2261897 Ontario Inc. v. Quest Audio Visual Inc., 2015 ONSC 2428

CITATION: 2261897 Ontario Inc. v. Quest Audio Visual Inc., 2015 ONSC 2428

COURT FILE NO.: CV-14-00502020

DATE: 20150416

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 2261897 Ontario Inc. O/A Center Stage Audio Visuals, Plaintiff

AND:

Quest Audio Visual Inc. and Kevin Terry, Defendants

AND:

Kevin Terry, Plaintiff by Counterclaim

AND:

2261897 Ontario Inc. O/A Center Stage Audio Visuals, Defendant by Counterclaim

BEFORE: Sean F. Dunphy J.

COUNSEL: Kashif Sher, for the Defendants/Plaintiff by Counterclaim and Moving Party

Aaron Rousseau, for the Plaintiff/Responding Party

HEARD: April 9, 2015

Reasons for judgment

[1] The defendants move for summary judgment of this claim and counterclaim arising from the departure of the defendant Kevin Terry (“Terry”) from his former employment at the plaintiff (“Center Stage”). A potpourri of issues is poured forth in the materials filed for this motion, suggesting a tangled web of contradictory factual claims and allegations. Are these issues nonetheless amenable to determination or simplification having regard to the enhanced capacities of the court conferred by Rule 20.02(2.1) and the principle of proportionality dictated by Rule 1.04(1.1) of the Rules of Civil Procedure?

[2] While complex at first blush, a small amount of diligence in teasing through the issues revealed a case that was more narrowly focused than it at first appeared to be. The parties have in fact undertaken a considerable degree of discovery such that at least the major lines of their dispute have been explored and been the object of affidavits, cross-examination and indeed examination of a number of non-party witnesses as well. More than a few issues have been added to a Statement of Claim which were clearly of the kitchen sink variety and/or of exceptionally modest economic weight.

[3] The defendant moving party urges upon the court that the all of the musty corners of the case have been fully exposed to the light and the court may do justice to the parties and draw appropriate conclusions and inferences from the record as it stands. Relying upon Rule 20.04, they submit no issue requires a trial having regard to the fact-finding powers of the court under Rule 20.04(2.1).

[4] The plaintiff, on the other hand, pleads that the matters are too complex and ill-developed to be decided at this stage. The parties have already heavily invested in this case and, were it left to its own devices without a summary judgment hearing to determine or simplify issues, would doubtless consume the better part of a ten day trial, delays of a year or more prior to a hearing and all of the attendant fees and expenses such an undertaking would entail.

[5] Having heard oral argument, reviewed all of the evidence filed by the parties and having regard to the principle of proportionality in Rule 1.04(1.1), I am satisfied as to each of the issues discussed below that (with the exception of the question of damages arising from the constructive dismissal claim) that none of the factual disputes between the parties requires a trial to be resolved justly and on the merits.

(i) Overview of Facts

[6] Kevin Terry has worked in the Audio Visual (or “AV”) industry for a number of years and in association with a number of different employers. His expertise was in the field of sales and, over the years, he had developed a “stable” of clients with whom he had a close relationship and who followed him through the various changes in his employment status over several years. Mr. Terry’s various employers were in the business of assisting their clients to stage multi-media events such as conferences, presentations and the like, at venues both public and private across the country.

[7] While clients in this industry might return repeatedly to a single supplier or relationship, contracts were almost invariably restricted to a single event or project. In other words, Mr. Terry or his various employers, are hired project-by-project under discrete contracts relating to the specific project or event even if the same client may have numerous such contracts with the same supplier (or a number of different suppliers) in a year or repeat some events each year.

[8] In August, 2011, Mr. Terry left his prior employer and accepted a position as “Senior Account Executive/Director of Business Development at the plaintiff 2261897 Ontario Inc. O/A Center Stage Audio Visuals and signed a contract of employment.

[9] It is undisputed that a significant element in his hire was his ability to bring with him a “book of business” represented by his existing client contacts and his ability to lever his relationship with them and familiarity with their business needs to obtain new business over time. The plaintiff was keen to ensure that Mr. Terry entered all data from his contacts and events that he worked on with them into their proprietary data base so future use could be made of it. Mr. Terry was not paid anything for the relationships he brought with him and the plaintiff sought no assurances regarding Mr. Terry’s possible status as a fiduciary from his former employer beyond verifying that there was no non-solicitation agreement in place. Mr. Terry’s contract of employment contained a non-solicitation clause the enforceability of which is a significant issue in this case.

[10] For just over two years, from August, 2011 until November 7, 2013, Mr. Terry worked with the plaintiff. The relationship was not without its frictions.

[11] Mr. Terry’s contract provided him a base salary of $43,500 plus commissions. The plaintiff sent Mr. Terry an email (dated October 25, 2013 – discussed further below) suggesting that his total pay was “under $90,000” and that he generated only about $250,000 in sales (for which his employment agreement set a margin target of 30-35%). These figures may be kept in mind when assessing the various claims advanced by the plaintiff.

[12] The plaintiff is owned by Mr. Dasrath and Mr. Fillier, who are also senior officers of the company. Over the course of the two years Mr. Terry worked with the plaintiff, Mr. Terry had, on at least a “handful” of occasions (per Mr. Fillier) or on a nearly daily basis (per Mr. Terry) complained of abuse or bouts of anger endured at the hands of Mr. Dasrath.

