SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 07-CV-325835PD 3
MOTION HEARD: 20111219

RE: William Seitz, Plaintiff

AND:
BMO Nesbitt Burns Inc., Defendant

BEFORE: Master Abrams

COUNSEL:
J. Mathers McHenry, for the Plaintiff
L. Talbot, for the Defendant

HEARD: December 19/11

REASONS FOR DECISION

[ 1 ] The plaintiff was a resident investment advisor with BMO Nesbitt Burns Inc. from 2002-2006. In October 2006, his employment was terminated without notice. The plaintiff commenced a wrongful dismissal action against BMO Nesbitt Burns, in January 2007. He claimed damages in the amount of $350,000 for his former employer’s failure to give him notice of termination and sought payment of bonuses from November 1/05-October 31/06. BMO Nesbitt Burns defended the action, alleging cause.

[ 2 ] All pre-trial steps herein have taken place. Documentary and oral discoveries have been completed; mediation has occurred; and, the proceedings have been set down for trial--with a pre-trial conference having been presided over by Stinson, J. in 2009.

[ 3 ] Now, almost five years after his action was commenced and when the only outstanding step to be taken herein is that of the trial, the plaintiff seeks to amend his statement of claim. The plaintiff’s motion is opposed, in part. BMO Nesbitt Burns says that certain of the amendments that the plaintiff proposes be made (i.e. those relating to his “book of business”) are not tenable at law and are statute barred.

[ 4 ] What is at issue is the plaintiff’s desire to add a claim for the value of his book of business, a claim which BMO Nesbitt Burns says is new and which the plaintiff says is incidental to, and flows directly from, the claims already made by him. The plaintiff seeks to add new factual allegations (including allegations relating to, what he says, was an agreement that he would be permitted to transition his client base to another financial advisor provided he ceased to be employed by BMO Nesbitt Burns); and, he seeks to add a claim for working notice to transition his client base (para. 31 of the proposed amended claim).

[ 5 ] The plaintiff has been represented by counsel, throughout, including by a senior and experienced employment lawyer (David Harris). The plaintiff’s evidence is that he raised with Mr. Harris the possibility of including a claim for damages in regard to the value of his book of business, at the time that his statement of claim was being prepared. He says that Mr. Harris advised him to “...wait to determine whether he would be re-employed quickly” before making any such claim. The plaintiff accepted Mr. Harris’ advice.

[ 6 ] The plaintiff also says that, as early as March 2007, he instructed Mr. Harris to amend his statement of claim to address the issue of the book of business. He says that Mr. Harris told him that he could and should wait to do so. By July 2007, the amendment was not yet made. The plaintiff says that he again instructed Mr. Harris to amend his claim, this after the conduct of mediation. Mr. Harris apparently declined to do so (advising that the amendment should occur at a later time).

[ 7 ] The plaintiff says that, between December 2007 and June 2008, he tried to reach Mr. Harris to request of him that he amend his claim. His evidence is that Mr. Harris was difficult to reach and did not respond to calls and letters.

[ 8 ] After examinations for discovery were completed herein, the plaintiff says that he again instructed Mr. Harris (this on more than one occasion) to amend his claim. He says that Mr. Harris told him that he would attend to doing so.

[ 9 ] By the time of the pre-trial conference, the claim had still not been amended. I note, though, that passing reference to the plaintiff’s book of business was included in the plaintiff’s pre-trial brief. That said, and for reasons unknown, in early January/10 Mr. Harris apparently told former counsel for BMO Nesbitt Burns that he wanted to convince the plaintiff not to amend his claim (see Exhibit “D” to affidavit of Alexander Smith, sworn November 14/11).

[ 10 ] Throughout much of 2010, the plaintiff says that he made efforts to reach Mr. Harris (to no avail). He later learned that Mr. Harris had been coping with a personal tragedy and a brief suspension by the Law Society such that he had not been working on the plaintiff’s file. The plaintiff conferred with the lawyer who was covering for Mr. Harris but was not content to have him act for him. He also says he tried to find other counsel to represent him, but could not.

