judge found all three defendants jointly and severally liable for defamation of AK and intentionally interfering with her economic relations, and Poulin and Valcom jointly and severally liable to Temagami for intentionally interfering with its economic relations and inducing breach of contract - Following her termination on the project, AK never again obtained military or aerospace consulting work - On appeal, the defendants challenged, inter alia, the $100,000 general award for defamation - They claimed that it was too high given comparable awards, and did not reflect the limited extent of the publication, the fact that ARINC rejected the allegations against AK and the positive references she received after her removal - They also claimed that it did not reflect the differing levels of blameworthiness amongst the defendants, given that they were held jointly and severally liable for the award - The Ontario Court of Appeal upheld the award - See paragraphs 19 to 21 and 101 and 102.

Damages - Topic 64

Considerations in assessing damages - Contingency allowance - Valcom procured an aerospace contract with the Department of National Defence - AK and her company Temagami provided services to Valcom on the contract through Valcom's subcontractor ARINC - Valcom needed AK and ARINC to win the bid - Subsequently, AK and her company Temagami sued Valcom and two of its employees, Lewis and Poulin - The trial judge found all three defendants jointly and severally liable for defamation of AK and intentionally interfering with her economic relations, and Poulin and Valcom jointly and severally liable to Temagami for intentionally interfering with its economic relations and inducing breach of contract - Following her termination on the project, AK never again obtained military or aerospace consulting work - On appeal, the defendants submitted, inter alia, that Temagami's award for economic loss insufficiently reflected reductions for contingencies - The Ontario Court of Appeal rejected the submission - Reductions for contingencies were necessarily case-specific and their calculation was very much an exercise of judicial discretion - There was no error in principle by the trial judge and no other basis to interfere with her award - See paragraph 108.

Damages - Topic 4045

Interference with economic relations - Interference with business relations - Loss of reputation - Valcom procured an aerospace contract with the Department of National Defence - AK and her company Temagami provided services to Valcom on the contract through Valcom's subcontractor ARINC - Valcom needed AK and ARINC to win the bid - Subsequently, AK and her company Temagami sued Valcom and two of its employees, Lewis and Poulin - The trial judge found all three defendants jointly and severally liable for defamation of AK and intentionally interfering with her economic relations, and Poulin and Valcom jointly and severally liable to Temagami for intentionally interfering with its economic relations and inducing breach of contract - Following her termination on the project, AK never again obtained military or aerospace consulting work - On appeal, the defendants challenged the award of general damages to AK for intentional interference with economic relations on the basis that it was duplicative of the general damage award for defamation - The Ontario Court of Appeal disagreed - The general damage award for the intentional interference tort was not for the damage caused to AK by the defamation, but for the damage to her reputation and self-esteem caused by her peremptory removal from her position and being locked out of the project - The trial judge found that this harmed her in the small Canadian aerospace community independent of whether that community had all learned of the defamation or not - See paragraphs 103 and 104.

Practice - Topic 1952

Pleadings - Particulars - Particulars in specific proceedings - Defamation action - AK and her company Temagami sued Valcom and two of its employees, Lewis and Poulin - Claims were made for defamation, intentional interference with economic relations and inducing breach of contract - The trial judge found all three defendants jointly and severally liable for defamation of AK and intentionally interfering with her economic relations, and Poulin and Valcom jointly and severally liable to Temagami for intentionally interfering with its economic relations and inducing breach of contract - On appeal, the defendants submitted that the trial judge considered causes of action not pleaded by relying on two acts of defamation that were not particularized, conspiracy and breach of contract as unlawful means for the tort of intentional interference with economic relations - The Ontario Court of Appeal rejected the submission - The cause of action at stake was not defamation, but the tort of intentional interference, which was clearly and expressly pleaded - Although only three acts of defamation were particularized in the statement of claim, that was in the context of pleading defamation as a separate cause of action - The statement of claim also pleaded "a variety of defamatory statements" made by the defendants, not as separate causes of action to which the strict specific pleading requirement would apply, but as unlawful means for the purposes of the intentional interference tort - The defendants did not seek particulars of this allegation, and the two additional defamatory acts were the subject of considerable evidence at trial - No injustice was caused by not pleading the particulars of these two defamatory acts, as would have been required had they been advanced as separate causes of action - Where the pleadings did not impair a fair trial, there was no need to extend the highly structured code for pleading defamation as a separate cause of action - The statement of claim also pled conspiracy, even if obliquely, by alleging a pattern of conduct by the three defendants to remove AK from her position with Valcom's subcontractor ARINC - The claim asserted that the defamatory statements they made about her were for the purpose of interfering with her economic relations - This was, in essence, what the trial judge ultimately found: an agreement between the defendants to defame AK in order to achieve their goal of getting rid of her - Finally, Valcom itself put the breach of the Valcom/ARINC subcontract in issue by arguing in its statement of defence that the contract entitled Valcom to deal with AK as it did - Accordingly, it was open to the trial judge, in rejecting this argument, to find that Valcom breached the contract and to use that in her analysis of unlawful means - All these issues were canvassed by both sides at trial - On appeal, the defendants did not point to any alleged prejudice from any pleading deficiency - Most importantly, the trial judge was alive to the weaknesses in the pleadings - See paragraphs 32 to 38.