[13] In October, 2013, a major contract obtained by Mr. Terry for the plaintiff with the Bank of Nova Scotia experienced technical difficulties. The parties are in disagreement as to where the fault lies although what happened is not in doubt. Technical difficulties associated with power fluctuations occurred at an event in Toronto for Bank of Nova Scotia. Mr. Terry’s position – as his title would suggest – was in sales, but the plaintiff alleges that on this occasion he was acting as a technical supervisor of some sort such that he bears responsibility for what occurred. Be that as it may, the client was unhappy and sought certain discounts or credits from the plaintiff. In the course of a rather coarse exchange of emails regarding the matter of the requested discount, Mr. Dasrath sent a number of intemperate emails to Mr. Terry on October 25, 2013 which virtually dared him to resign.

[14] On November 5, 2013, Mr. Dasrath and Mr. Terry had another unpleasant confrontation. On November 7, 2013, Mr. Terry wrote to the plaintiff indicating that he was resigning with immediate effect. The next day, Mr. Terry commenced work with the defendant Quest Audio Visual Inc. (“Quest”) under a contract of employment that on its terms was economically superior to the one Mr. Terry had with the plaintiff.

(ii) Allegations

[15] It is alleged by the plaintiff that Mr. Terry planned his departure for many weeks if not months. This was a motion for summary judgment and the plaintiff was able to produce no evidence whatsoever to persuade me that a trial would be required to decide the issue. Suspicions do not equal evidence.

[16] The defendant’s position – which is amply supported by the circumstantial evidence including the plaintiff’s actions (evidenced in writing) to constructively dismiss Mr. Terry on October 25, 2013 – is that Quest had casually indicated interest in recruiting Mr. Terry on a couple of occasions in 2013 but without any apparent interest on Mr. Terry’s part. Some time after October 25, 2013 and a few days before Mr. Terry’s resignation on November 7, 2014, Mr. Terry approached Quest to ask if their offer was still open. After a short discussion, Mr Terry agreed to come to work with Quest.

[17] It is alleged by the plaintiff that Mr. Terry diverted clients to Quest in the week between October 25, 2013 (when the intemperate emails from Mr. Dasrath were sent to Mr. Terry) and November 7, 2013 (when Mr. Terry notified of his resignation). Again, there was no evidence of anything along these lines nor anything on the record persuading me that a trial is required to do justice to this claim which, with one possible exception is also speculative and baseless. The single possible exception is an invoice which appears to indicate that Quest performed a tiny amount of work beginning on October 31, 2013 for a client that Mr. Terry had brought over to the plaintiff in 2011 (GE). The GE invoice was for approximately $1,000 (with net profit smaller still). This was the only arguable evidence of pre-departure solicitation or diversion of clients by Mr. Terry. I shall review this evidence further below but even this evidence is hardly unequivocal and, given the tiny amounts at issue, the principle of proportionality dictates that I decide that issue on the evidence before me if at all possible as a full trial to consider a matter that, in isolation would not likely even be pursued in Small Claims Court, would be a preposterous waste of resources.

[18] There is evidence that Quest obtained a number of contracts after Mr. Terry joined them from 6 former clients of the plaintiff. In no case is there evidence of solicitation of any of these clients by Mr. Terry – the record is silent or consistent with Mr. Terry’s former clients initiating contact with him. Each of the client relationships is discussed below. They were, for the most part, long time contacts of Mr. Terry brought with him from when he joined the plaintiff in 2011 or, in one case, a client that a long-time client had recommended him to and who took the initiative of searching out Mr. Terry’s new employer.

[19] There was a strong suggestion on the evidence that the plaintiff initiated this claim in reprisal for Mr. Terry having resorted to the Ministry of Labour claims centre to collect unpaid commissions owing him. Section 74 of the Employment Standards Act S.O. 2000, c. 41 prohibits reprisals by an employer against an employee who seeks to assert rights under the Act and places the burden of proof on the employer to establish that it has not acted in reprisal. It is true that Mr. Terry had to demand an accounting of his unpaid commissions over several months, eventually threatening “labour board” proceedings before he received even a low-ball offer to settle his claim for commissions. Whether the plaintiff commenced drafting the statement of claim (which was issued April 11, 2014 the day following a notification letter mailed by the Ministry of Labour) before receiving notice of the Ministry’s action is a moot point – they certainly had correspondence from Mr. Terry promising to take that step from a month earlier. My findings regarding the plaintiff’s claim and its lack of merit are strongly supportive of the conclusion that this action has been launched in reprisal and I would have no hesitation in finding that the plaintiff has failed to discharge its burden of proof to dispel that impression. That being said, the proper course of action is for the defendant, if he chooses, to seek administrative remedies by filing a complaint with the Ministry pursuant to s. 96 of the Act.

[20] The evidence shows that Mr. Dasrath in particular has on at least two known occasions engaged in vicious and defamatory disparagement of the defendants and, in the case of the defendant Quest, made very thinly veiled threats of physical violence. While contesting Mr. Terry’s claim of constructive dismissal, Mr. Dasrath has on at least two occasions boasted of having fired him.

