(Court of Appeal of Alberta) The court set out a number of propositions as to the intention required for inducing a breach of contract. These included inferred intention and recklessness. The Court of Appeal held as follows: ‘In order to find liability [for inference with contractual relations], a plaintiff must demonstrate that the defendant had an ‘intent’ to induce the breach of contract. The intent component of the tort is the most difficult to understand. Malicious motive, unlawful conduct, hatred or intention to harm are not required elements of intent: Allen v Flood, [1898] AC 1 9H.L.(E,));Parks West Mall Ltd v Jennett (1996), 36 Alta.L.R. (3d) 44 (C.A.) at 49; and Atcheson v College of Physicians and Surgeons (Alberta), [1994] 6 W.W.R. 239 (Alta.Q.B) at 246. However, what is required is less clear. The requisite intent has been described with ‘loose, vague and conflicting statements’ that sometime appear to be irreconcilable: Ed Miller Sales, supra, at 230.
Originally, the tort required the breach to be the result of wilful, deliberate and direct conduct which the defendant knew or hoped would result in a violation of the plaintiff’s contractual rights. See for example, Lumley v Gye (1853), 118 E.R. 749, 2 El. and B1.216 (Q.B); and Quinn v Leathem, [1901] A.C.495 (H.L.(I.)).
However, courts soon recognized that intent can also be inferred when the consequences of the conduct were a necessary or reasonable foreseeable result, because ‘people are presumed to intend the reasonable consequences of their acts’: South Wales Miners’ Federation v Glamorgan Coal Company, [1905]A.C.239 (H.L.(E.)) at 244. In Posluns v Toronto Stock Exchange and Gardiner (1965), 46 D.L.R. (2d) 210 (Ont. H.C) at 267; affirmed (1966), 53 D.L.R (2d) 193 (C.A.); affirmed [1968] S.C.R. 330, 67 D.L.R. (2d) 165, the court held that liability would attach if the defendant’s conduct resulted in the breach of a contract ‘of which it was or ought to have been aware’. The intention to bring about a breach of contract need not be the primary object; it is sufficient if the interference is necessarily incidental to attaining the defendant’s primary objective: Fraser v Board of Trustees of Central United Church (1983), 38 O.R. (2d) 97 (H.C.J.) at 103′ and Bank of Nova Scotia v Gaudreau (1985), 48 O.R. (2d) 478 (H.C.J.). [41] Intention can also be established when the defendant was reckless or wilfully blind to a breach. The defendant need not have actually known the precise terms of the contract or that his object only could be accomplished through breach of the contract. ‘If – turning a blind eye – he went about it regardless of whether it would involve a breach, he will be treated just as if he had knowingly procured it’: J.G. Fleming, The Law of Torts, 8th Ed. (Sydney: law Book Co., 1992) at 694.
Turning a blind eye may include situations in which the defendant failed to seek advice or employ the means available to obtain the necessary knowledge. For example, in Royal Bank of Canada v Wilton (1995), 165 A.R. 261, D.L.R. (4th) 266 (C.A.), the defendant was uncertain about the enforceability of a contract, had the ‘means of knowledge’ to determine if a legitimate contract existed, but made no efforts to seek advice. This court found the defendant liable because he deliberately chose not to acquire the information, but proceeded on the basis that the contract was unenforceable. Similarly, when there are competing legal interpretations and the defendant adopts an interpretation which will interfere with the plaintiff’s rights, the defendant ‘must at least show that he was advised and honestly believed that he was legally entitled to take that course’: Swiss Bank v Lloyds Bank, [1979] Ch.548 at 580 (CH.D.); reversed on other grounds [1982] A.C. 584 (C.A.); affirmed [1982] A.C. 604 (H.L.(E)).
If the defendant acted under a bona fide belief that contractual rights would not be infringed, liability will not be found even though the belief turned out to be mistaken. But for a mistaken belief to be bona fide, rather than the result of recklessness or wilful blindness, some basis for the belief must exist, and some reasonable effort must have been made by the defendant to learn the truth. In British Industrial Plastics Ltd. v Ferguson, [1940] 1 All E.R. 479 (H.L.(E.)), the defendants who had made the effort to seek advice were not found liable even though their belief was described as ‘illogical’. In Z-Mark International Inc. v Leng Novak Inc. (1996), 12 O.T.C. 33 (Gen. Div.), appeal dismissed (1999), 122 O.A.C. 341, a defendant made inquiries and obtained assurances and a warranty. The court found that the defendant had no reason to doubt the assurance or the warranty and therefore the defendant was not knowingly or recklessly indifferent to a breach of contract.
In some cases a distinction is drawn between direct interference, for which the breach must be foreseeable or reasonable consequence of the conduct, and indirect interference, for which the breach must be necessary or substantially certain consequence. See, for example, L.N. Klar, Tort Law, 2nd ed. (Scarborough: Carswell, 1996) at 498 and 507; Fleming, supra, at 694; D.C. Thomson and Co. Ltd. V Deakin ,[1952] Ch. 646 (C.A.); Bank of Nova Scotia, supra; Garry v Sherritt Gordon Mines Ltd., [1988] 1 W.W.R. 289, 45 D.L.R. (4d) 22 (Sask. C.A.); and Atcheson, supra.
[45] As this case involves direct interference, this distinction does not arise. Pocklington, as the director of Gainers, executed the documents to complete the transfer of the 350151 shares to his own company. The transfer caused Gainers to breach s. 12.03(1) of the Master Agreement, which prohibited dispositions of assets without Alberta’s consent. Therefore, if the breach was a reasonable or foreseeable consequence of that transfer, or alternatively, if Pocklington completed the transfer recklessly, was wilfully blind to its consequences, or was indifferent as to whether or not it caused a breach, the necessary intent element for the tort will be met.’
Citations:
(2001) 194 DLR (4th) 109
Links:
Jurisdiction:
Canada
Cited by:
Cited – Mainstream Properties Ltd v Young and others CA 13-Jul-2005
The claimant appealed refusal of his claim for inducing a breach of contract against the sixth defendant. It said that an intention to disturb a contract could be inferred.
Held: A mere recklessness as to whether contractual rights were . .
Lists of cited by and citing cases may be incomplete.
Commonwealth, Contract, Torts – Other
Updated: 07 December 2022; Ref: scu.229818