Admiralty Action in Personam
BETWEEN:
CANADA STEAMSHIP LINES INC.
Plaintiff
and
KENNETH WAYNE ELLIOTT
and
VOYAGEUR MARINE TRANSPORT LIMITED
and
FRED HUNEAULT
and
VESSEL TRADING CORP.
and
SUGARLOAF MARITIME INC.
Defendants
and
VOYAGEUR MARINE TRANSPORT LIMITED
and
FRED HUNEAULT
Defendants/Plaintiffs by Counterclaim
and
CANADA STEAMSHIP LINES INC.
and
SEAFARERS' INTERNATIONAL UNION OF CANADA
and
ROMAN GRALEWICZ
Defendants by Counterclaim
REASONS FOR ORDER
[1] The three defendants by counterclaim in this file have requested by motions under rule 221(1) of the Federal Courts Rules (the rules) that the counterclaim brought by the plaintiffs by counterclaim Voyageur Marine Transport Limited (VMTL) and Fred Huneault (Huneault) be struck out on the ground that it discloses no reasonable cause of action.
[2] The defendant by counterclaim Canada Steamship Lines Inc. (CSL) moved the Court on its own whereas the defendants by counterclaim Seafarers' International Union of Canada (SIU) and Roman Gralewicz (Gralewicz) brought their own motion.
[3] The motions at bar rely for all intents and purposes on the same essential ground, to wit, that VMTL and Huneault have not in their counterclaim pleaded any material facts which could constitute the tort of intentional and tortious interference with contractual relations. VMTL and Huneault acknowledge that said tort forms the basis of their counterclaim but vigorously oppose the motions.
Background
[4] On November 29, 2005, CSL issued a statement of claim seeking damages in the amount of $500,000 as well as an order directing the defendants to cease and desist in the use of the vessel now known as the MARITIME TRADER (ex TEAK GLEN) (the Vessel) in active service on the Great Lakes in the St-Lawrence River (the Trade). The defendants listed include VMTL and Huneault.
[5] CSL was the former owner of the Vessel. It sold the Vessel to Goderich Grain Elevators on or about the 19th of December 2003. The terms of the sale and purchase provided, inter alia, that Goderich undertook not to utilize the Vessel for any purpose other than as a permanent storage facility without CSL's permission.
[6] CSL alleges that subsequently, Goderich sold the Vessel to the defendants, Sugarloaf Maritime Inc. and/or Vessel Trading Corp. who in turn sold the Vessel to the defendant Kenneth Elliott.
[7] The defendant Elliott would have entrusted the management and operation of the Vessel to VMTL and Huneault.
[8] On or about September 26, 2005, Elliott sold the Vessel to VMTL.
[9] Under the terms of a labour agreement previously entered into between SIU and CSL, CSL would be subjected to successor rights that require the Vessel to be manned by unionized crews.
[10] CSL's statement of claim, at paragraphs 27, 28 and 30, further provides as follows:
27. At present the Vessel is manned by non-unionized crew, the effect of which upon CSL has detrimentally affected and will continue to so affect CSL's relationship with its labour unions, in particular at a critical time with the SIU as CSL and the SIU are entering into contract renewal negotiations.
28. With full knowledge of CSL's desire to prevent the ship from being operated in the trade and of the Restricted Use Clause, in the Sale Agreement, Defendants intentionally and tortiously interfered with the contractual relations between CSL and Goderich by conspiring, devising and implementing an illicit and deceitful scheme to purchase and take possession of the said vessel for the sole intentional and ultimate purpose of evading the intent and application of the Restricted Use Clause and of operating her in the Trade;
29. (...)
30. The aforesaid tortious behaviour of Defendants has caused and continues to cause Plaintiff to suffer prejudice, as well as loss and/or damages;
[11] Although SIU alleges that CSL's claim is based in contract, and even though this point is not central to our analysis here, my reading of said claim, and especially paragraph 28 therein, brings me to conclude, as counsel for VMTL and Huneault, that CSL's claim is not based in contract but is really based on the same tort as alleged by VMTL and Huneault in their counterclaim, that is the tort of intentional interference with contractual relations.
[12] In their statement of defence, VMTL and Huneault, inter alia, essentially sustain that their agreement to acquire the Vessel did not contain a restrictive use clause and, if so, said clause is in restraint of trade and not enforceable.
