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Sabotage: Inducing Breach of Contract in Employment

If a party, like a former employer, suggests to another to fire a certain employee, the party who tattled on the employee could be liable for damages by way of the “tort of inducing breach of contract.”

The tort of inducing breach of contract, as held in Drouillard v. Cogeco Cable Inc., 2007 ONCA 322 (CanLII) (“Drouillard“), is satisfied when: (1) a valid and enforceable contract exists; (2) the defendant was aware of the existence of the contract; (3) the defendant intended to and did procure a breach of the contract; and (4) the plaintiff suffered damages as a result of the breach.

In Drouillard, the defendant, Cogeco, influenced its installation contractor, Mastec, to fire its new employee, Drouillard, the plaintiff.

A Cogeco manager called a Mastec representative and “suggested, rather ominously, that it would be in Mastec’s best interest if Drouillard did not work for it” and that “it was definitely in Mastec’s best interest to ensure that Drouillard was not employed there.” In the result, Cogeco was liable for inducing breach of contract, as its actions satisfied the four criteria: (1) Drouillard had an employment contract with Mastec; (2) Cogeco was aware of Drouillard’s employment contract; (3) Cogeco intended to and did procure the breach of that contract because Drouillard was terminated by Mastec without proper notice; (4) Drouillard suffered economic loss by way of his job loss and because Cogeco “blackballed him” such that he would not likely find work with other cable installing companies serving Cogeco.

1. A valid and enforceable contract must exist

The first element is easily made out if there is an employment relationship. Even if there is no explicit contract, the common law implies a contract between master and servant.

2. The defendant must be aware of the existence of the contract

The second element is also easily answered in the employment law context. If the defendant knew, or ought to have known the plaintiff was an employee of the party it tattled to, then the defendant will have been aware of the existence of the contract.

3. The defendant intended to and did procure a breach of the contract

This is the only element that generally requires any analysis.

The third element is divided into two sub-elements. First, the tort requires that the defendant intended to procure the breach of the contract; and second, that there is conduct by which the defendant directly induced a third party to breach its contract with the plaintiff.

With regard to the first sub-element, the inducement tort requires intent on the part of the defendant to procure the breach. In this respect, intention is proven by showing that the defendant acted with the desire to cause a breach of contract, or with the substantial certainty that a breach of contract would result from the defendant’s conduct. At paragraph 33 the court stated:

[33] Although there is no direct evidence that Cogeco wanted Mastec to terminate Drouillard’s employment without reasonable notice, it is clear from the trial judge’s findings that he was satisfied that Cogeco was not concerned about the terms of Drouillard’s termination and that Cogeco acted intending to cause a breach of Drouillard’s employment contract, or with substantial certainty that its conduct would result in a breach. In my view, that finding was open to the trial judge and, therefore, the requirement of intent has been met.

With regard to the second sub-element, the inducement tort requires that the defendant caused the actual breach of the contract. Here, it is not enough for the conduct to merely hinder full performance of the contract. The plaintiff’s contract with a third party must be breached. In the employment law context, this means that the employee was terminated without adequate notice either per the common law or the contract, if one exists. At paragraph 37 the court stated:

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

4. The plaintiff suffered damages as a result of the breach

This element is again easily made in the employment law context. If the employee was fired from his new job, without proper notice, then he suffered loss of income. In addition, if the defendant’s tortious act has made it more difficult for the plaintiff to find new empowerment, then the plaintiff has suffered damages for future income loss.