# ONTARIO
# SUPERIOR COURT OF JUSTICE
**COURT FILE NO.:** CV-10-409401
**DATE:** 20140121
## BETWEEN:
**JONATHAN WAITE**
Plaintiff
– and –
**OFF574LTD., and HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO**
Defendant
Matthew A. Fisher, for the Plaintiff
Ronald F. Worboy, for the Defendant, OFF574LTD.,
Michele Smith & Christopher P. Thompson, for the Defendant, Her Majesty the Queen in Right of Ontario
**HEARD:** September 30, Oct. 1-4 & 13-15, 2013
**LEDERER J.:**
background
[1] The plaintiff, Jonathan Waite, worked for a business that was owned and operated by his mother. On July 5, 1982, his mother, Margaret Waite, entered into a contract with Her Majesty the Queen in Right of the Province of Ontario. It appears to have remained in place for 28 years. On February 1, 2010 a new agreement was signed. It is set to expire on January 31, 2015. In the first agreement the Queen was represented by the Minister of Transportation and Communications. In the new contract, it is the Minister of Government Services that represents the Queen. Margaret Waite appears to have signed the contracts in her own right. At the outset, she was and remains identified, in the agreements, as the “Issuer”. As of March 7, 2000, she incorporated the defendant, OFF574LTD. This is the corporate entity through which the business is operated. It was the employer of Jonathan Waite. From the beginning, Margaret Waite was to maintain an office for issuing motor vehicle permits and related documents. The office is located in Port Perry, Ontario. Through the intervening years, the services offered have broadened. They include the issuance of driver and vehicle permits and licences, health card transactions and the receipt and transmission of payments of retail sales tax, as well as other similar services that the Ministry of Government Services may, from time to time, authorize. In the initial agreement, Margaret Waite, as the Issuer, was also appointed as agent for the Attorney General for the collection of certain fines. It is not clear to me whether she continues to hold this authority.
[2] In 1994, Jonathan Waite began working for his mother in the licensing office. He did not always work full-time. In the late summer or early fall (August-September) of 1997, he opened a bar. It closed during August of 2000. At other times, he worked for a gym in Ajax and another one in Scugog. In 2002, he stopped working at the licensing office. In 2003, he and his wife opened a hair dressing salon. It failed after nine months. During 2005, he returned to work full- time at the licensing office.
[3] The agreement of February 1, 2010 calls for the Minister of Government Services to provide the equipment considered necessary to meet the service delivery needs of the community in which the office is located. In the initial contract, the one dated July 5, 1982, the Ministry of Transportation and Communications was to install and maintain the electronic equipment required for vehicle registration purposes. The current contract includes as electronic equipment “computer workstations”. The earlier agreement mentions “terminals”. I understand this to demonstrate that the computers which were and are central to operating the licensing office are provided and owned by the Minister of Government Services. An employee of the licensing office cannot service its clients without access to its computers and the information that can be inputted or retrieved through their use.
[4] The system records data, such as Driver’s Licence information which would include the name of the driver, his or her address, birth date and licence number. It has photographs that identify the individual. The database contains ownership information in respect of any automobile an individual resident in Ontario may own, including the VIN number, the model and year, as well as the licence plate number and the insurance carrier. It would contain reference to any safety certification required to transfer the ownership of an automobile and the weight of any commercial vehicle licenced to operate in the province of Ontario, as well as information relative to the other services offered. No licence can be renewed or licence plates obtained, no sales tax collected, car transferred or lost health card replaced without being able to enter the database that supports these and other transactions.
[5] Jonathan Waite dealt with the customers of the office and provided them with the services it offers. To do this, he used the computers and made use of and entered data as required. He did this from the day he returned to work in the licensing office, in 2005, until December 5, 2008. On that day, his mother received a telephone call from a representative of the Ministry of Government Services. She was advised that Jonathan Waite had not satisfied a security check which had been undertaken. She understood that she was to escort him from the building. The telephone call was followed by a letter, to Margaret Waite, bearing the same date. Among other things, it notes:
As a result of the unfavorable outcome of Jonathan Waite’s screening check, this letter notifies you that his access to the Licensing and Control System (LCS) has been revoked as of December 5, 2008. Please note that, effective immediately, Jonathan Waite is to be restricted from playing any role in the delivery of driver and vehicle services and must not have access to government assets and information, including, but not limited to, revenue, stock, completed application forms and the LCS.
Since that day, Jonathan Waite has not worked at the licensing office.
[6] As much as we may try and as unfair as it may seem to some, we cannot always outrun the past.
[7] It turns out that Jonathan Waite had, for some years, participated in functions arranged by, was friends with members of, and had an ongoing relationship with outlaw motorcycle gangs: first, Satan’s Choice and, after December 31, 2000, when it was taken over by Hell’s Angels, with the merged gang. Outlaw motorcycle gangs are not social clubs where the members enjoy a common interest and affection for riding motorcycles. They are criminal organizations. Hell’s Angels is a global organized crime network. It operates in forty countries and has four hundred chapters. Unlike other groups engaged in criminal activities which prefer to remain hidden and secretive, part of the modus operandi of outlaw motorcycle gangs is to be public and open about their presence in the community. It is a demonstration of strength. There is an intimidation factor at work. Violence is a means by which the rules of an outlaw motorcycle gang are enforced.
[8] The evidence outlined that these public displays often take the form of “runs”. Those involved gather and travel, on their motorcycles, in big groups, organized in a set hierarchy, through large parts of the province to a pre-arranged location where they gather, often for a weekend, to socialize and do business. Some of these runs are annual events repeated year after year. Police evidence suggested that outlaw motorcycle gangs prefer to work in this way. Private discussion, at an event, avoids reliance on cell phones or other electronic means of communication where conversations can be intercepted by public authorities. There was a considerable amount of evidence pointing to the participation of Jonathan Waite in these runs. By way of example, he was identified by the police as having been present on runs to: “the annual Caesarea Marina Party”, the Satan’s Choice “Corn Boil” in Oshawa, the “Lobo’s Annual Labour Day Party”, the “Oshawa Hell’s Angels ‘On the Road Party’”, an event in Port Dover, Ontario, a party hosted by the Downtown Toronto Chapter of the Hell’s Angels at their summer property, and a “mandatory” run to Sudbury. Jonathan Waite advised the court that, in 1996, he went to one such event and, from 1997 to 2000, he attended five or six each year. This is more than the three runs a member was obliged to go on during the course of any year.