(iii) Issues

[21] Upon a distillation of the pleadings, the following issues arise for determination on this motion:

1. Is there a valid and binding non-solicitation agreement between the defendant Terry and the plaintiff?

2. Was the defendant Terry a fiduciary of the plaintiff and, if so, what were his duties in relation to former clients upon taking up employment with the defendant Quest?

3. Did Terry owe the plaintiff a duty of fidelity and if so, did he violate this duty?

4. Can the plaintiff claim damages from the defendant Mr. Terry for alleged negligent performance of his duties in relation to the Bank of Nova Scotia contract?

5. Can the plaintiff sue the defendant for “time theft” in respect of days for which the defendant Terry was paid but is alleged to have failed to report for duty?

6. Does the defendant Terry have a claim for constructive dismissal and, if so, in respect of what damages?

[22] I shall address each of these issues both as to the law and the facts presented by the parties in the record separately.

(a) Non-Solicitation Clause

[23] Mr. Terry was party to a written employment agreement dated as of August 1, 2011. Under the heading “Roles and Responsibilities and Key Interactions”, the agreement outlines the responsibility of Mr. Terry to “develop new customers” through the described procedures of reviewing public and other information and that “all sales and customer info is confidential to” the plaintiff.

[24] The evidence was that Mr. Terry was hired in significant measure because of the personal client following that he already had and the “book of business” he was expected to be able to generate from it. The agreement makes no explicit mention regarding the ownership of information pertaining to “old” customers brought to the plaintiff by Mr. Terry and there is at least a basis to question whether the statements in the agreement regarding confidentiality of customer information applies in this context only to “new” customers developed by Mr. Terry. If that question were answered in the affirmative, this could have a bearing on the proper (and limited) interpretation of the non-solicitation clause on the next page.

[25] On Page 2 of the Agreement contains a “Confidentiality and Non Solicitation Agreement” which reads in its relevant portion as follows:

“By accepting this contract you are hereby in agreement that ALL customers that you service and others that are on the CSAV database are the property of CSAV and you will NOT solicit or have contact with any of these accounts or individuals for a period of ONE year after the date of employment from CSAV or legal action may be taken against you…(bold type emphasis added).

[26] The defendants take the position that the agreement is either inapplicable due to the expiry of more than a year since “the date of employment” or void due to uncertainty or its breadth. They state that Mr. Terry did not have his attention drawn to this particular clause and suggest he would not have agreed to such a clause in relation to his own clients particularly where he was not being paid any amount to “purchase” this book of business. Finally they submit if the clause is read to apply (as the plaintiff contends) from the end of employment rather than its beginning (as it clearly states), the clause should nevertheless be deemed void as being uncertain and unreasonable both as to time and extent.

[27] I am in agreement with each of the defendants’ submissions on these points. Given the plain wording of the contract, it applies only for a period of one year “after the date of employment”. Since he commenced as of August 1, 2011, the non-solicit agreement expired in accordance with its terms on August 1, 2012.

[28] It is not for the court to rewrite the agreement between the parties. Rectification is not pleaded in this case and could hardly be considered given the dubious evidence as to whether Mr. Terry was ever aware of or understood the clause at the outset and the implausible evidence of his alleged agreement to it as it related to his own clients. It would be impossible to conclude on the evidence of this case that there was any mutual understanding still less “reasonable expectation of the parties” that Mr. Terry would be prohibited from responding to contacts from his own clients for more than a year, even if fired or constructively dismissed by the plaintiff. The plaintiff can certainly not ask the court to do more than enforce the contract precisely as the plaintiff has written it. Since by its terms the non-solicitation obligations have expired, the plaintiff can found no claim upon it.

[29] I also agree with the plaintiff’s contention that a one year, unlimited non-solicit and non-contact clause extending both to customers known to Mr. Terry and those unknown and unknowable to him after departure (but residing on the secret CSAV database) was unreasonable and is void in the circumstances of the case.

[30] Mr. Terry would have no way of knowing which individuals or accounts would be subject to the prohibition given the extension of the prohibition to accounts known and unknown. The data base may contain information about clients with whom the plaintiff has done no business for years or for whom it provides only a negligible amount of services. The extension of the non-solicitation clause to an entire data base whose contents are unknown is fatal. The Employment Agreement refers to data bases containing dormant accounts and prospects.

[31] As drafted, the agreement would potentially prohibit Mr. Terry from earning any kind of living in the industry for a year and is manifestly unreasonable. Neither Mr. Terry nor a prospective employer would have any basis to know which potential client is included or excluded. A blanket prohibition on dealing with a broad, unknown data base of actual and former customers and clients or prospects of the plaintiff unrelated to actual confidential information pertaining to such customers possessed by the party being restrained is overbroad.

[32] Whether void for uncertainty or void for over-broad application, the result is the same. The clause is unenforceable. The moving parties cited Shafron v KRG Insurance Brokers (Western) Inc., 2009 SCC 6, H.L. Steabler Company Ltd. v. Allan, 2008 ONCA 576 and Mason v Chem-Trend Limited Partnership, 2011 ONCA 344 in support of the arguments in their factum with which I concur.

[33] Accordingly, I conclude that the plaintiff has no claim for breach of non-solicitation provisions of the Non-Solicitation provisions of the Employment Agreement against either defendant.

