[I]f a person without lawful justification knowingly and intentionally
procures the breach by a party to a contract which is valid and enforceable
and thereby causes damage to another party to the contract, the person who
has induced the breach commits an actionable wrong.
In the course of his judgment in the Posluns case Gale J., now
Chief Justice of the High Court of Ontario, thus defined the tort of
inducing breach of contract.2 The Posluns case was an action by a
stockbroker against the Toronto Stock Exchange, but it is in the
context of trade disputes, especially in cases of picketing, that the
tort of inducing breach of contract is significant in Canada. In the
confused fact situations arising out of trade disputes Canadian courts
have not always been as careful as was Gale, J. to identify each of
the elements of the tort, with the result, for example, that liability
has been imposed where it was not shown that there was any contract
actually breached.
In English trade dispute law, on the other hand, inducing breach
of contract is treated as a clearly defined tort consisting of five
elements. There must be an act of inducement, which usually takes
the form of persuasion of one of the parties to a contract, knowledge
of the contract in question, an intention to cause breach of the con-
tract and to injure the plaintiff thereby, and special damage caused
by the breach. There must also be an absence of what will be regarded
in law as justification. 3 Other considerations enter where what is
alleged is indirect inducement of breach of contract by an act illegal
in itself, but both direct and indirect inducing breach of contract are
bases of tortious liability that, in English law, are carefully circum-
scribed.
Assistant Professor of Law, Queen’s University.
1 This article is taken, substantially unchanged, from chapter IV of the writer’s
book, The Liability of Strikers in The Law of Tort; A Comparative Study of
Judicial Development of the Law in England and Canada, to be published by the
Queen’s Industrial Relations Centre.
2 Poslun v. Toronto Stock Exchange and Gardiner (1965), 46 D.L.R. (2d) 210,
3 See Rookes v. Barnard, [1964] A.C. 1129 (H.L.), per Lord Devlin at p. 1212.
McGILL LAW JOURNAL
Not only has liability been imposed in Canada where English law
would not recognize -that the tort of inducing breach had been com-
mitted but, there are other reasons, sounder at least in judicial logic,
why the tort has a more important place in Canadian law of industrial
conflict. For one thing, there is no statute, like the English Trade
Unions & Trade Disputes Act, 1906,4 that prevents “inducing breach”
being based on breach of employment contracts. Almost as important
is the fact that in recent cases judicial notice has been taken of ‘the
rule” against crossing a picket line. Canadian judges now take it
as established fact that the ethic of trade unionism is such that
unionists will, as a predictable consequence, refuse to “cross another
man’s picket line”. Therefore, it has been held,l the picket may be
said to have effectively caused any resulting breaches of contract.
The English concept of liability for indirect inducement, which is
relevant in such a situation, does not seem always to have been
clearly understood. Moreover the concept of justification has not
been developed to take into account the protection of union interests
under a collective bargaining agreement, although Canadian col-
lective bargaining legislation demonstrates irrefutably the legal
legitimacy of those interests.
There is, of course, no longer any reason why the law in this
country should not depart from that of England where the facts of
Canadian life call for it. But the departure should be conscious, to
meet the needs of a different environment, -and not the result of
reliance on a complex and misunderstood head of tortious liability
in which substantial changes are made for reasons that can only
be guessed at.
(B) The Law In England
The law of inducing breach of contract in England was formed
mainly in pre-twentieth century cases that can, with some distortion,
be called “labour” cases. In 1906, by Act of Parliament, the “in-
ducer” in such cases was relieved of liability where the contract was
one of employment, as it had been in the principal cases up to that
time. This political intervention meant that thereafter, the tort was
the subject of judicial consideration in cases that, for the most part,
did not involve industrial conflict. There were, naturally enough, a
considerable number of “labour” cases concerning the scope of ap-
46 Edw. 7, c. 47.
5Smith Brothers Construction Co. Ltd. v. Jones, [1955] 4 D.L.R. 255 (Ont.
(Ont.
H.C.); Hersees of Woodstock v. Goldstein (1963), 38 D.L.R. (2d) 449
C.A.); and see infra, footnotes 288-239 and accompanying text.
INDUCING BREACH OF CONTRACT
plication of the Act of 1906, and the decisions on this point may
well be of more importance in the law of England than the cases
on “inducing breach” itself. In what follows, the development of the
tort of inducing breach of contract in the 19th century is considered
first, followed by a consideration of section 3 of the Trade Unions
Trade Disputes Act, 1906 (U.K.) and its effect on liability for in-
ducing breaches of contracts of employment. The next two heads
deal with twentieth century refinements relating to the questions of
what consititutes “inducing” and when there may be said to be
“justification”. The concluding part of this section is an examination
of the complex basis of liability for indirect inducement of breach
of contract that has been developed in two of the leading English
labour cases of recent years. 6 It may be that liability for such indirect
inducement is really something quite different from the sui generis
tort of inducing breach. Whether that is so or not, it is an area of
the law that deserves, and demands, analysis.
Development of the tort of inducing breach of
contract in the 19 century
In the early common law a master who, by violence to his servant,
was deprived of the man’s services had a right of action against
the wrongdoer. The Statute of Labourers of 1349,7 and the Statute
of Labourers, 1350,8 gave a master -an action for the enticement of
his servants out of his service, even where there was no violence0
The modern, and such restricted, 0 action per quod servitium amisit,
which is based on interference with the status of the servant in the
master servant relationship,” has evolved from these roots. 2 What-
ever the derivation of these rights of action it was clear in the 19th
century that there was a right of ‘action for interference with con-
tractual relations, but it was limited to interference with contracts
of service.
6 J. T. Stratford and Son Ltd. v. Lindley, [1965] A.C. 269 (H.L.) ; Thomson v.
Deakin, [1952] Ch. 646 (C.A.).
7 23 Edw. III.
825 Edw. III.
9 See Sayre, “Inducing Breach of Contract” (1923) 36 Harv. L. Rev. 663.
10I.R.C. V. Hambrook, [1956] 2 Q.B. 641.
“1A.G. for New South Wales v. Perpetual Trustee Co. Ltd., [1955] A.C.
12 So, too, did the action for wrongful retainer, which was based on inter-
ference with the contract of service. Blake v. Lanyon (1795), 6 T.R. 221;
101 E.R. 521. See Jones, “Per Quod Servitiu. Amisit”, (1958) 74 L.Q.R. 39.
McGILL LAW JOURNAL
From this material, in Lumley v. Gye 13 in 1853, the Court of
King’s Bench created, a new cause of action. Miss Johanna Wagner,
an operatic performer of unique talents, had contracted with the
plaintiff to sing exclusively in his production. The defendant per-
suaded her to perform for him, in breach of her contract with the
plaintiff. It was argued for the defendant that, because Miss Wagner’s
was not a contract of service, but a contract to perform services, no
action would lie for inducing her to act in breach of it. The court
was, however, not to be influenced by the novelty of their argument.
Said Crompton J.,
The nature of the injury and of the damage being the same, and the
supposed right of action being in strict analogy to the ordinary case of
master and servant, I see no reason for confining the case to services or
engagements under contracts for services of any particular description;
and I think that the remedy, in the absence of any legal reason to the
contrary, may well apply to all cases where there is an unlawful and
malicious enticing away of any person employed to give his personal labour
or service for a given time.. 14
Counsel had also argued on the broad ground that a wrong in-
tentionally done to another must always give him a right of action.
Crompton J. did go on to say that, while he based his decision on
the narrower ground of analogy to a master’s right of action where
he has been deprived of his servant’s services, he did not wish to be
taken as saying that the wider argument advanced by counsel was
not tenable. Nor was he confining the right of action for “malicious”
inducement of breach of contract to cases involving contracts for
personal services.
Erle J. agreed in the result but based his decision on the broad
ground that the “procurement of the violation of a right is a cause
of action in all instances”, including breach of contract.” Wightman
J., however, said that it was not necessary to rely on such general
principles and, like Crompton J., he based his decision on a master’s
historic rights of action. In his opinion the right of action for pro-
curing persons to quit service antedated the Statute of Labourers.
It was not limited to menial servants and others to whom the Statute
applied and extended to persons who had contracted for personal
service for a time. Coleridge J., who dissented, took the opposite
13 (1853), 2 E. & B. 216; 118 E.R. 749
14Ibid., at p. 227 (E. & B.), p. 753 (E.R.).
15 Ibid., at p. 232 (E. & B.), p. 755 (E.R.). Erle J. stands out as the foremost
exponent in the 19th century of a judicial attitude which seemed based on
” ‘Laisez faire’ as a legal rule rather than a political maxim”, to borrow the
phrase used in Finkelman. “The Law of Picketing in Canada: I”
(1937-8) 2 U.
of T. L.J. 344, at p. 355.
INDUCING BREACH OF CONTRACT
view. In his opinion such rights of action were based on the Statute
of Labourers, and were not to be extended.
These judgments did not receive reported consideration until
Bowen v. Hall,16 in 1881. In the opinion of the Court of Appeal, the
facts in that case fell clearly within the rule in Lumley v. Gye. The
only question, said Brett L.J., with whom Lord Chancellor Selborne
concurred, was whether that case should be approved by a Court of
Error.17 It seemed to His Lordship that the dissenting judgment of
Coleridge J. had been “as nearly as possible, if not quite, conclusive,”‘ 8
that the right of action for interference with contracts of service
was based on and confined to such contraots as were covered by the
Statute of Labourers. 9 On the wider ground of the decision in
Lumley v. Gye, that taken by Erle J., the case was, however, in His
Lordship’s opinion, correctly decided; that is,
if the persuasion be used for the indirect purpose of injuring the plaintiff,
or of benefiting the defendant at the expense of the plaintiff, it is a ma-
licious act. and… an actionable act if injury ensues from it.20
It then seemed an obvious step for his lordship, sitting as Lord
Esher M.R., in Temperton v. Russell, a decade later, to suggest that
there was no distinction between inducing persons to breach contracts
already existing and inducing them not to enter into contracts. “There
was the same wrongful intent in both cases, wrongful because malic-
ious”,.21
In Allen v. Flood, however, the majority of the House of Lords
thought that the step that Lord Esher had taken was far from obvious.
Said Lord IHerschell,
So far from thinking it a small step from the one decision to the other, I
think there is a chasm between them…
10 (1881), 6 Q.B.D. 333 (C.A.).
17 Ibid., at p. 337.
18 Ibid., at p. 340.
10In De Francesco v. Barnum (1890), 63 L.T. 514 (Ch. Div.) it was held that
Bowen v. Hall and Lumley v. Gye were authority that the action for wrongful
retainer did not depend on the Statute of Labourers, by then repealed.
20 Supra, footnote 16, at p. 338.
21 [1893] 1 Q.B. 715 (C.A.) at p. 728.
The other two members of the Court of Appeal simply based their decisions
on the broad principle that a person who induces a party to a contract to
break it, intending thereby to injure another person or get a benefit for himself,
commits an actionable wrong; per Lopes, J., at p. 730. To the same effect, see
A. L. Smith, L.J., at pp. 732-33. Lopes, L.J. did not decide on the broad ground
that Lord Esher, M.R. did, nor did he say that it is actionable for one person to
induce others not to enter contracts. Lord lacnaghten, in Quinn v. Leathem,
[1901] A.C. 495, (H.L.), at p. 508 seems to indicate that that is what Lopes, L.J.
did say.
McGILL LAW JOURNAL
I thing this was an entirely new departure. A study of the case oi
Lw mley v. Gye has satisfied me that in that case the majority of the Court
regarded the circumstance that what the defendant procured was a breach
of contract as the essence of the cause of action.22
Lord Macnaghten, while he took the same view, pointed out that
Bowen v. Hall and Temperton v. Russell did stand as authorities that
the action for procuring a person .to break a contract was not con-
fined to contracts for personal services, but dike Lord Herschell,23
he declined to give the authority of the House of Lords to the action
for inducing breach of contract.2 4 In the words of Lord Shand,
If it has not yet been decided by this House that a third party who had,
without the use of fraud or other unlawful means, induced the contracting
party to break his contract himself thereby incurs liability in damages,
the question seems to me worthy of full discussion and consideration. 25
Nor did the House of Lords deal with this head of liability in
Quinn v. Leathem, where their Lordships’ concern was to demonstrate
that Allen v. Flood applied only to acts of -individuals. In the process
they rehabilitated Temperton v. Russell, but it was Temperton V.
Russell “disembarrassed of the expressions which Lord Esher un-
fortunately used”. 20
In Quinn v. Leathem Lord Macnaghten, however, did use, by way
of illustration of a broader principle, the following words which
have been heavily relied on in some later cases 27 (and now stretched
to their uttermost limits by Canadian courts in trade dispute cases 28) ;
[I]t is a violation of a legal right to interfere with contractual relations
recognized by law if there be no sufficient justification for the inter-
ference. 29
The right of action for inducing breach of contract as established
in English law by the turn of the century,30 nevertheless, clearly
22 [1898] A.C. 1 (H.L.), at p. 121. See also Lords Watson, Davey and James of
Hereford at pp. 109, 171 and 179.
23 Ibid., at p. 123.
24 Ibid., at p. 153.
25 Ibid., at p. 168.
26 [1901] A.C. 495 (H.L.), per Lord Macnaghten at p. 509. Their lordships were
concerned only with the “conspiracy to injure” aspects of Temperton V. Russell.
Fokuhl v. Raymond, [1949] 4 D.L.R. 145 (Ont. C.A.).
28 See infra, footnotes 111 and 196 and accompanying text. However, in a context
not involving trade unions the orthodox English approach has recently been
affirmed. See Posluns v. Toronto Stock Excehange and Gardiner (1964), 46 D.L.R.
(2d) 210, at p. 266, per Gale, J., affirmed without adverse comment on this point
by the Ontario Court of Appeal in (1965), 53 D.L.R. (2d) 193, especially at pp.
195 and 207.
29 Supra, footnote 26, at p. 510.
30 E.g. see Read v. Friendly Society of Operative Stonemasons of England,
Ireland & Wales and others, [1902] 2 K.B. 732.
INDUCING BREACH OF CONTRACT
required “interference with actual contracts”.3 Allen v. Flood estab-
lished such a requirement to be the law, and it has continued to be a
necessary element in establishing liability where there is no conspiracy
or intimidation.32 In 1964 Lord Donovan said in the course of deliver-
ing one of the majority judgments in Stratford v. Lindley,
the argument that there is a tort consisting of some undefinable interference
with business contracts, falling short of inducing a breach of contract, I
find as novel and surprising as I think the members of the House who decided
Crofter Hand Woven Harris Tweed Co. Ltd. v. Veitch 33 would have done.34
The requirement that the breach of an actual contract be shown
is implicit in the judgments in South Wales Miners’ Federation v.
Glamorgan Coal Co.,35 the first inducing breach of contract case
decided by the House of Lords. In that case the defendant federation
(a registered trade union) 3 had been formed to protect the interests
of its members under an agreement setting up a sliding scale of the
kind upon which miners’s wages were based throughout most of
England and Wales.37 Wages rose and fell with the price of coal.
The Federation, therefore, considered -it to be in the best interest
of its members to order a “stop day”. Many thousands of men, in
obedience to the order, broke their contracts of service. The action
in this case was then brought by the Glamorgan Coal Company and
seventy-three other coal companies, claiming damages for “wrong-
fully and maliciously procuring and inducing workmen in the col-
lieries to break their contracts of service with the plaintiffs”, s3 and
alternatively, for conspiring to do so. The trial judge found that the
defendant union officers had acted from an honest desire to forward
the interests of the workmen, and in no sense from ill-will or a
desire to injure the employers. His decision for the defendants was
reversed by the Court of Appeal.39
The House of Lords upheld the decision of the Court of Appeal
on the grounds, in the words of Lord Macnaghten, that
31 Posluns Case, supra, footnote 28, at p. 266.
32 As outlined in Rookes v. Barnard, [1964] A.C. 1129
(H.L.), and see the
writer’s comment in (1964) 42 Can. Bar Rev. 464. Further with regard to the
relationship between “inducing breach” and “intimidation” see infra, footnotes
139-141, and accompanying text.