[13] The gist and controlling allegation of VMTL and Huneault's counterclaim, the pleading herein impugned, is that SIU and Gralewicz (the president of SIU), together with CSL, intentionally and tortiously interfered with the contractual relations of the Vessel and the vessel Voyageur Independent as well as the contractual relations of VMTL with their customers and charterers, by taking illegal actions against the said vessels to prevent and obstruct the vessels' service providers, contractors and employees from performing their tasks.
[14] I agree with VMTL and Huneault's counsel to consider that the counterclaim, when considered with the particulars provided on March 21, 2006, can be seen to contain the following relevant allegations and conclusions which for the purpose of our upcoming analysis must be taken to be proven:
a) Re paragraph 33 of the counterclaim: VMTL and Huneault claim damages presently in the amount of CDN $ 350,000 with additional monetary damages to be assessed.
b) Re paragraph 40 of the counterclaim: the defendants planned a scheme to take illegal actions against the Vessel and the vessel Voyageur Independent to prevent and obstruct the vessels' service providers, contractors and employees from performing their tasks. More particularly, insofar as the plaintiff CSL is concerned, Messrs Carter, Dumais and others telephoned suppliers and customers of VMTL, including the Canadian Wheat Board and Shelley Machine, and incited them to abstain from and warned them against providing services to and doing business with VMTL.
c) Re paragraph 42 of the counterclaim: the defendants attempted to extort an agreement for collective bargaining from the Plaintiff by dressing up picket lines to prevent workers from going on board the Vessel to perform their tasks. They prevented worker from proceeding with quality control tests of the grain cargo loaded on the Vessel. They prevented Bunge employees from unloading the cargo from the Vessel. As a result, the Vessel was placed off hire by the charterers. They enticed and encouraged unionized tug employees to refuse to perform their contractual obligations of assisting the Vessel to the dock. As a result of the labour problems the Vessel was placed off hire by its charterers. This means that the Vessel is not earning any freight while the ship is illegally delayed.
d) Re paragraph 43 of the counterclaim: the defendants removed their picket lines because they were well aware that their actions were illegal and that the plaintiff would be successful in obtaining an interim order against them.
e) Re paragraph 44 of the counterclaim: the Vessel had been delayed for more than two and a half days by the defendants' illegal activities;
f) Re paragraph 45 of the counterclaim: the plaintiff CSL conspired with SIU and Gralewicz in planning the actions described above which were implemented by the Union's representatives. The defendant Gralewicz encouraged and enticed the members to continue to disrupt the activities of the Vessel in the coming months.
g) Re paragraph 46 of the counterclaim: the defendants' activities were illegal and have caused irreparable harm, delays and loss of business in 2005 and a potential loss of revenue for 2006.
Analysis
[15] It is trite law that on a motion under rule 221(1)(a), all the facts and allegations in the statement of claim must be deemed to have been proven.
[16] Additionally, as indicated by Decary, J.A. in Sweet et al. v. Canada (1999), 249 N. R. 17, at 23:
Statements of claim are struck out as disclosing no reasonable cause of action only in plain and obvious cases and where the court is satisfied that the case is beyond doubt (see Inuit Tapirisat of Canada and National Anti-Poverty Organization v. Canada (Attorney General), [1980] 2 S.C.R. 735; 33 N.R. 304; 115 D.L.R. (3d) 1, at 740 [S.C.R.]; Operation Dismantle Inc. et al. v. Canada et al., [1985] 1 S.C.R. 441; 59 N.R. 1; 13 C.R.R. 287; 18 D.L.R. (4th) 481; 12 Admin. L.R. 16 and Hunt v. T & N plc et al., [1990] 2 S.C.R. 959; 117 N.R. 321; 4 C.C.L.T. (2d) 1; 43 C.P.C. (2d) 105; 49 B.C.L.R. (2d) 273; 74 D.L.R. (4th) 321).
[17] Therefore, it would be premature for the Court to decide on a motion to strike a counterclaim and without reviewing any evidence (and in view of paragraph 221(2) of the Rules, I have decided to exclude the affidavit evidence presented by SIU and Gralewicz) whether the interference is sufficient to establish liability for the tort.
