COURT FILE NO.: 38263
DATE: 2013-07-09
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MAURIZIO AGOSTINO
Plaintiff
– and –
GARY BEAN SECURITIES LTD. and GARY BEAN
Defendants
In person
Linda Smits, for the Defendants
HEARD: November 20, 21, 22 and 23, 2012 and January 10 and 11, 2013
GRACE J.
[1] On July 6, 2011, Mr. Agostino was dismissed from his employment with Gary Bean Securities Ltd. (“Bean Securities”) after approximately four years of service. He maintains his dismissal was without cause and that he is entitled to significant compensation in lieu of notice.
[2] Bean Securities disagrees. It says the decision to terminate was justified due to an unacceptable number of errors, too many under margined accounts and client complaints that called into question Mr. Agostino’s integrity. The employer denies owing Mr. Agostino anything. In fact, Bean Securities alleges that Mr. Agostino owes it $121,020.59 on account of expenses paid on his behalf and to reimburse Bean Securities for payments made to correct Mr. Agostino’s mistakes.
A. Background
[3] Mr. Agostino started his career as an investment adviser (“IA”) in 1990 with Burns Fry (later Nesbitt Burns). Soon after the end of his relationship with that firm, he was introduced to Gary Bean.
[4] Mr. Bean had incorporated Bean Securities in 1996. It had a branch office in London, Ontario. In May, 1997 Bean Securities offered and Mr. Agostino accepted an IA position there.
[5] Although not reduced to writing, the terms of the original arrangement are not in dispute.
[6] Bean Securities and Mr. Agostino agreed to share commissions equally. A furnished and equipped office with secretarial and administrative support was supplied without charge. However, Mr. Agostino was to bear other costs including, for example, marketing and promotion, annual RRSP administration fees and costs incurred in correcting his errors or omissions.
[7] Although there was no formal review process, for some time the relationship seems to have been mutually satisfactory. Mr. Agostino’s client list grew. His book of business was second only to Mr. Bean’s.
[8] Mr. Agostino did voice one complaint with respect to the early years. In 1998, the commission arrangement changed. On its face the amendment seemed favourable to IA’s. Their share of commissions increased to sixty four percent. However, in addition to its share, Bean Securities charged the IA a flat fee per trade. According to Mr. Bean, the changes meant that IA’s received more money on trades generating a commission of at least $225 and less on smaller trades. I will return to this topic later in these reasons.
[9] The beginning of a rift between the parties can be traced back to late 2000. Mr. Agostino was a firm believer in the hi-tech industry. Many, if not most, of his clients had significant investments in the sector.
[10] Unfortunately, the hi-tech bubble burst and the value of the portfolios under Mr. Agostino’s management fell sharply.
[11] Some of his clients traded on margin. The fall in the value of their securities led to an increasing number of margin calls.
[12] The IAs received a summary of the trades transacted the previous business day. They were expected to review the summary to ensure that each client’s instructions had been fulfilled. Several of Mr. Agostino’s clients contacted Bean Securities after receiving confirmation of a trade and advised the firm that their instructions had not been fulfilled. The items that were the subject of their concerns had not been identified beforehand.
[13] Shortly before termination Bean Securities received a June 21, 2001 letter of complaint from Michael McMahon. He alleged that Mr. Agostino, his IA, had sold shares of Juniper Networks Inc. (“Juniper”) without his knowledge or consent. According to Mr. Bean, the letter and a subsequent event involving the McMahon account were the final straws.
[14] On July 3, 2001, Messrs. Bean and Agostino met. Once again, nothing was documented. However, the parties agree that Mr. Bean expressed dissatisfaction with respect to Mr. Agostino’s performance and asked for his resignation.
[15] Mr. Agostino e-mailed Mr. Bean the following day. He said in part:
I had a chance to think about it overnight and I have decided that I am not ready to resign at the moment. I am quite happy where I am and what I am doing.