33 [1942] A.C. 435 (H.L.).
34 J. T. Stratford and Son Ltd. v. Lindley, [1965] A.C. 269 (H.L.), at p. 340.
35 [1905] A.C. 239 (H.L.).
36It had been decided in the Taff Vale case, [1901] A.C. 426 (H.L.), that a
registered union was a suable entity.
37 See Sharp, Industrial Conciliation and Arbitration in Great Britain, (1950)
(London), Chapter II.
3s Supra, footnote 35, at p. 239.
39 [1903] 2 K.B. 545.
McGILL LAW JOURNAL
It is not disputed… that the union … acting by its executive, induced and
procured a vast body of workmen, members of the union, who were at the
time in the employment of the plaintiffs, to break their contracts of service,
and thus… knowingly and intentionally
inflicted pecuniary loss on the
plaintiffs.4O
This, in his Lordship’s opinion, was an actionable wrong. Lord
Macnaghten then considered the argument that since there was no
ill-will, but only an honest desire to further union interests there
should be no liability. He said,
It is no defence to say that there was no malice or ill-will against the
masters … It is settled now that malice in the sense of spite or ill-will is
not the gist of such an action as that which the plaintiffs have instituted.4 1
Lord Lindley pointed out that in such cases it is better to drop
the word “malice” altogether, where all it means is “an intention to
commit an unlawful act.142
It was thus established that the tort of inducing breach of con-
tract had been committed, in that the defendants had knowingly and
intentionally caused damage to the plaintiffs 43 by getting the miners
to break their contracts, and a lack of spite or ill-will did not constitute
justification for such behavior.
Section 3 of the trade disputes act, 1906 (U.K.)”
inducing breaches of contract of employment
The Royal Commission on Trade Disputes and Trade Combina-
tions of 1906 apparently felt almost as strongly about the sanctity
of contracts of employment as did the House of Lords. The trade
union right to strike, which the Commission recommended should be
assured by statute, firmly excepted any privilege of breaking or
inducing the breach of contracts.45 However, Sir Charles Dilke added
the first provision of what is now section 3 of the Trade Disputes
Act, 1906 to the section as originally proposed in order to prevent
40 Supra, footnote 35, at p. 245, and see Earl of Halsbury, L.C., at p. 244, Lords
Jamees and Lindley at pp. 250, 253.
41Ibid., at pp. 245-6.
42 Ibid., at p. 255, see also Lord James at p. 250.
43 “Damage is the gist of actions such as the present; that in order to succeed
and make a good case for either damages or an injunction damage must be proved,
not, indeed, damage in detail or special damage in the narrow sense of that epithet,
but actual damage –
damage. which has been, or, where an injunction is
sought… will be, the natural consequence of the act complained of.” National
Phonograph Co., Ltd. v. Edison-Bell Consolidated Phonograph Co., Ltd., [1908]
1 Ch. 335 (C.A.), per Kenedy, L.J., at p. 370.
446 Edw. 7, c. 47.
45 Cd. 2825, Summary of Recommendations Nos. 2 and 3.
INDUCING BREACH OF CONTRACT
the tort of inducing breach of contract from being used to defeat
the right to strike. 46 That section provides:
An act done by a person in contemplation or furtherance of a trade dispute
shall not be actionable on the ground only that it induces some other person
to break a contract of employment…
Since 1906, therefore, the tort of inducing breach of contract has
been of less importance in trade disputes.47 Obviously, it becomes
of importance in any case in which the contract in question is not
one of employment 48 or where the court finds that the inducing was
not done “in contemplation or furtherance of a trade dispute”.
Section 5 (3) of the 1906 Act provides:
In this Act and in the Cospiracy and Protection of Property Act, 1875,4 9
the expression “trade dispute” means any dispute between employers and
workmen, or between workmen and workmen, which is connected with the
employment or non-employment, or the terms of the employment, or with the
conditions of labour, of any person, and the expression “workmen” means
all persons employed in trade or industry, whether or not in the employment
of the employer with whom a trade dispute arises; (and in section 3 of the
last mentioned Act, the words “between employers and workmen” shall be
repealed) .50
At acks on the immunity formula in the 1906 Act, thus defined,
have been frequent. In 1909, in Conway v. Wade,51 the House of Lords
held that there was no trade dispute where the trouble arose from
a union official’s attempt to force a recalcitrant member to pay a
fine imposed by the union for breach of its rules, and to punish
him for not paying it. Lord Chancellor Loreburn, with whom Lords
Macnaghten and Correll concurred, said of this matter; “A mere
personal quarrel or a grumbling or an agitation will not suffice. It
must be something fairly definite and of real substance.5 2 Before
46 Parl. Deb. (4th ser.) Vol. 162, Col. 1678. Canadian experience indicates how
vital this protection is –
see infra, footnotes 181-185 and accompanying text.
51 [1909] A.C. 506 (H.L.).
52 Ibid., at p. 510.
47 See now the Trade Disputes Act, 1965, s. 1(1) (b), which makes the same
exception to liability for threatening to induce breaches of contract of employment.
8 E.g. Bents Brewery Co., Ltd. V. Luke Hogan, [1945] 2 All E.R. 570; Thomson
v. Deakin, supra, footnote 27; J. T. Stratford and Son Ltd. v. Lindley, [1965]
A.C. 269 (H.L.), as that case was seen by Lords Pearce and Donovan.
49 The words in the 1906 Act granting immunity from liability for civil con-
spiracy to injure were added as an amendment to section 3 of the 1875 Act (38
and 39 Viet., c. 86).
50 The scope of the protection offered by the Act is obviously dependant on
the courts’ interpretation of the words “all persons employed in trade or industry”,
as well on the matters considered in the text. On this see Hickling, M. A.,
Restoring the Protection of the Trade Disputes Act: Some Forgotten Aspects
(1966) 29 M.L.R. 32, at pp. 33-39.
McGILL LAW JOURNAL
the 1906 Act had been passed the immunity formula, as it appeared
in The Conspiracy and Protection of Property Act, 1875, had been
held to apply only where the dispute was between the defendant
workmen and his own employer l3 but Lord Loreburn pointed out
that, under the new definition, dmmunity could not be considered to
apply only to acts done by the immediate parties to the dispute. He
then continued,
If, however, some meddler sought to use the trade dispute as a cloak beneath
which to interfere with impunity with other people’s work or business, a
jury would be entirely justified in saying that what he did was done in
contemplation or furtherance, not of a trade dispute, but of his own designs,
sectarian, political or purely mischievous, as the case may be.54
As was recognized in Conway v. Wade, the Act was quite clear
that any dispute over the usual subjects of industrial disagreement
fell within the -immunity formula, and it left little doubt that ordinary
sympathetic action was covered. However, Lord Loreburn’s “meddler”
and the requirement of “workmen” as necessary parties to a “trade
dispute” could be a dangerous combination in the hands of courts
who still tended to see all unions as meddlers bent upon taking
advantage of, rather than acting for, workmen.5
That line of attack, however, was laid to rest dn 1943 by Lord
Wright when, in the course of his judgment in N.A.L.G.O. v. Boulton
Corporation, he said,
It would be strangely out of date to hold, as was argued, that a trade union
cannot act on behalf of its members in a trade dispute, or that a difference
53See Report of the Royal Commission on Trade Disputes and Trade Combina-
tions Cd. 2825, Art. 62:
It is to be observed that in the above proposed amendment we have omitted
after the words ‘trade dispute’ the words between ’employers and workmen’
which are found in section 3 of the Act of 1875. Our reason for so doing is
that in Quinn V. Leathem [1901] A.C. 495 the House of Lords expressed
their opinion that the third section of the Act of 1875 would in the case before
them have afforded no exemption from criminal liability because the acts
of the defendants were not acts, within the terms of the statute, in contem-
plation or furtherance of a trade dispute between employers and workmen.
54 Supra, footnote 51, at p. 512.
55 Valentine V. Hyde, [1919] 2 Ch. 129. See also the following decisions by the
Court of Appeal, reversing trial judges who felt that the participation of a
union took the industrial action in question out of the protection of the Trade
Disputes Act: Dallimore v. Williams & Jesson (1912), 29 T.L.R. 67 (C.A.) and
(1913), 30 T.L.R. 432 (C.A.), and White v. Riley, [1921] 1 Ch. 1 (C.A.). In
Hodges v. Webb, [1920] 2 Ch. 70 and Fowler v. Kibble, [1922] 1 Ch. 487 (C.A.)
jurisdictional disputes were held to be trade disputes within the meaning of the
Act, following Gaskell v. Lancashire & Cheshire Miners’ Federation (1912), 28
T.L.R. 518, at p. 520 per Cozens-Hardy, M.R.
INDUCING BREACH OF CONTRACT
between a trade union acting for its members and their employer cannot be
a trade dispute.56
A similar line of attack has more recently found favour with
the Irish courts,” the argument taldng ‘the form that where none of
the union members are, at the time of the dispute, employees of the
is
employer with whom -the union is in dispute, the matter
not a “trade dispute” within the Act. In Bird v. O’Neal 58 the Privy
Council, quoting Lord Wright in the N.A.L.G.O. case, rejected a
similar argument. There is, therefore, good reason to think that the
English courts accept the view that a union’s participation in a
dispute may provide the element necessary to satisfy the definition
in such a case. 9 Somewhat the same issue was raised, for example, in
Beetham v. Trinidad Cement 60 which arose out of a recognition
dispute in which a union was attempting to force the employer to
accept it as bargaining agent for his employees. The Judicial Com-
mittee of the Privy Council, -again relying on the N.A.L.G.O. case,
rejected the argument that a recognition dispute was a dispute
between an employer and the union seeking recognition, rather than
between “employers and workmen” within the terms of the Act. This
would seem to accord with the aims of the 1906 Act because, in
English industrial relations, there is no other way to gain recognition
than, ultimately, by relying on the sanction of -ndustrial action.
The realities of English Labour relations seem to have been given
less consideration however in the recent case of Stratford v. Lindley.61
In that case union officials, who ordered their members to refuse to
work the plaintiff’s barges because he had made a collective agree-
ment with a rival union, were held by the House of Lords not to
have been acting “in contemplation or furtherance of a trade dispute”.
In the Court of Appeal Lord Denning had held, with the concurrence
of the other members of the court, that “[w]henever a trade union
claims recognition (or negotiation rights, as it is sometimes called)
on behalf of its members, and an employer declines to recognize that
56 [1943] A.C. 166 (H.L.), at p. 189; approved in Bird v. O’Neal, [1960] A.C.
907 (P.C.), and in Beetham v. Trinidad Cement, [1960] A.C. 132 (P.C.).
60 Supra, footnote 56.
61 Supra, footnote 34.
57 Doran v. Lennon, [1945] I. R. 315. In the Irish Republic the 1906 Act was
never limited as it was in England by the Trade Disputes and Trade Unions Act,
1927, 17 & 18 Geo. V, c. 22, repealed in 1946 and 9 & 10 Geo. VI, c. 52, so there
have been many more cases before the Irish courts dealing with the nature of
a trade dispute. See V. T. H. Delany, Immunity in Tort and the Trade Disputes
Act – A New Limitation? (1955) 18 M.L.R. 338.
58 Supra, footnote 56.
59 M. A. Hickling, The Judicial Comni ttee on Picketing and Trade Disputes,
(1961) 24 M.L.R. 375. But see Larking v. Long, [1915] A.C. 814 (H.L.).
McGILL LAW JOURNAL
-0 2 But, in the House
claim, there is a trade dispute within the Act”.
of Lords it was considered important that no formal approach had
been made to the plaintiff just before the embargo was imposed.
Having failed to make the claim for rights the unionists could not
purport to have taken action in contemplation or furtherance of a
dispute over the plaintiff’s failure to accede.0 Moreover, this poor
timing indicated to their Lordships that the defendants sought
“merely the advancement of their union’s prestige in rivalry with
another union. ‘0 4
If Stratford and Lindley is indicative of a more stringent attitude
toward -the immunity formula 05 in the 1906 Trade Disputes Act, the
incidence of -the tort of inducing breach of contract in English labour
relations will be greatly increased.
Liability for inducing breach is likely to become even more
frequent as a result of the Contracts of Employment Act, 1963 00 in
accordance with which many terms formerly contained only in collec-
tive agreements will be incorporated into contracts of employment.
This problem has already been faced by the Court of Appeal in Camden
Exhibition and Display Ltd. v. Lynott.67 In that case shop stewards
had procured collective refusal to work overtime despite the terms
of employment which appeared to provide for certain required over-
time. Only Lord Denning interpreted the working rule in question
as having been breached, but his Lordship spoke for the court in
holding that prima facie this was a dispute connected with the terms
of employment under which the men were working. Unlike Stratford
v. Lindley, this was a straightforward case of employees trying to
force wage concessions from their employer by industrial action
directly against the employer himself, but, even so, it was argued
nevertheless that the demand for wages was really a specious cover
for other ends. The demand, it was said, was made solely for dis-
ruptive purposes. The rejection of this argument makes the Camden
case a valuable reaffirmation of the kind of judicial attitude that
02Ibid., at p. 281, and pp. 289 and 300.
63 Ibid., at pp. 334 and 341, per Lords Pearce and Donovan.
64 Ibid., at pp. 323 and 326-7, per Lord Reid and Viscount Radcliffe. Lords
Pearce and Donovan express this view as well, ibid. Lord Upjohn simply said
that the respondents had not made out a prima facie case that there was a trade
dispute, at p. 337.
65 See the forceful opinion of Mr. K.W. Wedderburn in his note on Stratford v.
Lindley in (1965) 28 M.L.R. 205, at p. 209.
66 C. 49, “s. 4(1) … the employer shall give to the employee a written state-
ment… giving. particulars of the terms of employment [as provided] …
07 [1965] 3 W.L.R. 763; [1965] 3 All E.R. 28(C.A.).
INDUCING BREACH OF CONTRACT
made section 3 of the Trade Disputes Act a real source of protection
for trade unionists in the years between Conway v. Wade and Strat-
ford v. Lindley.
In Stratford’s case the union did fail to make clear its demands
before taking action so it may still be said that the Trade Disputes
Act affords protection in the ordinary case of a trade union official
calling out the members in breach of their contracts of employment
in pursuance of a disagreement with the employer. In such a case
the unionist will not be held liable for inducing breach of contract.
Twentieth century refinements
The law of tortious liability for inducing breach of contract, in
spite of its inapplicability in most trade dispute cases, has undergone
considerable refinement in this century. Rigby L.J. had said in 1896,
“[I]t is not, as I understand the law, every procuring of a breach
of contract that will give a right of aotion,” 69 but in the light of
subsequent cases this reservation must be taken to have been a
reference to cases in which knowledge, causal connection or some
other element of the tort was held to be lacking. It now appears
that the tort may be based on all classes of contracts. 70
Lord Devlin, in Rookes v. Barnard, has given a recent ‘author-
itative statement of the tort; 7″
What are the requisites for a cause of action for inducing breach of contract ?