(b) Fiduciary Duties

[34] The plaintiff alleges that Mr. Terry was a fiduciary and thus bound by the full range of fiduciary duties which, they claim, includes non-solicitation obligations. They allege that he supervised two other sales employees and had the title “Director, Business Development”. In all respects, they say, Mr. Terry was the “face of the company” in dealing with clients. Mr. Terry set pricing and sought and accepted purchase orders without specific approval requirements (although they concede that write-downs to invoices once rendered required senior level approval). In a nutshell, they allege, Mr. Terry “checks all the boxes” of a fiduciary but for having a traditional corporate title of director or officer. In particular, the plaintiff alleges that it was “particularly vulnerable” to the plaintiff by reason of his close relationship to clients.

[35] The defendant characterizes himself as a sales person without managerial responsibilities. He was not an officer or director. They suggest that as a mere sales person, he is not a fiduciary. In any event, they argue that fiduciary duties ought not to extend beyond contractual duties where the parties have addressed the issue and the contract provided for non-solicitation for only the first year of employment.

[36] Upon a review of the evidence presented by both parties, I am of the view that there is no issue requiring a trial on the matter of whether Mr. Terry was a fiduciary. Both parties have put their “best foot forward” with affidavit evidence and cross-examination. The factors that the cases suggest need consideration and balancing in making a determination have been thoroughly explored and I can see no basis for expecting that viva voce testimony at a trial would permit a better assessment of these factors.

[37] Factors that I have noted from the evidence that have bearing upon the matter include the following:

i. Mr. Fillier described the hiring of Mr. Terry as being motivated by the fact that he “had been in the industry for a while and he was a - - a decent salesman that had clients and was a hustler. We were looking for a salesperson”;

ii. Mr. Fillier described Mr. Dasrath’s reactions to Mr. Terry’s complaints as being instances where Mr. Terry “needed..to step up and to, you know, to follow the policies and procedures, and the impacts if he didn’t”;

iii. Although Mr. Dasrath sought to describe Mr. Terry as “management” during his cross-examination, he occasionally dropped his guard and described friction that was caused because of “what management wanted or expected from Kevin and what he wants”;

iv. Mr. Dasrath responded to Mr. Terry’s resignation letter by writing “I had every intention of having you be part of the management team” clearly implying that he had not in fact been part of the management team;

v. The same letter from Mr. Dasrath responding to Mr. Terry referred to Mr. Terry as “a poor excuse for a man and as an employee”, and a “lazy…[further insults and expletives deleted] that cannot follow my very simple instructions on business development and excellent customer service” (emphasis added) – descriptions which are quite inconsistent with the plaintiff’s attempt to characterize Mr. Terry as having been a senior manager in fact;

vi. Mr. Dasrath described himself as having “disciplined or admonished” Mr. Terry on occasions;

vii. Mr. Dasrath conceded that management would review budgets for events sold by Mr. Terry and approved invoices before they were sent out – mitigating somewhat the idea that Mr. Terry had complete autonomy in the matter of “setting prices”;

viii. Mr. Terry was paid a salary of $43,500 per year plus commissions (on the evidence, commissions appear to have been approximately half or more of his income);

ix. Mr. Terry’s written employment agreement required him to attend “a monthly sales review with your Manager”

[38] D. Brown J., as he then was, conducted a detailed review of the jurisprudence regarding fiduciary duties of departing employees and which types of employees have and have not been found to be subject to fiduciary duties in the case of Boehmer Box L.P. v Ellis Packaging Limited et al., [2007] O.J. No. 1694. Factors which he found to be important in that case included exclusive relationships with customers, the ability to act unilaterally and bind the employer as well as the responsibility of supervising employees. The employee in question in Boehmer was the highest paid employee of the plaintiff, a factor which failed to weigh heavily since the compensation came largely from commissions. The employee was found not to be a fiduciary but rather someone who “seemed to perform the classic roles of a good salesperson – know where the market is, and keep the customer satisfied”. I find the phrase a particularly apt description of Mr. Terry’s role in the present case.

[39] I cannot find on the evidence that Mr. Terry was a fiduciary. Mr. Terry had no exclusive territory or customers per se. Far from being management, he was treated and described by Mr. Dasrath rather derisively as an employee who had failed to make transition to earn promotion into management. While he certainly bid for contracts from clients and, to that extent, might be said to have “set prices”, he only “set prices” in the way that an estimator on a construction project sets prices. His budgets, invoices and write-downs were subject to review, supervision and approval procedures from above. Expenses on sales calls needed to be pre-approved by his supervisors (example San Diego trip where Mr. Fillier purchased his ticket for him). He was closely supervised, admonished and disciplined on numerous occasions by Mr. Dasrath. All of the foregoing is inconsistent with a fiduciary on the cases and the very limited evidence of a nominal supervisory role over two other sales people does not alter the picture.

[40] In Boehmer, D. Brown J. quoted the decision of Adams J. in C.H.S. Air Conditioning Ltd. v Environmental Air Systems, 1996 CanLII 8137 (ON SC), 20 C.C.E.L. (2d) 123 (Ont. Gen. Div.) where he wrote (at page 23): “where former employees exploit obviously and highly confidential information in a manner that strikes a court as grossly unfair, it is more likely that a fiduciary obligation will be found to exist or that the information will be treated as the equivalent to a trade secret”. The present case strikes me as being the opposite of that and the scales are tilted in quite the opposite direction.

