I. OVERVIEW

[1] Until January 2012, Robert Wilson was the President of a small private trust company called Legacy Private Trust. Legacy’s business is selling, administering and managing estates, trusts, agencies, foundations and wills for which fiduciary fees are paid.

[2] As President of Legacy Wilson had to be and be seen to be, trustworthy and competent to oversee the management of Legacy’s business.

[3] While he was President of Legacy,

(a) Wilson spent time and effort managing and overseeing the operations of RecordXpress. He referred to himself as President, shareholder and member of the Board of Directors of RecordXpress although he held none of these titles. He was offered but did not accept, remuneration of $10,000 per month from RecordXpress;

(b) Wilson was reimbursed by Legacy for a trip to New York during which he did work for both Legacy and RecordXpress. He was also reimbursed by Legacy for a lunch meeting at the National Club during which he did work for RecordXpress only; and

(c) Wilson was reimbursed by Legacy for at least $104,255.37 of expenses that he also claimed as business expenses on his income tax returns.

[4] In January 2012, Wilson was confronted with allegations that he was working for RecordXpress while at Legacy and that he had submitted some improper expense claims to Legacy for reimbursement. Shortly thereafter, Wilson left his employment with Legacy.

II. THE POSITIONS OF THE PARTIES

Wilson’s Position

[5] Wilson testified that he agreed to withdraw from Legacy only after Love said his confidence in Wilson had been shattered and on condition that he be compensated. He was never offered compensation save for the value of his Legacy shares. Wilson said he did not resign; his employment was terminated.

[6] He claimed his employment was terminated without just cause. He did no wrong in performing work for RecordXpress while employed by Legacy as:

(a) Legacy’s Chief Executive Officer, James Love encouraged him to become involved with other organizations to hone his business skills provided those organizations were not in competition with Legacy;

(b) Love himself was involved with other organizations that did not compete for Legacy business;

(d) Love knew Wilson was providing advice to RecordXpress;

(e) Wilson devoted his full time and energy to Legacy and Legacy expressed no concerns about his work until January 2012; and

(f) Wilson received no remuneration from RecordXpress.

[7] Wilson claimed that, although he was reimbursed in full by Legacy for two expense claims for which some or all of the time was spent on RecordXpress business, these were honest mistakes made in the context of submitting hundreds of expense claims. Wilson claimed his work with RecordXpress and these two instances of poor record keeping should not result in his summary dismissal.

[8] Wilson admitted he was “sloppy” about the many Legacy expenses for which he sought deductions on his income tax and had no system to deal with expenses. However, he said he did not mean to deceive anyone and, at the time of trial, was speaking to his accountant about resolving matters with Revenue Canada. He also claimed that as all of the expenses were properly submitted to Legacy for reimbursement, the fact that he also sought deductions for these expenses from Revenue Canada thereafter should not be sufficient grounds for his dismissal without warning.

[9] Wilson claimed that as an officer of Legacy and a minority shareholder, he was the subject of oppressive conduct by Legacy and its parent company Basel CanadaCorp Limited. Legacy refused to compensate him as a co-founder of Legacy, denied him the ability to be an effective President and officer of Legacy by undermining his authority, and found a pretext to terminate his employment because two of the Love children did not like him.

[10] Wilson disputed that he appropriated any confidential information belonging to Legacy or enticed any Legacy clients to leave and to work with him instead.

The Defendants’ Position

[11] At trial, the Defendants’ position was as follows[^1]:

(a) Wilson’s employment was not terminated: he chose to resign;

(b) If Wilson’s employment was terminated, Legacy had just cause to terminate his employment. As a senior employee and member of management, Wilson had a fiduciary duty to Legacy and breached that duty as:

i. Wilson oversaw and was extensively involved in the day-to-day operations of RecordXpress,

ii. Wilson used Legacy resources to conduct RecordXpress business and was fully reimbursed by Legacy for two receipts for work done for RecordXpress, and

iii. Wilson was reimbursed by Legacy for at least $104,255.37 worth of expenses and thereafter wrongfully claimed those same business expenses on his income tax returns.

[12] By way of counterclaim, the Defendants claimed:

(a) Wilson had access to confidential information regarding two Retirement Compensation Arrangements (RCAs) and was designated by Legacy as a “custodian” of those trusts. Wilson had a fiduciary obligation to Legacy. He breached that duty by approaching the two RCA clients, without Legacy’s knowledge, to secure their business to the detriment of Legacy (as Legacy was administering the trust). Legacy sought damages in the range of $250,000 to $2 million to compensate Legacy for the loss of the Gerber trust and for loss of other RCAs Legacy would have secured but for this litigation. (During the trial, counsel advised that the Gerber trust remained with Legacy. As such there are no damages for the loss of any existing clients of Legacy); and

(b) reimbursement of half of the amount Legacy paid to Wilson for the trip to New York, and the full cost of the National Club meeting, as those costs were incurred to conduct business on behalf of RecordXpress not Legacy.

III. THE ISSUES

[13] The main issues to be decided are:

(a) Did Wilson resign or was his employment terminated?

(b) If Wilson’s employment was terminated, was it terminated for just cause?

(c) Whether or not Wilson’s employment was terminated for cause, did the Defendants engage in oppressive conduct toward Wilson?

(d) After his departure from Legacy, did Wilson wrongfully appropriate confidential information belonging to Legacy?

(e) Is Legacy entitled to reimbursement for RecordXpress expenses, and Legacy expenses for which Wilson obtained tax deductions?

[14] At trial it was agreed that Wilson would be paid $385,000 in exchange for his Legacy shares. Moreover, the Defendants did not pursue their claim for an accounting of monies lost as a result of RecordXpress work performed by Wilson while employed by Legacy.

IV. THE MATERIAL FACTS

[15] Except where specifically noted, the material facts are not in dispute.

The Parties

[16] Before working with Legacy, Robert Wilson worked as a trust officer for National Trust and as a trust officer, sales and account executive for Scotia Bank. He holds a Trust and Estate Practitioner designation from the Society of Trust and Estate Practitioners. Wilson was Senior Vice-President Operations of Legacy from 2001 to 2004 and President from 2004 to 2012.

[17] Wilson met James Love in the early 1990s. Love was a mentor and friend of Wilson’s. Wilson reported to Love.

[18] James Love is a partner in the law firm Love and Whalen LLP which specializes in the areas of trust and taxation. He was at all times Chair and Chief Executive Officer (CEO) of Legacy. Love’s role with Legacy was more strategic than operational. Love also sat on the Board of Directors of several other companies and the Royal Canadian Mint.

[19] Legacy Private Trust is a private trust company incorporated on December 31, 2001 under the Trust and Loan Companies Act (Canada) S.C., 1991, c. 45. The Office of the Superintendent of Financial Institutions (Canada) issued an order for Legacy to begin business as a trust company on February 1, 2002. Legacy provides trust and fiduciary services including the administration and management of estates, trusts, agencies, foundations and wills for which fiduciary fees are paid. Legacy enjoyed steady and consistent profit growth and by 2009, had accumulated approximately $9 million in retained capital.