[9] It is not only that Jonathan Waite was present at these gatherings. At some, he was given a position of trust and responsibility. He drove the “crash vehicle”. This was a van that follows behind the motorcycles and picks up any that have broken down or that have failed a safety check undertaken by the police. In this way, Jonathan Waite was entrusted with what members regard as a most valued possession, their motorcycles.
[10] Jonathan Waite had other connections to the gang community. The bar he operated from 1997 to 2000 was called “Sled Heads & Softails”. “Sled Heads” refers to those who enjoy riding Ski Doo’s and “Softails” to a type of motorcycle ridden by some gang members. The bar was intended to serve these groups. Presumably in response to concerns this raised, the liquor licence it held had, as a condition, a requirement that: “No bikers ‘colours’ identifying insignia, emblems or clothing to be worn in the establishment”.[1] These would identify the bar as a place where members of outlaw motorcycle gangs would gather. This restriction was openly defied. At least one employee (Ray Akleh) wore clothing (a cap and bracelet) that identified him as a member of the Satan’s Choice Motorcycle Club. There was a hearing, held on May 20 1999, before the Ontario Alcohol and Gaming Commission. As a result of the breach of the condition, the licence of the bar was suspended for ten days. On the same day, there was a hearing before the same members of the Commission which considered a proposal that the condition be removed. It was refused. Despite this, there was evidence that a motorcycle with stickers emblematic of an outlaw motorcycle gang was part of the décor of the bar. Later, following a hearing on July 6, 2000 the Commission issued a “Decision and Order” where an agreed Statement of Facts acknowledged that: “The licence holder permitted a person wearing an Outlaw Motor Cycle Club jacket to enter into the licenced premises.”[2]
[11] Jonathan Waite testified that the licence of the bar was suspended three times as a result of the condition being breached. He said that, among the reasons for closing the bar was the attitude of the regulator in respect of this condition. He was “sick of fighting... the powers”.
[12] Another factor in understanding Jonathan Waite’s involvement with outlaw motorcycle gangs was his association with Ray Akleh. They appear to have had a long-standing friendship. It was Ray Akleh who introduced Jonathan Waite to the Satan’s Choice and, through Ray Akleh, that Jonathan Waite was invited to take part in gang runs. Ray Akleh was an employee of Sled Heads & Softails. The decision of the Ontario Alcohol and Gaming Commission which considered the breach of the condition on the licence reports that when Ray Akleh was asked, by the police, to remove the cap that evidenced the breach, he refused. He did not take it off at the request of Jonathan Waite. As put by the panel in its decision, Jonathan Waite “…apparently could do nothing, as the person in charge, to stop [the breach of the condition] from continuing when asked by the police to do so”.[3] At some point, Ray Akleh was convicted of a serious criminal offence and is presently in jail.
[13] It was his connection to, and relationship with, these outlaw motorcycle gangs that caused the Ministry of Government Services to determine that Jonathan Waite presented a security risk. At the root of the risk, was his access to the database through the computers used in the operation of the licensing office. This access allowed Jonathan Waite to obtain the information found on the database with respect to any Ontario resident recorded there. This would include personal data of a wide array of our citizens including, presumably Crown attorneys, police officers, witnesses, jurors, judges, rival gang members and members of the media. Access allows for the data, say the VIN number of a vehicle owned by the individual identified or its licence plate number, the weight a commercial vehicle is permitted to carry, emission certificates or even the photograph of a person and sales tax calculations, to be changed. One does not need much imagination to see how this ability would be of interest to a group whose primary function is organized crime. Jonathan Waite was aware of the danger. He had seen an article in the media which referred to police concerns that a motorcycle club could infiltrate licensing offices. He testified that he stopped attending gang functions because he had read of their interest in getting access to these issuing offices.
[14] Jonathan Waite advised that he did not take part in any gang events after 2001. In the police evidence, there was, at least the suggestion, that his direct relationship with outlaw motorcycle gangs had been observed as late as 2004. Whenever his immediate association ceased, it did not affect the decision to refuse the security clearance. There was evidence that it is not uncommon for these relationships to go quiet for a period of time only to be resuscitated when the individual can be of use to the gang. It was suggested that an individual may have more value after a period in which police attention has been diverted. If requested to provide a service to the gang, Jonathan Waite would remain obligated to respond. It is in this sense that it may not always be possible to completely leave the past behind. The evidence of the police officers who were asked was that Jonathan Waite remained a security risk.
[15] It is important to understand that this is not an appeal of the determination that Jonathan Waite was, or is, a security risk. There is no appeal from such a finding. This is not a judicial review questioning the fairness of the process by which this decision was taken. Rather, it is said that the defendant, Her Majesty the Queen, bears liability for inducing breach of contract or, in the alternative, for intentional interference with economic relations.
