Drouillard v. Cogeco Cable Inc.

86 O.R. (3d) 431

Court of Appeal for Ontario,

O'Connor A.C.J.O., Feldman and Rouleau JJ.A.

May 1, 2007

Damages -- Torts -- Inducing breach of contract -- Plaintiff's employer withdrawing employment offer after defendant told employer it did not want plaintiff working on projects for defendant -- Defendant liable to plaintiff for inducing breach of contract -- Trial judge awarding plaintiff damages for past loss of income and an additional $62,465 for "at large" damages based on plaintiff's humiliation, embarrassment, loss of reputation and loss of his chosen career -- Trial judge erring only in failing to deduct income actually earned from damages for past loss of income -- Trial judge exercising discretion reasonably in not awarding punitive damages.

Torts -- Inducing breach of contract -- Plaintiff's employer withdrawing employment offer after defendant told employer it did not want plaintiff working on projects for defendant -- Defendant liable to plaintiff for inducing breach of contract.

Torts -- Intentional interference with economic relations -- Plaintiff's employer withdrawing employment offer after defendant told employer it did not want plaintiff working on projects for defendant -- Tort of intentional interference with economic relations not made out -- Failure by defendant to comply with internal policy of preventing contractors from using particular individuals on projects for defendant only where it had reasonable cause to do so not constituting unlawful act.

The plaintiff was a cable and fibre optic installer. He worked for the defendant in Windsor until 1999, when he resigned to take employment in the United States. In 2001, the plaintiff returned to Windsor and accepted an employment offer from Mastec, a cable industry contractor that was working on a large upgrade project for the defendant. When the defendant informed Mastec that it would not allow the plaintiff to work on projects for it, Mastec told the plaintiff that unless he agreed to commute and work on projects in London or Kitchener, he would not have a job. Because of substantial family commitments, the plaintiff was not prepared to accept the alternative assignment, and his employment offer was revoked. Several months later, Mastec rehired the plaintiff and assigned him to a project with the defendant. Almost immediately, his employment was terminated when the defendant again told Mastec that it would not allow the plaintiff to work on any of its equipment. The plaintiff was unable to obtain employment with another Windsor cable industry contractor due to rumours that contractor had heard about him. Unable to secure employment in his field in Windsor, he retrained and obtained employment as a railway conductor. He was laid off in 2004. The plaintiff's action against Mastec for damages for wrongful dismissal was settled. The plaintiff sued the defendant for a declaration that it had wrongfully interfered with his employment and for damages. The action was allowed, and the trial judge awarded the plaintiff damages for lost income in the amount of $135,535 and an additional $62,465 for "at large" damages based on the plaintiff's humiliation, embarrassment, loss of reputation and loss of his chosen career. The defendant appealed. The plaintiff cross-appealed, arguing that the trial judge should have awarded punitive damages. [page432]

Held, the appeal should be allowed in part; the cross-appeal should be dismissed.

The trial judge erred in finding the defendant liable to the plaintiff for intentional interference with economic relations. The three elements which had to be proven to make out that tort were: intent to injure the plaintiff; interference with the plaintiff's business by illegal or unlawful means; and an economic loss on the part of the plaintiff. The second element was not made out on the facts of this case. The breach by the defendant of an internal policy to the effect that if it wanted to prevent a contractor from using a certain individual on one of its projects, it could so instruct the contractor if there was reasonable cause to do so, did not amount to an unlawful act. Nothing in the record suggested that either the defendant or its employees were not at liberty to act contrary to the defendant's policy or that the plaintiff or Mastec had relied on that policy such that they could require the defendant to respect it.

The trial judge's factual findings supported a conclusion that the defendant induced Mastec to breach its employment contract with the plaintiff. The plaintiff had to prove the four elements of the tort of inducing breach of contract, which are: the plaintiff had a valid and enforceable contract with Mastec; the defendant was aware of the existence of that contract; the defendant intended to and did procure the breach of contract; and as a result of the breach, the plaintiff suffered damages. All of those elements were made out. Although there was no direct evidence that the defendant wanted Mastec to terminate the plaintiff's employment without reasonable notice, it was clear from the trial judge's findings that he was satisfied that the defendant was not concerned about the terms of the plaintiff's termination and that the defendant acted intending to cause a breach of the plaintiff's employment contract, or with substantial certainty that its conduct would result in a breach. That finding was open to the trial judge. A defence of justification was not open to the defendant on the facts of this case. The trial judge found that the defendant had meddled with and violated the plaintiff's employment agreement with Mastec, had acted contrary to its corporate policy, and that its conduct was malicious and punitive. According to the trial judge, there was also evidence of malice or unfair dealing on the part of the defendant in acting against the plaintiff's attempt to obtain employment with Mastec. Nowhere did the trial judge suggest that the defendant's actions were justified and, on the facts of this case, there was no basis for making such a finding.

The trial judge did not err in his assessment of damages, with one exception. The damages for lost income should have been reduced by the income which the plaintiff actually earned for the period in question. The trial judge did not err in failing to award punitive damages. The trial judge's findings of fact could provide the basis of an award of punitive damages. While the trial judge did not specifically state why he was not awarding punitive damages, it was clear that he was well aware of the impact of the defendant's conduct on the plaintiff. He took that conduct into account in assessing the "at large" damages. The exercise of his discretion to award "at large" damages rather than punitive damages was reasonable.

