Claims Against Competitors For Business Interference Must Meet Strict New Supreme Court Test To Succeed

If you are thinking about suing a competitor for interfering with your business because of its improper dealings with a third party, your case will have to pass a more exacting test if it is to have any chance of success.

The test is set out in the Supreme Court of Canada's recent decision in A.I. Enterprises Ltd. v. Bram Enterprises Ltd.

A.I. Enterprises focuses on a tort (a wrongful act leading to legal liability) that has been referred to by a number of different names -- "Unlawful interference with economic relations," "interference with a trade or business by unlawful means," "intentional interference with economic relations" and, as adopted by the Supreme Court in A.I. Enterprises, the "unlawful means" tort.

The unlawful means tort allows a plaintiff to sue a defendant for economic loss resulting from the defendant's unlawful act against a third party. In A.I. Enterprises, the Court used an example from the case Tarleton v. M'Gawley (1793), Peake 270, 170 E.R. 153 to demonstrate how the tort operates.

In Tarleton, the defendant, the master of a trading ship, fired its cannons at a canoe that was attempting to trade with the defendant's competitor, the plaintiff. The plaintiff was able to recover damages for the economic injury resulting from the defendant's wrongful conduct towards third parties (the occupants of the canoe).

A more modern example of how the tort could apply would be where Competitor A approaches a supplier and makes intentional misrepresentations to the supplier regarding Competitor B, resulting in the supplier electing to cut off the supply of inventory to Competitor B. The resulting loss may give rise to the unlawful means tort.

The Supreme Court of Canada, in A.I. Enterprises, has defined what sort of conduct constitutes "unlawfulness" and when the "unlawful means" tort can be pursued in an action.

What Does "Unlawful Means" Mean?

The Supreme Court concluded that "unlawful means" must be interpreted narrowly and should apply only to conduct that would give rise to a civil cause of action by the third party (the canoeists in the Tarleton case), or would do so if the third party had suffered loss as a result of that conduct.

The Court also stated that "Mere foreseeability of economic harm does not meet the requirement for intention in the unlawful means tort. The defendant must have the intention to cause economic harm to the plaintiff as an end in itself or the intention to cause economic harm to the plaintiff...