[16] Understanding the provenance of these economic torts helps explain the difference between them. Inducing breach of contract was founded on the idea that interference with the relationship between a master and his servant was wrongful.[4] Its origins extend back to the 14th century when a remedy was devised against taking away a servant by persuasion rather than by force.[5] Over time, the remedy was expanded.[6] In Lumley v. Gye[7], a well-known opera singer was engaged to perform for the season. She was persuaded by another to break her contract and sing elsewhere. Liability was based on the second party, the defendant in the action, having caused the contract to be breached. The case became the basis for the application of the remedy to all manner of contractual relations.[8] “The essence of the wrong is the unjustifiable procurement or inducement by the defendant of a breach of contract between the plaintiff and a third party where the plaintiff is damaged.”[9]
[17] The origins of intentional interference with economic relations also reach back. In the past, there was support for the idea that: “he that injures another in his trade or livelihood is liable to an action for so hindering him”.[10] There did not need to be a contract between the parties to any prospective action. This changed. In Allen v. Flood[11], the defendant, acting on behalf of a union of ironworkers, advised their employer that if it did not stop employing shipwrights, his members would be “called out or knock off work”. The underlying purpose was to put an end to shipwrights doing ironwork. The employers discharged the plaintiffs and did not engage them again. A jury found that the defendant had maliciously induced the employer to terminate the respondents and gave judgment for the respondents. The House of Lords determined that interference with economic relations, which are in prospect and not yet cemented by contract, was not a tort.[12] This, too, has evolved. In Rookes v. Barnard[13], a draughtsman resigned from his union. It threatened to strike unless he resigned or was fired. He was suspended and later dismissed. The draughtsman sued union officials. The House of Lords found it was unlawful intimidation “to use a threat to break their contracts with their employer as a weapon to make him do something which he was legally entitled to do but which they knew would cause loss to the plaintiff”.[14] In other cases not involving threats, this tort was referred to as intentional interference with a person’s trade or business by unlawful means[15] or causing loss by unlawful means[16]. In Torquay Hotel Co. v. Cousins[17], the hotel had a contract for the supply of oil. The manager of the hotel made a comment, subsequently repeated in the press, on a labour dispute between a union and another hotel. Members of the union were responsible for delivering the oil. The union advised the supplier that the oil would not be delivered. An alternate supplier, with no connection to the union, was found. It made a delivery, but was warned by the union that there would be serious repercussions if further supplies were made available. The hotel demanded that the union remove the restriction. It placed a new order with its original supplier. It heard nothing from the union, but the order was delivered without incident. In the absence of an undertaking from the union that future deliveries would not be interfered with, and for fear that they would be, the hotel applied for an injunction. Lord Denning stated that the time had come for the principle in Lumley v. Gye to be “further extended to cover ‘deliberate and direct interference of the execution of a contract without causing any breach’”.[18] “The suggestion made by Lord Denning was repeated by him, in other cases, in different ways and, eventually, was accepted by other courts in England[19]. In the absence of a breach of contract, Canadian courts have referred to this form of liability using the broader language of “interference with contractual relations” or “interference with economic relations”[20]
[18] The difference between the two torts has been “muddled”.[21] This was driven by the idea that the principle in Lumley v. Gye “…extended to all interference with contractual rights by unlawful means”:
The unified theory thus treated procuring breach of contract, the old Lumley v. Gye tort, as one species of a more general tort of actual interference with contractual rights.[22]
[19] This understanding was dispensed with in OBG v. Allan[23]. This case dealt with three separate appeals. It rejects the theory of a unified, single, albeit flexible, economic tort:
Both my noble and learned friends agree that the ‘unified theory’ of the economic torts, attractive though it is, must be rejected. The tort of intentionally inducing a breach of contract is essentially different from inflicting harm by unlawful means, although in some factual situations they may overlap.[24]
and
In OBG, the House of Lords confirmed that despite some historical confusion of the two causes of action, they are distinct in their genesis, purpose, and effect.[25]
ANALYSIS
(a) The Issues
[20] In OBG v. Allan, Lord Hoffman outlines the four differences between inducing a breach of contract and interference with economic relations, as follows:
(1) unlawful means (interference with economic relations) is a tort of primary liability, not requiring a wrongful act by someone else, whereas inducing breach of contract created what has been called an ‘accessory liability’, dependant on the primary wrongful act of the contracting party;
(2) unlawful means (interference with economic relations) required the use of independently unlawful means, whereas inducing a breach of contract required participation in the breach of contract;
(3) liability for unlawful means (interference with economic relations) does not depend, as does inducing a breach of contract, upon the existence of contractual relations, as long as the intended consequence of the wrongful act is damage in any form, for example, the plaintiff’s economic expectations; and,
(4) both are torts of intention, however the intended results are different, in that in unlawful means (interference with economic relations) the defendant must have intended to cause the plaintiff damage, whereas in inducing breach of contract an intention to cause a breach of contract is necessary and sufficient.[26]
[21] These distinctions demonstrate the different requirements to be satisfied in proving these torts. In considering how they apply to the case I am asked to decide, it becomes apparent that, to succeed in his claim for inducing breach of contract, Jonathan Waite must demonstrate that there was a contract, that it has been breached, that the breach was induced by the actions of the defendant, and that those acting in Her name intended to induce the breach. Ultimately, with respect to inducing breach of contract, these reasons will turn on the question of intention. To succeed in his claim for interference with economic relations, Jonathan Waite would have to demonstrate that such interference resulted in damage that was intended and was caused by unlawful means. In these reasons, the claim for interference with economic relations will turn on whether the Crown acted by unlawful means.
(b) Inducing Breach of Contract
[22] It was accepted that Jonathan Waite was employed at the licensing office. As a result, there was an employment contract. Those acting for the Crown did not argue or suggest there was no contract or that, having identified Jonathan Waite as a person who could not be given the required security clearance, they were unaware that such a contract existed. Assuming the contract was breached, something the plaintiff took to be a given, the question remains whether the Crown intended, by the action taken on its behalf, that this occur. Jonathan Waite sees the answer to this as obvious. The whole point was that Jonathan Waite should no longer be permitted to work at the licensing office. Thus, the intention was that his contract of employment be breached. The issue is not that simple.
