Intentionally inflicted economic harm in Canada.

• Author: Donovan, Brendan

I INTRODUCTION II THE TWO TORTS DEFINED III THE ANGLO-CANADIAN TORT IN PRACTICE IV THE ARGUMENTS Malice is a Common and Useful Consideration in Tort Law The Unlawful Means Standard is at Odds with Negligence Law The Unlawful Means Standard is at Odds with the Law of Civil Conspiracy The Unlawful Means Standard is Inherently Unstable The Unlawful Means Standard is Essentially Parasitic The Malice Standard has not been Unworkable in Foreign Jurisdictions The Malice Standard is not Theoretically Incoherent Malevolence is not that Uncommon V CONCLUSION Abstract

'My obnoxious neighbour is paying my customers to take their business elsewhere. What can I do?" In the common law jurisdictions of Canada, the answer is nothing. Although there is a tort of intentional interference with economic relations, it requires the plaintiff to show that the defendant used a separately unlawful means. This could include a crime, a tort or some other misdeed that the courts have had difficulty defining. In a number of recent cases, the scope of 'unlawful means" has given rise to problems', see Drouillard v. Cogeco Cable Inc. (2007), 223 O.A.C. 350, OBG Ltd. v. Allan, [2007] 4 All E.R. 545 (H.L.) and Correia v. Canac Kitchens (2008), 240 O.A.C. 153. In this article, the author argues that the unlawful means requirement should be abandoned in favour of a legal malice standard. That is, the defendant should be liable if she caused economic harm intentionally and without legal justification, such as free speech or business competition. The legal malice standard is already employed in the United States, France and Germany, as well as in other areas of Canadian law, e.g., malicious prosecution and civil conspiracy. The author argues that such a reform would be in keeping with the fact that "unlawful means' has not been satisfactorily defined in over a century of jurisprudence, and the fact that reliance on a separately unlawful act produces a highly parasitic analysis. Permitting recovery for maliciously inflicted economic harm would also be sensible given the fact that Canada now permits recovery for negligently inflicted economic harm: see Canadian National Railway Co. v. Norsk Pacific Steamship Co., [1992] 1 S.C.R. 1021. In this article, the author addresses arguments with respect to predictability and coherence, and concludes that a legal malice standard is to be preferred.

Resume

'Mon odieux voisin paye mes clients pour qu'ils fassent affaire ailleurs. Que puis-je faire?' Au Canada, dans les juridictions de common law, la reponse est rien. Quoiqu'il existe un delit d'ingerence dans les relations economiques, ce dernier exige au demandeur de demontrer que le defendeur a utilise un moyen illicite. Il peut s'agir d'un crime, d'un delit ou d'autres mefaits que les tribunaux ont jusqu'a present eu du mal a definir. Dans certains recents arrets, la portee des termes << moyens illicites >> a ete embrouillee : voir Drouillard v. Cogeco Cable Inc. (2007), 223 O.A.C. 350, OBG Ltd. v. Allan, [2007] 4 Ail E.R. 545 (H.L.) et Correia v. Canac Kitchens (2008), 240 O.A.C. 153. Dans cet article, l'auteur suggere que l'element de << moyen illicite >> devrait etre abandonne en faveur d'une norme de malveillance. Ainsi, la defenderesse ayant cause un dommage economique et n'ayant en sa disposition aucune justification legale (liberte d'expression; concurrence) serait tenue responsable. Cette norme de malveillance est deja employee aux Etats-Unis, en France et en Allemagne, ainsi que dans d'autres domaines du droit canadien (poursuite malveillante et collusion). Une telle reforme tiendrait compte du fait qu'au cours de plus d'un siecle de jurisprudence, aucune definition satisfaisante de << moyens illicites >> n'a ete etablie. Elle considere egalement le fait qu'une analyse hautement parasitique resulte du fait qu'un moyen illicite est un element necessaire au delit. De plus, il serait logique de permettre une cause d'action pour recouvrer des dommages economiques infliges de facon malveillante puisque le Canada permet maintenant un recours pour les delits economiques causes par la negligence : voir Cie des chemins de fer nationaux du Canada c. Norsk Pacific Steamship Co., [1992] 1 R.C.S. 1021. Dans cet article, l'auteur adresse les arguments concernant la previsibilite et la coherence, et conclut qu'une norme de malveillance est preferable.

