ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO: CV–08-361316
DATE: 2013-10-07

B E T W E E N:

Merge Inc.

Plaintiff

• and -

Glen Allison

Defendant

Josephine L. Comegna, for the Plaintiff

No one appearing for the Defendant

HEARD: September 30, 2013

WHITAKER J.

1This is an action for damages for breach of contract, fiduciary duty, negligent misrepresentation, intentional interference with economic relations, aggravated, punitive and exemplary damages.

2The plaintiff claims to have suffered damages as a result of the defendant’s conduct while the defendant was retained in a senior executive capacity as Vice-President of Sales for the plaintiff’s operations.

3The defendant’s statement of defence was struck by a Master on February 21, 2013. The defendant was noted in default on May 30, 2013. The plaintiff’s motion for default judgment was heard unsuccessfully on September 10, 2013.

4I heard the matter as an uncontested trial on September 30, 2013.

5The plaintiff has refined the claim and now seeks only certain liquidated damages and costs.

6The plaintiff’s CEO, Mr. Daryl Frimer, provided an affidavit and testified at the hearing.

7Following an executive search, the defendant was hired on March 17, 2006 by the plaintiff as senior Vice-President of Sales. In this capacity the defendant was part of the senior management team with a detailed job description and a variety of broad executive responsibilities.

8Over a year after being retained, and on May 15, 2007, the defendant signed confidentiality, non-competition and proprietary rights agreements.

9The plaintiff accepted the defendant’s letter of resignation on June 18, 2007.

10Following the defendant’s resignation, the plaintiff conducted an investigation of the defendant’s conduct during the period of his employment.

11The plaintiff concluded:

(a) the defendant did not perform his duties as agreed and understood between the parties;

(b) two junior employees retained on the recommendation of the defendant did not perform their duties as agreed and understood between the parties;

(c) the defendant had impersonated the plaintiff’s President at a meeting with clients;

(d) the defendant falsified records and reports so as to disguise his incompetence and failure to meet his obligations to the plaintiff;

(e) the defendant without justification, persuaded the plaintiff to take a loan so as to staff-up in anticipation of new business which did not materialize. The loan has now been retired with interest;

(f) the defendant failed to deliver particular new clients after having confirmed to the defendant that the clients were obtained by him.

12The plaintiff now seeks to recover as liquidated damages:

(a) the salary and benefits paid to the defendant during the period of his retainer;

(b) the salary and benefits paid to the two persons retained on the defendant’s recommendations;

(c) the value of the loan taken out on the defendant’s recommendations including interest;

(d) the value of invoices submitted to a client where the client declined to pay for work done by the defendant.

13There is no doubt in my mind that the defendant misconducted himself in a serious way which would justify cause for dismissal. To reiterate, the defendant created false paperwork to cover his trail, impersonated the plaintiff’s President in a meeting with clients, and generally failed to perform at the levels reasonably expected by the plaintiff.

14Notwithstanding the plaintiff’s characterization of the defendant as an independent contractor, the underlying relationship here is one of employer and employee. Essentially this is a situation where an employee has acted dishonestly and has failed to meet his employer’s expectations. The claim which now remains for liquidated damages is based on the performance of the defendant while working for the plaintiff.

15Whereas here, the assertion made by an employer is that an employee’s performance fell below expectations, the appropriate relief in these circumstances is not the repayment of all monies earned by the defendant during his employment but rather to dismiss with cause or to bring an action for inadequate notice.

16In the present case, it appears the plaintiff accepted the defendant’s resignation and in any event issues of notice and cause were not raised by the parties.

17I am not persuaded that the plaintiff is entitled to be repaid the salary and expenses paid during the course of the retainer, nor is it appropriate for the plaintiff to be repaid the salary and expenses of the two junior employees hired on the recommendation of the defendant.

18With respect to the loan, it has been repaid and the only potential loss is the interest incurred. Even then, it is not possible to say with reasonable certainty that the defendant is solely responsible for the plaintiff’s decision to obtain the loan and that it was entirely without legitimate justification.

19With respect to the invoices unpaid, the same reasoning applies. I am not satisfied that the plaintiff should be paid the value of the invoices that the customer has decided not to honour.

20Despite the defendant’s obvious misconduct, the particular liquidated damages sought by the plaintiff have not been proven.

21I have reviewed the cost outline submitted by the plaintiff. Given the outcome, no costs are ordered.

WHITAKER, J.

DATE: October 7, 2013

COURT FILE NO: CV–08-361316
DATE: 20131007

ONTARIO
SUPERIOR COURT OF JUSTICE

B E T W E E N:

Merge Inc.
Applicant

• and -

Glen Allison
Respondent