[18] What the Court must decide here is whether it is plain and obvious that the tort of intentional interference with contractual relations is not adequately pleaded by VMTL and Huneault.
[19] For the followings reasons, I am of the view that said question must be answered in the negative. Therefore the motions at bar must fail.
[20] As a governing point, it is not clear and obvious at the very least that the test to be retained for the appreciation of whether VMTL and Huneault have adequately pleaded the tort of intentional interference with contractual relations is the one mainly put forth by CSL, or SIU and Gralewicz.
[21] From a reading of the case law referred to by all three defendants by counterclaim, the test they all rely on to sustain their approach appears to be the one to rely on when one party wants to establish a specific economic interference tort, that is the tort of inducing breach of a specific contract. This tort appears to be a narrower one than the one relied upon by VMTL and Huneault in their counterclaim, to wit the tort of intentional and tortious interference with contractual relations.
[22] For instance, in TDL Group Ltd. v. 1060284 Ontario Limited, (2000) CarswellOnt. 1192 (hereinafter TDL Group Ltd.), a case relied on by CSL, the Ontario Superior Court of Justice had to evaluate the adequacy of a statement of claim which alleged two torts, that is that the defendant interfered with the plaintiff's economic relations and induced breach of contract.
[23] When evaluating at paragraph 13 the inducement to breach contract, the Court recited as follows the essential ingredients of said tort:
Inducement to Breach Contract
13 In Fasson Canada Inc. v. Mediacoat Inc. (September 24, (1993), Doc. 40982/89Q (Ont. Gen. Div.), appeal dismissed (October 10, 1996), Doc. CA C16912 (Ont. C.A.), McMurtry A.C.J.O.C. refers to G.H.L. Fridman, The Law of Torts in Canada, Vol. II (Scarborough: Carswell, 1990) and, at para 24, recites the essential ingredients of the tort of interference with contract:
1. knowledge of the contract;
2. an intention to bring about a breach of the contract;
3. conduct which results in the breach;
4. damage to the plaintiff; and
5. the lack of anything that might justify what the defendant did.
At para. 30, McMurtry A.C.J.O.C. stated:
It is apparent from the decided cases that the plaintiff must establish an intention on the part of the alleged wrongdoer to procure a breach of the contract ... intention is proven by establishing that the defendant acted with desire to cause a breach of contract, or with substantial certainty that its conduct ... would result in a breach of contract.
14 Adaptante did not by his alleged misconduct intend to cause a breach of the franchise agreements between the plaintiff and B & G Foods.
(My emphasis.)
[24] Similarly, in Ontario Store Fixtures Inc. v. Mmmuffins Inc. et al., [1989] O.J. no 1357, a case relied upon by SIU and Gralewicz, it is clear from a reading of the following extract, at pages 2 and 3 of 5, that although the Court purports to outline the elements constituting the tort of intentional interference with contractual relations, the Court was seized with allegations of inducement to breach specific contracts and really identified the element governing that latest tort:
The plaintiff alleges in the statement of claim that it has suffered damages as a result of the failure of the corporate defendant to pay for goods delivered and services rendered. Additionally, the plaintiff alleges that the defendant, Bregman, as an officer, director and the directing mind of the corporate defendant, intentionally induced those breaches of contract between the plaintiff and the corporate defendant.
This matter was the subject of a previous motion before Austin J. on January 26, 1988, when he was asked to strike para. 6 of the original statement of claim. That claim alleged that on the occasions on which the corporate defendant wrongfully withheld or delayed payment to the plaintiff, it had done so "at the urging and direction of the defendant, Bregman, who has thereby caused and induced the corporate defendant to breach its agreement with the plaintiff, to pay for goods delivered and services rendered". Austin J. ordered that para. 6 of the statement of claim as outlined above be struck out with leave to amend, without prejudice to the defendants to move for further particulars.
An amended statement of claim was delivered in which it is now alleged that the breach of contract had been at the urging and direction of the defendant, Bregman, "acting without bona fides and for his own purposes". The defendant sought particulars by letter dated March 16, 1988. Some 15 months later the plaintiff responded, stating that the defendant, Bregman, was the controlling mind of the corporate defendant, that the alleged lack of bona fides related to the fact that the defendant, Bregman, knew of the existence of the contracts between the plaintiff and the corporate defendant and that his actions by design interfered with the performance of the contracts. Further, the plaintiff stated that the personal liability of corporate directors or officers arising from allegations of mala fides could only be determined on the evidence at trial.