[20] Basel CanadaCorp Limited was incorporated by Legacy in 2010 for tax planning purposes. The existing shareholders of Legacy transferred their Legacy shares to Basel on December 31, 2011, in exchange for an equal number of shares in Basel. They also agreed to defer in whole or in part, the recognition of the capital gain that would otherwise accrue which resulted in a tax deferral. Legacy then declared a dividend of $2 million to Basel.

The Incorporation of Legacy Private Trust

[21] Love and Wilson disagreed as to Wilson’s contribution to the founding of Legacy. Love claimed he alone came up with the idea and fleshed out the concept for Legacy. He claimed Wilson was just one of several individuals to provide services and who helped to prepare the comprehensive 100 page business plan that was submitted to the Office of the Superintendent of Financial Institutions.

[22] Wilson agreed that Love had the idea to set up a trust company but claimed he was a cofounder who was instrumental to the genesis of the idea.

[23] Love and his law partner, Ross Whelan, contributed all of the required capital for Legacy in the amount of $5 million and Love recruited Whalen, Westaway and Wilson to work on the formation of Legacy Private Trust. Love found the Legacy premises and at the beginning, most of the clients were referred by the Love and Whalen law firm. At the time of inception the officers of Legacy were:

(a) James Love, Chair and CEO,

(b) Peter Westaway, Senior Vice President of Investments and Chief Financial Officer,

(d) Robert Wilson, Senior Vice President Operations, and

(e) Natalie Aruda, Corporate Secretary and Compliance Officer.

[24] At the time of incorporation, Whalen and Love were the only shareholders of Legacy. They continue to hold the majority of shares in Legacy.

[25] Once Legacy started operating, Love and Whalen continued to run their law practice and other activities while Wilson worked for Legacy full-time. Love and Whalen have never received a salary from Legacy.

[26] It was agreed that Wilson would become an owner of Legacy after he infused some “sweat equity” into the company. Wilson became a Legacy shareholder in 2003. By January, 2012 Wilson had 310,000 shares in Legacy’s holding company Basel for which he paid $25,000.03. This represents a slightly less than 5% interest in Legacy (and later, Basel).

[27] Love and Whalen both testified that at the time Legacy was incorporated, Legacy was to be the Love and Whalen families’ legacy and Wilson understood this. Wilson disputed this: He said he understood ownership would be held by three families (Love, Whalen and Wilson) but there was no discussion about engaging family members to work there.

Robert Wilson’s Roles and Responsibilities with Legacy

[28] In the document submitted to the Office of the Superintendent of Financial Institutions, Wilson’s duties are described as management of the day-to-day operations of the company, supervising the marketing strategy, managing client development and personnel, and performing the duties of the President when the President is unavailable. Wilson’s actual responsibilities included bringing in new business, and managing Legacy operations including sales, hiring, training and supervising personnel.

[29] Wilson was paid a $50,000 salary and an additional $100,000 in commissions which enabled him to write off his expenses.

[30] Wilson’s contract of employment was never reduced to writing.

[31] Wilson signed the Legacy Code of Conduct in 2010. The Code of Conduct stipulates that,

“Where you engage in outside business activities – such as taking a second job, participating in external activities that are intended for profit (e.g. running your own business), accepting a directorship or generally doing anything for which you are compensated by someone or some organization other than Legacy Private Trust – you must discuss any plans or offers for outside business activities with the President or Chief Compliance Officer for prior approval, so that the potential for any conflicts can be assessed and dealt with appropriately. Typically, outside business activities which compete with any aspect of Legacy Private Trust’s business will be prohibited.”

[32] The Legacy Conflict of Interest and Confidentiality Policy states, “Legacy Private Trust personnel are expected to devote their full-time attention to the business and affairs of Legacy Private Trust”.

[33] Andrea Love sought and obtained permission to do substitute teaching while she was engaged by Legacy. Michael Fabbri and Wilson sought and obtained approval to further their education while engaged with Legacy. Wilson obtained approval to sit on the Board of Directors of RecordXpress.

[34] In 2008, Wilson began meeting with Love to discuss the idea of Wilson succeeding Love as Chief Executive Officer. They continued to do so until shortly before Wilson left Legacy.

[35] A formal succession plan was adopted by Legacy’s Board of Directors in November 2010. As part of that plan, Love agreed to mentor Wilson with a view to his becoming the successor Chief Executive Officer of Legacy. It was agreed that Wilson would take courses to improve his financial literacy and management skills and Love would groom Wilson to succeed him.

Difficulties with Love’s Children

[36] In 2010, two of the Love children had poor working relations with Wilson. Three of the fifteen individuals employed by Legacy left Legacy in 2011. Each of the three departing employees, Driscoll, Virgo and Fabbri, testified that they had poor relations with two of the Love children and this was one of the reasons they left Legacy. They had good working relations with Wilson. A fourth employee, Ms. Laycock also resigned in 2011. The written notes of her exit interview provide that her relationship with one of the Love children was one of the reasons she left Legacy.

[37] On one occasion, Michael Love spoke to Wilson in a disrespectful way using profanity. In addition, he sent some terse emails to Wilson.

[38] Wilson testified he brought these issues to the attention of James Love but Love refused to address them. Wilson says he now believes this was because Love had resolved to undermine his authority and remove him from the business.

[39] James Love denied this. On the contrary, Love testified that he spoke to Michael Love and informed him that if he behaved this way again, his employment could be terminated.

Wilson’s Alleged Breaches of his Duties and Obligations to Legacy

A. Wilson’s Work with RecordXpress while Employed by Legacy

[40] Wilson engaged in the following activities on behalf of RecordXpress, some of which were documented in his diary:

(a) interviewing, hiring and signing employment contracts for Anna Sergeeva and Rachel Wang in his capacity as “President” of RecordXpress;

(b) approving training and vacation requests;

(d) approving and signing performance reviews for RecordXpress employees;

(e) approving vendor proposals and signing contracts with suppliers;

(f) communicating with consultants on behalf of RecordXpress;

(g) preparing training manuals and attending training sessions;

(h) reviewing marketing materials including approving the design for the RecordXpress website;

(i) leasing premises;

(j) purchasing supplies such as furniture, photocopiers and shredders;

(k) soliciting business on behalf of RecordXpress;

(l) approving gift baskets for vendors of RecordXpress;

(m) hosting RecordXpress meetings at Legacy premises; and

(n) travelling on behalf of RecordXpress twice while employed by Legacy.

[41] Wilson said he spent only two or three hours per week assisting RecordXpress. Legacy submitted that given the tasks he performed, the time commitment must have been much greater.

[42] Wilson had business cards made up on February 22, 2012 with the information “Robert Wilson Managing Director, RecordXpress” on them.

