Court of Appeal for Ontario

Date: 2018-03-02 Docket: M48840 (C64908) Motions Judge: Fairburn J.A.

Between

Hampton Securities Limited Appellant (Moving Party)

and

Christina Nicole Dean Respondent (Responding Party)

Counsel

Sara J. Erskine and David Barbaree, for the moving party

Christopher J. Somerville and Daphne Hooper, for the responding party

Heard: February 27, 2018

Endorsement

Overview

[1] The applicant is a registered investment firm. The respondent was employed at the firm as a trader. Her employment ended in 2009. The applicant maintains that the respondent was terminated with cause. The respondent maintains that she was constructively dismissed.

[2] On the day following the events leading to the respondent's termination, the applicant filed a Notice of Termination (NOT) on the National Research Database (NRD). The NRD is maintained by the Investment Industry Regulatory Organization of Canada (IIROC). The NOT states:

Dismissed for cause. …

No unresolved client complaints. …

Failed to follow trading desk policies & procedures – unauthorized trading resulting in losses.

[3] The applicant commenced an action against the respondent, claiming damages from losses she incurred as a trader. The respondent defended the action and counterclaimed for constructive dismissal and defamation.

[4] The trial judge found that the respondent had been constructively dismissed and defamed by the applicant. The applicant was ordered to pay the respondent the equivalent of six months' salary plus 4% vacation pay in lieu of notice, damages for defamation, and punitive damages. The applicant was also ordered to correct the NOT filed with IIROC in a manner consistent with the trial judge's findings of fact.

[5] The applicant appeals from the trial judge's decision on a number of grounds, including that he erred by finding that the NOT was defamatory and/or was not within the defence of qualified privilege. The applicant also maintains that the trial judge exceeded his jurisdiction by making a mandatory order requiring the applicant to file a notice of correction with IIROC.

[6] Pursuant to rule 63.01(1), the monetary award against the applicant is automatically stayed pending resolution of the appeal. This motion relates to the applicant's request under rule 63.02(1), that the trial judge's order to amend the NOT be stayed pending disposition of the appeal.

General Facts

[7] The respondent was required to have a reserve fund when she commenced her work as a trader with the applicant. For purposes of this motion, it is unnecessary to get into all of the details surrounding the reserve fund.

[8] During a meeting on April 2, 2009, the respondent was told that she had to increase her reserve by $50,000 because her losses exceeded her reserve (a suggestion that the trial judge found was not true). The respondent was told that she could not trade until she increased her reserve by the stipulated amount. The respondent said that she wanted to think about it. Within 24 hours of that conversation, her employment was terminated. The applicant then submitted the NOT to IIROC and it was made available to other regulators and those in the trading industry to see.

[9] The trial judge found that: (a) the applicant had no contractual right to demand $50,000; (b) there was "no basis on which to conclude that [the respondent] failed to follow trading policies or engaged in unauthorized trading"; and (c) the respondent's termination had nothing to do with what was stated in the NOT, namely, failing to "follow trading desk policies & procedures – unauthorized trading resulting in losses". The trial judge found that this statement was false and defamatory. He found that qualified privilege did not apply.

[10] The applicant was ordered to correct the NOT in a "form satisfactory to both parties". The parties later came to an agreement about the wording that should be used. The agreed upon wording is found in the trial judge's endorsement of February 7, 2018:

Completely and permanently delete and replace the words "i) Dismissed for cause" and "ii) Failed to follow trading desk policies & procedures – unauthorized trading resulting in losses" under "Termination Details" … with "iv) Resigned in good standing" and "ii) No internal discipline matters", respectively.

[11] Although the parties reached an agreement on this wording, the applicant seeks to stay the order requiring that the NOT be changed until after the disposition of the appeal.

Analysis

[12] RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, at para. 48 sets out a three-part test for an injunction:

First, a preliminary assessment must be made of the merits of the case to ensure that there is a serious question to be tried. Secondly, it must be determined whether the applicant would suffer irreparable harm if the application were refused. Finally, an assessment must be made as to which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits.

(i) The Strength of the Appeal

[13] The applicant raises numerous grounds of appeal. For purposes of this motion, he focusses on the suggestion that the trial judge erred in finding that the NOT was defamatory and/or not within the defence of qualified privilege and that the trial judge exceeded his jurisdiction by making the mandatory order to amend the NOT.

[14] The applicant submits that the trial judge erred by reasoning that because the statements in the NOT were untrue (a characterization of the statements that the applicant rejects), qualified privilege could offer no defence to the defamation claim. I would not necessarily read the impugned paragraphs as the applicant suggests. However, the applicant's position is not so frivolous or vexatious that it cannot meet the first stage of the analysis.

(ii) No Irreparable Harm

[15] Irreparable harm refers to "the nature of the harm suffered rather than its magnitude. It is harm which either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other": RJR, at para. 64.

[16] The applicant argues that the appeal could be rendered moot if the NOT were to be amended now, causing irreparable harm to its interests. The applicant maintains that, as the mandatory order to amend the NOT rests on the cause of action in defamation, if this cause of action fails to succeed on appeal, then the entitlement to the amendment will evaporate. As such, the applicant reasons that changing the NOT could have the effect of rendering the appeal moot because, as they put it, the "entitlement to the remedy is still under appeal". I disagree.

[17] Among other authorities, the applicant relies upon Martin v. Martin, 2012 ONCA 814. Martin is a two paragraph endorsement of this court quashing an appeal where the matrimonial home that formed the subject of the appeal had been sold between the time of the original order and the appeal. The home was gone and there was no means by which to revisit the sale. I see no parallel between the result in Martin and this case.

[18] Compliance with the order below will not render the appeal moot. If the applicant succeeds in the appeal, the NOT can simply be adjusted back to the original wording or changed to wording arising from some other remedy that may be imposed. I see nothing in this record that would render the appeal moot if the applicant complies with the trial judge's order.

[19] The applicant further submits that requiring it to amend the NOT will undermine its statutory obligations under the Securities Act, R.S.O. 1990, Chapter S.5, and its contractual obligations with IIROC. I need not decide this issue. IIROC has communicated to the parties that once they agree on the changes to the NOT, "or there is a final decision" on the correction, then the change will be forwarded for "processing". I take from this email exchange that IIROC is prepared to make whatever change they are asked to make, provided both parties agree or there is a final decision.

[20] The applicant has failed to meet the burden of establishing irreparable harm on this motion. If irreparable harm exists, it lies with the respondent. The trial judge found that the defamatory statements adversely impacted her professional standing. There is also evidence on this motion that the respondent's employer is taking the comments in the NOT into account in respect to the respondent's current prospects for job advancement.

[21] I do not find compelling the suggestion that, regardless of whether or not the amendment is made, the respondent's potential for job advancement may be held at bay until completion of the litigation. It seems clear that, at a minimum, the removal of the now presumptively defamatory comments from the NOT will at least remove one barrier in the respondent's way to professional progress.

[22] Although some delay in bringing the litigation to conclusion appears to fall at the feet of the respondent, this does not undermine the fact that the statements found to be false have had and continue to have an adverse impact on her professional standing. This results in real, present and ongoing harm to the respondent.

[23] The applicant has failed to establish that they will suffer irreparable harm if a stay is not imposed.

(iii) Balance of Convenience

[24] As the applicant has failed to show irreparable harm, the balance of convenience cannot be in their favour.

Conclusion

[25] The motion for a stay of the mandatory order is dismissed. If the parties cannot agree upon costs, they may each file two pages of written submissions in the next 14 days.

Fairburn J.A.