[23] In taking this position, counsel for Jonathan Waite relied on Drouillard v. Cogeco Cable Inc.[27] The plaintiff was a skilled cable and optic fibre installer. He worked for the defendant, Cogeco, but resigned and took employment in the United States. Upon his return, he was offered employment by a third party to work on a project it had undertaken for the defendant. Cogeco advised that it did not want the plaintiff working on its equipment. The offer was withdrawn. This happened twice. The trial judge found in favour of the plaintiff . Cogeco had engineered the termination and its conduct was malicious and punitive. The Court of Appeal concluded that the trial judge had failed to properly distinguish between inducing breach of contract and unlawfully interfering with economic relations. He had conflated the two. The Court of Appeal considered them separately. In considering the requirement that the inducement of the breach must be intended, the Court of Appeal quoted the following statements:
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.[28]
and
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.[29]
[24] There is nothing in the facts or evidence that could properly be relied on as demonstrating that those acting on behalf of the Crown acted out of malice towards Jonathan Waite or turned a blind eye to harm they knew would be the result of their actions.
[25] On October 4, 2006, the Management Board of Cabinet approved the Contractor Security Screening Operating Policy.[30] Its purpose was to support the provision of appropriate security for the assets, information, clients and employees of the Ontario Public Service. A screening check and security clearance was required for all contractors commencing in six priority areas, which included Driver and Vehicle Licensing. On May14, 2008, the Ministry of Government Services (Service Ontario) promulgated an “Issuer Memo” entitled “Contractor Security Screening”[31]. Its purpose was: “To advise the Private Issuing Network (PIN) of the new Contractor Security Screening Operating Policy, which is a government-wide policy for security screening of third-party contractors providing goods or services to or for the government of Ontario”. This general direction applied to Jonathan Waite. The Emergency Management and Security Branch, later re-named the Security Services and Contingency Planning Branch, was responsible for the screening and security checks required under the policy. On or about September 2, 2008, Jonathan Waite delivered “An Authorization and Consent to Security Check”. It consented to the release of police records held by the Ontario Provincial Police (the “OPP”).[32] As the named contractor and as the “Company Security Officer”, Margaret Waite, on or about September 16, 2008, delivered a “Contractor Security Screening: REQUEST and VERIFICATION Form verifying personal information of Jonathan Waite, including his name, date of birth and address information. A CPIC (Canadian Police Information Centre) check yielded “no hits”. Although it was not entirely clear from the evidence, it would seem that a “Niche report” reflects a search of a second and separate database available to the OPP. It revealed the relationship of Jonathan Waite to the outlaw motorcycle gangs. He was identified as a member of the Oshawa Chapter of the Hell’s Angels. It is on this basis that, on December 5, 2008, the telephone call was made to Margaret Waite, the confirming letter was written and the security clearance refused.
[26] The letter does not require the dismissal of Jonathan Waite. Rather, it indicates that his access to the “Licensing and Control System has been revoked”. He was restricted from playing any role in the delivery of driver and vehicle services and was not to have access to government assets (for example, the computers) and information. The letter allowed for Jonathan Waite to submit a written request for information as to the reason why he was not granted clearance. On December 8, 2008, Jonathan Waite wrote asking for an explanation with the expectation that he would have a hearing. Those responsible for the security check made additional inquiries. The understanding that, in 1999, Jonathan Waite had been a member of Satan’s Choice was confirmed and, on January 22, 2009, a letter was written to Jonathan Waite indicating that his 1999 membership in Satan’s Choice was the basis on which the clearance was denied. This letter also makes clear that the refusal did not require the dismissal of Jonathan Waite. It said:
Where an individual worker is not provided with clearance, the company can decide to exclude this individual for the purposes of the proposed contract. In this case the individual would be deemed ‘withdrawn’ from the screening process for the term of the contract....
[27] On February 4, 2009, Jonathan Waite responded, by letter, to the Security Services and Contingency Planning Branch. He acknowledged a social relationship with people who may have been members, but denied that he had ever been a member of a gang. Further inquiries were undertaken. An effort was made to have Jonathan Waite speak to an OPP Biker Enforcement Unit member. That discussion took place on March 15, 2009. Jonathan Waite conceded his relationship with the Satan's Choice Motorcycle Club, but explained that he was no longer involved with those who had been members. In the end, it was determined that “a much stronger case can be made that Mr. Waite was an associate of Satan’s Choice in 1999 and 2000 and not a member”.[33]
[28] As a result, the Security Services and Contingency Planning Branch sought and received information as to the role an “associate” played in the hierarchy of an outlaw motorcycle gang. The following definition was provided by the OPP:
“Associate”: He is introduced to the club members by a colour-wearing member. The individual's background is thoroughly checked. He cannot attend club meetings, but might be invited to parties and bike runs. The associate assists [outlaw motorcycle gang] members by facilitating, promoting and protecting their criminal activities. Persons from any walk of life can be an associate. At this stage, the individual is not part of the process of becoming a [outlaw motorcycle gang] member and has no official [outlaw motorcycle gang] status.
An Associate of a[n] [outlaw motorcycle gang] can range from a person that wears [outlaw motorcycle gang] support clothing and attends various [outlaw motorcycle gang] functions to an individual that does not wear clothing that supports the [outlaw motorcycle gang] and does not attend [outlaw motorcycle gang] functions. An advantage to the latter type of Associate allows that person to be involved in criminal activities that benefit the gang but does not draw the attention of law enforcement as well as facilitates the infiltration of phone companies, the post office, and other government offices where private information could be obtained for the benefit of the [outlaw motorcycle gang].
An Associate may or may not want to begin the process of becoming a full patch member of the [outlaw motorcycle gang].
[29] This change in the understanding of the status Jonathan Waite held with outlaw motorcycle gangs did not cause the OPP to change its position regarding the seriousness of this association and his conduct. There was no information that would result in a change to the original decision to refuse the security clearance. Finally, a meeting was arranged between Malcolm Smeaton, the Director of the Security Services and Contingency Planning Branch, and Jonathan Waite. In agreeing to meet, Malcolm Smeaton made clear that any fresh information would be taken into account:
If you have new facts regarding your application for a security clearance that you have not already provided to our office or the OPP, we will review those facts, with the OPP and legal counsel and determine whether it impacts our decision regarding your application.[34]
[30] The meeting took place on October 9, 2009. Malcolm Smeaton and Jonathan Waite have somewhat different recollections of what occurred. The refusal to grant him the required security clearance remained in place.