[43] At various times Wilson signed correspondence as President, Managing Director, member of the Board of Directors and shareholder of RecordXpress. Wilson was never President, shareholder or a member of the Board of Directors of RecordXpress.

[44] Wilson’s curriculum vitae for RecordXpress provided that he, “created the 5 year strategic plan and one year business plan” although Wilson testified that he simply had input into and approved a plan written for him by others.

B. Offer of Remuneration by RecordXpress

[45] Steven Scott, the owner and President of RecordXpress testified that in May 2008, he asked Wilson to become more heavily involved with RecordXpress. He sent him a draft Consulting Agreement offering him $10,000 per month effective June 1, 2008. He also sent him an Option Agreement and a Shareholder’s Agreement. The Consulting Agreement provided that “the consulting services will consist of identifying, evaluating and advising on sales and marketing, administration and related business services requested by the Corporation from time to time and overall management of the business and affairs of the Corporation.”

[46] Wilson refused these offers but agreed to continue to help RecordXpress. Neither Wilson nor Scott was asked to explain why Wilson refused this offer but provided services to RecordXpress without remuneration.

[47] Six months later, on February 3, 2009, a Revised Shareholder Agreement, and an Option Agreement were again sent from RecordXpress to Wilson along with a note asking Wilson for his comments and instructions. Neither Wilson nor Scott was asked why this second set of agreements was sent to Wilson.

[48] Wilson and Scott testified that Wilson never received remuneration from RecordXpress. There was no evidence to suggest he did.

C. Legacy’s Knowledge of Wilson’s Activities with RecordXpress

[49] Wilson claimed Legacy knew of his role with RecordXpress: he regularly booked meetings with the principals of RecordXpress at Legacy’s office through the company receptionist, recorded the meetings in his Legacy office calendar (only some of which could be seen by others) and stored documents on the Legacy server.

[50] Wilson said Love knew what he was doing at RecordXpress, though he did not outline all of “the line items”. He said he told Love about the people he was meeting with for RecordXpress, and the nature of the business as Legacy encouraged people to host meetings at Legacy to get traffic in the door. Love denied this.

[51] Minutes of the April 8, 2009, Legacy Board of Directors meeting reflect that Wilson was “pleased to announce his RecordXpress directorship appointment and he then provided the Directors with a brief overview of the company.” As noted above, Wilson was never a director of RecordXpress. Wilson said he made this announcement as he was told he would be made a Director of RecordXpress.

[52] In Wilson’s curriculum vitae which was sent only to the human resources person at Legacy on January 31, 2011, Wilson described himself as a “shareholder and managing director” of RecordXpress and gave an account of some activities that he performed for RecordXpress. James Love and Andrea Love testified that they had never seen it.

[53] On or about September 23, 2011, Wilson sent a draft copy of his curriculum vitae to Love for his review which provided that Wilson was “managing director of RecordXpress”. Love acknowledged that he saw this curriculum vitae.

D. Payment of Wilson’s Expenses

[54] Wilson testified that he submitted his entertainment expenses to Legacy for reimbursement shortly after they were incurred and kept copies of the receipts.

[55] He also said he had no system to separate expenses reimbursed by Legacy from those he sought to deduct from his income tax. Wilson testified that he kept his receipts for the purposes of income tax deductions at his home, his office and his car and it was a “hodge-podge”. He put his receipts in a folder and would “eye ball” the expenses to determine what expenses would be submitted as deductions from his income tax. He gave rough numbers of his deductions for meals, home office, vehicle and other expenses without any supporting documentation to his accountant.

[56] Wilson’s income taxes for 2006 and 2007 were audited and Love drafted the Letter of Objection to Revenue Canada on Wilson’s behalf. Love testified that he was not provided with any of the individual receipts in support of the deductions although Love had approved all of Wilson’s Legacy expenses.

[57] Wilson was reimbursed in full by Legacy for a flight to New York to meet a Legacy client in April 2008. During the trip Wilson also conducted RecordXpress business. It is not clear how much time Wilson spent on Legacy business and how much time he spent on RecordXpress business.

[58] Wilson was also reimbursed in full by Legacy for a $116 meeting room charge at the National Club although the meeting was to discuss RecordXpress business.

[59] After Wilson’s departure from Legacy, Froese Forensic was retained by Legacy to review an expense analysis prepared by Legacy and to provide findings relating to expenses claimed by Wilson that were reimbursed by Legacy and expenses deducted by Wilson as expenses on his income tax returns. Froese reviewed the backup documentation submitted by Wilson in support of his expense claims from 2002 to 2010 and drew the following conclusions:

(a) Wilson had entertainment receipts in the amount of $243,200.93;

(b) Wilson was reimbursed by Legacy for entertainment expenses in the amount of $171,090.73;

(d) Wilson claimed $203,401.60 for food, beverage and entertainment expenses on his tax returns from 2002 through 2010;

(e) $203,401.60 (food and entertainment expenses claimed on Wilson’s tax returns) minus $72,110.20 (expenses not claimed by Wilson on his tax return), minus unsupported entertainment expenses claims in 2009 and 2010 of $27,036.03 leaves $104,255.37;

(f) a minimum of $104,255.37 of entertainment expenses were both reimbursed by Legacy and claimed as expenses on Wilson’s income tax returns from 2002 to 2010.

[60] Wilson admitted he did not check to see if there was substantial duplication and approximately $104,255.37 of expenses were paid by Legacy and then claimed as expenses on his income tax returns between 2002 and 2010.

[61] Wilson said he knew Love “felt very strongly about ethical behaviour.” He testified that Love discovered that Whalen met with a trust company that had been blacklisted by Legacy, Love told Whalen he was extremely disappointed with his behaviour and Whalen agreed to resign as President of Legacy but remained on the Legacy Board. Whalen’s reasons for resigning as President were not disclosed to the Legacy Board.

[62] Wilson acknowledged that if Love had known the Legacy expenses he approved were being deducted as expenses on Wilson’s income tax return, he would not have reimbursed Wilson for them.

The End of Wilson’s Employment with Legacy

[63] Love testified that on January 3, 2012, Whalen told him he had spoken to someone who said Wilson must be doing well as he was receiving two large salaries: one from Legacy and one from RecordXpress. Love said he never asked Whalen who gave him this information.

[64] Whalen said he could not remember who told him this but he believed it was his friend Chris Degeer. Degeer testified that he ran into Whelan during the 2011 holiday season and told him he had heard Wilson was unhappy and might be leaving shortly. Degeer did not recall saying Wilson was receiving two large salaries. DeGeer testified that he had never met Wilson and never heard of RecordXpress.

[65] Love testified that when he was told Wilson was earning two salaries he was very upset and asked Andrea Love to retrieve documents pertaining to Wilson from the Legacy server. She retrieved four boxes of documents.

[66] On the morning of January 5, 2012, Wilson was asked to attend a meeting with Love and Westaway. He was not told why they wished to meet with him.