The issue in this motion is whether the plaintiff has properly pleaded facts which set out all of the elements of the tort of intentional interference with contractual relations. The elements of this tort include the following: (1) an enforceable contract; (2) knowledge of the plaintiff's contract; (3) an intentional act on the part of the defendant to cause a breach of that contract; (4) wrongful interference on the part of the defendant, and (5) resulting damage.
(My emphasis.)
[25] The fact however that different economic interference torts do exist at common law, that the test for interference with contractual relations is the same as for interference with economic interests, and the fact that a distinction needs apparently to be drawn between, on one hand, the tort of interference with contractual relations or economic interests and, on the other hand, the tort of inducing breach of contract are apparent from the following extracts.
[26] Firstly, in Daishowa Inc. v. Friends of the Lubicon (1996), CarswellOnt. 1620, the Court expressed itself as follows:
The Economic Interference Torts
50 It is useful to describe each of the economic interference torts briefly.
51 The tort of intentional interference with contractual relations and economic interests requires the plaintiff to prove:
(1) an intention to injure the plaintiff;
(2) interference with another's method of gaining his or her living or business by illegal means; (See I.B.T., Local 213 v. Therrien [1960] S.C.R. 265 at 280.) and (emphasis in the original text)
(3) economic loss caused thereby.
52 The tort of inducing breach of contract requires the plaintiff to prove:
(1) the defendant's knowledge of the contract and its terms;
(2) the intention to procure a breach of the contract;
(3) conduct by which the defendant directly persuades or induces a third party to break a contract with the plaintiff;
(4) there must be a breach of contract; and
(5) the plaintiff must suffer damage.
(See Lumley v. Gye (1853), 2 El. & Bl. 216.)
(My emphasis.)
[27] Secondly, in G.H.L. Fridman, The Law of Torts in Canada, 2nd Ed., Carswell, 2002, an author incidentally relied upon by all three defendants by counterclaim, the author clearly establishes as follows, at pages 808-809, the distinction between the two categories of torts:
In Canada, courts have eagerly embraced the idea propounded by Lord Denning that liability should not be confined to situations where the defendant has induced or brought about a breach of contract. With one exception, various provincial courts have held that there can be liability even if no breach of contract has resulted from the acts of the defendant. Such liability has been referred to as "interference with contractual relations", or, perhaps more frequently, "interference with economic relations (or interests)," to distinguish this kind of liability from the "original tort of inducing a breach of contract" (a distinction the importance of which has been emphasised, since the original tort is narrower in scope than the newer one).
Objection to this development has been made by Twaddle J.A. of the Manitoba Court of Appeal in Merchants Consolidated Ltd. (Receiver of ) v. Canstar Sports Group Inc. The learned judge declared that the tort of interference with contract could not be committed unless there was an actual breach of contract. He refused to follow the lead given by Lord Denning in the Torquay Hotel case. It must be said, however, that Twaddle J.A. is in a minority. Many other Canadian judges when faced with this issue have made it clear that a breach of contract is not necessary if the other ingredients of the tort are established. There are: (a) interference with the plaintiff's trade or business, i.e., his economic interests; (b) the use of unlawful means; (c) the intent to injure the plaintiff; (d) damage suffered by the plaintiff.
Although the cases draw no sharp distinction, but speak generally of interference with contractual or economic relations or interests, it is possible to differentiate two kinds of situations. In one, the defendant interferes with an existing contract between the plaintiff and a third party without causing a breach in respect of which the third party could sue de plaintiff. In the other, the defendant acts in a manner that interferes with or disrupts the plaintiff's economic interests without reference to a particular contract already entered into by the plaintiff with a third party but by doing something that affects projected or intended contracts, or affects the plaintiff's economic situation generally.
(Citations omitted.)
[28] As indicated earlier, the cause of action pleaded by VMTL and Huneault in their counterclaim is not inducement to breach a contract but the tort of intentional interference with contractual relations.