APPEAL AND CROSS-APPEAL from the judgment of Gates J. of the Superior Court of Justice, dated July 26, 2005, in an action for damages for wrongful interference with employment.

Cases referred to Reach M.D. Inc. v. Pharmaceutical Manufacturers Assn. of Canada (2003), 2003 27828 (ON CA), 65 O.R. (3d) 30, [2003] O.J. No. 2062, 227 D.L.R. (4th) 458, 25 C.P.R. (4th) 417, 17 C.C.L.T. (3d) 149 (C.A.), distd Other cases referred to Broome v. Cassell & Co. Ltd., [1972] A.C. 1027 (H.L.); Cutsforth v. Mansfield Inns, [1986] 1 W.L.R. 558 (Q.B.D.); [page433] D.E. and J.C. Hutchison Contracting Co. v. Windigo Community Development Corp., [1998] O.J. No. 4884, 80 O.T.C. 16, 84 A.C.W.S. (3d) 54 (Gen. Div.); Dimbleby & Sons Ltd. v. National Union of Journalists, [1984] 1 W.L.R. 67, [1984] 1 All E.R. 117 (C.A.); Dirassar and James v. Kelly, Douglas & Co. Ltd. (1966), 1966 524 (BC CA), 59 D.L.R. (2d) 452, 58 W.W.R. 257 (B.C.C.A.); Emerald Construction Co. Ltd. v. Lowthian, [1966] 1 W.L.R. 691, [1966] 1 All E.R. 1013 (C.A.); Fasson Canada Inc. v. Mediacoat Inc. (Trustee of), [1996] O.J. No. 3532 (C.A.), affg [1993] O.J. No. 2228, 42 A.C.W.S. (3d) 989 (Gen. Div.); Posluns v. Toronto Stock Exchange and Gardiner, 1968 6 (SCC), [1968] S.C.R. 330, [1968] S.C.J. No. 19, 67 D.L.R. (2d) 165, affg 1965 32 (ON CA), [1966] 1 O.R. 285, [1965] O.J. No. 1091, 53 D.L.R. (2d) 193 (C.A.), affg 1964 199 (ON SC), [1964] 2 O.R. 547, [1964] O.J. No. 792, 46 D.L.R. (2d) 210 (H.C.J.); Sengmueller v. Sengmueller (1994), 1994 8711 (ON CA), 17 O.R. (3d) 208, [1994] O.J. No. 276, 111 D.L.R. (4th) 19, 1 L.W.R. 46, 25 C.P.C. (3d) 61, 2 R.F.L. (4th) 232 (C.A.); Thermo King Corp. v. Provincial Bank of Canada (1981), 1981 1731 (ON CA), 34 O.R. (2d) 369, [1981] O.J. No. 3136, 130 D.L.R. (3d) 256 (C.A.); Torquay Hotel Co. Ltd. v. Cousins, [1969] 1 All E.R. 522, [1969] 2 W.L.R. 289 (C.A.); Waxman v. Waxman, 2004 39040 (ON CA), [2004] O.J. No. 1765, 186 O.A.C. 201, 44 B.L.R. (3d) 165 (C.A.) [Leave to appeal to S.C.C. refused [2006] S.C.C.A. No. 486] Authorities referred to Fleming, J.G., The Law of Torts, 9th ed. (Sydney: LBC Information Services, 1998) Klar, L.N., Tort Law, 3rd ed. (Toronto: Carswell, 2003) Osborne, P.H., Law of Torts, 2nd ed. (Toronto: Irwin Law, 2003)

Adrian Miedema, for appellant. Raymond Colautti and Anita Landry, for respondent.

The judgment of the court was delivered by

[1] ROULEAU J.A.: -- In February 2001, Drouillard received an employment offer from Mastec Canada ("Mastec"), a cable industry contractor, to work on one of Mastec's projects which involved internet upgrades for Cogeco Cable Canada Inc. ("Cogeco") in the Windsor area. Upon being advised by Cogeco that it did not want Drouillard working on any of its equipment, Mastec withdrew its employment offer from Drouillard who was at Mastec's office in anticipation of signing his employment contract. In May 2001, Drouillard was hired by Mastec but was terminated for the same reason almost immediately after starting work.

[2] The trial judge found that Cogeco committed the tort of unlawful interference with Drouillard's economic relations and ordered Cogeco to pay $200,000 in damages together with pre- judgment interest and costs. Cogeco has appealed liability, the [page434] quantum of damages, and the quantum of costs. Drouillard has cross-appealed seeking punitive damages and damages for future lost income.

[3] For the reasons that follow, I would dismiss Cogeco's appeal as to liability but would vary the quantum of the damages award. I would dismiss the cross-appeal. In light of my decision of those issues, I would not decide the appeal as to costs pending the receipt of further submissions or agreement between the parties.

Facts

[4] Cogeco is a large cable and internet services provider whose territory includes the Windsor area. Drouillard resides in Windsor and is a skilled cable and fibre optic installer. He worked for Cogeco until 1999, when he resigned to take employment in the United States.