[67] At Westaway’s suggestion, the Defendants called security to attend on January 5, 2012 to be on hand as Love testified that he and Westaway agreed that, “you never know what might happen”. The security person, Carson Henessey, testified that he was asked to sit in “during a possible employee termination” to ensure the safety of staff in the office. He was not in uniform and sat outside the meeting room.

[68] Once the meeting ended Henessey said he was asked to take the Legacy property in Wilson’s possession and escort him off the property. Shortly after the encounter Henessey prepared a report in which he stated that, “Ms. Love advised that an employee of the company was being released.” Andrea Love denied she told him this.

[69] At the meeting on January 5, 2012, Love claimed they had information that Wilson had been running another company through Legacy by,

(a) taking a salary from RecordXpress in the amount of $10,000 per month,

(b) spending significant time on the day-to-day operations of RecordXpress (as evidenced by hundreds of emails regarding RecordXpress found on Wilson’s account on the Legacy server),

(d) claiming reimbursement for a trip to New York and lunch at the National Club from both Legacy and RecordXpress.

[70] Love asked Wilson for an explanation regarding his expenses. Westaway asked why Wilson had claimed expenses from both Legacy and RecordXpress. Neither showed Wilson the documents.

[71] Westaway told Wilson, he must be earning an income from RecordXpress and that all of the RecordXpress emails they had found on the Legacy server and the expenses reports were proof Wilson was earning an income from RecordXpress.

[72] Wilson expressed shock and stated that Love had approved his involvement with RecordXpress. Love had seen him meeting with Steven Scott of RecordXpress and Wilson said the Legacy Board was fully informed of his activities with RecordXpress. Westaway and Love disputed this. Love testified that the only thing Wilson told him was that he was on the Board of Directors of RecordXpress.

[73] Westaway testified that Love asked Wilson several times for an explanation of the time he was spending on RecordXpress activity and Wilson replied that the time was minimal. Westaway was not satisfied as he had seen the emails. Wilson testified that he estimated that he spent only a few hours a week on RecordXpress activity.

[74] Wilson denied he had taken a salary from RecordXpress. He said if there was an error with his expenses he could explain it. He had no idea what expenses they were talking about and was not told specifically what they were.

[75] Wilson said several times that in his heart of hearts he did not believe he had done anything wrong. Westaway said he accepted that that was Wilson’s view but he and Love did not accept it.

[76] The aide memoire prepared by Westaway and Love shortly after the meeting provided that “Peter [Westaway] stated, ‘In light of the extreme seriousness of this situation, you are suspended with pay effective immediately until this situation is resolved. We need your phone while we take time to think about how to proceed and give you time to do the same. Let’s meet tomorrow at 10am.’” Wilson denied he was told he was suspended with pay.

[77] Wilson said, “I have a feeling my time with Legacy is coming to an end.”

[78] Love testified that he entered the meeting, “with the strong hope that we could move forward” but that by the end of the meeting, he began to think Wilson had no response to the questions they asked.

[79] Wilson was asked to return a Blackberry Smartphone, access cards to the premises of Legacy and the parking garage of the building. After Wilson returned to his office to pick up some books, the security guard accompanied Wilson to the parking garage to obtain the parking pass from him when he left the garage.

[80] On January 6, 2012 Wilson returned for a second meeting, this time with Love and Whalen. At that time, Wilson asked that Love reiterate the allegations against him and this was done. Wilson again denied them.

[81] Wilson testified that James Love indicated his trust in Wilson had been shattered. Wilson replied that if trust in him was shattered, “I need a number. I will help any way I can with the transition. I love the Company.” Wilson said when he agreed to this, he thought the number would include severance, the sale of his shares and other consideration.

[82] Love and Whalen testified it was Wilson who said, “I can see your faith in me has been shattered. It is time for me to go.” Love said they did not review the expenses because Wilson had already indicated he would resign and move on. He said Wilson wanted an email to be sent out so that there would be no rumours swirling around. Love offered to draft a notice for clients and provide a number for Wilson to consider.

[83] Love said the number was only supposed to reflect the value of his shares as Wilson had agreed to resign. After the meeting Love took the net book value of the shares, divided it by the number of outstanding shares and arrived at $384,000.

[84] Shortly after the January 6 meeting, Love sent Wilson a draft email for him to send to his clients regarding his resignation. Wilson selected the persons to whom the email would be sent and revised the wording of the email. At the time he had not yet retained counsel.

[85] On January 8, 2012 Love sent an email to Legacy personnel that Wilson had decided to leave to pursue other interests.

[86] On January 9, 2012 Love sent an email to the Legacy Board of Directors advising them that “Bob Wilson’s employment with Legacy was terminated last Friday.” Love said he went through the facts with the Board.

[87] Wilson’s Record of Employment dated January 16, 2012 provides that the reason he was no longer with the company was that he “quit”. Andrea Love said she filled in the form this way because this was what she was told had happened. She did not recall who told her this. (Wilson appealed this finding that he “quit” in February 2013 but was unsuccessful.)

[88] On January 17, 2012 Legacy’s counsel purported to acknowledge Wilson’s resignation in a letter to Wilson which stated that at the January 5 meeting, Wilson was “presented with certain allegations which, if true, would have amounted to conduct in breach of your duty of fidelity and breach of trust as President of Legacy Private Trust.” He also confirmed that in consideration for his resignation and the sale of his shares, he would receive $385,000 and no other amount. This was the first time a figure had been placed on the compensation to be paid to Wilson upon his departure from Legacy.

[89] On February 23, 2012, Legacy’s counsel further advised Wilson that “information came to the attention of senior management of Legacy Private Trust that disclosed that you have been using the premises of Legacy Private Trust and its Information Technology assets for the purpose of managing the business and affairs of another company, namely RecordXpress” and that certain expenses incurred had been claimed by him and reimbursed by both Legacy and RecordXpress and this demonstrated that Wilson “was not devoting [his] full time and attention to [his] responsibilities at Legacy Private Trust.”

[90] Wilson issued his Statement of Claim on March 30, 2012.

[91] The Minutes of the April 11, 2012 Legacy Board of Directors meeting provide that the Chairman (Love) informed the directors that a litigation matter had arisen relating to Robert Wilson’s “termination”. On November 21, 2012, the word “termination” was changed to “resigned”. Love testified that this was because when the word termination was used, he did not understand the legal meaning.

Retirement Compensation Arrangements

[92] Legacy administered two Retirement Compensation Arrangements (RCAs). These were retirement funds funded by employers for the benefit of their employees. The beneficiaries of those two trust funds were Martin Gerber and Scott Gomez, both of whom were professional athletes.

[93] Love testified that Wilson was appointed trustee because he was advised that if the beneficiary is a professional athlete, a company cannot be trustee. Section 248(1) of the Income Tax Act requires the naming of a designated custodian of the RCA.

[94] Wilson was designated as he was an officer and employee of Legacy. As trustee, Wilson could be held personally liable for issues regarding the management of the RCA Trusts.

[95] Only the beneficiary or his or her representative can remove the trustee.