[31] Unlike Drouillard v. Cogeco Cable Inc., there is nothing in any of this that could be said to be malicious or punitive. The evidence demonstrates that those who represented the Ministry of Government Services and the police acted in response to a continuing concern for the security of information available to those who work in licensing offices such as the one operated by Margaret Waite. The evidence demonstrated that, even with time, the risk of a past relationship being called on, by outlaw motor cycle gangs, to obtain and misuse the available information remained. Unlike the situation confronted by the cable installer in Drouillard v. Cogeco Cable Inc., the security check, which was the origin of the termination, was not directed against Jonathan Waite personally.[35] He was not the primary and only target of the actions taken.[36] This was a general screening directed at many people in similar situations. The concern was not that Jonathan Waite be fired, but that he be denied access to the data. It may be, given the circumstances of the particular licensing office (it is in a small community with only four employees, all of whom service the public), that the termination was a natural consequence of the refusal to provide the security clearance, but that does not demonstrate intent. The government representatives did not “turn a blind eye”. The police spoke to Jonathan Waite. The Director of the Director of the Security Services and Contingency Planning Branch met with him. They advised that, if new information was provided, they would take it into account and consider whether it would affect the decision that had been made. There was nothing indifferent in the actions or attitude demonstrated by those responsible for refusing the security clearance.[37]
[32] The proposition made on behalf of Jonathan Waite seems to be that, having been advised or upon learning that Jonathan Waite would lose his employment, those responsible should have relented and, despite the security concerns, provided the necessary clearance. If this is the idea, it cannot stand.
[33] From this, it should be apparent that the action for inducing breach of contract cannot succeed. Nonetheless, counsel for Jonathan Waite suggested that the necessary intent is demonstrated by what he submitted was a conscious and knowing breach of the policy that governed these security screenings. As he sees it, those involved examined records that were not referred to as part of the check and, in so doing, breached the privacy rights of Jonathan Waite. In short, the security screening was unlawful. I shall have more to say about this later in these reasons. For the moment, I say only that the allegation that the screening was unlawful does not serve to demonstrate intent. In taking this position, counsel makes the same mistake as that made by the trial judge in Drouillard v. Cogeco Cable Inc. He is conflating the requirements of unlawful interference with economic relations with those of inducing breach of contract.
[34] If there is any doubt about the determination that the requirement of intent has not been met, it should be removed by a consideration of OBG v. Allan and Correia v. Canac Kitchens, a division of Kohler Ltd.[38]:
Finally, there is the question of intention. In the Lumley v. Gye tort, there must be an intention to procure a breach of contract. In the unlawful means tort, there must be an intention to cause loss. The ends which must have been intended are different. … But the concept of intention is in both cases the same. In both cases it is necessary to distinguish between ends, means and consequences. One intends to cause loss even though it is the means by which one achieved the end of enriching itself. On the other hand, one is not liable for loss which is neither a desired end nor a means of attaining it but merely a foreseeable consequence of one’s actions. [Emphasis added.][39]
and
The defendant’s conduct in relation to the loss must be deliberate. In particular, a defendant’s foresight that his unlawful conduct may or will probably damage the claimant cannot be equated with intention for this purpose. The defendant must intend to injure the claimant. This intent must be a cause of the defendant’s conduct … [Citations omitted; Emphasis in original.][40]
[35] In Correia v. Canac Kitchens, an employer was concerned that there were crimes being committed in its plant. It placed an undercover agent in the plant. He identified several employees as having been engaged in theft and drug dealing. Through an error in identification, the plaintiff was fired and charged. Subsequently, the mistake was proved and the charges were dropped. The employee sued. There was a motion for summary judgment. There was an appeal. The Court of Appeal agreed, with the motion judge, that claims for inducing breach of contract and interference with economic relations should be dismissed. This decision came after, and relied on, OBG v. Allan. It takes a narrower view of what is required to demonstrate intent in a claim for inducing breach of contract:
The Lords confined the tort to cases where the defendant actually knew that its conduct would cause the third party to breach (it is not enough that the defendant ought reasonably to have known that its conduct would cause the third party to breach); the defendant must have intended the breach (it is not enough that a breach was merely a foreseeable consequence of the defendant's conduct); and there must be an actual breach (it is not enough for the conduct to merely hinder full performance of the contract).[41]
and
Importantly, the requirement of an intention to injure is not made out where the wrongful conduct at issue was not deliberately targeted against the complaining party but, rather, was simply an incidental or foreseeable result of the defendant’s wrongful conduct. The purpose of the unlawful or wrongful conduct must be to inflict injury on the complaining party, that is, the plaintiff: see Cheticamp Fisheries Co-op Ltd. v. Canada 1995 NSCA 24, 139 N.S.R. (2d) 224 (N.S.C.A.), at para. 36, leave to appeal refused, [1995] S.C.C.A. No. 202.[42]
[36] The application of this stricter test makes it all the more clear that the intention, which is an essential requirement to prove inducing breach of contract, was not present. There was nothing to suggest that the individuals involved set out to cause a breach of the employment contract of Jonathan Waite. Their intention was to protect the information held in the database used by the licensing office. It is his access to that information, not his employment, that was the concern.
[37] I should point out that it is not clear that the contract of employment was breached. An individual can be terminated for cause and without cause if sufficient notice is given or if an appropriate payment in lieu of notice is made. In any of these circumstances the contract is not breached. OFF574LTD. was included as a defendant as a result of the suggestion that the payment made to Jonathan Waite following the end of his employment was insufficient to meet the legal requirement for notice. Although wrongful dismissal was referred to in the Statement of Claim, at trial, there was never any suggestion that Jonathan Waite would seek any direct payment from the business owned by his mother. The question of whether terminating an employee for failure to pass a security check necessary to the employment could be cause was not raised. All that was said, on behalf of Jonathan Waite, was there was no misconduct and, accordingly, there was no cause. It was submitted by counsel for the Crown that the period to be covered by any payment in lieu of notice would be accounted for beginning December 5, 2008, being the day of the telephone call to Margaret Waite, as well as the date of the confirming letter. The payment in lieu of notice was identified by the counsel as representing 13.3 weeks (approximately three months) pay for three years of work (2005-2008) and did not demonstrate a breach of the employment contract. It was within the appropriate range.
