B.C. Court Of Appeal Clarifies The Elements Of The Tort Of Abuse Of Process

• Published date: 29 July 2020
• Subject Matter: Litigation, Mediation & Arbitration, Trials & Appeals & Compensation
• Law Firm: McCarthy Tétrault LLP
• Author: Canadian Appeals Monitor and Connor Bildfell

In Oei v. Hui,¹ the B.C. Court of Appeal clarified the elements of the tort of abuse of process and, in doing so, reinforced its narrow scope. In particular, the Court of Appeal clarified that the tort is narrower than the procedural fault of abuse of process and has three elements: (i) a collateral and improper purpose; (ii) an overt act in furtherance of the collateral and improper purpose; and (iii) resulting loss. While some B.C. cases had suggested that an overt act might not be required, the Court of Appeal rejected this suggestion and confirmed that an overt act is essential. It also held that a plea of knowing falsity (i.e., a plea that the earlier claim rests on allegations that the claimant knows to be false) cannot transform a purpose that is within the scope of the litigation into a collateral and improper purpose. The message is clear: the tort must remain carefully circumscribed to avoid a proliferation of unmerited retaliatory lawsuits.

Facts

Oei involved two separate but related proceedings in which the plaintiffs and defendants traded places. Both proceedings arose out of a written agreement between Concord Pacific Acquisitions Inc. ("Concord") and a Singapore-based businessman named Mr. Oei and two of his companies (the "Oei parties") in respect of a major real estate development project in Vancouver. First, Concord sued the Oei parties for breach of contract in connection with the agreement. Second, the Oei parties sued Concord and its principal (the "Concord parties") for the tort of abuse of process, alleging that the Concord parties knowingly advanced false claims against the Oei parties in the first action for the purposes of constraining their ability to deal with the lands in question and coercing them to negotiate. In response, the Concord parties applied to have the Oei parties' pleadings struck on the basis that they disclosed no reasonable claim. On such an application, courts are required to assume the truth of the facts pleaded, so the merits were not in issue.

Chambers Judge's Decision

The chambers judge dismissed the Concord parties' application to strike. He observed that the elements of the tort of abuse of process have been described as: (i) a collateral and improper purpose; (ii) an overt act; and (iii) resulting loss. He noted, however, that the law in B.C. was unclear on whether an overt act is required.

The arguments before the chambers judge focused on the first element of the tort. The chambers judge accepted that the "incidents or consequences of litigation", such as "delay, cost, potential embarrassment, difficulty in securing financing and a chilling effect on those who would otherwise do business with the party who has been sued", do not qualify as a collateral and improper purpose.² He considered however, that where a party knowingly advances false claims for the purpose of achieving...