Intentional Interference With Economic Relations: A Narrow, But Powerful Tort

At common law, a party can sue another for intentionally interfering with their economic relations. Also known as the tort of "unlawful" means, this cause of action allows the plaintiff to bring an action against the defendant where the defendant intended to injure the plaintiff's economic interests.

In recent years, Canadian Courts have narrowed the scope of the tort of intentional interference. As set out below, the Supreme Court of Canada's 2014 decision in A.I. Enterprises v. Bram Enterprises, 2014 SCC 12 ("A.I. Enterprises") limited the circumstances in which a defendant can be held liable for interfering with the plaintiff's economic relations.

A recent decision of the Ontario Court of Appeal has affirmed the reasoning of A.I. Enterprises.

In Grand Financial Management Inc. v. Solemnio Transportation Inc., 2016 ONCA 175, per Blair J.A. ("Grand Financial"), the Court made two important findings about the tort of intentional interference with economic relations: (i) first, the tort is narrow in scope. Specifically, the requirement that the defendant use "unlawful means" to achieve its end will be interpreted narrowly by the courts; and (ii) second, if the defendant's liability can be proven, the Court may award damages "at large" to compensate the plaintiff.

What is the Tort of Intentional Interference with Economic Relations?

The tort of intentional interference with economic relations is a commercial tort. It establishes a "parasitic" form of liability where three parties are involved: that is, it allows a plaintiff to sue a defendant for economic loss resulting from the defendant's unlawful act against a third party.

The tort has three requirements: (i) the defendant must have intended to injure the plaintiff's economic interests; (ii) the interference must have been by illegal or unlawful means; and (iii) the plaintiff must .have suffered economic harm or loss as a result.

Each of these three elements were met in the Court of Appeal's decision in Grand Financial.

The Facts of Grand Financial

Grand Financial involved a "factoring agreement". This is a contract in which a party assigns its accounts receivable to a financing party, known as the "factor". In exchange for the assignment of the accounts receivable, the assignor receives immediate payment for its accounts at a discount. In turn, the factor collects the accounts from the third party who was responsible for payment. The factor therefore assumes significant risk that the payment of the account by the third party may be delayed or may never be made at all.

Grand Financial provided factoring...