B.C. Court of Appeal Clarifies the Elements of the Tort of Abuse of Process

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In Oei v. Hui,[1] the B.C. Court of Appeal clarified the elements of the tort of abuse of process and, in doing so, reinforced its narrow scope. In particular, the Court of Appeal clarified that the tort is narrower than the procedural fault of abuse of process and has three elements: (i) a collateral and improper purpose; (ii) an overt act in furtherance of the collateral and improper purpose; and (iii) resulting loss. While some B.C. cases had suggested that an overt act might not be required, the Court of Appeal rejected this suggestion and confirmed that an overt act is essential. It also held that a plea of knowing falsity (i.e., a plea that the earlier claim rests on allegations that the claimant knows to be false) cannot transform a purpose that is within the scope of the litigation into a collateral and improper purpose. The message is clear: the tort must remain carefully circumscribed to avoid a proliferation of unmerited retaliatory lawsuits.

Facts

Oei involved two separate but related proceedings in which the plaintiffs and defendants traded places. Both proceedings arose out of a written agreement between Concord Pacific Acquisitions Inc. (“Concord”) and a Singapore-based businessman named Mr. Oei and two of his companies (the “Oei parties”) in respect of a major real estate development project in Vancouver. First, Concord sued the Oei parties for breach of contract in connection with the agreement. Second, the Oei parties sued Concord and its principal (the “Concord parties”) for the tort of abuse of process, alleging that the Concord parties knowingly advanced false claims against the Oei parties in the first action for the purposes of constraining their ability to deal with the lands in question and coercing them to negotiate. In response, the Concord parties applied to have the Oei parties’ pleadings struck on the basis that they disclosed no reasonable claim. On such an application, courts are required to assume the truth of the facts pleaded, so the merits were not in issue.

Chambers Judge’s Decision

The chambers judge dismissed the Concord parties’ application to strike. He observed that the elements of the tort of abuse of process have been described as: (i) a collateral and improper purpose; (ii) an overt act; and (iii) resulting loss. He noted, however, that the law in B.C. was unclear on whether an overt act is required.

The arguments before the chambers judge focused on the first element of the tort. The chambers judge accepted that the “incidents or consequences of litigation”, such as “delay, cost, potential embarrassment, difficulty in securing financing and a chilling effect on those who would otherwise do business with the party who has been sued”, do not qualify as a collateral and improper purpose.[2] He considered, however, that where a party knowingly advances false claims for the purpose of achieving these same consequences and coercing the other party, this constitutes a collateral and improper purpose.[3] On this premise, he held that it was not plain and obvious that the Oei parties’ pleadings were bound to fail.

Court of Appeal Decision

The Court of Appeal allowed the Concord parties’ appeal. Its reasons focused on the first two elements of the tort.

Knowing Falsity and the Improper and Collateral Purpose Requirement

The Court of Appeal confirmed that the tort of abuse of process is distinct from, and narrower than, the procedural fault of abuse of process, which may ground the striking of pleadings, an elevated costs award, and other procedural remedies, but which cannot lead to a damages award. It also confirmed that, unlike the procedural fault of abuse of process, the tort requires proof of a collateral and improper purpose.

On that point, the Court of Appeal stressed that one action may beget another only where the first is brought for a purpose that is both improper and collateral, meaning that the purpose is “outside the normal incidents of litigation”.[4] This requirement, the court stated, “keeps the litigation between parties from multiplying beyond the original proceedings, which are intended to address all issues between the parties arising from the lis”.[5]

The main issue before the court was whether a plea of knowing falsity could transform a purpose that is within the normal incidents of litigation into one that is outside the normal incidents of litigation. The court answered this question in the negative, stating that “knowing falsity, by itself, is not a ‘purpose’ as required for the tort, and a plea of knowingly false allegations cannot transform an acceptable purpose into a tortious purpose”.[6] It added that the collateral and improper purpose requirement is what allows the tort to stand in harmony with the doctrine of absolute privilege, which generally shields statements — even knowing falsehoods — expressed in the course of litigation from becoming the source of further litigation.

The Overt Act Requirement

The Court of Appeal then observed that certain B.C. decisions — including, most notably, the Court of Appeal’s own decision in Smith v. Rusk[7] — had suggested that an overt act might not be necessary to establish the tort. The court rejected this suggestion. In doing so, it referred to case law explaining that, in the absence of an overt act requirement, any legal process could be challenged on account of its “hidden agenda”,[8] and the tort could be made out on an “examination of bad motives alone”.[9]

Remedy

The Court of Appeal held that the chambers judge erred in law by concluding that a plea of knowing falsity could transform a purpose that is within the normal incidents of litigation into one that is outside the normal incidents of litigation. However, because the chambers judge did not consider whether, absent the plea of knowing falsity, the Oei parties had pleaded a collateral and improper purpose, the Court of Appeal considered it appropriate to remit the matter to the B.C. Supreme Court for determination.

Comments

The Court of Appeal’s decision sends the message that the tort of abuse of process must remain carefully circumscribed to avoid a proliferation of unmerited retaliatory lawsuits. It also provides a welcome degree of clarity on the elements of the tort. That is not to say that this area of the law is without uncertainty. For example, whether a particular purposes qualifies as one that is “collateral and improper” (i.e., sits outside the normal incidents of litigation) may be debated. Similarly, whether a particular act qualifies as an “overt act in furtherance of the collateral and improper purpose” may be debated. These are important questions that will have to be resolved on the particular facts of each case.

Because the deadline for seeking leave to appeal to the Supreme Court of Canada has yet to expire, it remains to be seen whether the Court of Appeal’s decision will be the last word on the subject.

Case Information

Oie v Hui, 2020 BCCA 214

Docket: CA45549

Date of Decision: July 24, 2020

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[1] 2020 BCCA 214 [Oei].

[2] 2018 BCSC 1346, at para. 25.

[3] Ibid., at para. 26.

[4] Oei, at paras. 26, 37.

[5] Ibid., at para. 37.

[6] Ibid., at para. 37.

[7] 2009 BCCA 96.

[8] Oei, at para. 69, quoting Summex Mines Ltd. v. Farallon Resources Ltd., [1998] B.C.J. No. 1723 (S.C.), at para. 181.

[9] Oei, at para. 72, quoting Office and Professional Employees Int’l. Union v. Office and Professional Employees Int’l. Union, Local 15, 2006 BCSC 847, at para. 24.

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