[96] On April 24, 2008 Wilson flew to New York to meet with Paul Aunger the representative for the Gomez Trust. On the same trip he conducted RecordXpress business. Wilson was reimbursed for the full amount by both Legacy and RecordXpress.

[97] After he left Legacy, Wilson was asked by Legacy to resign as trustee of these two RCAs. He refused. Thereafter, he heard nothing further from Legacy on this subject until November 2012 nor did he receive any reports regarding the RCAs.

[98] Wilson wrote to Legacy in his capacity as Trustee and requested that the RCA trust files be transferred to his counsel.

[99] In November 2012, Wilson asked Legacy to forward the RCA files to him and sought to transfer to RCAs to another administrator.

[100] On November 1, 2012 Wilson wrote to ask that the Gomez Trust be transferred. Love wrote to him shortly thereafter to advise that the name of the trustee had been changed and on November 23, 2012, the agent for the Gomez Trust confirmed that, “We spoke last week and I notified you that Scott was going to change the trustee for his accounts.” The Gomez trust remained with Legacy.

[101] Love testified that he was told in the Fall of 2012 that Gerber wanted to maintain the status quo until the litigation was resolved. During the Closing submissions, Legacy counsel advised that Gerber had decided to remain with Legacy and retain a new trustee to replace Wilson.

Wilson’s Efforts to Find New Employment

[102] Wilson has not received any job offers since he ceased working for Legacy. He said that work with trust companies was a limited market.

[103] Wilson said the first six months after leaving Legacy were very difficult for him. He suffered from stress and was depressed. After the first six months he began to put his life back together and seek alternate employment in earnest. Wilson claimed that as at the time of trial, he had applied for a host of positions online and was involved in networking to try and find a job.

Damages Claimed by Legacy

[104] Legacy claimed Wilson used its confidential information to attempt to appropriate Legacy clients. The “confidential information” consisted of the names of the RCA trusts and letters written to the beneficiaries or their agent.

[105] Since counsel was advised at trial that Gerber would remain a client of Legacy, it is now agreed that Legacy has suffered no loss of existing clients.

[106] Legacy claimed that this litigation caused damage to Legacy’s reputation such that other RCA’s would not be referred to Legacy. Legacy therefore claims damages in the range of $250,000 to $2 million. No evidence was adduced in support of this claim.

V. ANALYSIS OF THE LAW AND CONCLUSIONS

Issue #1: Did Wilson Resign?

[107] The employee bears the burden of proving on a balance of probabilities that he was dismissed. A resignation must be clear and unequivocal. It must objectively reflect an intention to resign, or there must be conduct evidencing such an intention. (Gill v. A.D. Precision Ltd. (2010) ONSC 4646, 2010 ONSC 4646, 84 C.C.E.L. (3d) 294 at para. 66 and Kieran v. Ingram Micro Inc. 2004 4852 (ON CA), [2004], 33 C.C.E.L. (3d) 157 (Ont. C.A.) at para. 27, leave to appeal to S.C.C. refused, [2004] S.C.C.A. No. 423.)

[108] The surrounding circumstances must be reviewed to determine whether a reasonable person, viewing the matter objectively, would conclude that the employee resigned. (Dragone v. Riva Plumbing Ltd. (2007), 2007 40543 (ON SC), 61 C.C.E.L. (3d) 261 (Ont. S.C.J.) at para. 3; and Kieran at para. 30.)

[109] A resignation during a spontaneous outburst in highly charged emotional circumstances can undermine its essential voluntariness. Moreover, sometimes an employee’s actions are equivocal such that his actions cannot be construed as a voluntary resignation. The length of time an employee maintains that he resigned is relevant to the determination that he resigned and was not dismissed. (Gebreselassie v. V.C.R. Active Media Ltd., 161 A.C.W.S. (3d) 261(Ont. S.C.J.)).

[110] For the following reasons, I am satisfied on a balance of probabilities that Wilson did not resign; his employment was terminated:

(a) Wilson behaved in a manner inconsistent with the behaviour of someone who freely chose to resign:

i. he was not told why he was asked to come to a meeting with Love and Westaway on January 5, 2012, he had no time to prepare for the meeting, and he did not attend with legal counsel;

ii. at the meeting, he was accused of working for RecordXpress and earning two salaries (which he was not), and that he had been reimbursed for expenses by Legacy when the work was incurred on behalf of Legacy and RecordXpress. Wilson denied he’d taken a salary from RecordXpress and said if there was an error in his expenses he would explain it. He was not permitted to see the documents the Legacy representatives were relying on;

iii. Wilson was emotionally upset at the meeting;

iv. he was told confidence in him had been shattered and as such, it was reasonable for him to conclude that he would not be permitted to continue working with Legacy. Only after that did he say that since Love’s faith in him was shattered, if he were given “a number”, he would assist with a smooth transition. The Legacy representatives agreed to get back to him with a number;

v. when Wilson received a letter from Legacy’s counsel for the value of his shares only, there was no agreement on the number and the offer was declined.

(b) The Legacy representatives acted in a manner consistent with a decision to terminate Wilson’s employment:

i. security was brought to the Legacy premises in anticipation of the January 5 meeting and the security guard testified that he was told this was a “possible employee termination”;

ii. at the end of the January 5 meeting, Wilson was told to return his Legacy property including his security pass, his parking pass and his company telephone. The security guard escorted him from the premises;

iii. Wilson was told that Love’s confidence in him was shattered and Love admitted on cross-examination that he did not know whether there was anything Wilson could do to regain his confidence;

iv. Legacy’s Board of Directors was advised on January 9, 2012 that “Wilson’s employment was terminated”. This was repeated in the Board minutes of April 2012. (The minutes were later revised to change the word “terminated” to “resigned.”

Issue # 2: Was Wilson Wrongfully Dismissed from his Employment with Legacy?

[111] To determine whether an employer is justified in dismissing an employee for misconduct, there must be an assessment of the full context of the obligations of the employee, including the nature and seriousness of the wrongdoing, to assess whether it is reconcilable with the employment relationship. As noted by Iacobucci J. in McKinley v. B.C. Tel. 2001 SCC 38, [2001] 2 S.C.R. 161at para. 53, “An effective balance must be struck between the severity of an employee's misconduct and the sanction imposed.” As such, there is no general rule as to the degree of misconduct required to justify dismissal.

[112] In Shelanu Inc. v. Print Three Franchising Corp. (2003), 2003 52151 (ON CA), 64 O.R. (3d) 533, (C.A.)at para. 118, the court adopted five factors to analyze whether there was a substantial failure of performance amounting to fundamental breach such that the innocent party should be excused from future performance of the contract. They are as follows:

(a) the ratio of the party’s obligation not performed to the obligation as a whole;

(b) the seriousness of the breach to the innocent party;

(d) the seriousness of the consequences of the breach; and

(e) the relationship of the part of the obligation performed, to the whole obligation.