[29] The three elements required to support said tort have been clearly set out by the Ontario Superior Court of Justice in WestJet Airlines Ltd. v. Air Canada, (2005) CarswellOnt. 2101, where at paragraph 25 the Court adopted, as follows, the test established in Daishowa, supra:
25 WestJet also includes in its action a claim for intentional interference with economic interests and a claim for conspiracy. The elements for the tort of intentional interference with economic interests are set out by the Court of Appeal in Lineal Group Inc. v. Atlantis Canadian Distributors Inc. (1998), 42 O.R. (3d) 157 (Ont. C.A.) wherein, at p. 159, the court quoted with approval from the Divisional Court's decision in Daishowa Inc. v. Friends of the Lubicon (1996), 27 O.R. (3d) 215 (Ont. Div. Ct.) at p. 230 as follows:
The tort of intentional interference with contractual relations and economic interests requires the plaintiff to prove:
(1) an intention to injure the plaintiff;
(2) interference with another's method of gaining his or her living or business by illegal means [citations omitted]; and
(3) economic loss caused thereby.
[original emphasis]
[30] This three element test was also approved by the Ontario Court of Appeal in Reach M.D. Inc. v. Pharmaceutical Manufacturers Assn. of Canada, (2003) CarswellOnt. 1944, where, at paragraph 44, the Court states:
44 Reach cannot succeed on its main ground of appeal merely by showing that the Committee's August 1990 ruling was unauthorized. Instead, it must show that this ruling amounted to the tort of intentional interference with economic relations. To establish this tort, Reach must prove three elements:
(i) PMAC intended to injure Reach,
(ii) PMAC interfered with Reach's business by illegal or unlawful means, and
(iii) As a result of the interference Reach suffered economic loss.
See Lineal Group Inc. v. Atlantis Canadian Distributors Inc. (1998), 42 O.R. (3d) 157 (Ont. C.A.).
[31] Even in the case of TDL Group Ltd relied upon by CSL, when the Court evaluated at paragraph 6 the tort of interference with economic relations (one of the two torts raised in that case), the Court therein retained the same approach as in WestJet, supra, and Reach M.D. Inc., supra:
Intentional Interference with Economic Relations
6 The tort of intentional interference with economic relations requires the plaintiff to prove:
1. an intention to injure the plaintiff;
2. interference with another's method of gaining his or her living or business by illegal means;
3. economic loss caused thereby.
Lineal Group Inc. v. Atlantis Canadian Distributors Inc. (1998), 42 O.R. (3d) 157 (Ont. C.A.), (application for leave to appeal to the S.C.C. dismissed, without reasons, October 14, 1999) [reported (1999), 249 N.R. 194 (note) (S.C.C.)].
[32] I agree with VMTL and Huneault's counsel that under the three element test of WestJet, there is no requirements herein that VMTL and Huneault had to plead that the three defendants by counterclaim had, inter alia, knowledge of any enforceable and specific contract between VMTL and its suppliers, nor that actions by same defendants resulted in the breach of specific contracts.
[33] For the purpose of this motion, I very much lean on the side of VMTL and Huneault in saying that they have in their counterclaim adequately pleaded the material facts to support the three elements of the test of WestJet.
[34] In that regard, VMTL and Huneault have sufficiently pleaded specific acts by specific individuals. In the present case, it is open to VMTL and Huneault to rely on upcoming discoveries to ascertain whether individuals other than those named already would have participated in the activities challenged.
[35] More particularly, as for the first element of the test, namely here an intention on the part of the defendants by counterclaim to injure VMTL and Huneault, I am satisfied if one refers to the summary of paragraphs 40, 42, 44 and 45, supra at paragraph 14, that the impugned counterclaim does contain the allegations required to meet this first element of the test, that is allegations that tend to establish that the defendants by counterclaim's acts were in some measure directed against VMTL and Huneault.
[36] The second element calls for an interference with another's method of gaining his or her living or business by illegal means. Here again I am satisfied that when one compares the activities that can be associated with the relevant paragraphs of the counterclaim (see paragraph 14, supra) with the situations dealt with by the Courts in Reach M.D. Inc., supra, Drouillard v. Cogeco Cable Inc. (2005) CarswellOnt 3527 and Daishowa, supra, the counterclaim under attack contains sufficient allegations that the scheme and activities allegedly planned by the defendants by counterclaim were improper and unwarranted and would therefore meet the second element of the test.