You shocked me at the meeting yesterday because I assumed the meeting was concerning the sale of the building as per my comments upon your arrival. At our meeting on May 23, 2001 we discussed a higher payout where I would pay for all my expenses once the building was sold…
…We also discussed some problem clients and everything seemed to be fine at that point…[W]ith regards to client complaints it was shocking and surprising to me to here (sic) that from you because they had already been resolved prior to our meeting on May 23, 2001. I have spoken to those clients in the last few weeks and even executed trades on their behalf and there were no signs of any problems at that time. I will be in the office tomorrow morning…
[16] On July 6, 2001, Mr. Agostino was terminated. He was given a lump sum payment of $4,000 less statutory deductions in “recognition of…past service and to help you find new employment”. A Uniform Termination Notice was completed by Bean Securities and sent to the Investment Dealers Association (“IDA”). It cited an “inability to comply with company standards” as the reason for the end of the relationship. The “other” rather than the “dismissed for cause” box was marked.
[17] Bean Securities responded “No” to the question “Is the firm in possession of any information which would suggest that the employee has engaged in conduct which contravenes regulatory requirements or is inconsistent with just and equitable principles of trade?” It did, however, list the McMahon complaint as unresolved, three under margined accounts in excess of $5,000 and five other accounts that had been “charged back” to Mr. Agostino.
[18] Mr. Agostino expressed his disagreement with the notice in the space provided and outlined his reasons in a July 10, 2001 letter he attached. He denied that there were unresolved complaints, maintained that the margin had been restored on two accounts and accepted responsibility for four of five errors. He said that Bean Securities had allowed one account to continue to be under margin and was responsible for the error in another. Furthermore, he denied receiving company standards or policies during his tenure.
[19] The issues are:
a. Was Mr. Agostino dismissed without cause?
b. If so, what damages were sustained?
c. How much money must Mr. Agostino pay Bean Securities to reimburse the firm on account of expenses paid on his behalf and on account of errors or omissions attributable to him?
B. Was Mr. Agostino dismissed without cause?
[20] Mr. Agostino suggested he was dismissed by Bean Securities twice. The first time, he argued half-heartedly, was in 1998 when the commission arrangement was changed unilaterally.
[21] I disagree with Mr. Agostino’s suggestion he was constructively dismissed at that time. I accept Mr. Bean’s evidence that all of the IA’s employed by Bean Securities received advance notice of the change as well as the underlying rationale. Further, the adjustment was not intended to reduce and did not have the effect of reducing Mr. Agostino’s compensation. It resulted in a lower commission on some and a higher commission on other transactions.
[22] In fact, Mr. Agostino continued to work contentedly under that arrangement until he was terminated.
[23] What is really at issue is whether Bean Securities had cause to dismiss Mr. Agostino on July 6, 2001.
[24] Ms. Smits made several concessions in her submissions on behalf of Bean Securities. She acknowledged that:
a. Termination is the capital punishment of employment law;
b. An employer bears the onus of proving cause; and
c. In some circumstances, employers have a duty to warn an employee about and to give an employee a reasonable opportunity to correct substandard conduct before termination.[^1]
[25] Bean Securities maintains that it had cause to terminate Mr. Agostino due to the totality of the following:
a. The significant number of clients of Mr. Agostino who were under margin;
b. The significant number of errors attributable to Mr. Agostino; and
c. The actions of Mr. Agostino in relation to the account of Michael McMahon.
[26] I will deal with each of those matters in turn.
[27] Other IA’s, including Mr. Bean, had clients who were periodically under margin. Mr. Bean explained that the problem affected Mr. Agostino more because of his preference for investments in the troubled hi-tech sector. He testified that he had cautioned Mr. Agostino that his strategy was a risky one on several occasions.
[28] Stephanie McManus was called by the defendants. Ms. McManus has been involved in providing legal and compliance advice in the investment industry for more than fourteen years. She was qualified to give opinion evidence with respect to the standards and practises in the Canadian investment industry in 2000 and 2001.
[29] Ms. McManus acknowledged that higher than average margin calls were to be expected in Mr. Agostino’s portfolio given the market volatility that existed in the hi-tech sector in those years. However, she was of the opinion that some of Mr. Agostino’s clients were not suitable candidates for margin trading given the number of margin calls and sell outs revealed by the records she reviewed.
[30] Mr. Agostino acknowledged that his clients were susceptible to margin calls given the fall in the market. However, he maintained that they were being managed in an appropriate and timely manner.
[31] Both Mr. Bean and Ms. McManus readily agreed that a range of errors can and do occur. Communications are often oral or jotted down quickly and instructions may be misunderstood.
