• Ellen Vandergrift

"Poster child" for the tort of unlawful means civil conspiracy

Canadian Hedge Watch Inc. v. Street, 2015 ONSC 454, identified by the chambers judge as a "poster child " for the tort of unlawful means conspiracy, provides a quick tour through some of the other business torts and gives an idea of the complexity of such cases: the parties' factum materials on this interlocutory application exceeded 120 pages.


Facts

The plaintiff produced the Niagara Institutional Dialogue Conference (the NID Conference), the premier conference in Canada for the institutional investor and pension industry . Two of the defendants, Holt and Lett, were involved from the beginning in establishing the NID Conference. They were not employees of the plaintiff, but agreed to provide their services by sitting on the advisory board for the conference, and had access to confidential information about the conference. The other defendant, Street, was the plaintiff’s vice president of sales, a member of the advisory board and the face of the conference to attendees and sponsors. Her contract with the plaintiff contained confidentiality and non-solicitation clauses.


In early 2014, the Ontario Securities Commission brought proceedings against the CEO of the plaintiff concerning an unrelated investment that pre-dated the creation of the conference. The defendants claim that these proceedings were fatal to the NID Conference and in early July, 2014, the defendants met and agreed to take over the conference through another entity.

Street resigned from the plaintiff on August 13, 2014. Lett told the conference’s existing sponsors about the OSC proceedings and said the NID Conference might not be held in 2015 as a result, despite knowing that plans were underway. Lett led the hotel which had hosted the NID Conference in the past that he was booking on behalf of the conference in order to take over its reservation.


Street admitted that, despite the express terms of her contract, she left with computerized customer and sponsor lists and other documents of the plaintiff that included not just names, but contact information, pricing, negotiated discounts that became the starting point for their own lists. They copied word-for-word the operative wording for their sponsorship contracts directly from the plaintiff's contract forms. They knew and used the plaintiff's pricing information as to which sponsors needed which deals in order to sign up. Street solicited only new sponsors while the other defendants solicited the plaintiff's existing sponsors.


They called their company "The Alliance for Institutional Dialogue" and told sponsors and attendees that they were building on the strong tradition established by Lett, Street and Holt at the NID Conference. At the time of the application, they had recruited six of the 2014 NID Conference sponsors. They bought several internet sites to direct the plaintiff’s internet traffic to the defendant. As set out in a smoking gun e-mail from Lett to Street:


Holt tied up www.Instititionaldialogue.org and .net so if anybody puts the wrong address in they will be directed to our website. Sneaky.


Decision


The chambers judge found that:

  • There was strong prima facie case that Street breached her contract with the plaintiff;

  • There was a serious issue to be tried as to whether Street owed a fiduciary duty as a “key employee” of the plaintiff;

  • The other defendants knew and participated in Street's conduct and arguably induced her to breach her duties to the plaintiff, whether grounded in contract or fiduciary duty;

  • There was a serious issue to be tried as to whether Lett and Holt, as members of the advisory board of the plaintiff were under an implied duty to act in the best interests of and avoid conflicts of interest vis-à-vis the plaintiff;

  • There was a strong prima facie case of unlawful interference with economic interests because the defendants made false statements to third parties with the intent to injure the plaintiff; and

  • There was a serious issue to be tried as to whether the defendants succeeded in passing-off their conference as the plaintiff’s by causing confusion in the minds of sponsors and the market place: they used a similar name, the same hotel, the same date, some of the plaintiff's business documentation, and referred to their history and traditions which in reality were the plaintiff's history and traditions.

With respect to the tort of civil conspiracy, the chambers judge found the following:


42 This case is a poster child for the tort of civil conspiracy by unlawful means. There is discrete and express evidence showing a strong prima facie case of all of the classic elements of the tort. There is clear evidence of agreement; overt acts to carry out the agreement; unlawful means used; the acts were directed at the plaintiff; they were done knowing that as a result the plaintiff would likely be injured; and it was indeed injured by those acts. See Canada Cement Lafarge Ltd. v. British Columbia Lightweight Aggregate, [1983] 1 S.C.R. 452


He concluded:


51 … What the defendants appear prima facie to have done is to set out to unlawfully take that which is not theirs through a conspiracy that included breaching Ms. Street's contract, passing themselves off as the plaintiff, bad mouthing the plaintiff, interfering in its relations with third parties, using its confidential information, and hurting it so that only the defendants' conference can proceed….


Remedy


On these facts, the chambers judge held that the balance of convenience favoured the granting of an interlocutory injunction to protect the plaintiff from suffering irreparable harm as a result of continuing tortious conduct:


47 In this case, to confine the plaintiff to a remedy in damages would be most unjust and inadequate. The defendants cannot pay. The calculation is ephemeral and uncertain being bound up in the value of reputation and goodwill that is at the very core of why conferences exist as a marketing tool. The potential spillover effect from the loss of clients and sponsors from the premier NID Conference into other aspects of the plaintiff's business will be very difficult and expensive to prove. Moreover, allowing the defendants to succeed in their unlawful design is contrary to any conception of fairness. It is not clear that the NID Conference can recover from the harm inflicted upon it already. However, saying to the plaintiff "Too bad; so sad; see you at trial" is unacceptable. Doing so would vindicate the defendants' surreptitious breaches of duty and intentional torts.


The chambers judge queried whether the injunction might end the case, and encouraged the parties to resolve the case by summary judgment if it did not.

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