[38] Counsel for Jonathan Waite submitted that the notice period should commence, not on December 5, 2008, but on January 22, 2009. This was the date of the letter written to Jonathan Waite advising him that the reason for his termination was his membership in Satan’s Choice. If correct, this would shorten the notice period by 48 days or one day less than 7 weeks. The implication is that the approximately 6 ½ weeks of notice that was left would not be sufficient, indicating a breach of the contract. The explanation was that January 22, 2009 was the first day that Jonathan Waite understood the reason for his termination and it was from that day he knew he would be required to find alternative employment.
[39] On this basis, anyone dismissed, without a reason being provided, would be extended a period of grace before the time for calculation of any payment in lieu of notice began to run. On December 5, 2008, Jonathan Waite knew that he was being denied access to the computers necessary to serve the clients or customers of the licensing office. If this meant he would be unable to continue to work in the licensing office, then he, and those who employed him, would have recognized that it was, as of that date, that his dismissal was effective. Any notice period began to run on that day. 13.3 weeks is within the acceptable range. If the action taken by the government stood as an inducement to breach the contract of employment, the breach it effected would have taken place on December 5, 2008. If I were required to determine if there was a breach of the employment contract of Jonathan Waite, I would find that no breach took place.
[40] I find that the constituents of a proper claim for inducing breach of contract, in particular that inducement of the breach was intended, are not present. The claim is dismissed.
(c) Interference with Economic Relations
[41] The critical element to the claim for interference with economic interests is that the interference must occur by the use of means that are unlawful. What is meant by “unlawful means”? Once again, guidance is provided by OBG v. Allan. The case provided the following summary:
Unlawful means therefore consists of acts intended to cause loss to the claimant by interfering with the freedom of a third party in a way which is unlawful as against that third party and which is intended to cause loss to the claimant. It does not in my opinion include acts which may be unlawful against a third party but which do not affect his freedom to deal with the claimant.[43]
[42] In the context of this case, this points to Jonathan Waite as the claimant, the Crown as the party that caused the interference and OFF574LTD. as the third party. The more interesting question is which economic relations were interfered with:
(a) Was it the employment relationship between Jonathan Waite and OFF574LTD? Did actions of the Crown use means that were unlawful to interfere with the employment relationship?
(b) Was it the relationship between Her Majesty the Queen and OFF574LTD. which permitted the latter to operate the licensing office? Did the actions of the Crown use means that were unlawful (say, threats or intimidation) such that OFF574LTD dismissed Jonathan Waite in order to maintain its right to operate the licensing office?
[43] The answer to these questions is not found in the Statement of Claim or by any direct statement of counsel for Jonathan Waite, in his submissions, made at the end of the trial. It is revealed by a review of what counsel says is the demonstration of the unlawful acts. He submitted that what was unlawful was the reliance on information that was obtained and factors that were considered that were outside the terms of the policy documents released by the government to indicate the nature and breadth of the security checks. Material that was considered was not subject to the consent signed by Jonathan Waite and was in breach of his right to privacy.
[44] Without going further, it can be shown that no unlawful means, as that term is referred to in respect of interference with economic relations, were employed. To be the basis for a claim for interference with economic relations, the wrong must be actionable by the third party:
In my opinion, and subject to one qualification, acts against a third party count as unlawful means only if they are actionable by that third party. The qualification is that they will also be unlawful means if the only reason why they are not actionable is because the third party has suffered no loss. In the case of intimidation, for example, the threat will usually give rise to no cause of action by the third party because he will have suffered no loss.....[44]
[45] The claim is not sustainable where the wrong is itself actionable by the plaintiff:
…Aston’s alleged negligence is directly actionable by the appellant, based on duty of care and foreseeability principles. There is no need to interpose the tort of intentional interference to obtain redress against Aston. The intentional torts exist to fill a gap where no action could otherwise be brought for intentional conduct that caused harm through the instrumentality of a third party.[45]
In summary:
In my view, therefore, it is now clear that to qualify as ‘unlawful means’, the defendant’s actions (i) cannot be actionable directly by the plaintiff and (ii) must be directed at a third party, which then becomes the vehicle through which harm is caused to the plaintiff.[46]
[46] When it is claimed that a policy document dealing with the security screening of individual has not been followed or that the privacy rights of an employee have been trenched on, there is nothing that is actionable by the employer as a third party. There was nothing in the evidence of Margaret Waite that suggested she felt or was threatened or intimidated by the telephone call of December 5, 2008 or the letter that followed. As reported in the evidence and demonstrated by reading the letter, dated December 5, 2008, the effect of these communications was to advise Margaret Waite that her son had not been granted security clearance and that he was being denied access to the database. The letter and the evidence confirm that there is nothing that would be actionable by the third party (either OFF574LTD., as the employer, or Margaret Waite, as the Issuer). To the contrary, these issues are directly actionable by Jonathan Waite. On this basis, they cannot satisfy the requirement that unlawful means were the cause of any interference. On that alone, the claim for interference with economic relations must fail.