[113] Ongoing reckless conduct may be grounds for summary dismissal. (Machias v. Mr. Submarine Ltd., 2002 CarswellOnt 1176 (S.C.J.).)

[114] In Felker v. Cunningham (2000), 191 D.L.R. (4th) (Ont.C.A.), leave to appeal to the S.C.C. refused, [2000] S.C.C.A. No. 538, the court held at para. 14 that,

“high echelon managers and directors of an organization owe their employer a fiduciary obligation that transcends their implied duty of fidelity as a regular employee. … fiduciary employees cannot enter into engagements in which they had a personal interest that conflict with anything the employer does, or realistically may do, without first making full disclosure and obtaining the employer’s consent. Moreover, as the fiduciary duty is based on trust, loyalty and confidence, and not on economic cost to the employer, fiduciary employees are not relieved of their fiduciary duties if the business opportunity sought to further their own ends is one that the employer would have been unwilling or incapable of exploring.”

[115] Where a fiduciary employee is engaged in full-time service for an indefinite period, but spends significant time during business hours working on the affairs of another company, that is incompatible with the employee’s obligation to serve his employer. (Ross v. ReadyFoods Ltd and Levenstein, 1981 3493 (MB QB), 9 Man. R. (2d) 393 (Man. Q.B) at pp. 399-400.)

[116] An employer is entitled to rely on wrongdoing discovered after the employee’s employment was terminated so long as the acts occurred prior to termination of the employment. (Lake Ontario Portland Cement Co. Ltd. v. Groner, 1961 1 (SCC), [1961] S.C.R. 553 at pp. 563-564 and Dowling v. Ontario (Workplace Safety and Insurance Board) (2004), 2004 43692 (ON CA), 246 D.L.R. (4th) 65 (Ont.C.A.) at para. 51, leave to appeal to S.C.C. refused, [2005] S.C.C.A. No. 25). This is because the issue is not whether the reasons given for termination have been proven by the employer but whether the misconduct as a whole was serious enough to warrant termination with cause. (Tsakiris v. Deloitte & Touche LLP, 2013 ONSC 4207, 8 C.C.E.L. (4th) 210, at para. 49.)

[117] There is a difference between “acts of misconduct hidden from the employer, or incapable of discovery in the normal course of the employment relationship, and acts which relate to matters of job performance and which, with due diligence, would have been known to anyone who took the time to observe what was happening in the workplace.” (Doucet v. Spielo Manufacturing Inc. 2011 NBCA 44, 332 D.L.R. (4th) 407 at para. 89, leave to appeal to S.C.C. refused, [2011] S.C.C.A. No. 317.)

[118] As President of Legacy, Wilson was the most senior employee of the trust company. Wilson owed a fiduciary duty to devote his full time and energy to furthering the best interests of Legacy.

[119] Wilson performed many different and important tasks for RecordXpress both during and outside usual Legacy hours including signing significant contracts, hiring employees, leasing premises, communicating with consultants and soliciting business on behalf of RecordXpress. He told others he was President, shareholder and a Director of RecordXpress but he held none of these positions. He also said he created the five year business plan for RecordXpress which he did not.

[120] Legacy knew or ought to have known Wilson was assisting RecordXpress as:

(a) some of his activities were described in Wilson’s online day timer at Legacy and some RecordXpress meetings were held at Legacy premises;

(b) in a draft copy of a curriculum vitae sent directly to Love, Wilson described himself as “managing director of RecordXpress”; and

(c) Wilson advised the Board of Directors of Legacy that he had been appointed a director of RecordXpress (which he had not).

[121] There is no documentary evidence to show how much time Wilson spent on RecordXpress. However, given that RecordXpress was a small start-up company, it is possible that as Wilson suggested, he spent no more than two or three hours a week over several years assisting RecordXpress. Moreover, Love testified that he was satisfied with Wilson’s performance as President of Legacy until January 2012.

[122] Wilson admits that he did not disclose “the line items” to Legacy and neither sought nor received approval from Legacy to act as General Manager or President of RecordXpress and take on the extensive responsibilities for RecordXpress that he did.

[123] Other Legacy employees sought and received express permission to carry on outside activities. (Andrea Love sought and obtained permission to do substitute teaching while she was engaged by Legacy. Michael Fabbri and Wilson obtained approval to further their education while engaged with Legacy.)

[124] Although James Love sat on a number of other Boards and spent time on other projects, Wilson’s role was different: Love infused capital into the company, he drew no salary and was not expected to devote his full time and energy to Legacy. Wilson on the other hand, was in his words, the “sweat equity” handling the day-to-day operations of Legacy. Wilson did not infuse capital into the company, he drew a considerable salary and he was expected to manage the day-to-day operations of Legacy.

[125] Unlike some of the other employees, Wilson never signed an employment agreement. Moreover, Legacy’s Code of Conduct addresses the issue of “generally doing anything for which you are compensated by someone or some organization other than Legacy”. Although Wilson was offered significant remuneration on two separate occasions, there is no evidence that he accepted any remuneration from RecordXpress.

[126] Wilson’s misrepresentation of his titles and the level of his involvement with the five year plan for RecordXpress are worthy of warning. However, they are not so serious, in my view, as to justify the termination of Wilson’s employment without warning.

[127] Wilson’s ongoing and frequent reckless conduct regarding his expenses is more serious. Wilson carried on a pattern of reckless behaviour that demonstrated, at a minimum, his inability to manage financial affairs. He sought and obtained reimbursement for expenses amounting to at least $104,255.37 from Legacy while at the same time, deducting many of those expenses as business expenses on his income tax returns. This took place over an eight year period.

[128] While Wilson may not have deliberately set out to defraud Legacy or Revenue Canada, he had no system in place to separate Legacy expenses from other expenses or to determine what expenses had been reimbursed.

[129] Wilson’s lax behaviour regarding his expenses was addressed at the January meeting, but the issue of the deduction of his expenses on his income tax returns was not. This is understandable as that information had only just become available two days before the meeting. It was voluminous and had not yet been analyzed by the defence expert to determine the extent of the problem.[^2]

[130] Legacy’s business is selling trusts; its success depends on the trust and loyalty clients place in its personnel and in their ability to manage money. Legacy in turn must be able to trust its personnel.

[131] As President of Legacy with senior administrative and management functions regarding estates, trusts, agencies and foundations for which fiduciary fees were paid, it was particularly important that Wilson be and be seen to be trustworthy and able to manage money.

[132] The following facts, taken together, demonstrate that Wilson was not fit to watch over the affairs of Legacy:

(a) He told third parties that he held various roles within RecordXpress which he did not;

(b) He misrepresented his role in creating the five year plan for RecordXpress;

(d) Over an eight year period, he sought reimbursement from Legacy for expenses in the amount of $104,255.37 and then deducted those same expenses as business expenses on his income tax returns.

[133] These are very serious breaches that are incompatible with Wilson’s fiduciary obligations to Legacy to be and be seen to be a trusted guardian and able manager of funds. Legacy was therefore justified in terminating Wilson’s employment for cause.

