Inducing Breach of Contract

1. Inducing Breach of Contract Bus 393 Presentation Charles Chou Cody Watson Queenie Chou Kelly Chan March 7th, 2007

2. Objective of Presentation • Introduce the concept of inducing breach of contract - History - Elements - Defences • Walk through case involving this intentional tort in a mock court

3. History • Decision in Lumley v Gye 1853 - inducing singer to breach contract - court: defendant’s action was tortuous

4. Definition An intentional tort in which the defendant causes a third party to break his contract with the plaintiff. Example

5. Classic Inducing Breach of Contract • Direct inducement of breach of contract “Mere advice is not sufficient to constitute persuasion” • Ingredients: Procurement Knowledge Intention Actual Breach

6. 6 Elements of Inducing Breach of Contract 1.A valid contract existed between plaintiff and a third party 2. The defendant knew of the existence of this contract 3.The defendant intentionally engaged in acts or conduct which induced the third party to breach the contract with plaintiff

7. 6 Elements of Inducing Breach of Contract 4. The defendant intended to induce a breach of such contract 5. The contract was in fact breached 6. The acts and conduct of the defendant which induced the breach caused damage to the plaintiff

8. Exception • Tort of inducing breach of contract requires proof of a breach • But cause of action for interference with contractual relations is distinct and requires only proof of interference Pacific Gas v Electric Co

9. Defence of Justification • Protecting Private Right Example: Collision of contracts • Protecting Private Interest Example: Legris v Marcotte • Protecting Public Interest Example: Public health and safety

10. Court in Action Drouillard vs. Cogeco Cable Judge: Kelly Chan

11. Parties Plaintiff: Drouillard vs Defendant: Cogeco Cable Inc. and Phasecom Systems Inc, now carrying business as Mastec Canada

12. The facts: Plaintiff • After 15 years of employment, Plaintiff resigned to pursue employment in the United States • Returned to Windsor after 2 years in hopes to resume career in cable business • Hired by Mastec on two occasions

13. The facts: Plaintiff (2) • Mastec: an independent outside contractor • Mastec hires technicians (much like the Defendant) to perform installations/servicing in Windsor/Essex County • Cogeco is Mastec’s largest customer

14. Claim: Plaintiff • Reason of termination from Mastec is in relation to Cogeco’s dislike for the plaintiff

15. The facts: Defendant Cogeco: Refusal for Mr. Drouillard to work on Cogeco equipment was based to Mr. Drouillard’s negative attitude and morals Mastec: Drouillard did not mitigate his losses

16. Plaintiff Represented by: Charles Chou

17. Plaintiff • Client Issue • Mr. Kevin Drouillard • Former employee of Cogeco • Worked 15 years as a technician • Outstanding track record • Witness, Rudy Dauncey, plaintiff’s supervisor describes Plaintiff’s to be: • “being very effective in trouble shooting on outages and that he had developed an excellent knowledge of the optical receivers “ • “good communication and inter-personal skills and that he worked well with the staff.”

18. Plaintiff • Applied to Mastec – spoke with Jim Vine and Don Lachrite • Offer and acceptance - Feb 8, 2001 • Later informed him that they are not able to hire him • Hinted Leo D’Agostini, original Plaintiff’s manager and Cogeco’s employee, harboured some dislike of the Plantiff. • Hired by Mastec for second time to commence work on May 28,2001 • After working on his first case, Plaintiff’s was dismissed from work again. Reason given: Cogeco has expressed dislike towards Plaintiff

19. Plaintiff • Sue for Mastec for breach of contract • Sue Cogeco for inducing breach of contract

20. Supporting Case • Precedent Case: Reach M. D. Inc. v. Pharmaceutical Manufacturers Association of Canada, et al, 65 O.R.(3d) • Plaintiff “Reach” created a calendar for distribution to the medical community, but the Defendant (“P.M.A.C.”) warned its members that advertising in such a calendar could jeopardize an individual’s membership in P.M.A.C.

21. Supporting Case • P.M.A.C.’s actions were fatal to Reach’s business and it sued P.M.A.C. for various economic torts. • Laskin J.A. identified the three elements which have to be proved in order to establish the tort of intentional interference with economic relations : • (i)   P.M.A.C. intended to injure Reach. • (ii)  P.M.A.C. interfered with Reach’s business by illegal or unlawful means. • (iii) As a result of the interference Reach suffered economic loss.