[ 11 ] When Mr. Harris returned to full-time practice, in August/10, he assured the plaintiff that he would give the plaintiff’s claim the attention it merited; and on that basis, the plaintiff states, he continued to work with Mr. Harris. A form of proposed amended claim was sent out by Mr. Harris, in draft form, thereafter. A motion to amend the claim (the draft proffered was different than the draft before me on December 19/11) was, to the plaintiff’s knowledge, scheduled to go ahead on December 16/10. In that the motion was not confirmed, it did not proceed.

[ 12 ] In April/11, the plaintiff retained his present lawyers, Teplitsky Colson LLP, and this motion was booked (with a new form of proposed amended pleading put forward for my consideration). I am asked to grant the plaintiff leave to amend his pleading, given the dictates of Rule 26.01 and the history of this action.

[ 13 ] Rule 26.01 provides that the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that cannot be compensated for by costs or an adjournment. Amendments must be tenable at law and no new cause of action may be asserted after the relevant limitation period elapses.

[ 14 ] BMO Nesbitt Burns says that, in seeking to add a claim for the value of his book of business in addition to a claim for pay in lieu of notice, the plaintiff is “double counting”, i.e. seeking double recovery for the same loss. Ms. Talbot refers to Merrill Lynch Canada Inc. v. Soost , 2010 ABCA 251 , a decision of the Alberta Court of Appeal, as support for her client’s position. She says, and I agree, that the analysis by the Court at paragraphs 30-38 is instructive. Key, from my perspective, is the comment by the Alberta Court of Appeal, at paragraph 35, that awarding lost future income (pay in lieu of notice) is more or less the same thing as awarding the present capital value of future income (the value of the book of business). On its face, the argument is made by Ms. Talbot, a claim for double recovery for the same loss cannot be tenable at law. [1] I agree.

[ 15 ] Then too and in any event, Ms. Talbot submits, the claim is founded on the premise that the plaintiff was entitled to working notice—i.e. that the plaintiff would have had an opportunity to transition (to another advisor) the client base he served, during the working notice period. With the Supreme Court of Canada having confirmed in Dunsmuir v. New Brunswick ( 2008 SCC 9 , [2008] 1 S.C.R. 190, at para. 74 ) that an employee has no right to working notice (as opposed to pay in lieu of notice), Ms. Talbot says (and I agree with this submission too) the proposed claim dealing with the book of business is not tenable.

[ 16 ] How do I reconcile these arguments of BMO Nesbitt Burns that I have accepted with the decision in Clark v. BMO Nesbitt Burns Inc. (2008), 2008 ONCA 663 , O.J. No. 3789 (C.A.)? Ms. Talbot posits that Clark [2] can be distinguished on its facts. At issue in Clark was a trial judge’s award of damages for a lost opportunity to sell a book of business when “...damages for lost opportunity” had not been specifically pleaded. Ms. Talbot argues, persuasively, that what informed the analysis was whether leave to amend the claim could be granted by the trial judge in a case where, until trial, it was implicit in the claim and the quantum of damages sought that something more than “lost commissions” was at issue. The fundamental question was whether the trial judge’s award of damages could be justified, given that it derived from pleas that were outside of the four corners of the statement of claim.

[ 17 ] Even if I am wrong in accepting, as I have, that the proposed amendments with respect to the book of business are not tenable, I am nonetheless persuaded that, as presently drafted, they constitute a new cause of action and that cause of action is statute barred. BMO Nesbitt Burns says, and I agree, that the proposed amendments set out new facts, which facts found the basis of a claim for an additional remedy: damages for “loss of...ability to sell the book of business” (in an amount equal to 1.25x the value of the assets under administration). In the (original) statement of claim, the only material fact pleaded that might be said to have given rise to this entitlement (even tangentially) was the termination of the plaintiff’s employment. The plaintiff did not plead, as he now seeks to do, a contractual obligation on the part of BMO Nesbitt Burns to allow him to transition his clients to another advisor, a breach of that contractual obligation and resultant damages.