INTRODUCTION

Intentionally inflicted economic harm plays a vital role in our society. We want the efficient baker to inflict economic harm on his lax competitors, just as we want the outspoken citizen to inflict economic harm on purveyors of ignorance. Yet not all intentionally inflicted economic harm is desirable. In some instances, ruining the livelihood of one's neighbour may constitute an actionable wrong. The problem addressed by this essay is how we ought to delineate that boundary between the permissible and the tortious.

Under current English and Canadian (1) law, the scope of liability for intentionally inflicted economic harm is drawn by reference to the concept of an 'unlawful means.' In essence, to recover for a ruined livelihood, the injured party must show interference by a separately unlawful act, such as another tort. Scholars and judges have often lamented the artificiality of this approach, (2) but the House of Lords has recently reaffirmed its commitment. (3) In my view, Canada should chart a different course. We should break with the concept of unlawful means and, like the U.S., round liability upon legal malice, defined as an intention to cause harm without legal justification. This change would produce more symmetry, realism and justice in our law.

This article will begin with a discussion of two economic torts: the Anglo-Canadian tort of interference by unlawful means (4) and the U.S. tort of malicious interference. (5) I will explain the differences between the two approaches as well as their origins. The second part of the article will examine how the unlawful means tort has been applied in practice. Without going too far into its storied history, I will suggest that it has been problematic. In the third part, I will present arguments--some old and some new--either in favour of, or opposed to, adopting the malice standard. I will submit, inter alia, that it is a jarring asymmetry to allow recovery for negligently inflicted economic harm in Canada but not for maliciously inflicted economic harm.

II THE TWO TORTS DEFINED

The clearest way to explore of the two torts is through a factual scenario. Suppose that an author writes a manuscript about the evils of widgets and submits his work to a publisher. During the evaluation process, the publisher receives a phone call from a widget company. The caller, hoping to stave off bad publicity, conveys to the publisher an honest view that the manuscript is inaccurate. The publisher decides to reject the manuscript and the author sues the widget company in tort. (6) Assuming that there is no defamation or intimidation, the defendant would not be liable under either Anglo-Canadian or American law. The only difference between the two tort regimes would be the path taken to that result. In England and Canada, the unlawful means tort would require the plaintiff to show that: (7)

1. The plaintiff had a valid business expectancy; (8)

2. The defendant intended to disrupt this expectancy; (9)

3. The defendant used an unlawful means, such as a tort or crime; (10) and

4. The plaintiff suffered economic harm. (11)

   Thus, although the widget company acted intentionally and caused economic harm, (12) it would not be liable. The act of giving an honest opinion would not constitute an unlawful means. In the U.S., the result would be the same, but the reasoning would be slightly different. The American malice tort would require the plaintiff to show that: (13)

1. The plaintiff had a valid business expectancy; (14)

2. The defendant intended to disrupt this expectancy; (15)

3. The defendant acted with legal malice; and (16)

4. The plaintiff suffered economic harm. (17)

   Notably, the concept of legal malice in this formulation need not carry with it spite or ill will. At common law, malice is the intention to perform a harmful act without legal justification. (18) The types of justification that have been recognised in the U.S. in this context include, but are not limited to, engaging in legitimate business competition, (19) protecting a third person toward whom one stands in a relationship of responsibility, (20) and giving honest advice. (21) Thus, although the widget company acted intentionally and caused economic harm, it would not be liable. Giving honest advice is a legal justification and so the element of legal malice is absent. (22)

   Importantly, though, the two torts do not always yield the same results. Consider, for instance, a dispute that arose in the context of ship repairs in 1894. At the close of the nineteenth century, a group of unionized ironworkers were employed alongside two non-unionized shipwrights at Regent Dock in Millwall. The trade union knew that the shipwrights had, on occasion, performed ironwork. Motivated by a desire to punish the shipwrights, union officials told the employer at Regent Dock that if he did not dismiss the two men, the ironworkers would lawfully cease work in every yard on the Thames. Since the shipwrights were employed on a day-to-day basis, the employer simply discharged them. (23)

   The decision of the House of Lords in Allen v. Flood (24) was 181 pages long and quite convoluted. What is clear, though, is that the shipwrights lost. Their Lordships ruled that although the union had acted with legal malice, the threat to cease work was not unlawful and therefore there could be no liability. (25) Allen v. Flood is thus regarded as the origin of the unlawful means standard in Anglo-Canadian law.

   The majority opinion in Allen v. Flood was not, strictly speaking, a numerical majority. Allen v. Flood was the last case in which...