[134] Moreover, given that Legacy was such a small company and Wilson was the most senior employee, it is difficult to envisage how he could have remained in the organization while having these responsibilities removed or constrained.

[135] This case is distinguishable from Doucet on the basis that Wilson was much more extensively involved in RecordXpress. Doucet headed a division of Spielo before his employment was terminated after 10 years of service. Doucet’s involvement was in sending or receiving 48 emails over 19 months, which were retrieved four years after commencement of the action. Moreover, unlike in Doucet, Wilson was involved in other more serious breaches of his fiduciary duty.

[136] Hardie v. Trans-Canada Resources Ltd. (1976), 1976 1102 (AB CA), 2 A.R. 289 (C.A.) is also distinguishable from the present case. In Hardie, the Department of National Revenue required that all expense payments paid by the employer to the employee be supported by written receipts. Failure to do so would result in payment of tax on those amounts by the employee. Contrary to that instruction, the employee used blank receipts whenever an expense was incurred for which he did not have a receipt. Although the employee was found not to have defrauded his employer, it “exposed an attitude of contempt for the ruling of the Income Tax authorities”: see Hardie, at para. 64. Unlike in this case, the employee in Hardie was not in a fiduciary industry and there were no other serious breaches in that case.

Issue #3: Is Wilson Entitled to an Oppression Remedy?

[137] Section 248(2) of the Ontario Business Corporations Act, R.S.O. 1990, c. B.16, provides as follows:

Where, upon an application under subsection (1), the court is satisfied that in respect of a corporation or any of its affiliates,

(a) any act or omission of the corporation or any of its affiliates effects or threatens to effect a result;

(b) the business or affairs of the corporation or any of its affiliates are, have been or are threatened to be carried on or conducted in a manner; or

(c) the powers of the directors of the corporation or any of its affiliates are, have been or are threatened to be exercised in a manner,

that is oppressive or unfairly prejudicial to or that unfairly disregards the interests of any security holder, creditor, director or officer of the corporation, the court may make an order to rectify the matters complained of.

[138] An oppression remedy allows a shareholder, director, or officer to commence a claim against a corporation where the acts or omissions of the corporation or its management are oppressive, unfairly prejudicial, or unfairly disregard his or her interests.

[139] In BCE Inc. v. 1976 Debentureholders, 2008 SCC 69, [2008] 3 S.C.R. 560, the Supreme Court observed that oppression is an equitable remedy that seeks to ensure fairness and, therefore, courts should look at business realities, not merely narrow legalities; a finding of oppression is fact-specific.

[140] The expectation of the wronged party must be reasonable having regard to the facts, the relationships, and the context of the case. The court may look at general commercial practice; the nature of the corporation; the relationship between the parties; past practice; steps the claimant could have taken to protect itself; representations and agreements; and the fair resolution of conflicting interests. The court must then decide whether the reasonable expectation was violated by conduct that results in oppression, unfair prejudice, or unfair disregard of a relevant interest: see BCE Inc., at paras. 72, 89, 95.

[141] In Naneff v. Con-Crete Holdings Ltd. (1993), 11 B.L.R. (2d) 218 (Ont. Gen. Div.), varied 1994 7542 (ON SC), 19 O.R. (3d) 691 (Div. Ct.), the plaintiff was a manager, director, and 50-percent shareholder in a family group of companies founded and built by his father. The plaintiff shared the management of the corporate group with his father and brother. Following his disclosure to the family of his intended marriage to a female employee of the group and the family’s opposition, the plaintiff was removed as an officer of the company and his position as employee. The action was allowed on the basis that the defendant family members engaged in oppressive conduct.

[142] Blair J. (as he then was) in the trial decision noted that in normal circumstances the wrongful dismissal of an employee would not provide the plaintiff with standing to grant an oppression remedy. But where the interests of the employee are integrally intertwined with his interests as a shareholder, officer, and director and where the dismissal is part of a pattern of conduct designed to exclude the plaintiff from any active role in the companies, the dismissal was properly considered as an act of oppression.

[143] When faced with an oppression remedy claim, the court has wide discretion to choose appropriate remedies, some of which include an order restraining the conduct complained of, directing the corporation to purchase the shares of a shareholder, compensating an aggrieved person, and/or liquidating and dissolving the corporation.

[144] Wilson had standing to initiate a complaint regarding the manner in which the affairs of Basel and Legacy were conducted. Wilson’s interest as an employee and officer of Legacy was integrally intertwined with his interest as a shareholder of Legacy and Basel and with Love who is a director of both corporations.

[145] Wilson claimed compensatory damages as a shareholder, officer, and co-founder of Legacy, who worked to enhance the value of the company from the time of its inception and was assured he would have a long-term interest in the business as a shareholder and its future CEO. Instead, according to Wilson, Love “pursued a course of conduct designed to marginalize, dilute and ultimately eliminate” him from Legacy. Wilson claimed this was done “for the wrongful purpose of transforming Legacy into a family business and enriching the Love family” at his expense. In particular he stated as follows:

(a) Love invited his children to join Legacy without consulting Wilson;

(b) Love gave his children special arrangements whereby they held second jobs;

(d) Love forced Wilson to clear his vacations with him in 2010 when he had never done so before;

(e) Love refused to discipline his children when they behaved badly and instead promoted them;

(f) Love removed Wilson’s authority over his children and the trust department at large and gave that responsibility to Andrea Love; and

(g) Longstanding employees were forced to resign due to the Love children’s misconduct and Love’s indifference to it.

[146] Wilson originally sought an order appointing a valuator to determine the value of his interest in Basel and an order requiring the Defendants to purchase his shares for fair market value. Wilson had a 4.8% interest in Legacy shares that were transferred to Basel on December 31, 2011. Compensation for the value of his shares is no longer an issue as the parties have agreed that Wilson is to receive $385,000 in exchange for the transfer of his shares. As such, there is no oppression claim based on the valuation of his shares.

[147] Wilson and Love agreed that Wilson played an important role with Legacy from the time of its inception in 2001 until his departure in 2012. He was involved as one of five founding people until January 2012. He had a reasonable expectation that he would replace Love as CEO of Legacy and would remain with Legacy for the long-term.

[148] However, this belief was premised on Wilson being a trustworthy employee and a competent manager of money. Wilson could not reasonably expect that he could continue to play a senior role within Legacy once Legacy discovered that Wilson

(a) had misrepresented to others the positions he held with RecordXpress;

(b) sought reimbursement from Legacy for expenses incurred on behalf of RecordXpress; and

(c) demonstrated an inability to manage money by engaging in a pattern of receiving reimbursements of expenses from Legacy and then claiming deductions for those same expenses on his income tax returns.

[149] Wilson claimed he was oppressed because several of the Love children were hired by Legacy without consulting him. They disliked him and made it impossible to do his work effectively. Wilson testified that he understood ownership in Legacy would be held by three families but he did not understand that family members would be engaged.