[ 18 ] The crux of BMO Nesbitt Burns’ argument in this regard is summarized at para. 24 of its factum. Specifically: “To make out a claim for the value of his “book of business”, [the plaintiff] must establish that he had a contractual right to profit from the transition of clients based on a factual matrix not previously pleaded. The claim for the loss of the book of business is not merely an alternative claim for relief arising out of the same facts previously pleaded, nor is it simply a different legal conclusion drawn from the same set of facts already pleaded”. I agree. The claim does not arise from the breach of an employment contract and the failure on the part of BMO Nesbitt Burns to provide the plaintiff with reasonable pay in lieu of notice; it is a newly-pleaded cause of action.

[ 19 ] I don’t accept, as Ms. Mathers McHenry suggests, that the proposed amendments with respect to the book of business do no more than particularize claims already made by the plaintiff. With his damages claim more than tripling (from $350,000 in the original statement of claim to $1,300,000.00 in the proposed amended claim) and, for the first time, with the plaintiff referencing representations allegedly made and relied upon to his detriment in respect of his ability to transition his book of business, and with no reference (even passing reference) having been made to the plaintiff’s book of business in the 2007 statement of claim, I cannot agree that the proposed amendments simply round out the original right of action setting out additional facts upon which the original right of action is based. [3]

[ 20 ] The plaintiff’s cause of action with respect to his book of business is governed by the Limitations Act, 2002 . That being so, it needed to be asserted within two years from the date of the plaintiff’s termination, October 19/08, if it was to be asserted in time. While I recognize that the plaintiff’s efforts to amend his claim in a timely fashion were frustrated by circumstances beyond his control, circumstances that were and are most unfortunate, I am unable to factor those circumstances into my decision (even if I would wish to do so). The Ontario Court of Appeal has made it clear that I do not have the discretion to extend the limitation period (see: Joseph v. Paramount Canada’s Wonderland (2008), 2008 ONCA 469 , 90 O.R. (3d) 401 (C.A.)) such that, having found that the plaintiff is seeking to assert a new cause of action some three years after the relevant limitation period expired, I cannot grant the plaintiff the relief that he is seeking.

[ 21 ] In all, I am persuaded that only those proposed amendments that are not opposed (and an amendment to paragraph 1(a), as set out below) may properly be made. Leave to amend paragraphs 1(b), 3, 5, 10, 11, 13, 14, 16, 17, 21, 23, 24, and 29, in the form set out in the proposed amended claim at tab C of the motion record, is granted. Further, the plaintiff may amend paragraph 1(a) to render it commensurate with 24 months’ notice at rate of pay that he alleges is correct.

[ 22 ] Further (limited) discovery is sought in respect of the increase from $130,000 to $250,000 set out in paragraph 14 of the proposed amended claim; and, it is permitted.

[ 23 ] Failing agreement as to the issue of costs, I may be spoken to.

Master Abrams
March 18/12

[1] Merrill Lynch Canada Inc. v. Soost , supra, was followed by Lederer, J. in Chrabalowski v. BMO Nesbitt Burns Inc. , 2011 ONSC 3392 .

[2] The decision pre-dates Merrill Lynch Canada Inc. v. Soost , supra, and Chrabalowski v. BMO Nesbitt Burns Inc. , supra.

[3] This factor too distinguishes this case from Clark v. BMO Nesbitt Burns Inc ., supra, at page 55. Clark reads, in part: “...[I]t is worthy of note that 24 months’ damages were sought in the statement of claim and the prayer for relief seeks $300,000 as damages for such a claim. While not explicit, given that the [defendant] viewed [the plaintiff] as earning less than $100,000 annually, this suggests a claim for something in addition to lost commissions”.