Practice - Topic 1967

Pleadings - Particulars - Particulars in specific proceedings - Interference with economic relations - [See Practice - Topic 1952 ].

Torts - Topic 5023

Interference with economic relations - Elements of liability - Use of unlawful means - [See Practice - Topic 1952 ].

Torts - Topic 5023

Interference with economic relations - Elements of liability - Use of unlawful means - The Ontario Court of Appeal reviewed the case law respecting unlawful means - See paragraphs 46 to 63 - The court stated that "it is now clear that to qualify as 'unlawful means', the defendant's actions (i) cannot be actionable directly by the plaintiff and (ii) must be directed at a third party, which then becomes the vehicle through which harm is caused to the plaintiff." - See paragraph 60.

Torts - Topic 5023

Interference with economic relations - Elements of liability - Use of unlawful means - AK and her company Temagami provided services to Valcom through its subcontractor ARINC - AK and her company Temagami sued Valcom and two of its employees, Lewis and Poulin - The trial judge found all three defendants jointly and severally liable for defamation of AK and intentionally interfering with her economic relations, and Poulin and Valcom jointly and severally liable to Temagami for intentionally interfering with its economic relations and inducing breach of contract - The Ontario Court of Appeal held that the trial judge erred in finding that the defendants' five acts of defamation against AK could satisfy the unlawful means requirement for the tort of intentional interference with economic relations because these claims were all directly actionable by AK based on the tort of defamation - Indeed, she did so successfully in respect of three of these acts - The same reasoning applied to the conspiracy to harm AK as unlawful means - However, AK could recover on the basis of unlawful means conspiracy against ARINC - The unlawful means was the defamation of AK - See paragraphs 64 to 75.

Torts - Topic 5023

Interference with economic relations - Elements of liability - Use of unlawful means - Valcom procured a contract with the Department of National Defence (DND) - AK and her company Temagami provided services to Valcom on the contract through Valcom's subcontractor ARINC - AK and her company Temagami sued Valcom and two of its employees, Lewis and Poulin - The trial judge found all three defendants jointly and severally liable for defamation of AK and intentionally interfering with her economic relations, and Poulin and Valcom jointly and severally liable to Temagami for intentionally interfering with its economic relations and inducing breach of contract - On appeal, the defendants argued that Valcom's breach of its contracts with ARINC and DND could not serve as unlawful means in finding Valcom liable to AK and Temagami for intentional interference with economic relations because neither breach caused economic loss to AK or Temagami - The Ontario Court of Appeal accepted the argument respecting DND, but not ARINC - Valcom breached its contract with ARINC on August 13, 2003, when it purported to suspend the contract and terminate AK's role in the project - That contract gave Valcom no right to suspend it, or to terminate AK's engagement on the project, without 15 working days' notice - These acts would have been actionable by ARINC - The breach of the ARINC contract caused damage to AK and Temagami - The same could not be said of the breach of the DND contract - Accepting the trial judge's finding that AK's peremptory removal from the project was a breach of the DND contract, it could not be said to interfere with the actions of DND in which AK had an economic interest - She was not being provided to the project by DND but by ARINC - The breach of contract did not cause DND to act in a way that adversely affected AK economically - See paragraphs 76 to 85.