[32] Mr. Bean testified that he had two concerns with Mr. Agostino’s performance in this area. First, errors were occurring with increasing frequency. He said two to three errors per IA per year was commonplace. However, in 2001 errors were being reported in Mr. Agostino’s portfolio at the rate of at least one per month.
[33] Second, in order to reduce, if not avoid, negative financial consequences for the firm, it was essential that errors be identified and corrected quickly. Therefore, it was critical, that IA’s review carefully and promptly the reports they received of trades effected on the previous business day to ensure that transactions were completed in accordance with each client’s instructions. Unfortunately, Mr. Agostino’s performance in that area was also slipping. On several occasions errors were reported by clients after receiving confirmation of a trade from Bean Securities. Mr. Agostino had not caught the error at all. Mr. Bean testified that Mr. Agostino did not seem to be paying much attention to his book of business.
[34] Mr. Bean testified that the effect of the errors was reflected in Mr. Agostino’s account with the firm. The balance owing was $15,925.91 as of October 31, 2000. By the time of termination barely eight months later, it had grown to $63,179.66. Over $44,000 of that amount was attributable to one large and costly mistake.
[35] Ms. McManus expressed the opinion that the records relating to Mr. Agostino’s clients evidenced an extraordinary number of cancelled transactions which she attributed to poor practices by Mr. Agostino, his assistant or unauthorized trades.
[36] Immediately following Mr. Agostino’s termination, Bean Securities completed the Uniform Termination Notice which it was required to submit to the IDA. It listed five errors involving an aggregate amount of $55,000. As mentioned, Mr. Agostino responded to the notice on July 10, 2001. He accepted responsibility for all of the errors save one $5,392.14 item relating to the sale of shares in EConnect.
[37] At trial, the EConnect transaction was explored in some detail with Messrs. Agostino and Bean. EConnect shares were purchased when the client had given instructions that they be sold. The error went unnoticed until the client complained. The cost of the mistake was calculated and responsibility allocated among those who either caused or failed to detect the error. As IA, Mr. Agostino was expected to ensure the accuracy of the trade when he received a report the next business day. He failed to do so. In my view, the employer correctly determined that Mr. Agostino was partly responsible and the allocation of 20% of the cost of correcting the error was a reasonable one.
[38] Mr. Agostino also questioned an error relating to the McMahon account that was listed on the Uniform Termination Notice. It related to the sale of shares in Juniper. At trial he maintained that this charge was inappropriate. He took that position notwithstanding a June 8, 2001 e-mail he had sent to Suzanne Mathers, the controller of Bean Securities. The e-mail read in part:
…client is claiming that he gave me an order to sell the 70 shares of Juniper at 50.00, I don’t remember so put the 70 shares of juniper (sic) in error account sell at market and charge the difference to my expense account.
[39] When cross-examined, Mr. Agostino maintained that the shares should have been sold on June 8 and not on June 13, 2001 as appeared to be the case from other documents filed. Mr. Agostino maintained the share price had fallen and that an immediate sale of the shares would have reduced, if not eliminated, the loss.
[40] However, Mr. Agostino’s objection ignores other evidence led at trial concerning the McMahon account: an account that caused growing dissatisfaction with Mr. Agostino’s performance to reach the breaking point. I turn to that client now.
[41] Mr. McMahon authored two letters to Bean Securities: the first dated April 17, 2000 and the second dated June 21, 2001.
[42] Mr. McMahon had called Mr. Bean on June 18, 2001 after receiving confirmation of a transaction advising him that 70 Juniper shares had been sold. Mr. McMahon said that he did not instruct Mr. Agostino to sell the Juniper shares at all. Mr. Bean asked that Mr. McMahon set out his concerns in writing.
[43] It appears that the June 21, 2001 letter included a copy of the earlier complaint.
[44] Mr. Bean and Ms. Mathers testified that they had not seen the April 17, 2000 letter before. While addressed to the head office of Bean Securities in Exeter, Ontario, it was not addressed to anyone’s attention. Mr. McMahon confirmed that no one from the firm contacted him to discuss the initial letter of complaint.