[47] Quite apart from whether these actions constituted the unlawful means necessary to support a claim for interference with economic relations is the question of whether they were unlawful in the conventional sense of “not conforming to or permitted by the law...”[47] and what impact that understanding has in respect of the tort of interfering with economic relations:
The case law reflects two different views of ‘illegal or unlawful means’, one narrow, the other broad. The narrow view confines illegal or unlawful means to an act prohibited by law or by statute....[48]
The broader view, however, extends illegal or unlawful means to an act the defendant ‘is not at liberty to commit’-- in other words, an act without legal justification.[49]
[48] The Ontario Court of Appeal has adopted the broader view:
I think that the trial judge was right to take a broader view of illegal or unlawful means. ...I see no policy reasons for taking a narrower view of unlawful means. Indeed, to do so would preclude redress ... for any number of unauthorized acts that on a common sense view would be considered unlawful, but nonetheless, were not prohibited by law or by statute.[50]
[49] The Contractor Security Screening Operating Policy[51] and the Issuer Memo: Contractor Security Screening[52] both refer to the following as evaluation criteria to be accounted for in any security check:
• Whether the conviction/charge/judicial order relates to the contract
• The nature, extent and seriousness of the conviction/charge/judicial order
• The frequency of the conviction/charge/judicial order
• The passage of time since the conviction/charge/judicial order, and
• The individual's undeclared information about any conviction/charge/
judicial order.
[50] Counsel for Jonathan Waite observed that each of these criteria assume that the individual being checked has been convicted or charged with a criminal offence or is the subject of a judicial order. Jonathan Waite has not been charged or convicted and is not subject to any judicial order. The refusal of security clearance for a reason that falls outside these criteria (the association with outlaw motorcycle gangs) is beyond the scope of the policy and, counsel submitted, on this basis, constitutes unlawful means.
[51] The Issuer Memo: Contractor Security Screening contains, as Appendix “A”, the “Contractor Security Screening Process”. It refers to the CPIC check, but makes no reference to the search of any additional database (for example: Niche). As counsel for Jonathan Waite sees it, those conducting the check were obliged to follow the process as outlined. Had they done so, they would have stopped, once advised through the CPIC search, that Jonathan Waite had not been charged, convicted and was not the subject of any judicial order. There would have been no reason to deny the security clearance which would have, and should have, been granted. Counsel submitted that, because those responsible acted outside the process presented, the denial of the security clearance resulted from illegal or unlawful means.
[52] The Contractor Security Screening Operating Policy notes that, where it is intended not to grant security clearance, the screening official will consult with an internal committee and will allow the “contractor” to address any facts that led to the intended refusal. It was the view of counsel for Jonathan Waite that these things had not been done and demonstrated other ways in which the screening had been carried out, contrary to the policy, rendering the results unlawful.
[53] In making these arguments, counsel read the policy too narrowly and failed to fully appreciate the evidence that was presented.
[54] It is true that the Contractor Security Screening Operating Policy refers to the five listed criteria.[53] It does not restrict any evaluation only to them. It introduces the criteria with the following words:
A determination to grant security clearance will be based solely on the information from the screening check and any subsequent information provided by individual being checked and in consideration of, but not limited to the following criteria:....
(The five criteria are then listed)
[Emphasis added]
[55] The Issuer Memo: Contractor Security Screening also lists the five criteria, but does so under the heading “Background”. It says that the criteria are applied when determining whether to grant security clearance. There is nothing to suggest that this is all that is considered. There is nothing that limits the evaluation to the criteria.
[56] Appendix “A: is referred to in the body of the Issuer Memo as a “High-level overview of contractor screening process”. I understand this to mean that it is an overview which is general in nature, lacking detail. This is confirmed by the fact that it makes no reference to any review by internal committee or opportunity for the individual affected to respond, both elements on which counsel for Jonathan Waite now seeks to rely. There is nothing that suggests that those responsible cannot reach further, beyond this outline, to ensure security of the information made available to those who work in licensing offices.
[57] Jonathan Waite was provided with an opportunity to address the issues that led to the refusal to grant security clearance. He spoke to Detective Sergeant Isnor, of the OPP Biker Enforcement Unit. He met with Malcolm Smeaton, the Director of the Security Services and Contingency Planning Branch. It may be that these events took place after December 5, 2008 when Jonathan Waite was escorted from the premises. The evidence was clear that those involved were concerned that the information, they were responsible for securing, could be ransacked or misused by the person whose security check was in doubt, while any review or consultation was taking place. On the other hand, those involved in undertaking the check were prepared to consider any fresh evidence that could impact on the decision. This was demonstrated by Malcolm Smeaton, who sought advice as to the difference between a “member” and an “associate” when the understanding of the status of Jonathan Waite within the applicable gangs changed. In his evidence, Malcolm Smeaton made clear there was an internal committee and that it was consulted.
[58] On this understanding, it cannot be said that those acting on behalf of the Crown did anything they were not at liberty to do. There was no act that was without legal justification.
[59] In making the contrary submission, reliance was placed on Reach M.D. Inc. v. Pharmaceutical Manufacturers Association of Canada.[54] A voluntary trade association published a code that governed the conduct of its members. Membership was conditioned on compliance with the code. The code forbade members from using what were known as “service oriented items” in the marketing of their products. This referred to advertising through the distribution of items unrelated to the product to be sold, but which identified the product or the manufacturer. They included post-it notes, scratch pads, hockey pucks, golf tee, pens, agendas, rulers and fridge magnets.[55] The code made no reference to service-oriented items produced and distributed by others who were not members of the association. The plaintiff was not a member. It developed a calendar which used cartoons to identify each month. It sold advertising to members of the defendant on spaces set aside for the purpose. The calendar was a success. A member complained. The committee responsible advised that the calendar did not comply with the code and that any member that advertised in it would be in contravention of the code. This was the effective end of the plaintiff’s business. The Court of Appeal determined that the code did not authorize the defendant to direct its members to stop advertising in the calendar. The contrary ruling of the committee was a tortious act.
[60] Reach M.D. Inc. v. Pharmaceutical Manufacturers Association of Canada has no application to the circumstances that give rise to this action. There, a finding was made that the defendant had acted outside rules it had imposed. It had done something those rules did not entitle it to do. As a result, it had interfered with the economic relations of the plaintiff which was not a member and which it had no jurisdiction over. In this case, those acting for the Crown had done nothing they were not entitled to do. Moreover, the interest of the Crown, its right to ensure that its policies were followed and the data on the computer system protected, is made evident by the agreement of July 5, 1982 (the only agreement which the court was provided with which pre-dates December 5, 2008, the day that Margaret Waite was advised that Jonathan Waite had been denied the required security clearance). Among other things, it says:
1. The Minister appoints the issuer to be an agent of the Minister to issue motor vehicle permits under subsection 7(11) of the Highway Traffic Act in accordance with the policies from time to time of the Ministry of Transportation and Communications (in this Agreement called “the Ministry”).