There must be, besides the act of inducement, knowledge by the defendant of
the contract in question and of the fact that the act induced will be a breach
of it; there must also be malice in the legal sense, that is, an intention to
cause the breach and to injure the plaintiff 12 thereby and an absence of
justification; and there must be special damage, i.e., more than nominal
damage, caused to the plaintiff by the breach. These three elements or
68 Ibid., at p. 769, and see pp. 770 and 772.
69 Exchange Telegraph Co. Ltd. v. Gregory & Co., [1896] 1 Q.B. 147, at p. 157.
70 See for example : National Phonograph Co. Ltd. v. Edison Bell, supra, foot-
note 43, to maintain list prices, etc.; Goldsoll v. Goldman, [1914] 2 Ch. 603, not
to set up business within stated area; G.W.K. v. Dunlop (1926), 42 T.L.R. 376,
to display tyres; B.M.T.A. v. Salvadori, [1949] Ch. 556, not to resell automobiles;
Bent’s Brewery v. Hogan, supra, footnote 48, not to disclose confidential infor-
mation; Thomson v. Deakin, supra, footnote 27, to supply newsprint; Jasperson
v. Dominion Tobacco Co., [1923] A.C. 709 (P.C.), not to buy beyond limit au-
thorized.
71 [1964] A.C. 1129 (H.L.), at p. 1212. See also, in the Crofter case, [1942]
A.C. 435 (H.L.), especially Viscount Simon’s statement of this tort, at p. 442.
(reproduced infra, footnote 232).
72 On this point, see also Thomson v. Deakin, supra, footnote 27 per Lord
Evershed, M.R., at pp. 676-7.
McGILL LAW JOURNAL
requisites are the grounds on which an action for inducing a breach of
contract must be based. If any one of them is missing, there is no cause of
action.
This statement of the tort is probably the most complete judicial
pronouncement to be found in the reports, but it leaves at least two
points unclear: In the first place, what constitutes inducement; and
in the second, what constitutes justification. Furthermore Lord
Devlin,’s statement contains no mention of the concept of “andirect
inducement”. Although it might be argued that this concept is not
properly considered as part of the law of inducing breach of contract
at all ,it will be examined, following a consideration of the other
two points.
What Constitutes Inducing
It is clear that the “act of inducement” may be an actual physical
interference; to be actionable it must be an act in itself unlawful
which prevents one party from performing his side of the contract,78
including, apparently, physical restraint on one of the parties, 4 but
in the form which the tort usually takes the inducing consists in
persuading one of the parties to breach the contract. 5
In the Glamorgan case 76 Lindley L.J. had appeared to distinguish
between the stop-work order given by union officials to their members
in that case and “advice’ or “counsel”. 7 In Thomson v. Deakin,
before the Court of Appeal in 1952, Lord Evershed held that there
was no inducement where a direct approach to the contract breaker
amounted to nothing more “than a statement of the facts, as the
members of the union understood them to be”, although there was a
“significant” reference to picketing.78 In Stratford v. Lindley79 on
the other hand, two of their Lordships held that there had been “in-
ducement” on the following facts :
The defendant trade union officials first ordered their members
not -to work barges owned by the plaintiff -and then informed the
73 G.K. W. v. Dunlop, supra, footnote 70; Thomson V. Deakin, ibid., per Morris
and Jenkins, L.J.J. at p. 702 and pp. 694-6.
74 Thomson v. Deakin, ibid., per Jenkins, L.J., at p. 695.
75 Indirect inducement, as established in Thomson v. Deakin, ibid., takes a
different form. It is dealt with below, see infra, footnotes 106-135.
76 Supra, footnote 35.
77 Ibid., at p. 254.
78 Supra, footnote 27, at pp. 685-6, see also Jenkins, L.J., at p. 697, where he
said that there is “nothing unlawful (…) in general appeals”, where what is
advocated could equally well be carried out by lawful means.
79 Supra, footnote 34.
INDUCING BREACH OF CONTRACT
plaintiff’s customers, who had hired barges from the plaintiff, that
it would be impossible to return the barges to him. Because of the
union embargo there would be no crew to take the barges back to
the plaintiff’s moorings. It was held by -the House of Lords that
ordering the plaintiff’s barges “blacked” and Informing his customers
in this way amounted to inducing breach of the hiring contracts,
which impliedly called for return of the barges. As Lord Pearce put it:
The fact that an inducement to break a contract is couched as an irresistible
embargo rather than in terms of seduction does not make it any less an
inducement.8 0
Lord Pearce’s statement may be -thought -to weigh against the
strict view of what is necessary to establish “inducement,” taken
by Lord Evershed in Thomson V. Deakin. It is suggested, however
that such ds not the case. In fact only two of the judgments 81 treat
the facts in Stratford V. Lindley as establishing a case of direct
inducement of breach of contract, as that tort was outlined by Lord
Devlin in Rookes V. Barnard.8 2 The other three treated it as a case
of indirect inducement. One of the prerequisites of liability under
the latter head, as established -in Thomson V. Deakin,8 3 is an illegal
act on the part of the defendants, aside from -the inducement itself.
Similarly, where there is to be liability for directly inducing breach
by means other than persuasion those means must themselves be
illegal.8 4 Lord Pearce’s statement, equating the effect of the giving
of information in Stratford’s case to “seduction”, may therefore be
taken to mean simply this: that to inform the other party to the
plaintiff’s contract that the performance of the contract has been
interfered with by means illegal in themselves will give rise to
liability as surely as would persuading that other party not to
perform. This is a matter quite different from the question of
whether or not a communication by the defendant amounted to per-
suasion, rather than the mere giving of information.
The question of whether the defendant has, by persuasion, brought
about the breach is really one of causation.8 5 It must be regarded
as somewhat unsettled, although Lord Evershed, in Thomson v.
80 Ibid., at p. 333.
81 Lord Pearce and Lord Donovan, who concurred on the questions here under
8 2 Supra, footnote 71, and accompanying text.
8 3 Supra, footnote 27, and see infra, footnote 113 and accompanying text.
84 Supra, see footnote 73.
85 Newell v. Barker and Bruce, [1950] S.C.R. 385, per Estey, J., at p. 393;
see infra footnote 241 and accompanying text; and see Payne, The Tort of
Interference With Contr’act (1954) Curr. Legal Prob. 94, at p. 103; Street, The
Law of Torts (3rd ed.) (1963)
(London), at p. 345.
McGILL LAW JOURNAL
Deakin did indicate that the courts should not be too ready to find
that merely to give information is to persuade. In fact it is probably
impossible ever to establish a precise
line of distinction between
persuasion and advice “meaning by the latter a mere statement of,
or drawing of the attention of the party addressed to, the state of
facts as they were”. 6 It has been held, for instance, that where
advice “is intended to have persuasive effects”8 7 -the advisor may be
held liable for inducing the ensuing breach of contract.
It is also clear, however, that “the contract breaker may himself
be a willing party to the breach without any persuasion by the third
party….”’88 This situation usually occurs in what may be regarded as
a special type of inducing case:89 the case in which the breach
occurs because the other party to the plaintiff’s contract makes a
contract with the defendant inconsistent with the one he has with
the plaintiff. In B.M.T.A. v. Salvadori,10 Roxburgh J. was at pains
to show “active steps” by which the defendant at least facilitated
such a breach. His Lordship was prepared, if necessary to treat the
offer of a price sufficiently high to make the seller “willing” as the
necessary active step. In any such case, however, the defendant has
clearly gained an advantage for himself, and that fact should, perhaps,
be treated as making his approach something other than mere advice
which is ‘allowable because it does not amount to persuasion. 91
Such cases of “inconsistent dealing” may also arise where the
defendant made his contract without knowing of the plaintiff’s
previously existing one, but continued to take advantage of it, to
the plaintiff’s detriment, after he learned the facts of the matter.2
Cases of this kind illustrate the importance of the element of know-
ledge required in the tort of inducing breach of contract, 3 because
in such cases the defendant brings himself within the scope of liability
not by entering the inconsistent contract, but by continuing to take
advantage of it after he knows of its effect on the plaintiff’s prior
contract.
s Thomson v. Deakin, supra, footnote 27, per Lord Evershed, M.R., at p. 686.
87 Camden Nominees Ltd. V. Forcey, [1940] Ch. 352, at p. 366.
88 Thomson V. Deakin, supra, footnote 27, per Jenkins, L.J., at p. 694.
s9 See H. Lauterpacht, Contracts to Break a Contract (1936) 52 L.Q.R. 494.
9o Supra, footnote 70.
91 But see Batts Combe Quarry, Ltd. v. Ford, [1943] Ch. 51.
92 Thomson v. Deakin, supra, footnote 27, per Jenkins, L.J., at p. 694, quoting
De Francesco v. Barnum, supra, footnote 19.
93 British Industrial Plastics, Ltd. v. Ferguson, [1940] 1 All E.R. 479 (H.L.);
British Homophone Ltd. v. Kunz and Crystallate Gramophone Record Manufac-
turing Co. Ltd. (1935), 152 L.T. 589.
INDUCING BREACH OF CONTRACT
What Constitiutes “Justification”
In Quinn v. Leathemn4 Lord Macnaghten spoke of “justification”
for interference with contractual relations. In the Glamorgan Coal
Case their Lordships acknowledged that there might, in some situ-
ations, be justification 95 but they all made it very clear that the sort
of trade union self-interest which is now considered a legitimate
motive in cases of conspiracy to injure 91 has no place in the tort of
inducing breach of contract. Lord James said,
The intention of the defendants was directly to procure the breach of
contracts. The fact that their motives were good in the interests of those
they moved to action does not form any answer to those who have suffered
from the unlawful act.97
Although “justification” was, in this way, brushed aside almost
impatiently by the House of Lords in the Glamorgan ease, lack of
justification survived 5 as an element of the tort of inducing breach
of contract.
Then only justification aside from statute, 9 which the courts
seem fully prepared to recognize is one based on a prior existing
contract. 100 Where the person induced is party to a previous contract
with the defendant, as Buckley L.J. observed in Smithies V. National
o4 Supra, footnote 26.
95Supra, footnote 35, per Earl of Halsbury L.C., at p. 244, Lords James,
Lindley and Macnaghten at pp. 251, 254 and 246.
90 Crofter Hand Woven Harris Tweed Co. Ltd. v. Veitch, [1942] A.C. 435.
Fleming, The Law of Torts (3rd ed., 1965), at p. 668 and p. 659.
07 Supra, footnote 35, at p. 252. See also Earl of Halsbury L.C. at p. 244, Lords
Macnaghten and Lindley at pp. 246 and 254.
9sIn Lord Devlin’s exposition in Rookes v. Barnard, for example. See supra,
footnote 71 and accompanying text.
09. Stott v. Gamble, [1916] 2 K.B. 504 may be considered to be an example of
100 In the Glamorgan case, supra, footnote 35, at p. 254, Lord Lindley mentioned
the duties of a parent or guardian as possible justification. Subsequent authorities
mention a parent’s right to persuade his daughter not to perform a contract to
marry as an example of justification; see e.g. the Crofter case, supra, footnote
71, per Lord Simon, at p. 442; Pratt v. B.M.A., [1919] 1 K.B. 244, at p. 265;
and see also Couldrey v. Orrin (1955) unrep., referred to in Salmond on Torts
(13th ed., 1961)
(London), at p. 662. In Brimelow v. Casson, [1924] 1 Ch. 302,
a plea of justification on behalf of the Joint Protection Committee of various
actors’ associations was allowed in an action against them for inducing the
breach of contracts between theatre managers and the plaintiff, who ran a revue
in which he drastically underpaid his chorus girls. This is the only case in which
“justification” in a sense that negatives malevolence, or in any moral or economic
sense based on public policy, has succeeded. e.g. see Bents Brewery Co. Ltd. V.
Lord Hogan, [1945] 2 All E.R. 570, and the review of authorities by Simonds, J.
in Camden Nominees v. Forcey, supra, footnote 87.
McGILL LAW JOURNAL
Association of Operative Plasterers,’0′ the courts will not only con-
sider inducing the breach of a subsequent inconsistent contract
justified; the “inducer” may invoke the help of the courts in en-
forcing the prior contract and thus causing breach of the second
one. Similarly, where the plaintiff, rather than the person induced,
is party to a prior contract with the defendant, which is inconsistent
with -the one that has been breached, the courts may well regard
this -as giving the inducer (defendant) a right, amounting to justifi-
cation,10 2 to interfere with the subsequent contract.
It has been suggested 1 0 3 that the enforcement of a pre-existing
collective bargaining agreement might be regarded, under these
principles, as justification for trade union officials inducing the
breach of an inconsistent contract. Although there is some authority
upon which to base this proposition, 0 4 the fact that such agreements
are generally considered not to be legally enforceable contracts might
well be a stumbling block.105
Indirect inducement of breach of contract
In the case of D.C. Thomson & Co. Ltd., v. Deakin 00 the Court of
Appeal engendered a new concept, that of “indirect inducement” of
breach of contract, which has since been accepted by the House of
Lords in Stratford v. Lindley107
The defendant in Thomson v. Deakin was General Secretary of
the Transport and General Workers Union. The plaintiffs were em-
ployers of non-union labour, in the printing and publishing trade.
101 [1909] 1 K.B. 310 (C.A.), at p. 337; see also Pratt v. B.M.A., ibid., at pp.
‘o2 Snithies v. National Association of Operative Plasterers, ibid., per Buckley,
L03 N. A. Citrine, Trade Union Law (2nd ed., 1960)
(London), at pp. 470-1;
Clerk and Lindsell on Torts (12th ed., 1961) (London), chapter 12, note 65.
104 Read V. Friendly Society of Operative Stonemasons of England, Ireland and
Wales [1902] 2 K.B. 88 (Div. Ct.), 732 (C.A.), per Darling, J., at p. 96, and
Stirling, L.J. in the Court of Appeal, at p. 742. Citrine, stpra, footnote 103, at
pp. 470-1, makes the same suggestion, -where the plaintiff is a member of the
defendant union, with regard to the rules of a trade union, which may be a
lawful and valid contract, although, by section 4 of the Trade Union Act, 1871,
not directly enforceable.
105 This point is taken up in somewhat greater detail when the Canadian law
is considered. In Canada collective agreements are, by statute, made binding
on the parties to them, which allows much greater scope for contractual justifi-
cation in trade disputes.
106 [1952] Ch. 646 (C.A.).
07 Supra, footnote 34.
INDUCING BREACH OF CONTRACT
Union opposition to this anti-union policy led to a strike of the
plaintiff’s employees, many of whom had organized secretly. Bowaters
Ltd. had a contract to supply the plaintiffs with paper. In support
of general exhortations by the defendant, -to “black” the plaintiffs,
Bowaters’ truck drivers, who were members of the T.G.W.U., gave
their employer notice that they might not be prepared to make
deliveries to the plaintiffs on the following Monday. Bowaters’
loaders took similar action. In fact, Bowaters never did call upon
either its truck drivers or its leaders to service the plaintiffs, but
simply informed the plaintiffs that they would not make deliveries.
On these facts the plaintiffs conceded that there was no actionable
conspiracy to injure and Upjohn J., held that the defendants had
not committed the tort of inducing breach of contract and could
not be enjoined. He decided on the ground that
There never was any direct action between the defendants or agents on
their behalf and Bowaters with the object of persuading or causing Bowaters
to break their existing contracts with the plaintiffs.0o
The Court of Appeal, although they upheld the decision of Upjohn J.,
based their conclusion on -the finding of fact that Bowaters had acted
voluntarily in cufing off -the plaintiff’s supplies and had acted prior
to any actual breach of contract by their employees which might
have forced a stoppage of supplies to the plaintiff. The Court of
Appeal did not share Upjohn J.’s opinion that the tort of inducing
breach of contract could not be committed other than by direct pro-
curement,1 0 although on the facts of the case before them there was
neither direct nor indirect procurement.