[45] Mr. Bean testified that the later letter concerned him more than the first. The June 21, 2001 letter read in part:
I must express my disappointment in the manner in which Mr. Moe Agostino has represented GaryBean (sic) Securities. I do not consider some of his actions to be of an ethical and professional manner. I and other investors from Windsor have experienced Moe misrepresent transactions on more than one occasion…Moe continuously selects stocks of high risk and does not create a balanced investment portfolio. This combined with the blatant misrepresentations of my account does not make him qualified to be my investment adviser any further. In addition, I strongly recommend you review his performance as a representative of your firm.
[46] The letter was not brought to Mr. Agostino’s attention until July 3, 2001. Mr. McMahon testified that after complaining to Mr. Bean about the sale of the Juniper shares, he spoke to Mr. Agostino. He said Mr. Agostino acknowledged proceeding without instructions but said the sale was necessary to “save” Mr. McMahon’s account.
[47] Mr. McMahon said that he did not give Mr. Agostino instructions to complete further trades. On June 28, 2001, Mr. Agostino purchased 25 shares in Siebel Systems for Mr. McMahon’s account.
[48] In his evidence, Mr. Bean said that Mr. McMahon’s complaint rang true.
[49] According to Mr. Agostino’s June 8, 2001 internal e-mail, Mr. Agostino had spoken with Mr. McMahon and agreed to accept responsibility for failing to sell 70 Juniper shares at $50. The shares were to be sold at the then current market price and Mr. McMahon was to be compensated for the difference at Mr. Agostino’s cost.
[50] If that was true, it was inconceivable that Mr. McMahon would complain when the shares were sold – especially since the shares were then trading at a price that was significantly below $50.
[51] Furthermore, Mr. Bean had been advised by Mr. McMahon that he had not instructed Mr. Agostino to complete any other transaction on his behalf. The Siebel Systems trade confirmed that Mr. Agostino had done something he acknowledged at trial he was not permitted to do: trade securities on a discretionary basis.
[52] Mr. Bean testified that he reached the decision to terminate when he considered the combination of the numerous errors, the McMahon complaint concerning the Juniper shares and the purchase of Siebel Systems shares without authorization.
[53] On July 3, 2001, Mr. Agostino met with Mr. Bean. While undocumented, it is undisputed that they discussed Mr. McMahon’s June 21, 2001 letter and that Mr. Bean asked Mr. Agostino to resign.
[54] As noted earlier, termination followed on July 6, 2001 when Mr. Agostino declined that request.
[55] Mr. Agostino argued that Bean Securities did not have cause to terminate him. He notes that cause was not alleged in the termination letter or Uniform Termination notice and that a payment, albeit an inadequate one, was voluntarily made.
[56] He maintains that the termination “blindsided” him. There had been no warnings. In fact, on May 23, 2001, he had met with Mr. Bean to discuss a revised commission arrangement when the Thames Insurance building in which Mr. Agostino’s office was located was sold. At that point Mr. Agostino was very much part of Bean Securities’ future plans.
[57] Mr. Agostino points out that he was not told of Mr. McMahon’s complaint promptly, that he was not given a copy of the June 21, 2001 letter until termination and was never told about or given a copy of the April 17, 2000 letter until during the course of this proceeding. During cross-examination and after much patient prodding, Mr. Agostino maintained that Mr. McMahon knew his account was under margin in June, 2001 and had issued instructions to sell the Juniper shares.
[58] I accept that Mr. Agostino was surprised when his resignation was requested because the McMahon complaint had not been previously disclosed. I do not accept, however, that he was unaware of Mr. Bean’s other concerns with his performance. Mr. Agostino knew that he had more under margin accounts than any other IA. He knew that errors were increasing in frequency. The economic consequences were being charged to his account with the firm and the balance was increasing rapidly.
[59] Furthermore, I accept Mr. Bean’s evidence that margins and errors were topics discussed with Mr. Agostino on May 23, 2001.
[60] I also accept Mr. Bean’s testimony that but for the McMahon complaints, other concerns had not reached the level of jeopardizing Mr. Agostino’s position. However, the landscape changed on and after June 21, 2001.
[61] What am I to make of the McMahon complaints?
[62] I am of the view that they were all well founded.
[63] I say that because without hesitation I accept Mr. McMahon’s evidence to the extent that his version of events differed from Mr. Agostino’s.
[64] Mr. Agostino identified the complaint letters Mr. McMahon sent during his direct testimony. However, he indicated that he would say nothing more about them until he questioned Mr. Bean and Mr. McMahon.