2. The issuer will comply with all legislation governing the issuance of permits and licences, with the Ministry's manuals, policies, instructions and directives, and with the Ministry's reporting requirements in a manner that allows immediate revenue reconciliation.
4. All information on the records maintained by the issuer or available on terminals is confidential and the issuer will not disclose it to any other person unless authorized by the Ministry.
17. The issuer will take reasonable precautions to protect revenue, documents and equipment and will notify the Ministry and local law enforcement agencies at the first opportunity of the occurrence of theft, robbery, unresolved revenue discrepancies or breach of security.
24. The issuer will make changes in the office, staff or procedures considered necessary by the Minister for the effective operation of the office.
26. All materials, documents, supplies, licenses, validation devices, equipment, correspondence, books of account and banking and other records relating to the business of the Ministry are the property of the Minister.
29. The Minister may revoke this agreement at any time without notice if the issuer commits a breach of any of its terms.
[61] These provisions speak to the “jurisdiction” of the Crown to deal with the issues of confidentiality and security of the data maintained at the licensing office, and used by its employees. They point to a broader authority to deal with these issues than counsel for Jonathan Waite suggested are allowed for by the Contractor Security Screening Operating Policy or the Issuer Memo: Contractor Security Screening.
[62] These distinctions underscore what, to my mind, is a basic difference between this case and Reach M.D. Inc. v. Pharmaceutical Manufacturers Association of Canada. In the latter, the code is part of a private contract between the association and its members.[56] The economic relationship interfered with was between the distributor of the calendar and the members who purchased advertising. This case concerns a regulatory scheme governing how a public service is to be provided and the public protected. The relationship between the Crown and the operator of the licensing office may be founded in a contract, but it is in respect of the provision of the public service. The economic relationship alleged to have been interfered with was between Jonathan Waite and his employer. In Reach M.D. Inc. v. Pharmaceutical Manufacturers Association of Canada, the claimant (the distributor of the calendar) was an innocent bystander who was not involved in the relationship between the association and its members. In this case, Jonathan Waite is the claimant. He is inextricably bound up in the relationship between the Crown and the operator of the licensing office. He is an employee of the operator and subject to the regulation that governs the relationship. In such circumstances, it is not appropriate to take arrangements respecting the delivery of a public service and equate them to a private contract.
[63] There is one further basis on which it is said the actions of the Crown were unlawful, thus demonstrating the presence of this element of the tort of interference with economic relations. In preparation for the security check, Jonathan Waite was requested to and did sign a form entitled “Individual Information, Authorization, Consent and Release”. Box 6: “Authorization and Consent to Security Check” begins:
I have read and understand the requirements and procedures listed on this form for a security screening check.
• I authorize the OPP to conduct a police records check in accordance with this form. I consent to the disclosure of information about me obtained by the OPP in a police records check to the EMSB.
[Emphasis added]
[64] On a simple reading, the phrase “police records check” suggests a broad look at whatever police records are available. On behalf of Jonathan Waite, it was submitted that taking into account the words “in accordance with this form” shows the check referred to as being quite narrow. The form is attached as part of Appendix “E” to the Issuer Memo: Contractor Security Screening. The Appendix includes a page with the heading: “Background Information”. It refers to “Police Records Check” as involving:
A search by the Ontario Provincial Police (OPP) of records maintained by the RCMP in the Canadian Police Information Centre (CPIC), and the records maintained by provincial and municipal police forces for information about you relating to:
• Convictions under the offence provisions of federal statutes, including but not limited to, the [Criminal Code (Canada)](https://www.canlii.org/en/ca/laws/stat/rsc-1985-c-c-46/latest/rsc-1985-c-c-46.html), and the [Controlled Drugs and Substances Act (Canada)](https://www.canlii.org/en/ca/laws/stat/sc-1996-c-19/latest/sc-1996-c-19.html) (Federal Offences). Convictions for which a pardon under the [Criminal Records Act (Canada)](https://www.canlii.org/en/ca/laws/stat/rsc-1985-c-c-47/latest/rsc-1985-c-c-47.html) has been issued or granted to you will not be collected.
• Where a court has made a finding of guilt in respect of a Federal Offence, and has granted a discharge, unless:
1. The discharge was absolute and granted more than one (1) year ago; or
2. The discharge was conditional and granted more than three (3) years ago.
• Charges that have been laid under Federal Offences but remain unresolved.
• Charges that have been withdrawn by the Crown or stayed or dismissed by a Court will not be collected.
• Records of the judicial orders in effect made in relation to Federal Offences.
[65] As counsel for Jonathan Waite sees it, this explanation limits what is referred to as a “police records check” and, accordingly, limits the breadth of the consent that was provided. On this understanding, Jonathan Waite consented to nothing more than the release of information gathered on a CPIC search and related to convictions, findings of guilt, charges and records of judicial orders as outlined in these paragraphs.
[66] On this basis, it was submitted that by relying on the Niche database and on the association of Jonathan Waite to outlaw motorcycle gangs, those undertaking the security screening exceeded the parameters of his consent. This was a breach of his privacy rights and, accordingly, unlawful. This proposition relied on the [Freedom of Information and Protection of Privacy Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-f31/latest/rso-1990-c-f31.html).[57] It says:
21(1) A head shall refuse to disclose personal information to any person other than the individual to whom the information relates except,
(a) Upon the prior written request or consent of the individual, if the record is one to which the individual is entitled to have access;
[Emphasis added]
21(3) a disclosure of personal information is presumed to constitute an unjustified invasion of
minicounsel