Chapter 5 Questions
⚖️ CHAPTER 5 — Miscellaneous Torts
Affecting Business
⚖️ Case: DeJohnette Developments v Peacock Electronics
(Tort of Interference with Contractual Relations)
Scenario (from textbook):
DeJohnette Developments was constructing a recording studio and agreed to purchase $5,000,000
worth of sound equipment from Peacock Electronics Inc.
Jarrett Koln, a competitor who builds custom sound equipment, heard about the project but did not
know that DeJohnette had already signed a contract with Peacock. Koln sent a letter to DeJohnette
warning:
“You should not, under any circumstances, buy from Peacock. Although that company
has been around for years, the quality of its merchandise is vastly inferior to mine.”
DeJohnette knew this was true—studies showed Peacock’s products were second-rate—but decided to
honour the contract anyway. Peacock, angered that Koln interfered, sues for inducing breach of
contract.
I – Issue
Can Peacock successfully sue Koln for the tort of inducing breach of contract, given that Koln
discouraged the buyer from doing business but was unaware of the existing contract?
P – Principle
The tort of interference with contractual relations (inducing breach of contract) occurs when the
defendant:
1.​ Knew of a valid and enforceable contract between the plaintiff and a third party;​
2.​ Intentionally induced the third party to breach that contract;​
3.​ The third party breached the contract; and​
4.​ The plaintiff suffered loss as a result.​
Key points:
●​ The knowledge element is crucial. The defendant must be aware of the contract’s existence.​
●​ Merely persuading someone not to enter a future contract or offering competitive information
is not enough.​
●​ The act must involve malicious or reckless interference with an existing contractual
relationship.​
●​ Truthful statements or honest competition are generally protected.​
A – Application
Koln did not know that DeJohnette had already entered into a contract with Peacock. His statement
was made honestly and was factually correct—Peacock’s products were objectively inferior.
Even if DeJohnette had terminated the contract (which it didn’t), Koln’s lack of knowledge of the
existing contract would have defeated the claim, since intent to interfere cannot exist without
knowledge.
Furthermore, Koln’s conduct was legitimate competition, not deceitful interference. He did not use
threats, coercion, or unlawful means—he simply offered a business opinion to promote his own
product.
C – Conclusion
Peacock cannot succeed in an action for inducing breach of contract.
●​ Koln lacked knowledge of the contract (no intent to interfere).​
●​ His statement was truthful and part of normal competitive business conduct.​
●​ DeJohnette did not breach the contract anyway — the agreement was completed.​
✅ Final Result: No liability for Koln.​
The tort of interference with contractual relations requires both knowledge and actual breach,
neither of which occurred.
🧠 Facts & Rules to Remember for Exam
Element
What Must Be Proven
Example / Explanation
Knowledge
Defendant knew about the existing contract
Koln did not know → fails test
Intent
Purposefully induced a breach
Koln gave opinion, not inducement
Breach
The contract was actually broken
DeJohnette honoured the contract
Damage
Plaintiff lost money
No loss, so no damages
Defences
Justified competition; truth; lack of intent
All apply to Koln
Exam Tip:
If a midterm question mentions “competitor, letter, warning, or advice” → check for knowledge of a
contract.​
Without it, the correct answer is no liability for interference.
1️⃣ Interference with Contractual Relations
Scenario Example:​
A rival company learns that one of your employees has a binding two-year contract. The rival
persuades that employee to break the contract early by offering more money. Your company loses a
valuable contract and sues the rival for interference with contractual relations.
Issue:
Can a business be held liable for intentionally inducing another party to breach an existing contract?
Principle:
To establish the tort of interference with contractual relations, the plaintiff must prove:
1.​ A valid and enforceable contract existed.​
2.​ The defendant knew about the contract.​
3.​ The defendant intended to cause a breach.​
4.​ The contract was actually breached because of the defendant’s interference.​
5.​ The plaintiff suffered damages as a result.​
Defences include justification (e.g., protecting a legitimate business interest) or lack of
intent.​
Application:
The rival was aware of the employment contract, deliberately induced the breach, and benefitted from
the employee’s departure. The conduct was intentional and without justification — it harmed the
plaintiff’s business expectations.
Conclusion:
The rival is liable for interference. The plaintiff can recover lost profits or the value of the breached
contract.
2️⃣ Intimidation
⚖️ Case: Federal Government & Cardinal
(Tort of Intimidation – Unlawful Threat Causing Economic Loss)
Scenario (from textbook):
The federal government operated a program leasing land to Aboriginal band members for
commercial use.​
Cardinal, a local supplier, entered into agreements to sell building materials to those lessees.
When government officials learned of Cardinal’s arrangements, they told the band members:
“If you continue to do business with Cardinal, you may lose your land leases.”