[150] Although there may not have been any discussion as to whether any of the Love children would be hired, given that Wilson admits he understood Legacy was to be owned by the three families, there is reason to believe family members might be otherwise engaged in the business. Moreover, there is no evidence that Wilson ever objected to the hiring or promotion of any of the Love children.

[151] Furthermore, Love’s evidence is that although his son did not apologize to Wilson, Love spoke to his son about the incident where Love’s son used profanity and behaved in a highly inappropriate manner with Wilson. Love testified that he told his son his behaviour was highly inappropriate.

[152] There is uncontradicted evidence that in 2010 to 2011, several former Legacy employees had difficulties with two of the Love children and that this was one of the reasons for their departure. Contrary to Wilson’s claim, there is no evidence they were forced to resign. While it is understandable that Wilson found this situation difficult, on the basis of the information available, there was only one incident involving the Love children (noted above) where their behaviour was utterly inappropriate and that behaviour was not repeated.

[153] Until the time of his departure, Wilson did not indicate that he was unable to perform his job as President. On the contrary, he told Westaway and Love in January 2012 that he “loved the company”. Until January 2012, Wilson was being groomed to become CEO. Wilson had periodic meetings with James Love and enrolled in courses to further this goal.

[154] On the evidence available in January 2012, Legacy had reason to have serious concerns about Wilson’s behaviour as Love had just come into possession of a document that suggested that Wilson had been offered $10,000 per month to work for RecordXpress years earlier and no documentation suggested that the offer was refused. Moreover, there was documentation to suggest Wilson had performed extensive work for RecordXpress and that Legacy had paid for some expenses incurred for RecordXpress.

[155] In summary, Wilson is not entitled to compensatory damages for oppressive conduct on the part of the Defendants. The value of his shares was in no way diluted, and, although the conditions of Wilson’s employment may have been less than ideal, they were not oppressive. Finally, Wilson could not expect to remain at Legacy having committed the acts that he did.

Issue #4: Did Wilson Misuse Confidential Information Belonging to Legacy?

[156] As a senior representative of Legacy, Wilson was designated the trustee of two Retirement Compensation Arrangements (RCAs) for Legacy clients. Legacy claimed Wilson misused contact information for the agents of the holders of the RCAs and used it to try and appropriate those clients for himself after his departure from Legacy.

[157] There is no provision in the trust agreements, nor is there any law prohibiting Wilson, as trustee of the RCAs, from communicating with the beneficiaries or their agents, after he ceased to be an employee of Legacy.

[158] On the contrary, Article 5.3 of the Gerber RCA and Article 7.01 of the Gomez RCA provide that Wilson may be held liable for losses resulting from administering the affairs of the trust if those losses are caused by the trustee’s negligence. The trustee must keep proper records of matters associated with his administration of the RCA and Legacy did not keep him apprised of what was happening with the administration of those trusts.

[159] Both trust agreements provide that Wilson can only be removed by the beneficiary or his agent. With respect to the administration agreements with Legacy, either Wilson (trustee) or Legacy (administrator) could terminate the administration agreement “at any time upon not less than 30 days written notice.”

[160] Legacy asked Wilson to resign as trustee of the RCAs on January 17, 2012. He refused. Accordingly, he remained trustee of both RCAs and Legacy continued to act as administrator of the two trusts. In November 2012, he exercised his right under the trust indenture administration agreement to remove Legacy as his administrative agent and transfer both trusts to a new administrative agent of his choosing. In so doing, Wilson was making an election to appoint a new administrative agent and requesting that the trust reporting be forwarded to him.

[161] There was no appropriation of confidential information: the names of the two beneficiaries were given to Wilson in his capacity as trustee. Assuming this information was confidential, the information was not misused. As trustee, Wilson had the right to contact the beneficiary to request that a new administrative agent be appointed after the breakdown in his relationship with Legacy and Legacy’s failure to provide him with reports regarding the administration of the funds. As such, the claim for breach of confidential information must fail.

[162] In any event, there is no evidence that Legacy suffered any harm as a result of Wilson’s communication to the beneficiaries or their agents as both RCAs remained with Legacy and advised Wilson that they no longer wished him to act as trustee. Furthermore, there was no evidence to support the claim that Legacy’s reputation was damaged as a result of Wilson’s conduct regarding the RCAs.

Issue #5: Is Legacy entitled to Reimbursement for RecordXpress Expenses, and Legacy Expenses for which Wilson obtained Tax Deductions?

[163] Iacobucci J. in Garland v. Consumers’ Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629, at para. 30, held that in order to prove unjust enrichment, the plaintiff must demonstrate that (1) the defendant was enriched, (2) by the same actions the plaintiff was correspondingly deprived, and (3) there is no juristic reason for the enrichment. A juristic reason can include a contract, a disposition of law, an intention to give, and other legal, equitable, or statutory obligations. If there is no juristic reason from an established category, then the plaintiff has made out a prima facie case under the juristic reason component of the analysis. The prima facie case is rebuttable where the defendant can show there is another reason to deny recovery, see Consumers’ Gas, at paras. 44-45.

[164] Legacy is entitled to be reimbursed for the National Club meeting expense because it was solely for RecordXpress work, not payable by Legacy. Legacy is entitled to be reimbursed for half of the cost of the New York trip as it is agreed that work was done for both Legacy and RecordXpress in New York.

[165] Wilson’s deduction of expenses on his income tax returns after having been reimbursed by Legacy for those expenses is grounds to dismiss him. However, the wrongdoing was not in seeking reimbursement from Legacy, but rather seeking to deduct those expenses from his income tax returns. Legacy is not deprived as the Legacy expenses were properly reimbursed by Legacy to Wilson. Therefore, Legacy is not entitled to be reimbursed for those expenses.

VI. SUMMARY OF CONCLUSIONS

[166] For the above reasons, I have concluded that Wilson did not resign; his employment was terminated for cause. The conditions of his employment were less than ideal but they were not oppressive. He did not appropriate confidential information or clients of Legacy. Legacy is entitled to reimbursement for half of the cost of the National Club meeting and the flight to New York. On the agreement of both parties, Wilson is to be paid $385,000 in exchange for his Basel CanadaCorp shares.

VII. COSTS

[167] If the parties are unable to agree on costs, they may provide brief written submissions on the issue of costs within 30 days.

Thorburn, J.

Released: April 2, 2014

COURT FILE NO.: CV-12-009670-00CL

DATE: 20140401

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ROBERT WILSON

– and –

LEGACY PRIVATE TRUST, BASEL CANADACORP LIMITED AND JAMES LOVE

REASONS FOR JUDGMENT

Thorburn J.

Released: April 2, 2014

[^1]: The Defendants’ position at trial was different from the position in the Statement of Defence and Counterclaim.

[^2]: While Andrea Love testified that she knew Wilson had tax problems, there is no evidence she knew of these specific issues.

Robert Wilson v. Legacy Private Trust et al., 2014 ONSC 2070

Case Summary