[5] In 2001, Drouillard returned to the Windsor area where he sought and obtained an employment offer from Mastec, a cable industry contractor that was working on a large upgrade project for Cogeco. He was offered employment with Mastec in February 2001 and told to report for work. Upon arriving at Mastec's offices, Mastec advised him that it could not let him work in Windsor on Cogeco projects. Unless he agreed to commute and work on projects in London or Kitchener he could not have the job. Because of the time and costs involved in commuting, as well as family obligations in the Windsor area, Drouillard was not prepared to accept the alternative assignment and his employment offer was revoked.

[6] Drouillard did not understand why he was being prevented from working on Cogeco's equipment. He retained a lawyer who pursued the matter with Cogeco. In May 2001, believing the problems with Cogeco had been resolved, Mastec hired Drouillard. Drouillard's first assignment was on a Cogeco project. Almost immediately after commencing work, his employment was terminated as a result of a call from Cogeco to Mastec. Cogeco advised Mastec that it would not allow Drouillard to work on any of its equipment.

[7] Drouillard also sought employment with another Windsor cable industry contractor, Silverline Cable. Due to rumours it had heard about him, Silverline Cable declined to hire him. Unable to secure employment in his field in the Windsor area, Drouillard retrained and was employed as a conductor by Canadian Pacific Railway in February 2004. He worked full-time for Canadian Pacific Railway until about August 2004, at which [page435] point he was laid off. He was still on layoff at the time of the trial and was not expected to return to work for Canadian Pacific Railway before 2005.

[8] Drouillard sued Mastec for wrongful dismissal and breach of contract and sued Cogeco for a declaration that it had wrongfully and/or tortiously interfered with his employment and for damages. The action against Mastec was settled before trial.

[9] The trial judge awarded judgment in favour of Drouillard. He found that Cogeco had engineered Drouillard's termination by Mastec and that its conduct was malicious and punitive. The trial judge rejected Cogeco's evidence wherein Cogeco suggested that it did not want Drouillard working on its equipment because of his attitude and because his presence on Cogeco's site would be bad for morale. The trial judge found that Drouillard was a competent and able technician and that there was no reasonable basis for Cogeco's refusal to allow Mastec to assign Drouillard to Cogeco projects.

[10] The trial judge also found that the three elements of the tort of unlawful interference with economic relations had been made out. Drouillard established that Cogeco intended to injure him, that Cogeco interfered with his employment by illegal or unlawful means, and that Drouillard suffered economic loss as a result of Cogeco's actions.

[11] The trial judge went on to find that due to Cogeco's dominant position in the Windsor area, Drouillard was unable to find employment in his field. He concluded that had Cogeco not prevented him from working for Mastec, Drouillard would have earned $137,535 for the period from February 2001 to February 2004. The trial judge therefore awarded Drouillard this amount for lost income. The trial judge also found that Drouillard had suffered humiliation, embarrassment, loss of reputation and loss of his chosen career. The trial judge awarded an additional $62,465 for "at large" damages.

Issues

[12] The issues raised on this appeal and cross-appeal are as follows:

(1) Did the trial judge err in finding Cogeco liable to Drouillard in tort?

(2) Was the trial judge's assessment of damages correct?

(3) Should the trial judge have awarded punitive damages? [page436]

(4) Did the trial judge err in awarding substantial indemnity costs without providing the parties with an opportunity to make submissions on the appropriate scale of costs?

1. Did the trial judge err in finding Cogeco liable to Drouillard in tort?

(a) Introduction

[13] Drouillard's pleadings contain a claim against Mastec for wrongful dismissal and breach of contract and a claim against Cogeco for tortious interference with his employment. The claim against Mastec was settled before trial. The claim against Cogeco proceeded and, although it is not clear from the pleadings, the cause of action appears to have been founded in the torts of unlawful interference with economic relations and inducing breach of contract. In finding Cogeco liable, the trial judge seems to have conflated the two torts in his analysis.

[14] Early in his reasons, the trial judge dealt with the tort of unlawful interference with economic relations. He framed the issue as being whether "there has been an unlawful interference with [Drouillard's] contractual and economic relations with Mastec". As he undertook the legal analysis, the trial judge then stated that the heart of Drouillard's claim is the allegation that "Cogeco has wrongfully [See Note 1 below] interfered with [Drouillard's] economic relations in the manner in which it caused his employment contract with Mastec to be rescinded by it on two separate occasions". The trial judge next dealt specifically with the tort of unlawful interference with economic relations identifying the three elements that need to be proven as:

(1) Intent to injure Drouillard;

(2) Interference with Drouillard's business by illegal or unlawful means; and

(3) Drouillard suffered economic loss.

[15] The trial judge then reviewed the evidence and concluded that all three elements had been made out. On this appeal, Cogeco has taken issue with the second element, maintaining [page437] that its actions were neither illegal nor unlawful. I will address this issue later in these reasons.

[16] Having concluded that the tort of unlawful interference with economic relations was made out, the trial judge addressed the appropriate damages award and appears to have done so on the basis that Cogeco was liable for the tort of inducing breach of contract. Specifically, the trial judge found that Drouillard was entitled to damages as a result of Cogeco's "wrongful act of procuring [the employment contract's] breach" and assessed the damages flowing from the tort of inducing breach of contract.

