Where did it happen? Causing loss by unlawful means

By Alexander Gay Web Only

Where did it happen? Causing loss by unlawful means

 

Torts are what happens when one person causes a loss to another.  Where they happen is an entirely different question. And it can be even trickier to figure out where a plaintiff should sue a defendant for interfering, unlawfully, in its business activities – what we call unlawful means tort. It’s a question Canadian courts have yet to resolve.

That’s because a series of events may be at play, and only one might determine where the tort happened.

It’s an issue we have mostly managed to ignore so far. In 2012 the Supreme Court in its Van Breda ruling gave us a two-stage inquiry into assessing whether a given court should assume jurisdiction over a tort. First, it’s up to the plaintiff to establish that a factor presumptively connects the litigation to the jurisdiction. That could be the location of where the tort was committed. Or it could be another connecting factor, such as where the defendant carries on business. Then, for the second part of the inquiry, it’s up to the defendant to rebut the presumption by showing that, based on the facts, the connection isn’t enough to be substantial and does not point to any real or strong relationship between the subject matter of the litigation and the forum.  If the defendant is successful on this count, the court must decline on jurisdiction.  

But in a case of unlawful means tort, still very much in its infancy in Canadian jurisprudence, determining where it was completed is necessary to establish a “presumptive connecting factor”. The courts have reformulated the tort a number of times since its inception, always fearful that its broad use may harm competitive behavior. Its most recent articulation is found in A.I. Enterprises Ltd. v. Bram Enterprises Ltd., which breaks the tort down into three basic elements, namely: (a) the defendant must have intended to injure the plaintiff’s economic interests; (b) the interference must have been by illegal or unlawful means; and (c) the plaintiff must have suffered economic harm or loss as a result. 

Given all that, there are a number of ways to determine where the tort was committed. It could be where the defendants hatched the conspiracy; or where it was implemented; or where the plaintiff sustained the direct damages.  At a time where corporations transact across multiple jurisdictions, the end result can produce any number of surprises.

Courts in other common law jurisdictions have also struggled with the issue. It’s particularly challenging in England and Australia, where they can assert jurisdiction only by establishing where the tort was committed.  In Canada, it is only one of many presumptive connecting factors that can be taken into account. 

The recent case of Khrapunov v. JSC BTA Bank, handed down by the England and Wales Court of Appeal nevertheless offers helpful guidance. The court held that the determinative event is when the conspiracy to harm is hatched, by putting the tort in motion, and not when it is implemented. Applied to the Canadian context, that means a conspiracy to harm that is hatched in British Columbia and intended to harm a corporation in Ontario is a tort committed in B.C. 

Also, it does not matter that one of the constituent elements of the tort requires that damages ensue from the conduct of the defendant, the court concluded in Khrapunov. Damages can occur in a jurisdiction that is different from where the tort is hatched or implemented.  The reasoning here is similar to that found in negligent misrepresentation. The determinative event is the utterance of the negligent misstatement, and not the receipt of the misstatement by the plaintiff or where the direct damages are suffered, which may be elsewhere.

While Van Breda ruling has been useful in helping us resolve difficult jurisdictional issues in the law of torts, the courts are likely to be called upon soon to weigh in further.

Alexander Gay is General Counsel at the Department of Justice. He maintains a broad civil litigation practice, with an emphasis on commercial and trade disputes. He is also a part-time professor at the University of Ottawa (Faculty of Law) and the author of the Annotated Arbitration Act of Ontario, 1991. The author's views are his own.

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