Torts - Topic 5024

Interference with economic relations - Elements of liability - Malice or intent to injure - AK and her company Temagami sued Valcom and two of its employees, Lewis and Poulin - Claims were made for defamation, intentional interference with economic relations and inducing breach of contract - The trial judge found all three defendants jointly and severally liable for defamation of AK and intentionally interfering with her economic relations, and Poulin and Valcom jointly and severally liable to Temagami for intentionally interfering with its economic relations and inducing breach of contract - On appeal, the defendants challenged the trial judge's factual finding that Poulin and Valcom were aware AK was contracting her services to ARINC, a subcontractor of Valcom, through Temagami - They submitted that Poulin and Valcom had no such knowledge and thus could not have intended to harm Temagami - They also argued that even if Poulin and Valcom knew that terminating AK's involvement with the project would cause loss to Temagami, that only constituted foreseeability of consequences and did not permit the trial judge to find that they intended that result - Hence, Valcom and Poulin could not properly be found liable for this tort - The Ontario Court of Appeal rejected the ground of appeal - At the beginning of the project, AK's services were supplied through a contract between Valcom and Temagami - Poulin and Valcom were clearly aware of this - When AK became an ARINC resource to the project, it was entirely open to the trial judge, even without direct evidence on the point, to infer that Poulin and Valcom knew this arrangement would be done by means of a contract between ARINC and Temagami, because of their own prior arrangement with Temagami for the same services - The defendants did not challenge the finding that Poulin and Valcom deliberately took steps to bring about AK's termination from the project - That finding was more than amply supported in the evidence - It was entirely open to the trial judge to conclude that, because of this, Poulin and Valcom intended to cause loss to Temagami, given its contract with ARINC for her services - They intended the natural consequences that they knew would arise from their deliberate actions - See paragraphs 39 to 43.

Torts - Topic 5208

Interference with economic relations - Contracts - Inducing or procuring breach of contract - The Ontario Court of Appeal held that the tort of inducing breach of contract required that there be an actual breach - In the present case, the trial judge erred in holding that frustrating a contract could satisfy the requirements of the inducement tort - See paragraphs 92 to 99.

Torts - Topic 5242

Interference with economic relations - Interference with business relations - What constitutes - [See fourth Torts - Topic 5023 and Torts - Topic 5024 ].

Torts - Topic 7280

Joint and concurrent tortfeasors - Consequences of joint liability - Joint and several liability - General - [See Damage Awards - Topic 632 ].

Cases Noticed:

Correia v. Canac Kitchens et al. (2008), 240 O.A.C. 153; 91 O.R.(3d) 353; 2008 ONCA 506, refd to. [para. 39].

Lineal Group Inc. v. Atlantis Canadian Distributors Inc., [1998] O.A.C. Uned. 450; 42 O.R.(3d) 157 (C.A.), leave to appeal denied (1999), 249 N.R. 194; 138 O.A.C. 197 (S.C.C.), refd to. [para. 46].

Reach M.D. Inc. v. Pharmaceutical Manufacturers Association of Canada et al. (2003), 172 O.A.C. 202; 65 O.R.(3d) 30 (C.A.), refd to. [para. 46].

Drouillard v. Cogeco Cable Inc. et al. (2007), 223 O.A.C. 350; 86 O.R.(3d) 431 (C.A.), refd to. [para. 46].

OBG Ltd. et al. v. Allan et al., [2008] 1 A.C. 1; 369 N.R. 66; [2007] UKHL 21, consd. [para. 48].

O'Dwyer v. Ontario Racing Commission (2008), 238 O.A.C. 364; 293 D.L.R.(4th) 559 (C.A.), refd to. [para. 59].

Hunt v. T & N plc et al., [1990] 2 S.C.R. 959; 117 N.R. 321, refd to. [para. 69].

Total Network SL v. United Kingdom (Her Majesty's Revenue and Customs), [2008] UKHL 19; 385 N.R. 310, refd to. [para. 72].

Hill v. Church of Scientology of Toronto and Manning, [1995] 2 S.C.R. 1130; 184 N.R. 1; 84 O.A.C. 1, refd to. [para. 102].

Counsel:

Peter K. Doody, Craig M. Bater and Jonathan M. Richardson, for the appellants;

Ronald G. Slaght and Yashoda Ranganathan, for the respondents.

This appeal was heard on March 29 and 30, 2010, by Goudge, MacFarland and LaForme, JJ.A., of the Ontario Court of Appeal. Goudge, J.A., delivered the following decision for the court on August 24, 2010.