[17] In order to dispose of this appeal, it is necessary to determine whether, considered separately, either of the torts of unlawful interference with economic relations or inducing breach of contract has been made out. Assuming that one or the other has been made out, I will then consider what damages flow from the breach.

(b) Was the trial judge correct in finding that Cogeco unlawfully interfered with Drouillard's economic relations?

[18] Cogeco maintains that the tort of unlawful interference with economic relations has not been made out because Cogeco's interference was not by illegal or unlawful means.

[19] Although there remains some uncertainty about how broadly the expression "unlawful interference" should be interpreted, it is accepted that the commission of an intentional tort constitutes unlawful means. This requirement could be satisfied if, for example, Drouillard had established that Cogeco's actions and interference were defamatory. It has also been held by this court in Reach M.D. Inc. v. Pharmaceutical Manufacturers Assn. of Canada (2003), 2003 27828 (ON CA), 65 O.R. (3d) 30, [2003] O.J. No. 2062 (C.A.), at paras. 50-52, that unlawful means also includes acts which the tortfeasor "is not at liberty to commit". In that decision, the court adopted the view of Lord Denning as expressed in Torquay Hotel Co. Ltd. v. Cousins, [1969] 1 All E.R. 522, [1969] 2 W.L.R. 289 (C.A.), at p. 530 All E.R., where he stated:

I must say a word about unlawful means, because that brings in another principle. I have always understood that if one person deliberately interferes with the trade or 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. [page438]

[20] In the present case, the trial judge found that Cogeco had an internal policy to the effect that if it wanted to prevent a contractor from using a certain individual on a Cogeco project it could so instruct the contractor if there was reasonable cause to do so. Based on this finding the trial judge then considered whether, applying the test set out in Reach, supra, Cogeco had been at liberty to act as it did. He concluded as follows:

In this case, while Cogeco may have had some right to dictate who works on its equipment, it is the way that it went about this that is all wrong. The secret and unsupported evidence that D'Agostini convinced McGuire to act on and which clearly did not pass the smell test of "reasonable cause" (a policy of the company) amounts, in my view, to an illegal act or one without legal justification and as such I find that the second element of the tort has been met. I would also add in support of my conclusion on this point that in taking this action against the Plaintiff Cogeco has breached its own corporate policy of not doing so without there being reasonable cause and then failing to investigate this issue.

[21] In my view, on the facts of this case, the trial judge erred in concluding that the breach by Cogeco of what appears to be an unwritten internal policy amounts to an unlawful act. Nothing in the record suggests that either Cogeco or its employees were "not at liberty" to act contrary to the company's internal policy or that Mastec or Drouillard had relied on this policy such that they could require that Cogeco respect it.

[22] The situation in the present case is quite different from the facts of Reach. In Reach, the tortfeasor, the Pharmaceutical Manufacturers Association of Canada (the "PMAC") was a voluntary trade association whose powers were set by its membership. The PMAC had a written Code of Marketing Practices (the "Code") which the association administered through one of its committees. The committee made a ruling against Reach M.D. Inc., one of the association's members, which it had no power to make according to the Code. Laskin J.A. held that the PMAC had not been "at liberty to commit" the act because "the Committee acted beyond its jurisdiction" in making a ruling which it "was not authorized to make. Its ruling was beyond its powers": Reach at paras. 43, 52 and 53.

[23] Reach is readily distinguishable from the facts in this case. In Reach, the PMAC's powers were circumscribed to a certain degree by its members and the Code was directed at protecting the interests of its members. In Reach, the PMAC's actions were problematic as the association's ruling went beyond the limits of the powers which its members had given it and the ruling adversely affected the interests of a member, Reach M.D. Inc. In the present case, however, Cogeco's unwritten internal policy [page439] was not put in place to protect the interests of Drouillard or Mastec. It does not appear that Drouillard or Mastec were aware of or relied on this policy. Further, there was no indication that Cogeco and the employees involved in the decision regarding Drouillard were "not at liberty" to suspend or simply disregard this unwritten policy.

[24] Although the limits of this tort have yet to be set, it would be inappropriate, in my view, to extend the application of this tort to breaches of a corporation's internal policies in circumstances such as those found in this case.

[25] Drouillard argued that Cogeco's actions were arbitrary and in bad faith and that this provided an alternate basis for a finding of illegal or unlawful conduct. While such conduct is not to be encouraged, I do not consider that such conduct, which can be viewed as distasteful, constitutes on the facts of this case unlawful or illegal means.

(c) Do the findings of the trial judge support a conclusion that Cogeco induced Mastec to breach its employment contract with Drouillard?

[26] I will turn now to the tort of inducing breach of contract. To succeed on this basis, Drouillard must prove the four elements of the tort which are as follows:

(1) Drouillard had a valid and enforceable contract with Mastec;

(2) Cogeco was aware of the existence of this contract;

(3) Cogeco intended to and did procure the breach of the contract; and

(4) As a result of the breach, Drouillard suffered damages.