Harking back to Lord Macnaghten’s reference to this tort (in
Quinn v. Leathem) in wide terms of “interference with contractual
relations”,”‘ the court, although it acknowledged that no such case
-“2 established, as authoritatively as was
had been decided before,
possible in light of the finding of fact, that liability for inducement
of breach of contract is not limited to cases of direct procurement.
Jenkins L.J. expressed the limits of liability for indirect inducement
as follows ;113
108 Supra, footnote 106, at p. 662.
109 Ibid., per Lord Evershed, M.R., at p. 685, Jenkins, L.J., at p. 695 and 699
and Morris, L.J. at p. 703.
110 Ibid., per Lord Evershed, M.R., at p. 687.
11 Supra, footnote 29 and accompanying text. See Lord Evershed, M.R. in
Thomson v. Deakin, ibid., at p. 674; Jenkins and Morris, L.J.J., at pp. 693 and
700 also referred to Lord Lindley’s statement in Quinn V. Leathem, at p. 535.
112Ibid., per Lord Evershed, M.R., at p. 674, Jenkins, L.J., at p. 696.
113Ibid., per Jenkins, L.J., at p. 696; Lord Evershed expressed a similar
opinion at p. 679, Morris, L.J. concurred generally, at p. 702.
McGILL LAW JOURNAL
… I think that in principle an actionable interference with contractual
relations may be committed by a third party who, with knowledge of a
contract between two other persons and with intention of causing its breach,
or of preventing its performance, persuades, induces or procures the servants
of one of those parties, on whose services he relies for the performance of
his contract, to break their contracts of employment with him, either by
leaving him without notice or by refusing to do what is necessary for the
performance of his contract, provided that the breach of contract between
the two other persons intended to be brought about by the third party does
in fact ensue as a necessary consequence of the third party’s wrongful inter-
ference with the contracts of employment.
This formulation makes it clear that, where the defendant is
alleged to have brought about a breach of the plaintiff’s contract
indirectly, the act from which this result is alleged to have flowed
must itself have been illegal. 114 Where the defendant simply persuades
the other party to the plaintiff’s contract to commit a breach, it is
clear, of course, that on that basis alone the defendant incurs liability,
but where he interferes by any other means, the means must them-
selves be illegal.115 The distinctive feature of “indirect inducing” is
that, while the means of causing the breach in the plaintiff’s contract
must be illegal in themselves, the illegality need not be a wrongful
act that would give the plaintiff a right of action, had it not resulted
in the breach of contract upon which the action is founded. Both
Lord Justice Jenkins and Lord Justice Morris give the example of a
case in which the defendant takes away the tools with which a third
party who has a contract with the plaintiff is to perform his obliga-
tions under it. In such a case only the third party has a right of
action for the removal of the tools, but the plaintiff will have a right
of action for the resulting interference with his contract. In Thomson
v. Deakin itself the alleged illegal inducement of breaches of contracts
of service corresponded to the taking away of tools in the example
given.” 16
Jenkins L.J. ‘s statement of the limits of liability for indirect
inducement of breach of contract calls for explanation of the phrases
“necessary consequence” and “knowledge of a contract”, as used by
his Lordship. He subsequently defined “necessary consequence” as
meaning that,
14Ibid., per Jenkins, L.J., at 696, Morris, L.J., at p. 702 and Lord Evershed,
1″ Suipra, footnote 73, and accompanying text.
116 Although it might be thought the the effect of section 3 of The Trade
Disputes Act, 1906 would be to render such inducing not “illegal” this was not
the view of the court. See infra, footnotes 130-132.
INDUCING BREACH OF CONTRACT
by reason of the withdrawal of the services of the employees concerned, the
contract breaker was unable, as a matter of practical possibility, to perform
his contract; … 117
In Stratford V. Lindley Lord Pearce expressly agreed with this dictum
on “necessary consequence” as it applied to cases of indirect in-
ducement. 1 8
As mentioned above, the facts in Stratford v. Lindley were treated
by Lords Pearce and Donovan as revealing direct inducement and by
the other three law lords as showing only indirect inducement.” 9
The case arose as follows: Three members of the Watermen’s Union
were employees of Bowker and King, a barge operating company
wholly owned by the owners of J.T. Stratford and Son Ltd. (and
treated by the House of Lords as part of the same entity for pur-
poses of this case). Having in previous years refused to recognize
any union, Bowker and King came to an agreement in 1963 with the
Transport and General Workers Union. As a result of this grant of
negotiation rights to a rival union, officials of the Watermen took
boycott action against Stratfords; they ordered dockworkers who
were members of their union not to work barges hired from Strat-
fords, and then informed the hirers of the fact. There wag some
question whether the dockworkers’ refusal to work barges hired from
Stratfords constituted a breach of employment contracts, and whether
implied contracts between the hirers and Stratfords were in fact
breached as a result, but the House of Lords held for the plaintiffs on
both of these questions.
Lords Reid and Upjohn, and Viscount Radcliffe held that the
defendants had indirectly induced breach of the contracts between
Stratfords and the hirers by causing the dockworkers to break con-
tracts of employment with the hiring companies. But Lords Pearce
and Donovan held that informing the barge hirers of the boycott
amounted to a direct inducement of breach of the hiring contracts.
There being, in his opinion, such a direct inducement, Lord Pearce
held that
if the defendants intended to procure the breach, and successfully procured
it as a reasonable consequence of their acts and their communications to the
hirers… it is not, in my opinion, a defence to say that the hirers could have
somehow avoided the breaches. 12 0
117 Supra, footnote 106, at p. 697.
18 Supra, footnote 34, at p. 333. Lord Donovan concured with Lord Pearce on
this point, at p. 342.
119 Supra, footnote 34, per Lord Pearce and Lord Donovan, at pp. 334 and
342 and per Lords Reid and Upjohn and Viscount Radcliffe, at pp. 323-4, 338
and 328.
120 Ibid., at p. 333.
McGILL LAW JOURNAL
His Lordship therefore rejected the argument that it was not estab-
lished that the hirers’ breach was a “necessary consequence”, because
the plaintiffs might have tried to employ men belonging to other
unions. However, Lord Pearce added, by way of dictum:
In a case where the defendant does not communicate any direct pressure or
persuasion to the contract breaker, but merely procures indirectly a situation
that causes the breach, I am inclined to agree with the dictum of Jenkins, L.J.
that it must be shown “that breach of the contract forming the alleged
subject of interference ensued as a necessary consequence of the breaches
by the employees concerned of their contracts of employment”. But that Is
not this case.1 21
This statement is especially important in light of the fact that the
three Law Lords who did treat the case as one of indirect induce-
ment did not deal with the “necessary consequence” argument.1 22 It
may be asserted therefore that Jenkins, L.J., in Thomson V. Deakin,
correctly stated the requirement of “necessary consequence” in estab-
lishing liability for indirect inducement of breach of contract. The
inducement of breach of contracts of employment or other illegal
act by the defendant which the plaintiff is alleging must “as a matter
of practical possibility” render the other party to the plaintiff’s
contract incapable of performing his obligations.
Stratford v. Lindley may have brought about a change of con-
siderable importance in the requirement of “knowledge of the con-
tract”, (i.e. the contract the breach of which is indirectly induced).
In the Court of Appeal it had been held that there was insufficient
knowledge to found the action for indirect inducement. “It must be
shown” said Lord Denning, M.R., “that the defendants knew of the
relevant terms of the contracts and intended to procure breaches
of them.” 123 In the House of Lords, on the other hand, Lord Pearce
said, “The relevant question is whether they had sufficient knowledge
of the terms to know that they were inducing a breach of contract”.12-‘
This would seem to mean, for instance, that where a union leader
calls a wholesale grocer’s truck driver out on strike in breach of his
contract of employment the union leader will be liable to retail mer-
chants who fail to get deliveries. Formerly it had been thought
necessary that the union leader know of the specific delivery con-
l2lIbid., at p. 333.
122 Presumably their Lordships made the assumption that the hirers had rightly
considered it not a matter of practical possibility to attempt to hire other men
to work the barges, in the light, perhaps, of the Watermen’s strength on the docks.
12 3Supra, footnote 34, at p. 288. Both Salmon, L.J. and Pearson, L.J. agreed
that the plaintiff had not made a prinma facie case that the defendants knew
of the contracts in question; at pp. 296 and 301.
124 Ibid., at p. 332.
INDUCING BREACH OF CONTRACT
tract in question 125 but if Lord Pearce is correct it is sufficient that
he knew in a general way that there would be such contracts. 126
It must be borne in mind, however, that Lord Pearce decided
Stratford V. Lindley on the basis that there was direct inducement
of the breach of the hiring contracts. This means that his state-
ments with regard to the knowledge required to found an action
for indirect inducement are reduced to the status of obiter dicta. Lords
Radcliffe and Reid, who did grant the injunction on the basis of
indirect inducement, are somewhat less clear on the knowledge re-
quired. Lord Reid, for example, said that it must have been obvious
to the defendants that the hiring was by contract, and he said “it
is reasonable to infer that they did know [that their interference
would involve breaches of these contracts]. “127 Moreover, Lords Up-
john and Donovan, and Viscount Radcliffe really said nothing more
than that knowledge of the contracts of hiring had been prima facie
If Lord Pearce is correct, the knowledge “hurdle”‘129
established.12
which faces the plaintiff is considerably lowered, and indirect ,in-
ducement takes on added importance for trade unionists in England.
But whether or not he is correct must, it is submitted, await further
judicial clarification.
Lord Justice Jenkins’ formulation in Thomson v. Deakin of the
basis of liability for indirect inducement of breach of contract’ 30
raises the further question whether, where section 3 of the Trade
Disputes Act, 1966 applies, as it would have in Thomson v. Deakin
itself, the “unlawful act” of -inducing the employees to break their
contracts of service (and thus indirectly procuring the breach of
the principal contract) would be rendered not “unlawful” by the
effect of that section. Jenkins L. J. does not deal with this
question and Morris L. J. expressly declined to decide it,’ 31 but Lord
Evershed said,
I should, therefore, be prepared to hold that the defendants would not be
entitled to resist the plaintiffs’ claim merely by saying that their own
125 See Thomson v. Deakin, supra, footnote 106 per Jenkins, L.J., at p. 699.
126 This appears to be the law in Canada. See Carrothers, Collective Bargaining
Law in Canada (1965) (Butterworths; Toronto), at p. 473, citing Body V. Mur-
doch, [1954]O.W.N. 334, at p. 337.
12 7 Stratford v. Lindley, supra, footnote 34, at p. 324.
128Ibid., at pp. 338, 342 and 328.
120 Wedderburn, “Note”, supra, footnote 65, at p. 206. See now Emerald
Construction v. Lothian, [1966] 1 W.L.R. 691 (C.A.), which seems to confirm
Lord Pearce’s view, but it, too, was a case of direct inducement of breach of
contract.
130 Supra, footnote 113 and accompanying text.
131 SUpra, footnote 106, at p. 703.
McGILL LAW JOURNAL
procuration of the workmen’s breach of contract was vis-a-vis Bowaters
protected by section 3.132
Lord Evershed’s dictum amounts to this: That English law recog-
nizes as “unlawful”, acts which are neither criminal nor actionable.
There seems to be little basis in English jurisprudence for such a
view, and certainly the contrary view is stressed by the judgment
of Salmon L.J. in the Court of Appeal decision in Stratford V. Lind-
ley.133 Moreover, it must be considered significant that in the House
of Lords judgments in Stratford each of the three Law Lords who
based his decision on indirect inducement was concerned to establish
that there was no trade dispute so that the 1906 Act could not apply
and render “not actionable” the inducement of breaches of the dockers
employment contracts. 134 Presumably their Lordships thought that
if that inducing were rendered “not actionable” it would, by the same
token, be no longer unlawful, in which case, as Salmon L.J. had held,
the defendants would not be liable for inducing breach of the principal
contracts.
In the light of this apparent conflict of authority it is impossible
to say with certainty that because a defendant acts in contemplation
or futherance of a trade dispute, he will never incur liability for
indirect inducement based on the act of inducing breaches of contracts
of employment. It is submitted, however, that reason and the pre-
ponderance of authority indicate that there should be no liability in
such circumstances. It follows that, in a trade dispute situation, a
threat to induce employees to break their contracts of employment
would not consititute the illegal act upon which an action for indirect
inducement could be founded, because it is now established
in
English law that “a threat to do an act which is lawful cannot… create
a cause of action…”‘135
What, it may be asked in the light of the foregoing, is the purpose
or effect in this connection of the Trades Disputes Act, 1965, which
provides in part;
1 (1) An act done after the passing of this Act by a person in contemplation
or furtherance of a trade dispute (within the meaning of the Trade Disputes
Act, 1906) shall not be actionable in tort on the ground only that it consists
in his threatening
132 Ibid., at p. 687.
133 Supra, footnote 34, at p. 303.
134Ibid., at-pp.-323, 327 and 337.
135Per Lord Buckmaster, in Sorrell v. Smith, [1925] A.C. 700 (H.L.), at
p. 747. See also Rookes v. Barnard, supra, footnote 32, per Lord Reid, at p. 1168;
and Camden Exhibition and Display Ltd. v. Lynott, supra, footnote 67, per Lord
Denning, M.R., at p. 770 (W.L.R.) ; 33 (All E.R.).
INDUCING BREACH OF CONTRACT
that a contract of employment (whether one to which he is party or not)
will be broken, or
(b) that he will induce another to break a contract of employment to which
that other is a party.
The Act was passed to restore the law to the state it was in, or was
thought to be in, before the decision in Rookes V. Barnard.136 Whether
or not it achieves that purpose fully, or in the most effective possible
way, must be beyond the scope of this paper.137 It does seem however,
that if, contrary to Lord Evershed’s dictum in Thomson v. Deakin,
the above submission on the effect of section 3 of the Trade Disputes
Act, 1906 is correct, then, the new Act does not affect the law in the
indirect inducing situation. If, on the other hand, Lord Evershed is
correct, it may be that the new Act would afford some protection in
such a situation. It would, for example, protect one who, by threats
to induce breaches of employment contracts, caused a breach in a
supply contract or sub-contract. This would be the effect of the Act
even though, according to Lord Evershed, one who actually induced
breaches in the employment contracts, with the same effect, would
not be protected by the 1906 Act. Even this result would depend on
the court interperting the words “shall not be actionable in -tort on the
ground only that it consists in his threatening”, as they appear in the
1965 Act, in a sense favourable to the defendant. It could always be
argued for the plaintiff that the breach of the principal contract
(e.g. the supply contract or sub-contract) constitutes another
“cground” upon which the defendant’s act is actionable. If such were
the opinion of the court the new Act would be rendered totally inef-
fective in the context of an action for inducing breach of contract.
In summary, it may be said that, subject to the refinements made
by the Stratford case in the meaning of ‘the phrases “necessary con-
sequence” and “knowledge of a contract”, and in the matter of the
illegality, in this context, of inducing breach of contracts of employ-
ment in the course of trade disputes, the law relating to inducing
breach indirectly is as Jenkins L.J. defined it in Thomson v. Deakin.15 8
The basis of liability for indirect inducement is clear enough
aside from matters of not unimportant detail. It may be, however,
that the law relating to indirect inducement is really only an example
of a wider head of liability. It is well established that for there to
be liability for indirect inducement the defendant must do some act
130 Supra, footnote 32.
13 7 For an early criticism see K. W. Wedderburn, The Worker and the Law
(London-Penguin), at pp. 291-94; and see now by the same author, Trade
(1965)
Disputes Act 1965 (1966) 29 M.L.R. 53.
l3 Supra, footnote 113, and accompanying text.
McGILL LAW JOURNAL
illegal in itself, quite apart from the procurement of breach of the
principal contract (i.e. the one to which the plaintiff ds a party).