Fearing the loss of their leases, the lessees refused to deal with Cardinal.​
As a result, Cardinal lost his business contracts and sued the federal government for intimidation.
I – Issue
Did the federal government commit the tort of intimidation by threatening the lessees, thereby
causing economic loss to Cardinal?
P – Principle
The tort of intimidation occurs when:
1.​ The defendant makes a threat to commit an unlawful act (e.g., breach of contract, abuse of
power, illegal action);​
2.​ The threat causes a third party or the plaintiff to act (or refrain from acting);​
3.​ The plaintiff suffers a financial loss as a result.​
There are two forms:
●​ Two-party intimidation: The threat is made directly to the plaintiff.​
●​ Three-party intimidation: The threat is made to a third party, and that third party’s coerced
act causes loss to the plaintiff.​
Key rule: the threat must be unlawful, not merely aggressive or competitive.
A – Application
Here, the federal government officials told the band members they would lose their leases if they
continued dealing with Cardinal.​
That was an unlawful threat, because the government had no legal authority to revoke leases based
on who the lessees purchased supplies from.
The band members acted under coercion — they reasonably feared the loss of their livelihood — and
therefore stopped purchasing from Cardinal.​
Cardinal’s loss was a direct result of that intimidation.
Even though the government did not physically force anyone, the abuse of power through an illegal
threat is enough to satisfy the test for intimidation.
C – Conclusion
The federal government is liable for the tort of intimidation.​
Its officials unlawfully threatened the band members, causing them to act against their will and
inflicting economic harm on Cardinal.
✅ Remedy:​
Cardinal is entitled to compensatory damages for lost profits and possibly aggravated damages for
the abuse of authority.
⚖️ Case: Ash Inc. & Izzy Supplies Ltd. v Roxel Corp
(Tort of Conspiracy – Unlawful-Means Conspiracy in a Competitive Market)
Scenario (from textbook):
The cement industry is dominated by a few major players, including Ash Inc. and Izzy Supplies
Ltd.​
When Roxel Corp., a new competitor, entered the market with advanced technology and a
superior product, Ash and Izzy became concerned about losing national profits.
They made an agreement to sell cement in the Maritimes at drastically reduced prices to
undercut Roxel.​
The plan succeeded — Roxel could not compete with the artificially low prices and was driven
out of business.​
Their agreement was illegal under the Competition Act because it involved regional price
discrimination.
Roxel sues Ash and Izzy for the tort of conspiracy.
I – Issue
Can Roxel successfully sue Ash and Izzy for the tort of conspiracy, given that their joint pricing
strategy was unlawful and designed to eliminate Roxel from the market?
P – Principle
The tort of conspiracy arises when:​
1️⃣ Two or more persons agree on a course of conduct;​
2️⃣ Their predominant purpose is to injure the plaintiff or they use unlawful means that
foreseeably cause harm; and​
3️⃣ The plaintiff suffers economic loss.
●​ If the parties’ dominant motive is to injure, liability exists even if the means are lawful.​
●​ If the parties use unlawful means, liability arises even if the injury to the plaintiff was
only incidental to their goal.​
(Crofter Hand Woven Harris Tweed Co. v Veitch (1942); Canada Cement LaFarge Ltd. v
British Columbia Lightweight Aggregate Ltd. (1983)).​
A – Application
Ash and Izzy entered into an agreement — satisfying the combination requirement.​
Their conduct (regional price discrimination) was unlawful under the Competition Act,
satisfying the unlawful-means element.
Even if their main motive was to protect national profits, they knowingly used illegal conduct
that predictably caused Roxel’s economic destruction.​
Roxel suffered clear financial loss — it was forced out of the industry.
Therefore, all elements of unlawful-means conspiracy are met:
●​ Concerted action;​
●​ Illegal pricing agreement;​
●​ Foreseeable economic harm to a specific competitor.​
C – Conclusion
✅ Roxel can successfully sue Ash Inc. and Izzy Supplies Ltd. for conspiracy.​
The companies engaged in an unlawful pricing agreement that intentionally and foreseeably
destroyed Roxel’s business.​
They are jointly liable for Roxel’s economic losses.
⚖️ Case 5 – Alltech Corporation
(Private Nuisance – Unreasonable Interference with Property Use)
Scenario (from textbook):
Alltech Corporation operated a chemical-processing facility. Over several years, odours and
airborne pollutants drifted into nearby warehouses and offices, forcing neighbouring businesses
to close windows and disrupting their work. The neighbours sued Alltech for nuisance.
I – Issue
Is Alltech liable for private nuisance even though it operates under valid environmental
permits?