[41] The plaintiff seems to conflate the working relationship Mr. Terry had with his clients with the possession of confidential information of the employer. While knowledge of the client’s past events might conceivably have been useful in anticipating future needs, the evidence was that there were no on-going supply contracts – clients retained the plaintiff one event or series of related events at a time. Many if not all of the events run would be public events readily knowable by other industry players employing the same data-mining techniques of publicly available information that Mr. Terry’s employment agreement anticipated he would employ to generate leads.

[42] The plaintiff characterized Mr. Terry as the “face” of Center Stage with its clients. The employment agreement and the evidence tell a different tale. The employment agreement obliged him to enter details regarding events “to allow Operations to implement the job”. The evidence was that Mr. Terry was not required to be on site for events that he sold as the technical team of the plaintiff (led by “Ryan”) were used for that purpose. The plaintiff had a number of faces working with clients on events – Mr. Terry was merely the “sales” face for clients he brought to the plaintiff.

[43] The plaintiff’s own actions when they hired him put paid to any suggestion that Center Stage had or could have had a reasonable expectation that Mr. Terry’s would be subject to a fiduciary non-solicit restriction in the absence of an enforceable contract. Although obtaining access to Mr. Terry’s client contacts was a central reason for hiring him, the plaintiff limited its due diligence to inquiring about the existence of a non-solicitation agreement in favour of his prior employer. Satisfied that no such agreement existed, they hired him and happily arranged to receive all of his clients and contacts into their data base without regard to any concern as to whether Mr. Terry might have been a fiduciary of his former employer. Their protest that Mr. Terry’s proximity to clients makes him a fiduciary today appears to have given them no pause when they hired him in 2011 with the precise intention of exploiting that same proximity to the detriment of his prior employer. The protestations of Inspector Renault collecting his winnings in Casablanca come to mind.

[44] The claim that the defendant is a fiduciary precluded from maintaining any relationship with clients that he brought – at no charge – to the plaintiff is all the more untenable when coupled with the conclusion (discussed below) that the plaintiff repudiated its agreement with Mr. Terry and constructively dismissed him. This fact takes Mr. Terry’s fact situation out of the fact pattern of all of the cases cited by the plaintiff which involved employees who secretly competed for several years with their employer (Radd Precision Inc. v Lall et al., [1996] O.J. No. 24 (Ont. Gen. Div.) or who exploited exclusive relationships granted to them by their employer and developed during their employment (Quantum Management Services Ltd. v Hann (1992), 1992 CanLII 7720 (ON CA), 11 O.R. (3d) 639 (C.A.)).

[45] As a non-fiduciary, Mr. Terry’s obligations as a departing employee were not extensive and there is no evidence that any of these were breached. There is no evidence that he took any actual confidential information of any kind with him.

[46] If I were mistaken in characterizing Mr. Terry as a non-fiducuary in this case, I would nevertheless dismiss the plaintiff’s claims against him. The right to call a fiduciary to account is of course a prerogative of the courts of equity and equity has ever required clean hands of its supplicants. It hardly needs saying that an employer who constructively dismisses an employee, viciously defamed him both to his new employer and to at least one client while making thinly veiled threats to the new employer is in no position to claim clean hands when it approaches a court of equity for relief in respect of a client list it acquired from that same employee free of charge.

[47] Further, the plaintiff’s evidence of actual breach of any fiduciary duty did not stand up to scrutiny.

[48] A total of six clients were named as having been “brought over” to Quest by Mr. Terry from the plaintiff. Four of the six clients had been long-standing clients of Mr. Terry while one had been a referred to him by a long-time customer. Each of these five customers were brought into the litigation and cross-examined before the hearing of the motion. The four pre-existing clients each confirmed their relationship with Mr. Terry pre-dated his employment by Quest, each either denied or could not confirm any suggestion that Mr. Terry had actively solicited their business on behalf of Quest and each confirmed their firm decision to have no further dealings with the plaintiff. The fifth (Arbonne Canada) had been referred to Mr. Terry by one of the other four and confirmed that they had taken steps to locate Mr. Terry on their own initiative after having been told of his departure from Center Stage by the plaintiff. None of these clients provides any concrete evidence to conclude that Mr. Terry expended any positive efforts to solicit their business, although there is no reason to doubt that he responded promptly to contacts from them.

[49] The sixth client (Indo-Canada Chamber of Commerce) was a client that Quest had submitted bids to in the past. During the week following Mr. Terry’s departure, the plaintiff arranged to contact all of his clients to seek to retain them. There is no suggestion that a week was not enough time for this task, it might be noted. The plaintiff emailed this client on November 12, 2013 and disparaged Mr. Terry in terms that I would not hesitate to call defamatory.

[50] The duties of a departing fiduciary are not fixed and uniform in any event. Misuse of confidential information to the detriment of its rightful owner, for example, is a frequently cited basis for intervention by the courts. The problem with the plaintiff’s claim is that substantially all of the client relationships that it seeks to impose an exclusive protective cloak around via its equitable claims are relationships that the plaintiff had prior to allegedly becoming a fiduciary. This is not a case of sale of a business – the plaintiff did not buy the goodwill from Mr. Terry. He did not possess any confidential information from them since he already possessed it before becoming associated with them. In such a case, it is hard to imagine that even a fiduciary – particularly one whose employment has been terminated – would have more than the slightest of duties to the employer. Such duties might, for example, extend to a brief period of non-solicitation that might not preclude responding to contacts initiated by the client (and certainly not in cases where there is any suggestion the employer is using the window to defame the former employee).