This requirement makes “indirectly inducing”, as a head of liability,
look very much like “intimidation”, as established by Rookes V.
Barnard.139 That case established beyond doubt that it is a tort “to
coerce a person by threats of violence or other illegal action into doing
or abstaining from doing something that he would otherwise have
every right to do”. 140 Inducing breach of employment contracts (,as
in Stratford) is such illegal action. In the absence of a trade dispute,
if Stratfords’ customers had breached the hiring contracts (or given
up their proven plans to make new ones) because they were threat-
ened with a boycott involving illegal breaches of employment con-
tracts liability could have been imposed under the tag of “Intimi-
dation”. Since there can be no liability for threatening an act unless
the act itself ‘is illegal 141 it would seem that the same concept of
illegality must be .said to have governed in the fact situation of the
Stratford case, where, rather than capitulating, the hirers waited
until the dockers actually refused to service the barges. The governing
concept
liability to A on the part of B when he strikes at A by an
act that is recognized by the law as being illegal in relation to C –
controls ‘in both cases.
The provisions of the new Trade Disputes Act (U.K.) are a
recognition that previous to that Act a threat to induce breach of an
employment contract, which leads the employer to act to the detriment
of a third party plaintiff, might very possibly have been the Mlelgal
act upon which an action for tortious intimidation could be based.
If an employer was led by such a threat not only to act in some
general way to the plantiff’s detriment but in fact to break a
contract with him it would seem to be that the cases would in essence
be the same, -although the latter would be called “indirect inducement”
and the former “intimidation”. If ‘the employer had been moved to
act -to -the plaintiff’s detriment by inducement of actual breaches
of contract by his employees -the case once again would be the same.
Where the illegality lies in the actual breach rather than the threat,
the relevant statute is, however, section 3 of the 1906 Act.
In cases of indirect inducement of breach of contract it is the
illegality of the initial act, rather -than the fact ,that A’s damage
arises from breach of contract, that is the basis of liability. This is,
of course, quite different from “direct” inducement, where the fact
139 Supra, footnote 32.
140 Fleming, The Law of Torts, supra, footnote 96, at p. 662. Italics added.
141 See supra, footnote 135, and accompanying text.
INDUCING BREACH OF CONTRACT
that there is breach of an actual contract is all-important. It may
well be therefore that indirect inducement should not be considered
as a branch of the tort of inducing breach of contract at all. Cer-
tainly a failure -to distinguish the two has caused considerable con-
fusion in the Canadian courts.
(C) The Law In Canada
Until the abolition of appeals to the Judicial Committee of the
Privy Council, Canadian case law was not, of course, free to develop
along lines different from those taken by its English parent, so it
may be that to compare Canadian and English law in an area upon
which statute law does not impinge is merely to record instances of
judicial courage or misunderstanding, as the case may be. However,
there are two Canadian statutory differences that could have played
an important paat in the separate development of the tort of inducing
breach of contract in trade disputes. In the first place, as was
mentioned above,1 42 Canadian labour relations legislation makes col-
lective agreements binding on the paties for some purposes. This
could be made the basis for saying that a union is justified in in-
ducing breach of subsequent irreconcilable contracts where it does
so to protect its interests under a collective agreement. Secondly, in
Canada there may be liability for inducing breaches of contracts of
employment in the course of a trade dispute. The second of these
differences has been relied upon by the courts; the first has not.
Of equal importance to statutory differences is the gradual broaden-
ing in Canada of ,the grounds upon which liability for inducing
breach may be based. “Interference with contactual relations” as
a basis of liability in Canadian law is wider than the tort of inducing
breach of contract known in English law.
These developments, coupled with judicial notice taken by Cana-
dian judges of a trade unionist’s predictable refusal to cross a picket
line, have helped render it very difficult for injunctions against picket-
ing to be avoided. Each of these points of comparison is examined
below in turn, and in conclusion, the requirement that the breach in
question be effectively caused by the inducement is considered. The
Supreme Court decision on this issue in Newell v. Barker and Bruce 143
is the one bright spot for trade unionists in what, for them, is a bleak
Canadian outlook on the law of inducing breach of contract.
4 2 Supra, footnote 105.
143 [1950] S.C.R. 385.
McGILL LAW JOURNAL
The Canadian courts at first approached the doctrines expounded
in Lumley v. Gye 144 and Bowen v. Hall 145 with understandable dif-
fidence, only mentioning those cases and gingerly suggesting that
they might apply.146 The action for enticing a servant under contract
to his master was, of course, well established. 147
In the early case of Hynes v. Fisher 14
the defendant unionists
had hustled out of town, apparently against his will, a fellow worker
who was under contract to the plaintiffs. In that case no mention
was made of either Lumley v. Gye or Bowen v. Hall. In fact, in con-
trast to judicial temper in England, the interim injunction previously
granted was dissolved on the motion to continue, partly on the basis
that the masters’ association could have resolved the conflict by
withdrawing a resolution which, it was held, understandably ag-
gravated the unionists.
There is now, however, no doubt of the complete reception into
Canadian law of -the tort of inducing breach of contract applied to
all types of contract. 149
After Hynes v. Fisher 150 the judicial attitude evident in trade
dispute cases appeared to change. For example, in the Krug Furniture
Company case 15 an injunction was granted partly on the basis that
the defendants had knowingly procured breach of contract by strke-
breakers, and it was also mentioned that some of the plaintiff’s em-
ployees had left their jobs before their day’s work or piece-work
144 Supra, footnote 13.
145 Supra, footnote 16.
1460McMillan v. Barton (1890-91-92), 19 O.A.R. 602, per Hagarty, C.J.O., at p.
606, and MacLennan, J.A., at p. 620; Edison General Electric Co. V. Vancouver
and New Westminster Tramway Co. (1885), 4 B.C.R. 460, per McCreight, J.,
at p. 476.
147 Trebilcock v. Barton (1904), 3 O.W.R. 679; See supra, footnotes 10-12 and
148 (1884), 4 0.R. 60 (Ont. Q.B. Div.).
149 The leading non-trade dispute case may be considered to be Jasperson V.
Dominion Tobacco Co., [1923] A.C. 709 (P.C.). Posluns v. Toronto Stock Exchange
and Gardiner, supra, footnote 28, at pp. 260-333, contains as exhaustive a con-
sideration of the tort of including breach of contract as is to be found anywhere.
Gale, J. (as he then was) does not, however, make clear the distinction between
direct and indirect inducing, but on the facts he was not called upon to do so.
150 Militant unionism was spreading across the border from the United States.
(1948), at p. 77; Jamieson,
See Logan, Trade Unions in Canada (Toronto)
Industrial Relations in Canada (Cornell)
151 Krug Furniture Co. v. Berlin Union of Amalgamated Woodworkers (1903),
5 O.L.R. 468 (H.C.), at p. 469.
INDUCING BREACH OF CONTRACT
contracts were completed. 152
the years after the Glamorgan
decision of 1905 13 the tort of inducing breach of contract was
frequently relied upon.
The Canadian courts did not, of course, question the lead of the
English courts in robbing the concept of “justification” of all sub-
stance. In Brauch v. Roth,5 4 Teetzel J. of the High Court of Ontario
readily adopted the Glamorgan case 155 on this -issue. Relying mainly
on the judgment of Lord James, the learned judge held that “malice”
insofar as they were necessary to tortious
and “wrongfulness”,
liability, were proved by showing the intentional procurement of
the breach of contract. Read v. Friendly Society of Stonemasons 156
established, in the opinion of Teetzel J., that the defendant union
official was not justified merely because he was enforcing union
rules.
In Klein v. Jenoves and Varley, in 1932, the Ontario Court of
Appeal noted that
It is still the law that “interference directed to bringing about a violation
of legal rights is a cause of action, and it is a violation of a legal right to
interfere with contractual relations recognized by law, if there is no suf-
ficient legal justification for the interference”.157
It was pointed out that Sorrell v. Smith, the House of Lords decision
which clarified the wide basis of “justification” for conspiracy to
injure, did not change the law. In a “conspiracy” case a judicially
approved intent or object rendered the combination not actionable,
but it was noted that in Sorrell v. Smith Vdscount Cave specifically
excepted the case of inducing breach of contract from his general
propositions. 55 Thus it may be said that in the field of labour law,
152 1n Le Roi Mining Co. Ltd. v. Rossland Miners Union, No. 38 Western
Federation of Miners (1901), 8 B.C.R. 370 an injunction issued to restrain, among
other activities, inducing employees to break their contracts.
153 Supra, footnote 35, and see e.g. Cotter v. Osborne (1909), 18 Man. R. 471
(Man. C.A.); Cumberland Coal and Railway Co. v. McDougall (1910), 44 N.S.R.
535 (N.S. S.C. en banc).
154 (1904), 10 O.L.R. 284 (Ont. H.C.,
155 Supra, footnote 35. Judgment in the Ontario case had been reserved until
the decision in the House of Lords was reported.
15 6 Supra, footnote 30, and see infra, footnote 165 and accompanying text.
157 [1932] 3 D.L.R. 571 (Ont. C.A.), per Riddell, J.A., at p. 575.
158 [1925] A.C. 700 (H.L.), at p. 713.
McGILL LAW JOURNAL
since Brauch v. Roth, there have been no real doubts about the in-
applicability of such “justification”. 59
As mentioned above, 10 the one type of justification that English
courts have indicated a willingness to recognize as a defence in an
action for inducing breach of contract is that based on a prior
statutory or contractual right. In his recent decision in Posluns V.
Toronto Stock Exchange Gale J. (as he then was) adopted this view,
stating that where a person acts in accordance with a right conferred
on him by contract, as distinct from acting in mere protection of
his own interests, he may be justified in procuring breach of another’s
contract.’ 61 Nevertheless, justification based on prior contractual
rights has never played any real part in English labour cases in-
volving inducing breach, probably because the most likely basis for
such justification would be a collective agreement, and they are
generally considered in England not to be legally binding.
Justification based on a contractual right should be of consider-
ably greater importance in the context of trade disputes in Canada
because Canadian labour relations legislation makes collective agree-
ments binding although, perhaps, only for the purposes of the labour
relations statutes themselves. For example, the Ontario Labour
Relations Act not only specifically makes a collective agreement
binding on the parties, its effect is that once a failure to comply
with the provisions of a collective agreement is established upon
arbitration, the arbitrator’s order to comply is enforceable as if it
were an order of the Supreme Court. 62 Clearly, therefore, in an
159 It has been consistently held in Canadian labour cases that “justification”
for inducing breach of contract is not a real issue. Once the breach and the pro-
curement are proven the tort is established. See Bennett and White v. Van Reeder
(1957), 6 D.L.R. (2d) 326 (Alta. S.C., App. Div.), per Johnson, J.A. (Porter,
J.A. conc.) at p. 334, citing Viscount Cave in Sorrell v. Smith, [1925] A.C. 700;
per Ford, J.A., at p. 329; Body v. Murdoch, [1954] O.W.N. 334 (Ont. H.C.), at
p. 337, and [1954] O.W.N. 338, at p. 340; North Fork Timber Co. Ltd. v. Mac-
Kenzie (1964), 45 D.L.R. (2d) 79 (Alta. S.C.). In Gunn v. Barr, [1926] 1 D.L.R.
855 (Alta. S.C., App. Div.) it was held that “justification” had no greater sub-
stance in a case where the defendant had induced his brother to breach a contract
to marry. However, in Posluns case, supra, footnote 28, which also was a non-
labour case, Gale, J. (as he then was) noted at pp. 270-1 that while “the defence
rarely succeeds” there have been instances in which “the courts have sanctioned
interference” where it was “promoted by impersonal or disinterested motives” or
“effected in th public intrest”.
‘o Supra, footnot 101 and accompanying text.
161 Supra, footnote 28, at p. 271. The trial decision was affirmed by The Ontario
Court of Appeal without adverse comment on the inducing breach of contract
point. See (1966), 53 D.L.R. (2d) 193. especially at pp. 195 and 207.
162The Labour Relations Act, R.S.O. 1960, c. 202, s. 34(8) and (9). See also
INDUCING BREACH OF CONTRACT
inducing breach of contract case as between the defendant and the
person induced to breach his contract (or between the defendant and
the plaintiff as the case may be) a collective agreement would
constitute a binding contractual obligation that would amount to
justification .16 3
There are two different types of fact situation in which “con-
tractual justification” might arise. The first is that in which A has
a contract with B, and B then makes an inconsistent contract with C.
A, in seeking to protect his interests under the first contract, per-
suades B to breach his contract with C. It seems beyond dispute
that, in an action by C for inducing breach of contract, A will have
a good defence of justification. Indeed, as has been pointed out
from the bench on at least one occasion,1 4 in enforcing A’s contract
the court itself would be causing the breach sued upon in the in-
ducement action. C. would, of course, have a right of action for
breach of contract against B.
The 1902 English case of Read V. Friendly Society of Operative
Stonemasons arose out of a fact situation of this first type. In that
case Darling J. suggested that a union would be justified in inducing
breach of an apprenticeship contract because of the provisions of
a collective agreement with the employer. 6 The agreement provided
the conditions upon which boys would be allowed to enter the stone-
mason’s trade. The county court judge dismissed the action because
in his view the defendants acted bona fide in their own interests in
persuading the employer to dismiss -the plaintiff, whom, they thought,
had been hired in breach of the collective agreement. 166 In Divisional
Court however, the majority, for whom Darling J. spoke, made it
clear that pursuit of legitimate self interest could not amount to
justification for inducing breach of contract, but his Lordship sug-
163 The Ontario Rights of Labour Act, R.S.O. 1960, c. 354, s. 3(3) provides:
A collective bargaining agreement shall not be the subject of any action
in any court unless it may be the subject of such action irrespective of any of
the provisions of this Act or of this Act or of The Labour Relations Act.
The Saskatchewan Trade Unions Act, R.S.S. 1965, c. 287, s. 27, is identical in
all material respects.
Where a defendant relies on a collective agreement, which is made binding
on the parties to it by The Labour Relations Act, as justification for having
induced a breach in the plaintiff’s contract the defendant is clearly not making
it “the subject of any action”. It is submitted that the Rights of Labour Act has
no application in this situation. The section would probably become relevant where
the allegedly tortious inducement was to break a collective agreement.
164 Smithies v. National Association of Operative Plasterers, per Buckley, L.J.,
supra, footnote 101 and accompanying text.
165 [1902J 2 K.B. 88 at p. 96; and see supra,, footnote 104 and accompanying
McGILL LAW JOURNAL
gested that if the union were protecting its rights under a prior
binding agreement with the employer then the case would be different
and the inducing would be justified. A new trial was ordered to
determine whether the employer had in fact breached a binding
agreement with the union. The order for a new trial was appealed
and, in the Court of Appeal, it was held that the plaintiff should
succeed in the action, the defendant having failed to establish justi-
fication.
In the Court of Appeal Stirling J.A.’s judgment turned on the
fact that he could find nothing in the rules to which the employer
had agreed that entitled the union to get the plaintiff dismissed.1 7
This does, however, carry the clear implication that if such were a
proper implication or was express on the face, the agreement
would amount to justification, as Darling J. had said. Collins M.R.,
for the majority, held that the agreement between the employer
and the union could not amount to justification because it was illegal,
as being in restraint of trade. Furthermore, Collins M.R. clearly
considered the breach of the apprenticeship contract to have been
induced by a threat of strike which in his view was illegal because
it was coercive. 168
Canadian courts have not relied on the Read case as authority
that one who induces breach of a contract may rely for justification
on his previous inconsistent contract with the person induced, but
have instead quoted at length from the judgment of Collins M.R. 69
His judgment quite clearly does not apply where there is no illegal
act, other than the alleged inducement of breach of contract, and
where the agreement relied upon as justification is legal and binding.