If the four elements of the tort have been made out, I need then to consider whether the defence of justification is available to Cogeco. See Posluns v. Toronto Stock Exchange and Gardiner, 1964 199 (ON SC), [1964] 2 O.R. 547, [1964] O.J. No. 792 (H.C.J.), affd 1965 32 (ON CA), [1966] 1 O.R. 285, [1965] O.J. No. 1091 (C.A.), affd 1968 6 (SCC), [1968] S.C.R. 330, [1968] S.C.J. No. 19. See also Waxman v. Waxman, 2004 39040 (ON CA), [2004] O.J. No. 1765, 186 O.A.C. 201 (C.A.), leave to appeal to S.C.C. refused [2006] S.C.C.A. No. 486.

[27] There seems to be no dispute that Drouillard was hired in May 2001 and had a valid and enforceable employment contract with Mastec. The first element of this tort is satisfied. [page440]

[28] Cogeco acknowledged that it was aware of the contractual relationship between Mastec and Drouillard. Cogeco's awareness satisfies the second element of the tort.

[29] To satisfy the third element of the tort, the procurement of the breach must be intended and direct. In Professor Lewis N. Klar's text Tort Law (Toronto: Carswell, 2003) at 612, he states:

In order to succeed, a plaintiff must prove that the defendant intended to procure a breach of contract. In this respect, intention is proven by showing that the defendant acted with the desire to cause a breach of contract, or with the substantial certainty that a breach of contract would result from the defendant's conduct.

See also Thermo King Corp. v. Provincial Bank of Canada (1981), 1981 1731 (ON CA), 34 O.R. (2d) 369, [1981] O.J. No. 3136, 130 D.L.R. (3d) 256 (C.A.); Dirassar and James v. Kelly, Douglas & Co. Ltd. (1966), 1966 524 (BC CA), 59 D.L.R. (2d) 452, 58 W.W.R. 257 (B.C.C.A.); Emerald Construction Co. Ltd. v. Lowthian, [1966] 1 W.L.R. 691, [1966] 1 All E.R. 1013 (C.A.), at p. 704 W.L.R.

[30] In John G. Fleming's text The Law of Torts, 9th ed. (Sydney: LBC Information Services, 1998) at 761, he notes that to be liable under this tort the defendant must have acted with the "necessary knowledge and intent of procuring a breach of contract": Fleming continues at 761-62:

Merely that the breach was a natural consequence of his conduct is not sufficient: he must have intended it. Not that he need have actually known the precise terms of it or that his object could be accomplished only through its breach. If -- turning a blind eye -- he went about it regardless of whether it would involve a breach, he will be treated just as if he had knowingly procured it. Indifference is equated with intent.

[31] In my view, the findings of the trial judge amply support the conclusion that this third requirement has been met. Because the claim against Mastec for wrongful dismissal and breach of contract had been settled prior to trial, the trial judge did not have to deal with Mastec's liability. Instead, he needed only to be satisfied that Cogeco intended to and did in fact procure a breach of the employment contract.

[32] On the question of intent, the trial judge found:

(a) A Cogeco supervisor called Mastec and "suggested, rather ominously, that it would be in Mastec's best interest if Drouillard did not work for it" and that "it was definitely in Mastec's best interest to ensure that Drouillard was not employed there".

(b) "Cogeco did indeed have a problem with [Drouillard] being employed by Mastec." [page441]

(c) "[B]ased on the meddling by [Cogeco employees, Mastec] once again terminated [Drouillard's] employment with Mastec."

(d) "[I]t is beyond question but that the actions of Cogeco were directed against [Drouillard] personally."

(e) "The primary and only target of Cogeco's actions was [Drouillard]."

(f) "[T]he damages to which Drouillard is entitled in tort are not for the breach of his employment contract with Mastec, but for wrongful act of procuring its breach."

[33] Although there is no direct evidence that Cogeco wanted Mastec to terminate Drouillard's employment without reasonable notice, it is clear from the trial judge's findings that he was satisfied that Cogeco was not concerned about the terms of Drouillard's termination and that Cogeco acted intending to cause a breach of Drouillard's employment contract, or with substantial certainty that its conduct would result in a breach. In my view, that finding was open to the trial judge and, therefore, the requirement of intent has been met. See Fasson Canada Inc. v. Mediacoat Inc. (Trustee of), [1993] O.J. No. 2228, 42 A.C.W.S. (3d) 989 (Gen. Div.), affd [1996] O.J. No. 3532 (C.A.).

[34] From the jurisprudence, it is not clear whether in order to succeed the plaintiff must show an unequivocal breach of the contract or whether something short of this will suffice. Some authorities suggest that the requirement can be met if the interference results in the contract being terminated in accordance with its terms or if the contract is made more difficult though not impossible to perform. [See Note 2 below] Beyond acknowledging these strands in [page442] the case law, I do not find it necessary to further address or resolve these issues in the present case.

[35] Although the requirement that the contract be breached is not directly addressed by the trial judge in his reasons, it is apparent when reading his reasons as a whole that he was satisfied that Mastec breached its contract with Drouillard. This logically follows from his specific reference to Drouillard being entitled in tort for damages against Cogeco for the wrongful act of "procuring its breach" and from the fact that throughout his exposition on damages, he refers to the damages as being awarded for the tort of "inducing breach of contract".