Finally, the defendants note that the parties entered into an agreement regarding non-solicitation which by its terms is inapplicable (applying only to the first year of employment). They point to a line of cases that suggest that the court should not impose through fiduciary duties stricter limitations than the parties themselves have bargained for in their contract. The case of IPC Investment Corporation v Sawaged, 2010 ONSC 6611 (at para. 92 et seq) in particular is relied upon.

(c) Duty of Fidelity

[51] I propose to deal with this allegation summarily. The plaintiff alleges that even as an employee, Mr. Terry owed them a duty of fidelity. They rely upon this principle to allege that steps to divert business to Quest while still an active employee would be a violation of that duty.

[52] The short answer to this claim is that the plaintiffs had precisely no evidence of anything at all answering to this description prior to October 25, 2013 when Mr. Terry was constructively dismissed.

[53] As for the time frame between October 25, 2013 and the letter of November 7, 2013, which could be characterized as acceptance by the employee of the employer’s repudiation of the contract of employment, there was equivocal evidence of precisely one incident of trivial economic dimension.

[54] The invoice from Quest to GE is dated November 12, 2013 and lists Mr. Terry as “Quest Rep”, it also appears to be in respect of services that may have been rendered prior to November 7 when Mr. Terry delivered his letter of resignation. GE was one of the long-standing clients of Mr. Terry that he had introduced to Center Stage previously. The invoice was for $1,095 plus HST. This is the only evidence of any clients allegedly brought over to Quest by Mr. Terry prior to his resignation letter.

[55] Ms. Landry (the GE representative to whom the invoice was delivered) was cross-examined but was not asked about this invoice in particular. While one might speculate as to how Quest came to perform this very small piece of work for a long-standing client of Mr. Terry in the week after he had been abused and dared to quit, speculation is not the standard to be applied here. While the plaintiff may have exceeded the “no evidence” threshold for its claim of breach of a duty of fidelity as regards the tiny GE contract only, the evidence it has produced is a long way from establishing to my satisfaction that there is a claim requiring a trial.

[56] In Sweda Farms v. Egg Farmers of Ontario, 2014 ONSC 1200, Corbett J. made the following finding in a summary judgment motion (at para 20):

“When I conclude that “there is no evidence” to support essential elements of Sweda’s claims, I must register an important qualification. Sweda’s claims are supported by speculation, argument presented as evidence, unparticularized assertions, and vague references to isolated pieces of evidence. What is absent is a rigorous analysis and presentation that places the isolated pieces of evidence into a coherent context. And the few pieces of hard evidence do not knit into a coherent claim.”

[57] I would dismiss any claim of the plaintiff for breach of the duty of fidelity as I find no issues raised in the Statement of Claim or the evidence presented in support which would require a trial having regard to Rule 1.04(1.1) and Rule 20.04(2) and (2.1) of the Rules of Civil Procedure.

(d) Negligent Performance of Employment Contract

[58] The materials filed by both parties address an allegation advanced by the plaintiff arising from the performance by Mr. Terry during the fulfillment of a contract with Bank of Nova Scotia relating to a cross-country event.

[59] The allegation is described in some detail in Mr. Dasrath’s affidavit. In summary, it is alleged that Bank of Nova Scotia was conducting a cross-country series of events utilizing the services of the plaintiff in a contract arranged by Mr. Terry. At an event in Toronto in early October, 2013 there were certain damaging performance issues. The issues arose from power fluctuations due to the manner in which power had been configured for the presentation. The client was unhappy and ultimately the client sought to obtain a discount on fees.

[60] Mr. Terry’s response to this allegation of negligence is that he was in sales not on the technical side and cannot be blamed for the incident that occurred. He was not expected to attend every event that he sold on behalf of the company. The plaintiff had a technical representative (“Ryan”) present at such events. At the limit, the plaintiff seeks to hold Mr. Terry responsible not for actually causing any harm in his own right, but for failing to supervise other (technical) employees of the plaintiff (outside of his sales group) in the performance of their duties.

[61] The claim has no merit in law and I find no need to delve in any depth into the conflicting claims on the facts.

[62] The Court of Appeal has closed the door on employer claims in tort against their employees for what might be called “ordinary negligence” in the case of Douglas v Kinger, 2008 ONCA 452. As Lang J.A. found, (at para. 52):

“An examination of the employment relationship demonstrates that employee negligence was foreseeable and that the employee’s liability for negligence was not. This is apparent from the expectations that can readily be inferred from any common-sense consideration of the employment relationship”.

[63] While the Court of Appeal in Douglas v Kinger did not involve a claim in contract (the employee being a minor) the reasoning of Lang J.A. applies with equal force or logic in any analysis of the employment relationship from a contract law perspective as well. In the absence of a written agreement imposing such liability, it cannot be consistent to a construction of the employment contract or with the reasonable expectations of the parties to impose an obligation upon the employee to indemnify the employer for consequences of ordinary negligence.