It is submitted, therefore that there is neither reason nor legal
authority for saying that inducing breach of contract in this first
type of situation cannot be held to be justified.
The second type of fact situation in which “contractual justifi-
cation” might arise is that in which A has a contract with B, and
B then makes an inconsistent contract with C. What distinguishes
this situation from the first is that in this case A approaches C
(rather than B) and persuades C not to carry out the inconsistent
contract, which B on his part would not be able to perform without
breaching his contract with A. In an action by B (rather than C,
166 Ibid., per Darling, J., at p. 94.
167 Supra, footnote 155, at p. 742.
168 Ibid., at pp. 737-8.
169 See for example Fokuhl v. Raymond, [1949] 4 D.L.R. 145 (Ont. C.A.), per
Roach, J.A., at p. 175; Body v. Murdock, supra, footnote 159.
INDUCING BREACH OF CONTRACT
as in the first case) A can show justification, based on his prior
contract.
In Smithies v. National Association of Operative Plasterers it
was recognized that in this second type of fact situation there would
be “contractual justification” for breach, 170 although the case itself
decides that breach of a contract between the plaintiff and the
defendant does not justify the defendant in inducing breach of an
entirely independant contract.’7 ‘ The defendant union had attempted
to justify inducing the breach of contracts of employment in the
course of a strike by showing that the employer had breached his
agreement with the union to take disputes to arbitration. The
Smithies case is distinguishable from the second type of fact situation
set out above because the contracts of employment did not bear in
any way upon the arbitration agreement, and it was not even
suggested that there was an inconsistency between them.
The logic of treating the inducement of breach of contract as
justified in this second type of fact situation is supported by the
authority of Posluns v. Toronto Stock Exchange. 72 Posluns was a
“customer’s man” for a brokerage firm which was a member of
the Exchange. His hiring and continued employment depended on
approval by the Exchange. On his application for approval Posluns
had agreed to submit to the jurisdiction of the Exchange.173 The
Exchange withdrew its approval and Posluns lost his job. In the
action that Posluns then brought against the Exchange for -inducing
breach of his contract of employment the main thrust of the judg-
ment in the High Court is that the Exchange was justified.174 Thus
the Posluns case may be regarded as one in which a prior contract
between the plaintiff and the defendant was treated as justifying the
defendant in inducing a third party (Posluns’ employer) to breach
his contract with the plaintiff.
It may be argued that Posluns’ case differs from the second type
of fact situation set out above in that Posluns expressly gave the
170 Supra, footnote 101, per Buckley, L.J., at p. 337, and see supra, footnote 102
and accompanying text.
171 In Posluns case, supra, footnote 28, at p. 270, the Smithies case is cited
as authority for the proposition that “justification” will not succeed as a defence
“where a person is induced to break a contract because the other party to it has
breached his contract with the intervenor”. It is respectfully submitted that the
statement in the text is more accurate.
172 Supra, footnote 28.
7 3 Ibid., at p. 272, (Ont. H.C.) and pp. 200 and 208 (Ont. C.A.) ; and see the
comment on the Posluns case by Dean A. W. R. Carrothers in (1965) 43 Can. Bar
Rev. 338.
174 Ibid., at pp. 272-86, and see Dean Carrothers’ comment at p. 346.
McGILL LAW JOURNAL
Exchange authority to intervene as it did should he fail to live up
to the Stock Exchange’s standard of behaviour. However, in any fact
situation of the second type it might be said that the defendant’s
prior contract with the plaintiff had impliedly given the defendant
the right to procure the breach of any inconsistent contract that
might subsequently be made by the plaintiff. This is only an alter-
native way of saying that the prior contract justifies inducing
breach of the subsequent one. The fact that Gale J. did not have to
make such an implication, because of the express agreement in
Posluns’ case, is not a ground of distinction.
In the Posluns case the contract breached was not inconsistent
with the prior one with the Exchange when made, but became in-
consistent when Posluns acted improperly. The effect in law then
became the same as if Posluns’ employment contract had been in-
consistent with the Exchange contract from the start, so Posluns’
case does lend judicial support to reason in concluding that “con-
tractual justification” is a good defence in the second, as well as
in the first, type of fact situation set out above.175
The importance of “contractual justification” in trade dispute
situations would be one in which an employer who has agreed in the
collective agreement not to “contract-out” any work normally per-
formed by members of the bargaininj unit breaches that agreement.
If union officers then persuaded the outside contractor not to perform
they should have a good defence of justification in an action for
inducing breach brought by the employer.
Similarly, justification would be a good defence in a case where
a non-unionist who had been hired contrary to the provisions of a
union security clause in the collective agreement was persuaded by
union members to leave the job without due notice. This case is,
perhaps, even clearer than the contracting-out example above. It is
more obviously similar to Posluns’ case, because a court could very
easily imply that by the collective agreement the employer had
authorized the union to dissuade non-unionists from working in the
unit. If, in an effort to persuade the non-unionist employee, the
union did or threatened any illegal acts against him there could,
of course, be no contractual justification. 176
175 Dean Carrothers, ibid., at p. 346, states :
Where two “rights” of the same class conflict they appear to be reduced to
the status of a privilege, which can be exercised with impunity but which
will not be protected at law –
let the harm lie where it falls. This virtually, is
where the judgment in Fosiuns case comes out.
176 Thus there can never be justification for “indirect inducing”, as outlined
infra, footnotes 106-138 and accompanying text, because an act illegal in itself
is always a prerequisite to liability under that head. An exception would be the
INDUCING BREACH OF CONTRACT
An example of the first, or Read v. Friendly Society of Stone-
masons type of fact situation, arises where a union, in pursuance of
its rights under a closed shop agreement, induces an employer to
fire a non-unionist in breach of his contract of employment. It
would, of course, be open to the employer to pay compensation in
lieu of notice, but quite aside from that point, the union would
seem to be justified in procuring the breach of contract. Another
example would be one where a union induced the general contractor
on a construction job to breach a sub-contract because the sub-
contractor was hiring non-union men contrary to the provisions of
the collective agreement between the union and the general con-
tractor.
The facts in the last example are similar to those in Newell V.
Barker and Bruce.177 The action in the Newell case was commenced
prior to the passing of the Ontario Labour Relations Act 78 so it
could not be argued that there was justification based on a collective
agreement rendered binding by statute. Even so, Estey J. expressly
accepted the trial judge’s finding that the union officials did nothing
inconsistent with an endeavour to have the governing collective
bargaining agreement lived up to 179 and stated,
The respondents, as officers of the union and Local 67, were quite within
their rights in advising Davis of appellant’s employment of non-union men
and the difficulties that the employment of non-union men upon the con-
struction of this building would involve.’ 80
The Newell case turned on the Court’s finding that breach of
the plaintiff’s contract was a matter of free choice by the contractor,
and could not be considered to have been caused by the union. The
judgments do, however, seem to indicate that the 1950 Supreme
Court of Canada would readily have accepted the provisions of a
legally binding collective agreement as justification for inducing
the breach of a subsequent inconsistent contract. It is surprising
that since the adoption by every province of collective bargaining
legislation there have been no reported cases of inducing breach of
contract in which such a defence was advanced.
case where the “illegal act” which indirectly induced breach of the plaintiff’s
contract was itself the tortious act of inducing breach of another contract. If
the procurement of breach of this second contract (which would probably be a
contract of employment) could be justified (probably on the basis of a collective
agreement) then there would be no “illegal act” as is required if there is to be
liability for the indirectly induced breach of the first contract.
177 [1950] S.C.R. 385. The Newell case is considered in greater detail infra,
at footnotes 240-242 and accompanying text.
178 S.O. 1950, c. 34.
179 Supra, footnote 177, at p. 393.
180 Ibid., at p. 391; and see per Rand, J., at p. 398.
McGILL LA W JOURNAL
Inducing breaches of contracts of employment
The most important fact to be recognized in comparing the tort
of inducing breach of contract as it has been applied in England and
Canada is that no Canadian jurisdiction has a statutory equivalent
of section 3 of the Trade Disputes Act, 1906,181 which means that in
Canada the tort may be based on the inducement of breaches of
contracts of employment. This, of course, has frequently been a
basis of trade union liability. 8 2
In Nipissing Hotel v. Bartenders Union 8 3 the far reaching effects
of this difference are made clear. During the course of bargaining
the defendants, who were the plaintiff’s employees, became dis-
satisfied with the plaintiff’s attitude. Well advised of the illegality
of striking at the bargaining stage, contrary to the Labour Relations
Act, the defendants continued to work, but when off shift they
placarded the plaintiff’s hotel. In an action for damages and to
make permanent an interim injunction, Spence J. did find breaches
of the Labour Relations Act but his judgment against the individual
defendant, a union official, was based on inducing breach of contract.
The learned judge held that in placarding their employer while still
working, the defendant union members had breached their implied
contract “that they should faithfully serve their master and should
take care of and further his interests” and, he held, the defendant
union official had induced them to do so.184 There could be no clearer
illustration of the importance of section 3 of the 1906 Act to English
trade unionists. The lack of a Canadian equivalent is not to be
dismissed lightly.
The law allowing actions for inducing breaches of employment
contracts is given added importance by the decision in Nelsons
Laundries Ltd. v. Manning. Dryer J. of the British Columbia Supreme
Court held in that case that,
181 The equivalent of the Trade Disputes Act, 1906 had been on the statute
books of Newfoundland since before Confederation in 1949; but by the decision
in Anglo-Newfoundland Development Company v. International Woodworkers of
America (1959), 17 D.L.R. (2d) 766 (Nfld. S.C.) those provisions were held to be
only applicable to registered unions. No union had registered in Newfoundland
since the passing of the Act, which was repealed by S.N. No. 59 s. 29.
182 e.g. Patterson v. Canadian Pacific Railway Co. (1917), 33 D.L.R. 136;
(1917), 34 D.L.R. 726;
(1918), 38 D.L.R. 183 (Alta. S.C., App. Div.); Sea-
board Owners v. Cross, [1949] 3 D.L.R. 709 (B.C., S.C.); Bennett and White V.
Van Reeder; Body v. Murdock, supra, footnote 159, Dewar v. Dwan (1958), 11
D.L.R. (2d) 130 (Ont. H.C.); Belleville Lock Co. Ltd. V. Tyner, [1950] O.W.N.
793 (Ont. H.C.).
183 Nipissing Hotel Ltd. v. Hotel and Restaurant Employees and Bartenders
International Union (1963), 38 D.L.R. (2d) 675 (Ont. H.C.).
184 Ibid., at pp. 687-88.
INDUCING BREACH OF CONTRACT
In the absence of some evidence to indicate a contrary stipulation I must
find that the terms of [the contract of service between the plaintiff and the
defendant] are those terms of the collective agreement which deal with the
rights and obligations which are to subsist between the employer on the one
part and the employee on the other.’85
Thus, entirely aside from the question of whether a collective agree-
ment may, in itself, support an action for inducing breach there will
often be derivative tortious liability. Wherever a court finds that a
union official has induced a workman to act contrary to a provision of
the collective agreement, and finds further that the provision is one
dealing with obligations which are to subsist between the employer
and his employees, the breach of the collective agreement will amount
to a breach of the contract of employment.
Further, it has been held in at least one case that a right of
action may arise directly from inducing breach of a collective agree-
ment. Under the statutes in force in every province of Canada,
(except Saskatchewan) collective bargaining agreements must pro-
vide that there shall be no strikes during the currency of the agree-
ment 80 (and provision must be made by the parties for arbitration
of disputes over “the interpretation, application, administration or
alleged violation of the agreement” 187).
In the Pacific Western
Planning Mills case, 88 where the defendants picketed a mill the em-
ployees of which had voted against striking, Coady J. held that the
defendants were both inducing breach of contract of employment –
“per se an unlawful act, a tortious act” –
1’9 and inducing an un-
lawful strike contrary to the British Columbia Labour Relations Act.
From this decision the line was, in a trial decision in B.C., then easily
crossed to the point where liability for inducing breach of contract
was based simply on a breach of the collective agreement.9 0
There thus inheres in every collective agreement
contract), a trigger for liability under the inducing breach doctrine.’91
In Ontario and Saskatchewan it may be that such a right of
action is ousted by statute. The Ontario Rights of Labour Act provides
(as in the ‘yellow dog’
185 (1965), 51 D.L.R. (2d) 537, at p. 544.
180 R.S.A. 1955, c. 167, sec. 73(5) ; R.S.B.C. 1960, c. 205, sec. 22(1) (a); R.S.M.
1954, c. 132, sec. 19; R.S.N.B. 1952, c. 124, sec. 18; R.S.N. 1952, c. 258, sec. 19;
R.S.N.S., c. 295, sec. 19; R.S.O. 1960, c. 202, see. 33; S.P.E.I. 1962, c. 18, sec. 23.
Saskatchewan alone has no such provision.
187 R.S.O. 1960, c. 202, sec. 34; in all other provinces this provision is coupled
with the “no strike” section, cited ibid.
183 Pacific Western Planing Mills v. International Woodworkers of America,
[1955] 1 D.L.R. 652 (B.C.S.C.) ; followed in Dawson Wade and Co. Ltd. v. Tunnel
and Rockworkers Union of Canada (1956), 5 D.L.R. (2d) 715 (B.C.S.C.).
189 Pacific Western v. Woodworkers, ibid., at p. 655.
190 Comstock Midwestern Ltd. v. Scott (1953), 10 W.W.R. (N.S.) 340 (B.C.S.C.).
McGILL LAW JOURNAL
that a collective agreement “shall not be made the subject of any
action in any court unless it may be the subject of such action
irrespective of… The Labour Relations Act”. The Saskatchewan Trade
Unions Act is identical. 9 2 The generally accepted view is that, aside
from federal and provincial labour relations legislation, collective
agreements are not legally enforceable, so it may be said to be on the
basis of the statutes that liability has been imposed for inducing
breach of such agreements. To bring an action for inducing breach
of a collective agreement is, surely, to make it “the subject of [an]
action”. It follows that there is no such right of action in Ontario
and Saskatchewan, whatever may be the case elsewhere. It does seem
however, in any Canadian jurisdiction, that to allow a right of action,
based on a collective agreement, against a person who is not a party
to the agreement is to go beyond the intention of the legislature. In
each statute collective agreements are only made binding “for the
purposes of this Act”, 193 and enforcement, if any is provided, depends
upon the fact that an arbitration decision may be registered as a
court order.19 4 In some cases the courts have, however, apparently
considered rights under a collective agreement to be as worthy of
protection from a third party interference as are rights under
common law contracts. 195
Interference with contractual relations
The extension of the basis of liability for inducing breach of
contract to include breach of collective bargaining agreements is not
at all surprising -in view of the willingness with which Canadian
courts have accepted other extensions in this form of tortious liabi-
lity. There has been a failure to insist that the required interference
191H. W. Arthurs, Tort Liability for Strikes in Canada: Some Problems of
Judicial Workmanship, (1960) 38 Can. Bar. Rev. 346, at p. 378.
192 See supra, footnote 163 for the text of the two statutes.
’93 E.g. The Ontario Labour Relations Act, supra, footnote 187, ss. 37 and 38 (1)
194 Supra, footnote 162.
195 Supra, footnote 188, and see G.H. Wheaton Ltd. v. Local 1598, United
Brotherhood of Carpenters and Joiners of America (1956), 6 D.L.R. (2d) 500
(B.C.S.C.), in which the plaintiff recovered on this basis. The plaintiff, as a
member of the Victoria Building Industries Exchange, was party to a collective
agreement with the defendant union. He employed carpenters to work on a pier,
although under union rules “work over water” was piledrivers’ work. The juris-
dictional dispute on this point was not arbitrable under the collective agreement.