[65] That seemed odd. Mr. McMahon’s complaints were serious ones: he alleged that he was not informed that his account was under margin in June, 2001, that holdings were sold without instruction and that Mr. Agostino had misrepresented his account balance and the share price for EConnect.
[66] Ms. Smits cross-examined Mr. Agostino about those allegations.
[67] She suggested to Mr. Agostino that he had no authority to sell the Juniper shares at all. Did he respond with righteous indignation? No.
[68] In fact, initially he did not respond at all. Instead, he led the court down an arterial road. The Juniper shares should have been sold immediately after Mr. Agostino’s June 8, 2001 e-mail requesting same: not five days later.
[69] When pressed, Mr. Agostino said that he always gave the client the benefit of the doubt. When asked what that meant, Mr. Agostino said that Mr. McMahon knew he was under margin because he had left messages for Mr. McMahon to that effect.
[70] When told that wasn’t responsive to the suggestion made minutes earlier by Ms. Smits, Mr. Agostino finally disagreed. He seemed to have forgotten he had already acknowledged not having spoken to Mr. McMahon until after Juniper shares were sold.
[71] Mr. Agostino’s testimony concerning the April 17, 2000 complaint letter was also problematic. In that letter, Mr. McMahon complained that he had been misled about the share price of EConnect. Having heard from other acquaintances that the price was a fraction of what he had been told, Mr. McMahon arranged to have a business associate listen in on his next conversation with Mr. Agostino. Mr. McMahon alleged that the misrepresentation was repeated and that he then confronted Mr. Agostino after his business associate hung up.
[72] Ms. Smits asked Mr. Agostino about the conversation. At first, he said he did not recollect it. Then he denied it occurred. During Mr. McMahon’s examination in chief, Mr. Agostino objected to a question concerning the conversation on the ground that Mr. McMahon had acted illegally in recording it. While Mr. McMahon denied recording the conversation, I found it puzzling that Mr. Agostino would suggest that Mr. McMahon had recorded a conversation Mr. Agostino maintained did not occur.
[73] It also did not escape my notice that Mr. Agostino did not suggest to Mr. McMahon that he had fabricated his complaints. I also noted that for the first time Mr. Agostino almost never made eye contact with a witness.
[74] In short, while Mr. McMahon was steadfast and responsive, Mr. Agostino was not.
[75] I am satisfied that Mr. Agostino misrepresented the EConnect share price, that he did not tell Mr. McMahon that his account was, yet again, under margin in June, 2001 and that he did not seek, let alone obtain, instructions to sell 70 Juniper shares.
[76] I am also satisfied that Mr. Agostino purchased shares in Siebel Systems without instructions from Mr. McMahon.
[77] What is the significance of those findings?
[78] Ms. McManus testified that unless the IA is dealing with a discretionary or managed account, every trade must follow instructions from the client. If instructions are not first obtained, the trade is unauthorized and, in her opinion, constitutes “one of the most egregious things that a regulated representative can do short of actually stealing money.”[^2]
[79] In this case Mr. Agostino made two unauthorized trades: the one that caused Mr. McMahon to complain (the sale of Juniper shares) and one made afterward but before Mr. Agostino knew of the complaint (the purchase of Siebel Systems shares).
[80] In Ahmed v. RBC Dominion Securities Inc., [1998] B.C.J. No. 1729 (S.C.) an investment adviser was terminated for engaging in discretionary trading. In finding that the employer had cause to terminate the adviser, Hood J. wrote at para. 108:
The defendant was entitled to view her conduct, which I have called misconduct, as not warranting simply a reprimand, or some other disciplinary action short of termination of her employment. Her misconduct cannot be labelled as trivial, given the nature of the defendant’s business, which is based on professionalism, integrity and trust, and which of necessity, is highly regulated, and requires unquestionable trust in the employee by the client and by the defendant employer. It is no answer for the plaintiff to say she was labouring under some form of misapprehension as to discretionary trading, even if her evidence in this regard is accepted, and which I do not accept. This is dictated by the nature of the defendant’s business, the nature of the defendant’s relationship with its clients, and most importantly, the relationship between the defendant and the plaintiff…
[81] Mr. Agostino argued that termination was disproportional to anything he had done because he always acted in the best interest of his client.
