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 defendants 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 Mastecs largest customer

14
Claim Plaintiff

• Reason of termination from Mastec is in relation
  to Cogecos dislike for the plaintiff

15
The facts Defendant

• Cogeco Refusal for Mr. Drouillard to work on
  Cogeco equipment was based to Mr. Drouillards
  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, plaintiffs supervisor
  describes Plaintiffs 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 DAgostini, original Plaintiffs
  manager and Cogecos 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, Plaintiffs 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 individuals membership in P.M.A.C.

21
Supporting Case

• P.M.A.C.s actions were fatal to Reachs 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 Reachs 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 DAgostini 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
  DAgostini convinced Mastec to act on is an
  illegal act or one without legal justification.
• Simply doesnt 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 Reachs 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
• Whats 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!!!