Nevertheless, the plaintiff was able to recover on the grounds that the piledrivers
local had impeded the carpenters, and in so doing had induced breach of the
provision in the collective agreement that the carpenters local would supply “com-
petent carpenters” where available and required.
INDUCING BREACH OF CONTRACT
take the form of procurement of actual breach of an existing con-
tract. Reliance has been placed on Lord Macnaghten’s dictum in
Quinn v. Leathem, where he said that an interference with contract-
val relations committed knowingly gives a cause of action, and other
hoary English authorities have been paraded in support of a very
wide basis of liability. 19 6
The decision of the British Columbia Court of Appeal in Hammer
v. Kemmis,197 which was reached partly on the basis that the plain-
tiff’s “contractual relations” with his customers were being disrupt-
ed, -is one example of a labour case in which liability was imposed
on some basis, akin to “inducing breach”, that apparently does not
require actual breach of a contract. In Poole Construction Company
v. Horst 19 1 the Saskatchewan Court of Appeal uses the same language,
although in that case there were existing contracts to which the
interference was directed. Even so, it is interesting that, almost
contemporaneously with the Poole case, Gale J. (as he then was),
in his Ontario High Court decision in Posluns v. Toronto Stock
Exchange accepted as correct the strict English definition of the
tort of inducing breach of contract.199
Certainly, as early as Allen v. Flood, English law rejected the
wide basis of liability for interference with contractual rights,200 and
in Stratford V. Lindley, the most recent House of Lords decision on
the matter, Lord Donovan said;
[T]he argument that there is a tort consisting of some undefinable inter-
ference with business contracts, falling short of inducing breach of contract,
I find as novel and surprising as I think the members of this House who
decided Crofter Hand Woven Harris Tweed Co. Ltd. v. Veiteh 2Ol would
have done.20 2
In Canada ,however, the argument is not novel. Another example
is Laidlaw J.A.’s decision on Fokuhl v. Raymond20 3 insofar as it is
based on “interference with contractual relations.” His Lordship
did not establish either that there was any ‘inducement of breach”
or that any of the plaintiff’s acts were wrongful in themselves.
1G9 See for example, Steeves Dairy Ltd. v. Twin City Co-op, [1926] 1 D.L.R.
197 (1956), 7 D.L.R. (2d) 684 (B.C.C.A.). See also Belleville Lock Co. Ltd. V.
Tyner, supra, footnote 182.
198 (1964), 47 D.L.R. (2d) 454 (Sask. C.A.), per Brownridge, J.A., at p. 462.
109 Supra, footnote 28, at p. 266.
2 0 0 Supra, footnote 22 and accompanying text.
201 [1942] A.C. 435 H.L.).
202 [19653 A.C. 269 (H.L.), at p. 340.
203 [1949] 4 D.L.R. 145 (Ont. C.A.). This case is considered in some detail
below; see infra, footnotes 211-222 and accompanying text.
McGILL LAW JOURNAL
It is unclear just what part the contract in question did play in
the decision in the Fokuhl case, but Laidlaw J.A. made a point of estab-
lishing that the plaintiff had a binding contract with the Austin Co.,
which the defendant’s actions forced the plaintiff himself to breach.
His Lordship did, at least, recognize that giving the inducee himself
a right of action based on inducing breach of contract made this a
case that “differs somewhat from Lumley v. Gye”. 20
1 Other courts
have not been so perceptive 205 when ostensibly basing liability, in
this reversed situation, on inducing breach of contract rather than
on any act otherwise unlawful.
In England there is authority 206 as well as logic to support the
view that, contrary to what Laidlaw J.A. held in the Fokuhl case,
the inducee cannot recover on the basis that he himself has been
induced to break a contract. If he has been forced to breach by
illegal pressure then an action will lie on the basis of the illegality
of the pressure. If no illegal pressure has been brought to bear it
seems strange that the contract breaker should have a right of action
based on the breach which he has himself committed. Nevertheless,
in Hersees of Woodstock Ltd. v. Goldstein 2 07 the Ontario Court of
Appeal seems to have accepted that such is a proper basis of liability.
It must be noted that liability was not imposed directly on the basis
of “reversed” inducing breach, but rather it was held that because
the plaintiff had been induced to break his own contract the picketing
that had taken place was rendered wrongful and not “peaceful”
under the Criminal Code.208 Aylesworth J.A. summarized his con-
clusions on this branch of the case as follows:
[A]ppellant had a contract with the Deacon Company; respondents knew
of the contract and attempted to induce appellant to break it by picketing
his premises; such picketing is a “besetting” of appellant’s place of business
causing or likely to cause damage to appellant; not being “for the purpose
only of obtaining or communicating information” the picketing is unlaw-
ful – Criminal Code 1953 –
and it ought to be
restrained.209
54 (Can.), c. 51, s. 366 –
204 Ibid., at p. 156.
205 Besler v. Mathews, [1939] 1 D.L.R. 499 (Man. C.A.) ; Wilson Court Apart-
ments Ltd. and Diamond and Mogil Builders Ltd. v. Genovese (1958), 14 D.L.R.
(2d) 758 (Ont. H.C.).
206Boulting v. Association of Cinematograph Television and Allied Technicians,
[1963] 1 All E.R. 716 (C.A.), per Upjohn, L.J., at p. 731. See also, Williams V.
Hursey (1959), 103 C.L.R. 30 (Aust. H.C.), per Fullagar, J. (for the majority),
at p. 77.
207 (1963), 38 D.L.R. (2d) 449 (Ont. C.A.). The Hersees case is criticized on
this point by Dean A. W. R. Carrothers in (1965) 43 Can. Bar Rev. 338, at p. 341.
208 S.C. 1953-54, c. 51, s. 366 (1) (f).
209 Supra, footnote 207, at p. 454. Commented on by H. W. Arthurs in (1963)
41 Can. Bar Rev. 573.
INDUCING BREACH OF CONTRACT
In order to conclude that there was a besetting contrary to the
Criminal Code the court had first to find that there was some act
which was tortious or criminal apart from the effect of the besetting
section itself, and Aylesworth J.A. meets this requirement by saying
that commission of the tort of inducing breach of contract can be
established. But, finding a tortious inducement in a situation where
the plaintiff was himself the party induced amounts to the same
thing as imposing liability for “interference with contractual re-
lations”. This is a different and far wider basis of liablity than the
established tort of inducing breach of contract.
Indirect inducement of breach of contracts: Inapplicable or
When the Court of Appeal, in 1952, rendered its judgment in
Thomson v. Deakin,210 many ill-defined extensions to the tort of
inducing breach of contract had already been made by the Canadian
courts. The Court of Appeal’s careful circumscription in that case
of the basis of liability for “indirect inducing” came as a clear
indication that the Canadian law had grown apart, and if that deve-
lopment had taken place by judicial design it was certainly not an
overt design. For instance, Fokuhi v. Raymond,21 ‘ decided three years
before Thomson v. Deakin, was also a case of indirect inducement,
although the Ontario Court of Appeal did not make that distinction.
The Fokuhl case arose in the following circumstances : Fokuhl
had been an electrical engineer in the employ of Austin Construction
Company. In order to satisfy the policy demand of the International
Brotherhood of Electrical Workers that members only work for
electrical sub-contractors, Austin arranged with Fokuhl that he
resign and make a sub-contracting arrangement with the company
instead of working for them directly. The sub-contract was legally
unimpeachable but in the eyes of the union it was not a genuine
arrangement .Raymond, an official of the International Union, used
the authority of his position to get the local union to strike,2 2 in
order to force Austin to work through a genuine sub-contractor. In
the result, the arrangement between the Austin Company and Fokuhl
had to be abandoned because he was unable to carry out the work.
It appears that it was Fokuhl, the plaintiff, who had himself
committed the breach in the sub-contract upon which his action in
tort was based. However, even if it is assumed that the Austin Com-
21OSupra, footnotes 106 ff., and accompanying text.
21 Supra, footnote 203.
212 Ibid., at p. 156, per Laidlaw, J.A.
McGILL LAW JOURNAL
pany took the initiative in actually effecting the termination, under
the kind of analysis adopted in Thomson v. Deakin the question
would then be whether Raymond caused the breach by acts unlawful
in themselves, since direct persuasion was not relied upon. It is
hard to conceive that under the circumstances an English court
could have found any such unlawful act. The plaintiff did not even
contend, for example, that there had been a breach of individual
contracts of service, such as allegedly founded the “unlawful acts”
in Thomson v. Deakin. Roach J.A. and Laidlaw J.A. nevertheless
both held that Raymond had wrongfully induced breach of contract,
or something akin to that. Although Aylesworth J.A. agreed with
the decisions and reasons of both, the two judgments proceeded on
quite different lines.
Roach J.A. made the assumption that it was Austin which had
breached the sub-contract and then found as a fact
that the defendants coerced the employees of the plaintiff to quit and to
refrain from returning to their employment by him, in order to prevent him,
if possible, from carrying out his contract with the Austin Company.213
The learned judge then went on to discount any justification,
but returned, just at the end of his judgment, to the element of
wrongfulness. He was, apparently, aware of the neutral legal quality
of “coercion” 214 because (in addition to references to the defendant’s
“yen” to demonstrate power) he said;
Here, there was a wrongful conspiracy not only between Raymond and his
co-defendants, but also between them and the employees of the plaintiff who
refrained from going to work… I am thoroughly satisfied that… Ray-
mond… at the least implied threats of union sanctions against those men
in order to induce them to remain off the job. The fact that they yielded
made them also conspirators… 215
The element of conspiracy, therefore, apparently provided that ele-
ment of wrongfulness which Roach J.A., like the Court of Appeal in
Thomson v. Deakin, thought to be necessary where the breach of
contract was indirectly induced.
Laidlaw J.A. was content to speak in terms of interference with
contractual relations.2 0 “The gist of the cause of action”, he said,
is the doing of an unlawful act or the employment of unlawful means for
the purpose of causing injury and the cause of action is given by law to
213 Ibid., at p. 173.
214 See Finkelman, The Law of Picketing in Canada: II
T.L.J. 344, at p. 357.
215 Supra, footnote 203, at pp. 175-76.
216Ibid., at p. 158; relying on Lord Macnaghten’s statement in Quinn v.
Leathem, supra, footnote 26; and see supra, footnotes 203-205 and accompanying
text.
INDUCING BREACH OF CONTRACT
the injured party. Thus, intimidation, coercion, obstruction and conspiracy
are prohibited and wrongful acts per se. They may also be unlawful means
to accomplish a wrongful purpose.217
Laidlaw J.A. did not greatly elaborate on the nature of the
wrongfulness of the coercion and obstruction that took place, beyond
expressing the opinion that the employees would not have struck
had Raymond not influenced them to do so and had he not relied
for his influence, to some extent, on the sanctions which the union
rules provided. He said, however, that Raymond “required and
demanded” each employee “against his will’
to join a combination
to compel the plaintiff to give up his contractual relations with
Austin.
A combination for that purpose, if it caused injury to the respondent, would
be plainly unlawful and actionable. It would be a conspiracy… Although
the respondent did not base his action nor seek relief on that ground, never-
theless he is entitled to treat their conduct as unlawful means …218
Thus, although Roach J.A. put his judgment in terms of wrongful
inducement of breach of contract and Laidlaw J.A. framed his in
terms of injury by a wrongful act, each, in fact, relied for the
necessary element of wrongfulness on the conclusion that there
was a conspiracy to injure. C’rofter Hand Woven Harris Tweed Co.,
Ltd. v. VeitCh,2 19 the leading case on the law of tortious conspiracy,
was mentioned only as establishing that union members and officials
could join together in a conspiracy.220 No mention whatever was
made of the fact that the Crofter case held that unless there was an
act illegal in itself, quite aside from the conspiracy, a combination
is not a tortious conspiracy if it is entered into for the purpose of
furthering legitimate trade union purposes. The fact that those
purposes may run counter to the interests of the employer does not
make the combination unlawful. An even more blatant omission, in
the light of their Lordships’ reliance on conspiracy, was the failure
to advert to section 3 (1) of the Rights of Labour Act 221 which makes
any act committed by trade unionists in furtherance of a trade dispute
not actionable simply because it is done in combination 222
217 Ibid., at p. 157, citing Bowen, L.J. in Mogul Steamship Co. v. McGregor,
Gow and Co. (1889), 23 Q.B.D. 598, at p. 614, and Lord Lindley in Quinn v.
Leathem, supra, footnote 26, at p. 535.
218Ibid., at p. 156.
219 Supra, footnote 201.
220 Supra, footnote 203, per Roach, J.A., at p. 176.
221 R.S.O. 1960, c. 354.
222 The Supreme Court decision in Newell v. Barker and Bruce, supra, footnote
177, may be usefully considered with Fokuhl V. Raymond for the contrasting
judicial attitudes displayed there. It is not, however, a case of indirect induce-
ment and will be considered in more detail below. Contrast also Stratford v.
Lindley, supra, footnote 202, especially Lord Reid, at p. 323.
McGILL LAW JOURNAL
Several of the lower court cases on inducing breach of contract
in the past decade have, like Fok’udl v. Rayniod, been casei of in-
direct inducement. In fact, in the two decisions in Body v. Mur-
doch 223 and in the interlocutory decision in Smith Brothers Con-
struction Co. v. Jones, 24 Fokuhl v. Raymond was expressly followed;
but Thomson V. Deakin has been more commonly quoted.225 It is not
at all clear however, that the Canadian courts have understood the
dicta in that case or applied it correctly. Often the distinction between
direct and indirect inducement, so important in English law, has
not been clearly expressed by Canadian courts.2 2
It has been suggested
that conditions in England and Canada are so different that dis-
tinctions such as this, which are useful in the U.K., are perhaps not
acceptable in modern Canadian trade union law based, as it is, on
collective bargaining legislation. 227 No such basis for failing to dis-
tinguish between direct and indirect inducement has ever been made
explicit by Canadian courts.
Picket lines and inducing breach of contract
One of the marked differences between trade union practice in
Canada and the U.K. is that there is little use of the picket line in
the U.K. On the other hand, in Canada the law of inducing breach
of contract is most frequently invoked to support an injunction
against pickets, and it is, indeed, in this context that the most
important recent Canadian judicial development has taken place, not
only in the law itself but in its application.
Smith Brothers Construction Co. v. Jones 228
is of the greatest
importance in this area of the law. The plaintiff in that case was
a construction company which had several” jobs on the Niagara
Peninsula. The company employed its own carpenters and sub-con-
tracted other work. The Carpenters Union, of which the defendants
were executive members, sought to negotiate with the plaintiffs but
was refused because it was not certified as bargaining agent. The
union officials then approached the managers of the companies for
223Supra, footnote 159.
224 [1954] 2 D.L.R. 117 (Ont. H.C.).
225 Bennett and White V. Van Reeder, supra, footnote 159, at p. 333; Dewar V.
Dwan, supra, footnote 159, at p. 134; Island Shipping V. Devine (1964), 41 D.L.R.
(2d) 226, at pp. 232-33.
226 Bennett and White V. Van Reeder, ibid.; Dewar V. Dwan, ibid.; Body V.
Murdoch, supra, footnote 159. This criticism may be made even of the judgment in
Posluns case, supra, footnote 149, at pp. 266-7.
227 See Carrothers, The Labour Injunction in British Columbia (1956)
Canadian Ltd.), at p. 84.
228 [1955] 4 D.L.R. 255 (Ont. H.C.).