P – Principle
Private nuisance occurs when the defendant’s use of land unreasonably interferes with the
plaintiff’s use or enjoyment of adjoining property.​
Key factors:
●​ Nature, duration, and severity of the interference;​
●​ Character of the neighbourhood;​
●​ Utility of the defendant’s conduct;​
●​ Sensitivity of the plaintiff.​
Defences: statutory authority, consent, or reasonable conduct in context.​
A – Application
Alltech’s operation was lawful but produced persistent and substantial odours and particles
beyond ordinary industrial tolerance. The interference was continuous and affected normal
business activities. Although it held environmental permits, that does not immunize it from
nuisance if actual interference is unreasonable.
C – Conclusion
✅
Alltech Corporation is liable for private nuisance.​
Remedy: damages for business disruption and an injunction requiring pollution controls.
⚖️ Case 6 – Hamilton House
(Rylands v Fletcher – Strict Liability for Escape of Dangerous Substance)
Scenario (from textbook):
Hamilton House, an apartment complex, installed a rooftop water-storage tank. Due to faulty
installation, the tank burst and flooded adjoining premises, destroying property in the
neighbouring building. The owner of the neighbouring building sued.
I – Issue
Is Hamilton House strictly liable for damage caused by the escape of stored water, even if it was
not negligent?
P – Principle
Under Rylands v Fletcher (1868), liability arises when a person:
1.​ Brings onto land something likely to do mischief if it escapes;​
2.​ Makes a non-natural use of the land;​
3.​ The substance escapes and causes damage.​
No need to prove negligence or intent.​
Defences: act of God, plaintiff’s fault, consent, statutory authority.​
A – Application
Hamilton House accumulated a large quantity of water in a rooftop tank—a non-natural use for
an urban building. The tank burst, flooding neighbouring property. The escape was directly
linked to Hamilton’s use; none of the defences apply.
C – Conclusion
✅
Hamilton House is strictly liable under Rylands v Fletcher.​
Remedy: full compensation for property loss, regardless of negligence.
⚖️ Case 9 – Dina Papadopoulos / Metro Union Journalist
(Defamation – Publication of False Statement)
Scenario (from textbook):
A journalist published an article accusing a local business of underpaying immigrant workers
and evading taxes. The allegations were false, and the business’s reputation suffered severely.
I – Issue
Can the business recover damages for defamation, or is the journalist protected by freedom of
expression?
P – Principle
Defamation requires:
1.​ A false and defamatory statement;​
2.​ That identifies the plaintiff;​
3.​ Publication to at least one third party;​
4.​ Harm to reputation.​
Defences:​
●​ Truth (justification)​
●​ Fair comment (opinion on public interest)​
●​ Qualified privilege (duty to inform)​
●​ Responsible communication (accurate, balanced reporting).​
A – Application
The article alleged criminal and unethical conduct—serious reputational harm. The statements
were presented as facts, not opinions, and were unverified. Since they were false and made
recklessly, no defence applies. Malice further defeats qualified privilege.
C – Conclusion
✅
The journalist and publisher are liable for defamation.​
Remedy: compensatory and aggravated damages for reputational loss.
⚖️ Case 12 – Censural Media Co.
(Interference + Defamation – Economic Harm through False Public Statements)
Scenario (from textbook):
Censural Media Co. ran a campaign accusing a rival advertising firm of falsifying client data.
The statements were false and intended to drive customers away.
I – Issue
Is Censural Media liable for both defamation and interference with business relations?
P – Principle
Publishing false statements that cause others to stop doing business with the plaintiff can
constitute:
●​ Defamation, if reputation is harmed;​
●​ Interference with economic relations, if falsehoods intentionally cause loss.​
Both torts may overlap; damages are awarded for reputational and economic loss.
A – Application
Censural’s campaign was deliberate and false, directly causing clients to withdraw. The intent
was to harm, satisfying both torts. No defence of truth or fair comment applies.
C – Conclusion
✅
Censural Media Co. is liable for defamation and interference with business relations.​
Remedy: general damages for reputation and special damages for lost contracts.
🧠 Summary Table – Chapter 5 Major Business Torts
Tort
Elements / Test
Example Case
Exam Reminder
Intimidation
Unlawful threat →
coerced action → loss
Federal Gov’t &
Cardinal
Threat must be unlawful,
not just pressure
Interference with
Contract
Knowledge + Intent +
Breach + Loss
DeJohnette v
Peacock
No knowledge → no
liability
Conspiracy
Agreement + Purpose to
injure + Loss
Census
Manufacturing
Multiple parties acting
together
Defamation
False statement +
Publication + Harm
Dina
Papadopoulos
Check for defences
(truth, fair comment)
Nuisance
Unreasonable
interference with
use/enjoyment
Alltech Corp.
“Reasonableness”
depends on context
Rylands v Fletcher
Escape of dangerous
substance → damage
Hamilton House
Strict liability, no need
for negligence
Interference +
Defamation Mix
False public claims
harming contracts
Censural Media
Co.
Overlap = claim both
torts