22. Element I • The actions of Cogeco were directed against the Plaintiff personally. Various comments that were made by D’Agostini to cause Plaintiff to lose his job are sufficient to fulfill first element

23. Element II • To fulfill the second element. Another case can be inferred. • Lord Denning in Torquay Hotel Co. Ltd., v. Cousins [1969] 1 All E.R. 522 where he stated: •  “If one person deliberately interferes with the trade or the business of another, and does so by unlawful means, that is, by an act, which he is not at liberty to commit, then he is acting unlawfully, even though he does not procure or induce any actual breach of contract. If the means are unlawful, that is enough.”

24. Element II • The secret and unsupported evidence that D’Agostini convinced Mastec to act on is an illegal act or one without legal justification. • Simply doesn’t satisfy the “reasonable cause” • Thus, second element is fulfilled

25. Element III • On two occasions, the Plaintiff had a job and on two occasions it was taken from him. That he has suffered an economic loss is obvious • Third element of this tort has been established

26. Defendant Represented by: Cody Watson

27. Defendant • Client Issues • Cogeco Cable Inc. • Employed Mr. D for 15 years (84-99) • Requested that Mr. D not work on Cogeco property • Phasecom Systems Inc. (Mastec Canada) • Began employing Mr. D after return to Canada (Feb/May 01) • Offered Mr. D employment in an alternative location in order to honour the contract

28. Defendant (Cogeco) • Informed Mastec and Silverline that we did not wish for Mr. Drouillard to work on equipment • Attitude and fellow employee moral are of concern • Our four witnesses have testified that Mr. D made negative comments about the company • Mr. D was seen taking coffee breaks in the morning with other employees in local parking lots

29. Defendant (Cogeco) cont. • Practice of disallowing employees from working on company equipment is common in the industry • After July of 2001, work dried up at Mastec as Cogeco began to use its own employees for the majority of work

30. Defendant (Mastec) • Original (Feb 01) offer for employment was withdrawn with just cause (warning from Cogeco) • Offered Mr. Drouillard employment in the London area • Mr. D rejected this offer on grounds of unwillingness to commute

31. Defendant (Mastec) cont. • Plaintiff has failed to mitigate his losses in the offer for work in London (Feb & Mar 01) • Rejected this offer due to commute time • London work would incur higher income (different contractor) • Offer was made to pay for commute ($8.60/hr + gasoline) • Plaintiff had previously commuted in his position in the United States

32. Defendant (Mastec) cont. • Not equivalent to a wrongful dismissal case • Plaintiff must prove his damages • Onus rests with plaintiff because this is a tort case • Mr. D must prove that he attempted to mitigate his damages • Mr. D could NOT have earned $80,000 per year as in the US • This is based entirely on speculation

33. Recess • Discuss: What do you think are the possible judgements in this case?

34. Judgement: Supporting Case • Recall previous case, Reach M.D. Inc. vs. P.M.A.C. • First element of tort: • “P.M.A.C. intended to injure Reach.” • No question that Plaintiff was targeted personally

35. Judgement: Supporting Case(2) • “P.M.A.C interfered with Reach’s business by illegal or unlawful means.” • Cogeco did have rights to determine who works on its equipment • The way it applied those rights were wrong • Secrecy and unsupported evidence lacked “reasonable cause”

36. Judgement: Supporting Case (3) • “As a result of the interference Reach suffered economic loss.” • Drouillard had two jobs taken from him • Economic loss is obvious

37. Judgement: Witnesses • Witnesses testified that they heard Plaintiff make negative comments about the company • No proof that comments regarded • Operation • Performance • Morale

38. Judgement: July 2001 • Defence claimed that there was no work in July 2001, and Cogeco had to use its own employees • What’s troubling: • Cogeco laid off 50-60 employees, yet did not hire independent contractors to do everyday tasks

39. Judgement: Mastec • Mastec had an obligation to keep its primary customer-Cogeco, happy • Mastec offered many other options to the Plaintiff to which he declined • Verdict against Mastec: Dismissed

40. Judgement: Damages • Witnesses’ statements confirmed that income following July 2001 would be only $45,000 annually-a far figure from $80,000 • Plaintiff could not contradict this

41. Final Judgement • 36 months of income: $137,535 • Humiliation, loss of reputation: $ 62,465 • Total: $200,000

42. Court Dismissed Thank you!! QUIZ TIME!!!