[36] The record contains little detail concerning the terms of Drouillard's employment agreement with Mastec or of the severance that Drouillard was entitled to receive. It would have been preferable if the trial judge had made findings as to the terms of the agreement and identified which terms were breached and explained the basis for his findings. His failure to do so is, however, understandable given that the claim against Mastec for breach of contract had been settled. There was, therefore, no claim for breach of contract. Although a finding that the contract was breached is a necessary element to the tort claim against Cogeco, this finding is clearly implied.

[37] From my review of the record, the trial judge's implicit finding that there had been a breach of contract was open to him. Drouillard entered into an employment agreement with Mastec on the understanding that the earlier problems with Cogeco were no longer an impediment to his employment with Mastec. Within hours of commencing his employment he was sent home and within a day or two, was terminated with little or no notice and little or no severance. On this basis alone, the trial judge could reasonably have found a breach.

[38] As to the fourth element, it is apparent that the trial judge concluded that Drouillard suffered damages.

[39] I turn now to defence of justification. There are certain situations where a defendant can avoid liability by claiming that his actions which induced the breach of a contract were justified. Phillip H. Osborne, Law of Torts, 2nd ed. (Toronto: Irwin Law, 2003) at 300-302, reviews the defence of justification but asserts there is little useful modern Canadian authority for this principle. Osborne notes, at 300-301, that what authority there is suggests "it has a narrow scope", "that the absence of malice or bad faith is insufficient to establish the defence", and "that a scrupulous consideration must be given to all the surrounding circumstances". Osborne paints with a [page443] broad brush certain circumstances -- such as protecting the public interest -- where inducing a party to breach a contract may be justified and where a defendant may be insulated from attracting liability in tort. See also Lewis N. Klar, Tort Law, 3rd ed. (Toronto: Carswell, 2003) at 618-20.

[40] In this case, the circumstances do not suggest that the defence of justification is open to Cogeco. The trial judge found that Cogeco had meddled with and violated Drouillard's employment agreement with Mastec, had acted contrary to its corporate policy, and that its conduct was malicious and punitive. According to the trial judge, there was also evidence of malice or unfair dealing on the part of Cogeco in acting against Drouillard's attempt to obtain employment with Mastec. Nowhere did the trial judge suggest Cogeco's actions were justified and, on the facts of the case, I see no basis for making such a finding.

[41] In conclusion, I am satisfied that Cogeco is liable in tort to Drouillard for inducing breach of contract.

2. Was the trial judge's assessment of damages correct?

[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 (H.L.), at p. 1073:

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.

See also Waxman v. Waxman, supra.

[43] In Fleming's The Law of Torts at 765, he states that recovery of "at large" damages for inducing breach of contract is "not limited to specific or special damage and may, for example in case of wrongful dismissal, include compensation for the inconvenience and unhappiness caused by a change of job. Neither are damages limited to those recoverable from the contract-breaker; they may include the prospect of continuing employment beyond the contractual period" (citations omitted).

[44] The trial judge's approach in this case was to consider what Drouillard would have earned from February 2001 to February 2004 had he been able to work for Mastec and then add to this figure damages for losses he considered to be "at large" in the sense that they were in excess of the demonstrated pecuniary loss sustained by Drouillard. The trial judge assessed the pecuniary loss as being $137,535 and the "at large" amount as $62,465 for a total of $200,000. He then determined that, by February 2004, [page444] Drouillard had retrained and there should be no award for future loss of income.

[45] Cogeco argues that the trial judge erred in finding that Drouillard suffered any damages at all. In the alternative, if he suffered damages, Cogeco submits that the amount of the award is too high because the trial judge did not reduce the lost income by 30 per cent to reflect the likelihood that Drouillard would have undergone periods of unemployment and did not further reduce the figure by $92,455.23 in mitigation to account for Drouillard's earnings during 2001, 2002 and 2003. Cogeco also submits that the "at large" award of $62,465 is too high.

[46] Drouillard for his part maintains that, subject to his cross-appeal on the failure to award damages for future lost income and punitive damages, the trial judge's assessment of damages should stand. He concedes that his earnings for 2001, 2002 and 2003 ought to have been taken into account as mitigating his loss. Drouillard maintains, however, that the mitigation should have been applied to a much higher lost income figure as the trial judge had erred in his calculation of the lost income figure. According to Drouillard, the amount by which the trial judge underestimated the lost income figure was substantially in excess of the $92,455.23 in mitigation. Although the correct net amount should in fact be greater than the amount calculated by the trial judge, Drouillard is content that the award made by the trial judge stand.

[47] Drouillard has also cross-appealed arguing that the trial judge erred by not awarding future lost income. He sought leave to file fresh evidence in support of this position. That evidence shows, among other things, that since the trial Drouillard has been on a lengthy layoff from his position with Canadian Pacific Railway.

[48] I will deal with each of these points in the paragraphs that follow.

(a) Did Drouillard prove that he suffered any damage?

[49] As I understand Cogeco's submission on this point, it submits that Drouillard has not met the onus on him to prove that he has suffered damage. The upgrade project for which Mastec hired Drouillard ended in July of 2001, and the availability of work for Drouillard from July 2001 to February 2004 was pure conjecture. Further, Cogeco argues that Drouillard should have accepted Mastec's offer to work in Kitchener or London rather than be terminated. [page445]

[50] I would reject this ground of appeal. The trial judge correctly noted that Drouillard bore the onus of proving his damages. He also accurately set out Cogeco's position to the effect that Drouillard ought to have accepted the offer of work in London or Kitchener. The trial judge's extensive analysis of the issue of damage makes it clear, however, that he was satisfied that Drouillard had met the burden of proof and had established that he suffered damage.