[82] Ms. McManus indicated that an IA’s belief that the trade was in the best interest of the client might be a mitigating factor from the perspective of a regulator.
[83] Clearly Mr. McMahon did not agree that a sale of the Juniper stock was in his best interest. He objected even though Mr. Agostino was prepared to guarantee a price well above market value.
[84] Further, there is an added element here. Mr. Agostino made representations to Mr. McMahon which were untrue.
[85] I recognize that dishonesty does not automatically mean that an employer has cause for dismissal. Writing on behalf of a unanimous court in McKinley v. BC Tel, 2001 SCC 38, [2001] 2 S.C.R. 161, Iacobucci J. said at para. 57:
…I favour an analytical framework that examines each case on its own particular facts and circumstances and considers the nature and seriousness of the dishonesty in order to assess whether it is reconcilable with sustaining the employment relationship. Such an approach mitigates the possibility that an employee will be unduly punished by the strict application of an unequivocal rule that equates all forms of dishonest behaviour with just cause for dismissal. At the same time, it would properly emphasize that dishonesty going to the core of the employment relationship carries the potential to warrant dismissal for just cause.
[86] However, Mr. Agostino was an investment adviser in a heavily regulated industry. In Korman v. Midland Walwyn Capital Inc. (1999), 1999 32278 (MB QB), 132 Man.R. (2d) 283 (Q.B.), MacInnes J. wrote at para. 64:
Honesty is absolutely fundamental to the employment of a financial adviser…
[87] I agree.
[88] In this case, Mr. Agostino lied to Mr. McMahon in the ways I have outlined. He misled Bean Securities by telling Ms. Mathers that Mr. McMahon had claimed to have given instructions to sell shares when he had done no such thing.
[89] The importance of an investment adviser dealing with each client and with his employer with uncompromising honesty and integrity should be self-evident. Trust is the foundation for the investment adviser’s relationships. In this case, it was shaken to the core.
[90] In light of Mr. Agostino’s unauthorized trades and misrepresentations, Bean Securities had cause for dismissal. As Taylor J. wrote at para. 85 of Carias v. Canadian Imperial Bank of Commerce (2003), 2003 BCSC 587, 25 C.C.E.L. (3d) 67 (B.C.S.C.):
This is not a case of an employee who, unaware of the standards expected of him, transgresses some undefined rule of conduct. Nor can the plaintiff’s situation be compared to that of an employee who, having had such conduct go uncorrected by his employer in the past, would be entitled to a caution or warning.
[91] I find that Bean Securities has discharged the onus it bears.
C. If Mr. Agostino was wrongfully dismissed, what damages were sustained?
[92] If the conclusions I have reached so far are wrong, what was the appropriate period of reasonable notice? Mr. Agostino alleges the period was twelve months. Bean Securities maintains that four months was sufficient.
[93] I have considered the non-exhaustive list of factors set forth in para. 21 of Bardal v. Globe & Mail Ltd., 1960 294 (ON SC), [1960] O.W.N. 253 (H.C.J.). Mr. Agostino was 37 years old at the time of termination. He had been in the investment industry since 1990. He had occupied an IA position with Bean Securities for almost exactly four years.
[94] Mr. Agostino testified that he had been offered a position in the mutual fund industry post-termination but he would not have had the ability to service his existing clientele to the same extent he had with Bean Securities. I accept that it may have taken Mr. Agostino several months or more to find a similar position with another investment firm in 2001.
[95] I have also reviewed the cases cited to me.[^3] In King v. Merrill Lynch Canada Inc., 2005 43679 (Ont. S.C.J.), R. Smith J. offered this view concerning the termination of an IA at para. 166:
I find that the unique character of the employment of a financial consultant, where his or her income is built up gradually over many years and a large part of the employee’s commission income earned each year is based on effort expended in previous years, the longer the financial consultant works and continues to build up his or her book of business, the longer the notice period should be.
[96] Had I concluded that Mr. Agostino was wrongfully dismissed, I would have concluded that the appropriate notice period was five months.
[97] In determining the amount of money that was payable I reviewed the T4s provided by Bean Securities to Mr. Agostino for 1999, 2000 and the first 6 months of 2001 and Mr. Agostino’s income tax returns for those years. Net of claimed employment expenses, Mr. Agostino earned an average of $5,488.29 per month or $27,441.46 for the five month notice period. He was paid $4,000 on termination.