[64] There is not a shred of evidence to suggest that this is other than an “ordinary” claim of negligence to take it out of Douglas v Kinger.

[65] The plaintiff relies upon Pinto v BMO Nesbitt Burns Inc. (2005), 2005 CanLII 18720 (ON SC), 40 C.C.E.L. (3d) 293 to argue the contrary case. Pinto and the line of cases it cites dealt with the vicarious liability of employers for the actions of their employees (and the liability of the employee as tort feasor). Whether the analysis is Pinto is consistent with the Douglas v Kinger case I shall leave to another court and another day. This is not a case of vicarious liability or contribution rights arising therefrom – there is no claim filed by Bank of Nova Scotia.

[66] The parties in this case had a written employment contract which made no mention of any indemnification obligation of the employee and the responsibilities of the employee described therein did not extend to “Operations” in any event.

[67] The claim in negligence, whether in contract or tor, is without foundation and is dismissed.

(e) Time Theft

[68] There is a first time for everything and this would be the first time I have heard a claim advanced for “time theft”. As best as could be pieced together from the argument addressed to this point, the plaintiff complains of three matters: (1) a period of four days where the plaintiff was in San Diego on a trip approved by the plaintiff on a ticket itinerary purchased for him by the plaintiff; (2) allegedly “overdrawing” of an unknown number of vacation days and sick/personal days, with inadequate particulars of a grand total of TWO such days; and (3) Mr. Terry’s alleged absence from the office during the period between October 25, 2013 and November 7, 2013 (eight days). It is alleged that the plaintiff has paid Mr. Terry for his non-performance of duties on these occasions and this amounts to “time theft”.

[69] It is worth recalling that Mr. Terry’s salary was $43,500 per year which amounts to $836.53 per week or $167.30 per day. These figures are worth recalling as the “time theft” claim is examined. If there is a contest for the best “kitchen sink” pleading, this must surely be in the running for first prize.

[70] On a summary judgment motion, the responding party is required to put their best foot forward. The defendant Mr. Terry moved to dismiss this claim and proffered evidence to the best of his ability to explain the allegations of “time theft”. The plaintiff put almost no evidence forward to justify this claim.

[71] The following observations are sufficient to dispose of this claim:

• The trip to San Diego was approved and the ticket bought and paid for by Mr. Fillier (one of the co-owners of the plaintiff) for the full four day period – the allegation of “time theft” in relation to this trip seems to stem from Mr. Dasrath’s after-the-fact questioning of the approval granted by his partner Mr. Fillier. The complaint is as devoid of foundation as it is spurious;
• Mr. Fillier’s affidavit notes that as of August 19, 2013 (i.e. more than two months prior to the end of Mr. Terry’s employment), Mr. Terry had taken six sick/personal days as compared to an allocation of five under his employment agreement and that Mr. Terry had taken 11 vacation days compared to an allocation of ten days. He did not bring the data forward to November 7, 2013 nor did he account for the increase in vacation entitlement from ten days to fifteen days which he approved on August 1, 2013. Under the “best foot forward” principle the plaintiff has failed to demonstrate any genuine issue requiring a trial about the possibility it may have given its employee an extra sick day months prior to his resignation;
• Mr. Fillier acknowledged that Mr. Terry worked significant amounts of overtime and time in lieu of overtime was permitted;
• I can think of few people who would have shown up for work at all in the eight days between October 25, 2013 and Mr. Terry’s formal letter of resignation on November 7, 2013 given the tremendously insulting and offensive language used by the plaintiff in daring Mr. Terry to resign that day, although Mr. Terry has provided evidence of attending to his employer’s business for each of the days to some extent;
• Having regard to my finding regarding constructive dismissal (below), the plaintiff would have been liable to compensate Mr. Terry in full for any lost employment earnings after October 25, 2013 – seeking to recover “time theft” for that time period would simply create an offsetting economic claim in respect of constructive dismissal;
• The plaintiff was perfectly well aware of the Mr. Terry’s presence or absence during all of those time frames and determined to pay his salary during that time frame without complaint or deduction before fabricating this claim five months after the fact.

[72] I find that the “time theft” claim is entirely without merit and should be dismissed. Again, this appears to be an instance of vindictive kitchen-sink pleading.

(f) Constructive Dismissal

[73] Mr. Terry delivered a letter of resignation on November 7, 2013. The letter does not use the term “constructive dismissal”, but it is nevertheless quite clearly a letter of “resignation for cause”. The letter indicates, among other grounds the evolution of the management style into a “dictatorship”. It goes on to indicate “If I had any doubts about leaving, they were removed during Richards’ (sic) rant on Tuesday”.

[74] In his counterclaim, Mr. Terry raises a number of complaints regarding the atmosphere that prevailed at work prior to the events of October 25, 2013. His evidence describes Mr. Dasrath as losing his temper and having created a toxic atmosphere. He claims to have raised these issues frequently with the other co-owner of the plaintiff’s business, Mr. Fillier without any notable improvement.