[51] With respect to the potential employment in Kitchener or London, the trial judge noted Drouillard's significant commitments to his children, his disabled spouse, and his aged grandmother and her developmentally challenged son. According to the trial judge, these circumstances meant that from Drouillard's perspective "he is somewhat tied to the Windsor/ Essex County area which would make the prospect of him travelling very far in order to carry out employment, somewhat problematic for him and his family members".

[52] The trial judge also dealt with Cogeco's submission that the completion of the upgrade project in July 2001 would have had a significant negative impact on Drouillard's employment. The trial judge acknowledged the importance of this fact, but found that despite the decrease in available work in the Windsor area, Drouillard would nonetheless have remained employed with Mastec on a full-time basis but with a substantially reduced income level. According to the trial judge, Drouillard would have continued working with Mastec "given his exemplary work record at Cogeco before leaving to work in the United States, his highly developed skills level and the very positive professional and technical regard with which he was held by his Cogeco Managers, not to mention the affection from his fellow employees".

[53] I see no basis to interfere with the trial judge's finding that Drouillard suffered a loss of income.

(b) Should the trial judge's $137,535 assessment of lost income be reduced by 30 per cent to reflect the likelihood of Drouillard encountering periods of unemployment?

[54] Cogeco submits that technicians such as Drouillard regularly suffer periods of unemployment. These occur when the large projects they are working on come to an end. They may remain unemployed until the next large project comes along. The appellant points out that the respondent's expert's lost income calculations provided for a 30 per cent reduction to the projected income to account for just such a contingency. [page446]

[55] I would reject this ground of appeal. The trial judge provided detailed and comprehensive reasons setting out how he came to his figure. He did not adopt the figures urged on him by the respondent's expert and the fact that the respondent's expert had applied a 30 per cent reduction to a much larger lost income figure is of no consequence. The approach adopted by the trial judge was to estimate the likely annual income of a person in the respondent's situation for the three-year period between February 2001 and February 2004.

[56] The trial judge's reasons show that he was keenly aware of the downturn in fibre optic installations after July 2001 and of the reduction in the earning capacity of technicians after that date. In my view, the trial judge's approach took into account the likelihood that Drouillard would have had to endure periods where he was on layoff or underemployed. I do not, therefore, see any basis to apply a 30 per cent reduction as submitted by the appellant.

(c) Is the $62,465 "at large" damages award too high?

[57] Cogeco submits that the "at large" damages award of $62,465 is too high. The trial judge came to this figure in large measure based on his assessment that Drouillard had lost an otherwise promising career as a cable and fibre optic technician. Cogeco maintains that this was an error. Drouillard was at liberty to work in other areas of the province and could work in the Windsor area provided the employer did not service Cogeco's equipment. Cogeco notes that Drouillard did engage in cable installation work for other employers during the 2001 to 2004 period.

[58] As set out earlier, damages for the tort of inducing breach of contract are "at large". The trial judge considered Drouillard's situation and determined that he had to and did change careers. Cogeco was the monopoly cable operator in the Windsor area and, for a cable and fibre optic installer, it was difficult if not impossible to find regular employment in the Windsor area without being in a position to work on Cogeco equipment. In my view, there was an adequate factual basis for the finding of the trial judge that Drouillard was required to change his career and that it was unreasonable, in the circumstances, to require that Drouillard move from the Windsor area. I find no error in the trial judge's setting of the "at large" damages amount and would reject this ground of appeal. [page447]

(d) Did the trial judge understate the amount that Drouillard could have earned from February 2001 to February 2004 as a cable and fibre optic technician?

[59] As set out in the preceding sections, I consider the trial judge's analysis of Drouillard's lost income to be thorough and correct. He took into account the downturn in the industry as well as the fact that because of Drouillard's exemplary work history and experience Drouillard would have been earning in the upper range of salaries for technicians in the field. Drouillard has not demonstrated a palpable and overriding error in the trial judge's findings in this regard.

(e) Should the $137,535 lost income figure for the period of February 2001 to February 2004 be reduced by the $92,455.23 of income actually earned?

[60] Drouillard concedes that the $92,455.23 earned by him should properly be considered as mitigation. Because I have rejected Drouillard's submission that the trial judge understated the amount that Drouillard could have earned as a cable and fibre optic technician from February 2001 to February 2004, the mitigation figure should be applied to reduce the lost income figure as determined by the trial judge. As a result, I would reduce the lost income figure by $92,455.23 resulting in a net lost income award of $45,079.77. The $62,465 in "at large" damages are to be added to this figure.

(f) Did the trial judge err in not making an award for future lost income?

[61] The trial judge considered Drouillard's claim for future loss of income. Based on the evidence before him, he concluded that he was "not satisfied that a case for future income loss has been made out by the Plaintiff".

[62] Drouillard sought to file fresh evidence on this appeal with respect to future lost income. This fresh evidence sets out the layoff patterns for Canadian Pacific Railway and shows that after the trial Drouillard has continued to be layed off from his position at Canadian Pacific Railway.