[98] Had I found that Mr. Agostino was wrongfully dismissed, I would have awarded him damages against Bean Securities in the amount of $23,441.46 together with interest in accordance with the Courts of Justice Act and accruing from the day each monthly payment was due.
[99] There was no basis for the claim against Mr. Bean personally and I would have dismissed that claim in any event.
[100] Mr. Agostino sought damages arising from the manner of dismissal. He alleged that termination was devastating for him financially and personally. He said he went bankrupt, his marriage ended and his mental health was affected as evidenced by the fact his family physician made a psychiatric referral.
[101] Both parties rely on Honda Canada Inc. v. Keays, 2008 SCC 39, [2008] 2 S.C.R. 362. On behalf of the majority, Bastarache J. wrote at paras. 57 and 59:
Damages resulting from the manner of dismissal must then be available only if they result…where the employer engages in conduct during the course of dismissal that is “unfair or is in bad faith being, for example, untruthful, misleading or unduly insensitive.”
…Examples of conduct resulting in compensable damages are attacking the employee’s reputation by declarations made at the time of dismissal, misrepresentation regarding the reason for decision, or dismissal meant to deprive the employee of a pension benefit or other right, permanent status for instance…
[102] This case does not fit within those principles. In fact, Bean Securities tempered the termination letter and the Uniform Termination Notice. Reference was made in the latter to a complaint by Mr. McMahon but no specifics were provided.
[103] For the same reason, Mr. Agostino’s claim to punitive damages must fail. As Bastarache J. added at para. 62 of Honda Canada Inc. v. Keays:
…punitive damages are restricted to advertent wrongful acts that are so malicious and outrageous that they are deserving of punishment on their own.
[104] Having found that Mr. Agostino’s employment was terminated for cause, it follows that I do not share his view that Bean Securities acted improperly let alone in a malicious or outrageous manner.
D. How much money must Mr. Agostino pay Bean Securities to reimburse the firm on account of expenses paid on his behalf and on account of errors or omissions attributable to him?
[105] Bean Securities alleges Mr. Agostino owed the firm $63,179.66 when he was terminated on July 6, 2001. That amount related to pre-termination errors and a host of business, advertising and office expenses.
[106] Particulars of the debits and credits were introduced into evidence at trial. While Mr. Agostino expressed concerns with the odd item, during his examination for discovery he was asked about his May 23, 2001 meeting with Mr. Bean. Question and answer 380 concerned the amount claimed by Bean Securities.
Q. At…the time of that meeting what was your understanding about the size of that…receivable account?
A. Yeah, at that point I think it approached 50,000 or 60,000.
[107] In fact, Mr. Agostino asked Ms. Mathers to take $4,000 monthly on account of the balance in a July 4, 2001 e-mail. He did not express any concern with or request further information concerning the account.
[108] As noted, Bean Securities sought payment of $121,020.59 at trial. The additional amounts belong to one of three categories: an equipment lease, payments made on account of errors post-termination and RRSP fees.
[109] I will deal with each category in turn.
[110] Mr. Agostino had arranged to lease a piece of equipment from Image Financial Services Inc. and agreed that the monthly payment would be charged to his account. After termination, Bean Securities discovered that Mr. Agostino’s signature appeared beneath the firm’s name despite the fact that Ms. Mathers had indicated that the corporation’s name was not to appear.
[111] However, notwithstanding that fact, Bean Securities took possession of the equipment, moved it to its Exeter head office and made full use of the equipment without any further communication with Mr. Agostino. In my view, by acting in that manner Bean Securities agreed to assume responsibility for the remaining lease payments.
[112] The second category of additional charges related to errors charged to Mr. Agostino’s account post-termination. However, Mr. Agostino was not notified that further claims had been made and played no role in their review or in their settlement or other resolution. Furthermore, he was not asked about any of the post termination entries in this category when he was cross-examined at trial. It is entirely possible that payments were made, in whole or in part, without legal responsibility simply to maintain a client relationship. In my view, a basis for holding Mr. Agostino responsible has not been proven.
[113] The third category related to RRSP administration fees paid in July, 2001. Mr. Agostino did bear responsibility for them when employed by Bean Securities. That was a cost he was prepared to bear to preserve his client relationships.