INDUCING BREACH OF CONTRACT
which the plaintiff was doing construction work and informed them
that unless the plaintiff recognized the Carpenters Union the con-
struction sites would be picketed. The manager of one of these com-
panies, Cyanamid Company Ltd., thereupon told the plaintiff’s of-
ficials that the plaintiff’s men were not to work on the Cyanamid
job, and as a result the plaintiff’s employees were told not to report
to work there. As it had threatened, the union then picketed the
other construction sites, with the result that all employees, including
those of the sub-contractors, refused to cross the picket line and
work came to a standstill.
The action was brought for interference with contractual rela-
tions between the plaintiff and his sub-contractors. (In the construc-
tion industry, where most workmen are hourly rated employees, the
men’s own contracts can seldom be shown to have been breached.)
At the trial,229 McLennan, J.A. held that what had occurred was not
a strike within the definition in the Labour Relations Act 230 or at
common law because sufficient agreement between the workmen who
ceased work had not been shown -.2 31 Nevertheless, His Lordship
granted a permanent injunction and damages on the ground that
what happened at the Cyanamid company clearly falls within the simple
case put by Viscount Simon, L.C. in Crofter Hand Woven Harris Tweed Co. v.
Veitch… This being so, the plaintiff has established a case of inducing
breach of contract or interference with contractual relations against the
defendants…X
Much more important to Canadian trade unionism, His Lordship
also found that there was unlawful interference with contractual
relations in the “not so simple case” of the jobs where pickets had
been placed. The pickets, in His Lordship’s opinion, had been com-
pletely peaceful but, he said,
229 Picketing had earlier been enjoined on interlocutory application on the
grounds that it was in support of an illegal strike and that it constituted an
interference with contractual relations and was, therefore, a violation of a legal
right; Smith Bros. Construction Co. v. Jones, supra, footnote 224, at p. 122.
230 Now R.S.O. 1960 c. 202, s. 1(1) (i).
231 The plaintiff company had previously been granted a declaration by the
Ontario Labour Relations Board that the union’s activity constituted a strike
and was unlawful under the Labour Relations Act. See R.S.O. 1960 c. 202, s. 67.
232 Supra, footnote 139, at pp. 262-63. In the passage referred to, in [1942]
A.C. 435, at p. 442, Viscount Simon, L.C. said :
If C. has an existing contract with A. and B. is aware of it, and if B.
persuades or induces C. to break the contract with resulting damage to A.,
this is, generally speaking, a tortious act for which B. will be liable to A. for
the injury he had done him. In some cases, however, B. may be able to justify
his procuring of the breach…
McGILL LAW JOURNAL
if the development of the trade union movement has reached the point where
workers will not cross a picket-line to go to work, that is just as effective an
interference with contractual relations as any other form of restraint
might be.23 3
McLennan J.A. considered his decision quite consistent with the
principles ennunciated in Thomson v. Deakin.24 However, the nub
of the case is that the sub-contractors were constrained to commit
breaches of their contracts with the plaintiff, so the decision in
Smith v. Jones is inconsistent with Thomson V. Deakin in this re-
spect: the constraint upon the sub-contractor from the universality
among unionists of “the rule”, of which McLennan J.A. took judicial
notice, was not demonstrated to be unlawful. In Thomson v. Deakin
it was made clear that all means of procuring the breach of con-
tract, other than direct inducement, must be unlawful in themselves
if the procurement is to be actionable. To be consistent with the
principles in Thomson V. Deakin his Lordship would have had to
decide that the workmen were induced by the picket line to breach
their contracts of employment, which in turn caused the breach of the
sub-contracts. Inducing breach of contracts of employment is clearly
an unlawful act in Canada,235 but McLennan J.A. did not mention
that employment contracts were breached, and indeed, it might have
been difficult to establish that such was the case where the em-
ployees were hourly rated construction workers.
Because picketing is so much a part of almost every North
American trade dispute, McLennan J.A.’s decision that “the rule”
(that the picket line shall be respected) may operate as “restraint”
in cases of inducing breach of contract has great significance for
trade .unionists.2 3 6 The British Columbia Court of Appeal, however,
held in the Becker Construction, case 27 that, where there was a
lock-out, legal under the Labour Relations Act, picketers could not
be enjoined on the ground that other trades refused to cross the
line. It was considered important in that case that any damage suf-
233 Ibid., at p. 264.
234 See his Lordship’s comment at p. 264, ibid.
235 Which is probably not the case in England. See supra, footnote 130, and
236See now, Bevaart v. Flecher (1956), 2 D.L.R. (2d) 77 (B.C.S.C.); Har-a-
Mac Construction Co. v. Harkness, [1958] O.W.N. 366 (Ont. H.C.); North Fork
Timber Co. Ltd. v. MacKenzie (1964), 45 D.L.R. (2d) 19 (Alta. S.C.).
237 Becker Construction Company Ltd. v. United Association of Plumbing and
Pipefitting Industry (1958), 26 W.W.R. 231 (B.C.C.A.). Followed in Common-
wealth Construction Company Ltd. v. International Association of Ironworkers
(1959), 30 W.W.R. 624 (B.C.C.A.).
INDUCING BREACH OF CONTRACT
fered was caused not by the picketers but by the tradesmen who
were unwilling to ignore the picket line.
Whatever the law may be in British Columbia, the influence of
Smith v. Jones is still great in Ontario. In the 1963 case of Hersees
of Woodstock Ltd. v. Goldstein 238 the Amalgamated Clothing Workers
of America picketed the plaintiff’s sportswear shop because he dealt
in goods manufactured by a company with which the union had a
dispute. Aylesworth J.A. upheld the injunction granted by the lower
court because in his opinion the picketing interfered with the plain-
tiff’s contractual relations with that company. In the course of his
judgment he referred to McLennan J.A.’s judgment, and said,
In this and in several other cases in Canadian Courts judicial notice has been
taken of “the rule” so far as employees are concerned. I am prepared to
take judicial notice that the rule affects as well, many other members of
the public who are not employees of the employer whose premises are
picketed, particularly such other members of the public in a community
where, as in the case at bar, there is widespread organization of labour.2 1
The issue of causation
The judicial attitude exhibited in the Hersees case toward “the
rule” that a trade unionist will refuse to cross another’s picket line,
could greatly increase the incidence of successful actions for inducing
breach of contract in trade dispute situations. However, the question
must still be answered in each case, whether the picketing is in fact
the effective cause of ensuing breaches of contract. The leading case
on this issue of causation in inducing breach of contract cases is
Newell v. Barker and Bruce; 240 the only Supreme Court of Canada
decision on inducing breach of contract in a trade dispute situation.
The Newell case, like so many other labour cases, arose from a
dispute in the construction industry. The Cooper Company, who had
the contract to do most of the work on a factory that was being built
for Proctor and Gamble Ltd., gave a sub-contract for part of the
plumbing work to the plaintiff. Unknown to them the plaintiff had
been ousted from membership in the local association of master
plumbers and consequently could not get union men to work for
him. The defendants, officers of the plumbers union with which the
Cooper Company had a closed shop agreement, pointed out to com-
pany officials that the plaintiff was employing non-union men and
that it was against union policy to work on the same job with them.
238 Supra, footnote 207.
29Ibid., at p. 453.
24OSupra, footnote 177.
McGILL LAW JOURNAL
As a result the company cancelled its contract with the plainiff. The
plaintiff gave the Cooper Company a release from liability but
brought an action against the defendants for inducing a breach of
the contract.
Estey J., for the majority of the Supreme Court, held that, on
the evidence, the defendants had not caused the cancellation of the
appellants’ contract. The project overseer had
. .acted upon his own judgment and just as he would have acted had he
otherwise learned or discovered that non-union men were being or would
be employed on the construction of this building. In these circumstances
there was no interference on the part of the respondents with contractual
relations within the meaning of the oft-quoted statement of Lord Macnaghten
in Quinn v. Leathem… 2 4 1
It was Mr. Justice Rand who attempted to state the reasons for
not holding the defendant unionists liable in terms which related to
the realities of modern society, of which organized labour is a legiti-
mate and important part. He thought, as did the majority, that the
case resolved itself into a question of causation. He said,
The market of labour is, therefore, restricted by considerations of competing
interests which are now part of the accepted modes of action of individuals
and groups…
The action of the respondents was not, therefore, either a procurement or
an inducement of the breach which I will assume took place in Newell’s
contract; but by it the building contractor. facing on one hand the contract
and on the other the source of labour not open to him, was put to a choice
of the side on which he considered his own interest to lie. It is, I think, the
proper view to attribute the cancellation of the contract not to the refusal
of labour by the respondents, but to the chosen course of action of the
building contractor… If this were not so, by unitedly declining to associate
themselves with non-union workers, the respondents and their workmen
would involve themselves in illegality brought about by the mere fact that
the desire of the building contractor for their labour was stronger than that
of observing the contract with Newell.242
If such were the attitude of Canadian courts in every case where
an action is brought for inducing breach of contract the wide scope
of that tort in trade disputes would deserve somewhat less concern
from trade unionists. Subsequent decisions have obviously sur-
mounted whatever obstacles to liability Newell v. Barker and Bruce
may present but the case is authority that, in Canada, the issue of
whether or not a defendant union has, in fact, caused a breach of
contract must be dealt with in the light of the union’s right to make
clear its policy (which may involve a work stoppage) without in-
curring liability.
241 Ibid., at pp. 393-94.
242 Ibid., at pp. 398-99.
INDUCING BREACH OF CONTRACT
Canadian courts have shown themselves more willing to impose
liability for inducing breach of contract in labour dispute cases than
are the English courts. Provided that the defendant’s activity can
be shown to have been the effective cause of the detriment suffered by
the plaintiff, Canadian judges have not been careful to ascertain that
there has been an actual breach of a contract. Thus it may be said
that liability has on occasion been imposed for interference with
advantageous trade relationships, rather than only for inducing
breach of contract.
If the strict requirement in English law of showing actual breach
of a contract, of which the defendant had demonstrated knowledge,
is to be relaxed, the defence of justification must become more im-
portant in the trade dispute law of Canada. In imposing liability on
the grounds of interference with something less than an established
contractual right the court takes to itself the function of balancing
the societal interests involved. Since there may be legitimate trade
union interests at stake in inducing cases, this balancing function
cannot be effectively performed unless the law gives real scope to
the defence of justification; but however, quite the opposite has
been the course of development of Canadian law. Not only have
Canadian courts followed English precedent in denying any place
to justification based on pursuit of legitimate interests, but, nothing
has ever been made of contractual justification, which could in many
cases be established on the basis of a collective agreement.
The absence of a Canadian equivalent of section 3 of the English
Trade Disputes Act, 1906, which provides that inducing breach of
employment contracts in the course of a trade dispute shall not be
actionable, also makes the tort of inducing breach of contract of
greater importance in Canadian labour law. The variety of terms
that may be implied in a contract of employment means that induce-
ment of breach thereof can easily be established. In the Nipissing
Hotel case,243 for example, the defendant was held to have induced
breach of the plaintiff’s employees’ implied promise “to care for and
further the plaintiff’s interests”. This is illustrative of the impor-
tance of the statutory difference between the laws of England and
Canada. Furthermore, it seems clear that many of the terms of the
collective agreement in force in any employment situation may also
be treated as implied terms of individual contracts of employment.
This not only emphasizes once again the importance of the fact that
liability may be based on breach of a contract of employment, it
2 Supra, footnote 183.
McGILL LAW JOURNAL
also stresses the relevance of the collective agreement as a basis
of justification in inducing cases.
Thomson v. Deakin,244 which has been called the case to which
the tort of inducing breach of contract “owes its most exhaustive
exposition”,2 45 makes it clear that, in the law of England, where a
breach of contract is induced by means other than direct persuasion,
liability results only if the means are illegal in themselves. In similar
fact situations Canadian courts have not been diligent in establishing
that there has been such illegality quite apart from the inducing.
Indeed, the distinction between direct and indirect inducing seems
never to have been recognized.
This departure from the requirement of English law that an act
illegal in itself must be shown is particularly important in picketing
cases. In some picketing cases a failure to recognize the special re-
quirements of indirect inducing has been coupled with judicial’ notice
of the ethic of the labour movement, that no man will cross an-
other’s picket line. In brief, Canadian courts now hold a peaceful
picket line to be the cause of a breach of contract where the breach
results from refusal to cross the picket line, and liability is imposed
althought the “ethical” restraint is not in itself illegal. On the
analysis put forth in Thomson v. Deakin, liability would not gener-
ally result in such a situation. There would be liability only where
the contract upon which the inducing action was based was the
employment contract between the plaintiff and the man who had
been persuaded not to cross the picket line. The picket could, in that
case, be said to have directly induced the breach. The more usual
case will be one like Smith Brothers Construction V. Jones2 40 where
the only inducement alleged is indirect. For example, the breach in
that case was of a building contract, and followed from a refusal of
the workmen to cross the picket line. Such a case is clearly one of
indirect inducement in which, according to Thomson v. Deakin, no
liability should be incurred because the restraint on the workmen is not
in itself illegal. That however, does not appear to be the law in Canada.
It may be that the complexities of the English law of indirect
inducement are out of place in the interlocutory injunction applica-
tions upon which such matters usually arise in Canadian courts. But
there is no reason to applaud the imposition of liability in such
cases, where no act illegal in itself has been shown, unless this exten-
sion of the law is offset by protection of legitimate trade union
244Supra, footnote 106, and see footnotes 106-113 and accompanying text.
245 So referred to by Dean Carrothers, Collective Bargaining Law in Canada
(1965) (Butterworths, Toronto), at p. 471.
24 O Supra, footnote 228.
INDUCING BREACH OF CONTRACT
interests in dispute situations. What is needed in the area of pick-
eting is legislation that provides for the issue of injunctions only
in specific fact situations, and those situations must be clearly de-
lineated in terms that are realistic in the context of North American
labour relations. Presumably picketing must be enjoinable where it
involves the commission of a crime or a tort other than nuisance.
Specified nuisance situations should, no doubt, also give rise to an
injunction, but those situations must be further spelled out to leave
scope for effective peaceful picketing. Picketing in support of a
strike contrary to the labour relations legislation of the province
probably should be enjoinable also, and the wisdom of outlawing
secondary picketing must be considered.
The specific provisions of new legislation on picketing are mat-
ters of detail beyond the scope of this consideration of the law of
inducing breach of contract. The important thing is that, whatever
limitations the legislature may see fit to impose on the right to
picket, it must be made clear that those are to be the only bases
upon which injunctions against picketing in the course of trade
disputes will issue. Indeed, this proposal for legislation differs from
the British Columbia Trade Union Act, 1959,247 mainly in that the
British Columbia Act fails to make it clear that the statutory bases
for the issue of injunctions are to be exclusive. If it were made clear
that the only grounds for injunction were to be those stipulated,
the tort of inducing breach of contract would, as a rule, come up
for consideration only in trial proceedings, and very seldom in cases
arising out of picketing.
Picketing is not, of course, the only type of fact situation in which
inducing breach of contract arises, and it may well be that there
should be legislation of more general application to free the law
from its complexities. Any Canadian legislature would undoubtedly
regard contractual rights as worthy of protection, just as the courts
have done; but it is more doubtful that they would follow the lead
of Canadian courts in extending the tort of inducing breach of con-
tract to protect prospective advantage against interference not other-
wise illegal. Certainly a legislative statement would have merits which
are lacking in the Canadian cases on the matter; for one thing it
would be clear, and for another, it would emanate from a body
qualified to decide whether, to what extent, and by what means
the law should enter that field of interest balancing. In any case,
it should not be beyond the wit of man to devise a more rational
means than the tort of inducing breach of contract, as presently
understood, for protecting contractual interests from third party
interference.
247 R.S.B.C. 1960, c. 384.