[63] Cogeco opposes the filing of the fresh evidence. It submits that the information regarding the layoff patterns of Canadian Pacific Railway was available at the time of trial and could have been presented if Drouillard had so chosen. With respect to Drouillard's post-trial layoff situation, Cogeco argues that there is nothing new in this evidence. Drouillard [page448] was on layoff at the time of trial and the fresh evidence does no more than show that the situation that existed at trial has continued. Cogeco also submits that this fresh evidence is being tendered to bolster a claim for future loss of income, a claim that was dismissed at trial.

[64] Cogeco argues that Drouillard has not established a proper basis for the filing of fresh evidence as set out by this court in Sengmueller v. Sengmueller (1994), 1994 8711 (ON CA), 17 O.R. (3d) 208, [1994] O.J. No. 276 (C.A.). Even if the evidence were received, it would have had no effect on the outcome. The trial judge was well aware of the fact that Drouillard was on layoff and that the layoff would continue for a period. He nonetheless rejected Drouillard's claim for future loss of income.

[65] I agree with Cogeco's submissions on this point. In my view, the fresh evidence ought not to be admitted. Further, I see no basis for setting aside the trial judge's finding that a case for future loss of income was not made out.

3. Should the trial judge have awarded punitive damages?

[66] In his cross-appeal, Drouillard argues that because the trial judge's reasons make no mention of the claim for punitive damages it is apparent that the trial judge simply failed to address whether an award of punitive damages should be made. Drouillard submits that the trial judge made all of the findings necessary to support an award of punitive damages and that this court ought to allow the cross-appeal and award $100,000 in punitive damages.

[67] Cogeco submits that a decision on whether to award punitive damages is mostly a factual one and that such awards are only made in exceptional cases. Here, the trial judge elected not to make the award and this court should defer to that decision.

[68] I agree that the trial judge's findings of fact could provide the basis of an award of punitive damages. The trial judge found that Cogeco had engineered Drouillard's termination by Mastec and that its conduct was malicious and punitive. The trial judge also found that because of Cogeco's actions Drouillard had suffered humiliation, embarrassment, loss of reputation and the loss of his chosen career.

[69] Although these findings could provide an adequate basis for an award of punitive damages, the trial judge elected not to award them. While it would have been preferable if the trial judge had specifically addressed the issue, I am not satisfied that the failure to award punitive damages was an oversight. [page449] The trial judge was well aware of the impact of Cogeco's conduct on Drouillard. He took this conduct into account in assessing the "at large" damages at $62,465. As set out by the trial judge, these "at large" damages took "into account not only the pecuniary, but non-pecuniary damages as well, for the humiliation and loss of reputation and most importantly, the loss of his career he suffered. They should also be reflective of the conduct of the Defendant toward him which in my view was malicious and punitive."

[70] In my view, the trial judge exercised his discretion to not award punitive damages in the circumstances and preferred instead to award "at large" damages. This exercise of discretion was reasonable on the facts of this case.

4. Did the trial judge err in awarding substantial indemnity costs without providing the parties with an opportunity to make submissions on the appropriate scale of costs?

[71] The disposition I propose for the appeal would substantially alter the amount of the judgment. This change may well have an impact on the appropriate award for the costs of the trial. I would, therefore, not decide this issue at this point and would ask the parties to make submissions on the appropriate disposition of the trial costs at the same time as they make submissions on the appropriate costs of the appeal. If the parties are unable to agree on costs, this fourth issue would be dealt with as part of a later decision by this court on costs.

Disposition

[72] For these reasons, I would dismiss the motion to file fresh evidence, dismiss the appeal as to liability, but would allow the appeal as to quantum and therefore vary the damages award to $107,544.77. I would dismiss the cross-appeal.

[73] If no agreement is reached on costs, I would ask Cogeco to make brief written submissions on the costs of the trial, the appeal, and cross-appeal within 15 days hereof. Drouillard would then respond within ten days thereafter.

Appeal allowed in part; cross-appeal dismissed. [page450]

Notes

Note 1: The trial judge appears to have used "unlawful" and "wrongful" interchangeably when speaking of the tort of unlawful interference with economic relations.

Note 2: Inducing breach of contract generally requires a contract to be breached. There is, however, Canadian case law citing with approval the British principle that a breach is not necessary for finding a party liable for inducing breach of contract. In D.E. and J.C. Hutchison Contracting Co. v. Windigo Community Development Corp. [1998] O.J. No. 4884, 80 O.T.C. 16 (Gen. Div.), at para. 30, Kozak J. cited with approval the British principle from Dimbleby & Sons Ltd. v. National Union of Journalists, [1984] 1 W.L.R. 67, [1984] 1 All E.R. 117 (C.A.): "The doctrine of interference with contractual relations has been extended to include ... where the performance became more difficult through not impossible." There is also English authority suggesting that the mere fact that the party induced had an option to terminate the contract under its terms is of no avail to a defendant who has procured a breach. See Emerald Construction, supra, but contrast Cutsforth v. Mansfield Inns, [1986] 1 W.L.R. 558 (Q.B.D.), at p. 563, Sir Neil Lawson.