[114] On June 20, 2001, Mr. Agostino advised Sherry Gilfillan-Penhale of Bean Securities that he would cover the RRSP fees for his clients in July. However, his agreement was undoubtedly a product of Mr. Agostino’s belief that he would continue to be their IA during the year that followed.
[115] He wasn’t. When Mr. Agostino left Bean Securities, he left his clients behind. The firm retained them and with those relationships, the burden of bearing the RRSP administration fees if unwilling to charge them to its customers.
[116] Mr. Agostino is indebted to Bean Securities in the amount of $63,179.66. If pre-judgment interest is claimed, Bean Securities is asked to include short written submissions with respect to the proposed rate and commencement date in its cost submissions.
[117] As noted previously, Mr. Agostino indicated that he went “bankrupt” following termination by Bean Securities. However, I have seen no evidence that Mr. Agostino formally became a bankrupt person in accordance with the Bankruptcy and Insolvency Act. If he did, the amount claimed by Bean Securities may well have been discharged by that statute already. I will deal with that item below.
E. Summary and Costs
[118] For the reasons given Mr. Agostino’s action is dismissed and subject to paragraph 117 hereof, Bean Securities shall have judgment on its counterclaim in the amount of $63,179.66.
[119] Unless the issue of costs is resolved by agreement of the parties, Bean Securities shall serve and file written cost submissions not exceeding five pages in length exclusive of any offer(s) to settle and case authority by no later than Friday, August 9, 2013. If prejudgment interest is sought the submissions may include two additional pages addressing the issues set forth in paragraph 116 of these reasons.
[120] Mr. Agostino shall respond to the submissions of Bean Securities by serving and filing submissions of his own by no later than Friday, August 30, 2013. The same page restrictions shall apply. If Mr. Agostino takes the position that the counterclaim is affected by a bankruptcy process, evidence of same should accompany his submissions. In that event, I will give direction as to whether a further personal attendance will be required.
[121] All submissions should be sent to me through Judges’ Administration, Court House, 80 Dundas Street, 12th Floor, Unit K, London, Ontario, N6A 6B2.
“Justice A.D. Grace”
Justice A. D. Grace
Released: July 9, 2013
[^1]: Geluch v. Rosedale Golf Assn., Ltd. (2004), 2004 14566 (ON SC), 32 C.C.E.L. (3d) 177 (Ont. S.C.J.) at paras. 82 and 95.
[^2]: See, too, Denhamer v. RBC Dominion Securities Inc. (2000), 2000 ABQB 651, 273 A.R. 159 (Q.B.) at para. 22.
[^3]: Bean Securities relied on Pollock v. First Heritage Financial Planning Ltd., [2003] B.C.J. No. 235 (S.C.); Capelli v. Promospec Specialty Advertising Ltd. (1997), 31 C.C.E.L. (2d) 202 (Ont. Gen. Div.); Isopo v. Kobe Fabrics Ltd. (1994), 5 C.C.E.L. (2d) 172 (Ont. Gen. Div.); Fleming v. Calyniuk, [2005] S.J. No. 347 (Q.B.); Gaudio v. Banca Commerciale Italiana of Canada, 1999 14869 (ON SC), [1999] O.J. No. 3871 (S.C.J.); Goldberg v. Western Approaches Ltd. (1985), 1985 674 (BC SC), 7 C.C.E.L. 127 (B.C.S.C.) and Fasullo v. Investments Hardware Ltd., [2012] O.J. No. 2384 (S.C.J.); Lambert v. Digital Rez Software Corp., [2002] B.C.J. No. 915 (B.C.S.C.) and Spurway v. Royal Lepage Real Estate Services Ltd. (1987), 1987 995 (NS SC), 77 N.S.R. (2d) 156 (S.C.). Mr. Agostino relied on Soost v. Merrill Lynch Canada Inc., 2009 ABQB 591; Cole v. Merrill Lynch Canada Inc., 2005 56201 (Ont. S.C.J.); King v. Merrill Lynch Canada Inc., 2005 43679 (Ont. S.C.J.); Ryshpan v. Burns Fry Ltd., 1995 7278 (Ont. S.C.J.) and Chann v. RBC Dominion Securities Inc., 2004 66310 (Ont. S.C.J.).