[37] The third element of the test requires economic loss caused thereby. The counterclaim is replete with allegations of damages: the ships were delayed, the Vessel was placed off hire by its charterers, the plaintiffs by counterclaim have incurred damages in the amount of $350,000 for delay and loss of business for 2006, with further loss of revenue to be assessed. In my appreciation, the element of economic loss has been sufficiently pleaded.
[38] SIU and Gralewicz tried to distance themselves from the impugned counterclaim by saying that the different situations raised for instance in paragraphs 41, 42 and 44 of the impugned counterclaim do not involve the plaintiff CSL along with SIU and Gralewicz, and that therefore paragraph 191(1) of the rules does not permit the counterclaim to stand against them. Paragraph 191(1) of the rules read:
| 191 (1) Where a defendant who counterclaims alleges that a person who is not a party to the action is liable to the defendant along with the plaintiff in respect of the subject-matter of the counterclaim, the defendant may join that person as a defendant to the counterclaim. (My emphasis.) |
191 (1) Lorsque le défendeur qui fait une demande reconventionnelle prétend qu'une personne qui n'est pas une partie à l'action principale a, comme le demandeur, une obligation envers lui à l'égard de la question visée par la demande reconventionnelle, il peut la constituer en défendeur reconventionnel. |
[39] Although SIU and Gralewicz might properly read paragraph 191(1) of the rules, I do not consider that when the counterclaim is read as a whole, and particularly when one pays attention to paragraphs 40 and 45 of the counterclaim, that it is fair and reasonable to consider, for instance, that paragraphs 40, 41, 42 and 44 are restricted to the involvement of SIU and Gralewicz to the exclusion of CSL.
[40] In that regard, paragraph 40 of the counterclaim alleges a three party conspiration to commit illegal actions. From there, one can see, as paragraph 41 expressly indicates, that the paragraphs that follow paragraph 40 are but examples of the more encompassing allegations of paragraph 40. In addition, if it was not clear already, paragraph 45 of the counterclaim reiterates the same understanding by providing that CSL conspired with SIU and Gralewicz in planning the actions described above in the counterclaim. Said paragraph 45 comes therefore to close the circle on the alleged three party conspiration.
[41] As to the adequacy per se of the allegation of conspiracy, I am satisfied that the counterclaim does plead the basic requirements of a pleading alleging conspiracy.
[42] Finally, the two notices of motion under study indicate as an alternative ground that no cause of action exists for intentional interference with contractual relations where the party alleging that a tort has been committed acknowledges that it allowed the conduct complained of to occur.
[43] However, said ground of attack was not developed by the defendants by counterclaim in their motion records nor was it addressed at all at the hearing. Therefore, for sake of clarity, the parties should consider this ground as moot and dismissed.
[44] Consequently, for the above reasons the motion to strike the counterclaim brought by CSL shall be dismissed, with costs. The same result must be achieved with respect to the similar motion moved by SIU and Gralewicz.
[45] CSL will have to serve and file its Response and Defence to the Counterclaim on or before June 6, 2006.
[46] SIU and Gralewicz will have to serve and file their Statement of Defence to the Counterclaim also on or before June 6, 2006.
[47] An order will issue accordingly.
"Richard Morneau"
Prothonotary
Montréal, Quebec
May 17, 2006
FEDERAL COURT
COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-2116-05
STYLE OF CAUSE: CANADA STEAMSHIP LINES INC.
v.
KENNETH WAYNE ELLIOTT ET AL.
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: April 24, 2006
APPEARANCES:
SOLICITORS OF RECORD:
| Borden Ladner Gervais Montréal, Quebec |
FOR THE PLAINTIFF (DEFENDANT BY COUNTERCLAIM)
|
|
| Lenczner Slaght Royce Smith Griffin Toronto, Ontario
Brisset Bishop Montréal, Quebec
|
FOR DEFENDANTS BY COUNTERLCAIM, SEAFARERS' INTERNATIONAL UNION and ROMAN GRALEWICZ
FOR DEFENDANTS (PLAINTIFFS BY COUNTERCLAIM), VOYAGEUR MARINE and FRED HUNEAULT |
|