Damages "at large" for inducing breach of contract

In Northbridge Consulting Services Inc. v. Quigley, 2014 NSSC 361, Northbridge sued three former employees for breach of contract, and the corporate defendant, Southridge Technical Services Ltd., for inducing breach of contract on the part of the former employees. Northbridge, an Ontario company in the business of assisting companies in the preparation of the technical and financial aspects of making claims for a tax incentive program, hired the individual employees to expand its business in the Atlantic region. While still employed with Northbridge, the individual employees incorporated Southridge to conduct the same business and solicited Northbridge's clients, capitalizing on the similarity in names.

The defendants did not contest a motion for summary judgment, and consented to the following order:

(a) That the individual Defendants, Quigley, Grant and Murray breached expressed and implied terms of their employment contract with Northbridge, and,

(b) That the Defendant, Southridge, induced the Defendants Quigley, Grant, and Murray to breach the terms of their employment contract with Northbridge.

Before addressing damages, the judge noted, at para. 14:

The word "furtive" is defined as done in a quiet and secret way to avoid being noticed, or done by stealth, or obtained underhandedly. Furtive is the word that best describes the defendants actions while they were Northbridge employees. This kind of behaviour left Northbridge in a very difficult spot when it came to garnering the evidence needed to pursue this action and this assessment of damages. The required evidence was in the possession of the defendants who resisted production.

For breach of contract on the part of the individual defendants, Northbridge was awarded the profit on all Southridge invoices signed by them while they were employed by Northbridge in the amount of $115.031.62, as well as $50,800 for loss of future profits.

Northbridge sought $200,000 from Southridge for damages at large as a result of Southridge's inducement of breach of contract. Southridge argued there was no basis for this number, and as such, no damages were warranted.

Northbridge cited the following from the text Remedies in Tort in support of its claim:

The plaintiff is entitled to recover damages even where he also recovers damages from the contract-breaker. The two actions are based on separate heads, and damages in tort will be awarded despite the plaintiff's recovery in contract. Damages in tort will be awarded for all loss flowing from the tortuous act; the plaintiff is not limited to what could be recovered in an action in contract between the contracting parties. The damages include those reasonably foreseeable to the defendant, including losses on other contracts which the defendant could foresee. Damages for inducing breach of contract are 'at large,' and accordingly take into account not only the pecuniary, but the non pecuniary damages for such matters as injured feelings, loss of reputation, and the nature of the conduct.

The decision also references, in a quote from a recent Ontario case, the leading case of Drouillard v. Cogeco Cable Inc., 2007 ONCA 322, which states:

42 Damages for the tort of inducing breach of contract are "at large." As set out by Lord Hailsham in Broome v. Cassell & Co. Ltd., [1972] A.C. 1027 at 1073 (H.L.):

The expression "at large" should be used in general to cover all cases where awards of damages may include elements for loss of reputation, injured feelings, bad or good conduct by either party, or punishment, and where in consequence no precise limit can be set in extent.

The judge awarded $150,000 as damages against Southridge for inducing breach of contract on the basis that Southridge had been able to exploit the opportunity to develop the Atlantic market that had been identified by Northbridge, at Northbridge's expense. As stated by the judge at para. 31: "...Northbridge lost the long term positive impact that it could have realized for many years to come."

The $150,000 included a $50,000 punitive component, and the judge declined to order any further punitive damages, despite the deceitful and manipulative conduct of the defendants.

As noted by the judge in this case, the extent of loss is often difficult to prove in business tort litigation because of the nature of the wrong committed. Where damages for breach of contract are difficult to prove, a claim for damages "at large" for inducing breach of contract provides an additional and more flexible way to seek appropriate compensation.