[75] Mr. Dasrath of course denies any such behaviour on his part. The workplace, in his description, appears as an informal, salty place where Mr. Terry gave as good as he got. Mr. Fillier generally supports his partner and denies that there was anything like frequent complaints by Mr. Terry. However, his affidavit does corroborate certain material aspects of Mr. Terry’s description of the atmosphere prior to the October 25, 2013 email exchange referenced below. For example, his affidavit confirms that Mr. Terry did complain about Mr. Dasrath to him on a “handful” of occasions where Mr. Terry felt he had been the victim of Mr. Dasrath’s “anger” arising from unjustified complaints by Mr. Dasrath and he admitted having spoken to Mr. Dasrath about these matters.

[76] Having reviewed a small portion of Mr. Dasrath’s written oeuvre, in particular his vicious and defamatory email to Mr. Terry’s new employer (the defendant Quest) of December 6, 2013 and his emails to Mr. Terry of October 25, 2013 and November 8, 2013 to say nothing of his email of November 12, 2013 to a client (Mr. Bajaj), I have little difficulty in accepting Mr. Terry’s version of events. Mr. Dasrath has given more than enough examples of his intemperate behaviour for me to be well satisfied that his denials in an affidavit or on cross-examination are to be taken with a grain, if not a box, of salt. That being said, the allegedly toxic atmosphere prevailing prior to October 25, 2013 is not the basis of the constructive dismissal claim so much as its prelude or context.

[77] On October 25, 2013, Mr. Dasrath engaged in what can only be described as a rant through a chain of emails. In this offensive series, Mr. Dasrath virtually dared Mr. Terry to resign often employing abusive and insulting language. The plaintiff sought to explain away this exchange as reflecting frustration arising from requests to agree to write-offs of invoices to a particular client (Bank of Nova Scotia). The issue was undoubtedly the catalyst for the rant, but that conclusion in no way diminishes or alters the impact of the emails taken as a whole. In the chain of emails, Mr. Dasrath noted, among other things, that:

• “this is my company and my way”,
• “going forward I have to be involved in everything with clients in my company”,
• “I’m tired of these stupid and idiotic threats and games you play like a f**** spoiled brat who doesn’t get their way…
• “I’ve now set up three appointments with Senior Account Executives from other AV companies to deal with this bull*** once and for all” ; and
• “If you aren’t happy here then please return the vehicle and go where you are happy to be Kevin”

The author of these comments can hardly claim to have been doing other than threatening to alter the terms of Mr. Terry’s employment agreement by placing him on a still shorter leash, threatening to replace him with someone else and challenging him to quit if he didn’t like it. The creation of an intolerably harsh, abusive or toxic work environment alone can constitute grounds for treating the employment agreement as having been repudiated by the employer. The alteration of duties is also a ground for finding repudiation of the employment agreement by the employer. In the event Mr. Terry failed to take the hint, the email added a threat to hire someone else and threw down the gauntlet and dared him to quit. The October 25, 2013 emails provided Mr. Terry with ample grounds to treat his employment agreement as having been repudiated.

[78] A further blow up occurred on November 5, 2013, two days prior to Mr. Terry’s resignation letter. The parties are in substantial disagreement as to where and how the unpleasant exchange occurred, but it is fair to say that the exchange was thoroughly unpleasant and no olive branch was offered nor any attempt to climb off of the ledge Mr. Dasrath had walked out on to vis a vis Mr. Terry by daring him to leave was made.

[79] The plaintiff has not helped itself regarding the constructive dismissal claim with its written admissions that it fired Mr. Terry on at least two occasions in terms so harsh as to invite further response of the court through a consideration of aggravated or punitive damages at a further hearing.

[80] On November 12, 2013, Mr. Dasrath wrote to Mr. Bajal of the Indo-Canada Chamber of Commerce. In his email, Mr. Dasrath wrote “Kevin [Terry] is no longer with us. I have endured two years of Kevin being sloppy with live events plus with his bogus expenses, disappearing from the office for days, drinking with clients and other issues I had to terminate him” (emphasis added). There were further defamatory comments in the following lines not set forth here. The admission by the plaintiff is plain and unambiguous.

[81] On December 6, 2013, Mr. Dasrath wrote an incendiary and transparently threatening email to Mr. Terry’s new employers following an encounter between them at a dinner event the prior evening. After a number of gratuitous insults directed at the defendants, he made a clear threat to the defendant Quest: “It would be wise for both of you to stay out of my way. I was raised in Regent Park, Parkdale and Jane and Finch and still have all my childhood friends. I do not tolerate disrespect from anyone especially idiots like you two.” The email disparaged Mr. Terry and clearly aimed at poisoning his relationship with his new employer to the extent possible in terms I need not repeat here. For present purposes, the email also referenced the plaintiff having fired Mr. Terry as follows: “I meant what I said that bad employees within a company is like a cancer inside a body and you must remove that employee asap to heal the company…best of luck with my rejects and I’ll continue to send more your way”.

[82] The emails of October 25 and the evidence of Mr. Terry (confirmed in its major lines by Mr. Fillier) and the evidence of Mr. Terry all present clear and convincing evidence both as to the toxic environment created by Mr. Dasrath at the workplace and of the actions amounting to repudiation of the employment relationship by the plaintiff as a result of the email chain of Mr. Dasrath on October 25, 2013. These two written admissions after the fact dispel any doubt.

[83] There is no evidence before me as to the damages suffered by Mr. Terry arising from his constructive dismissal. His new job appears to have been on superior economic terms. His counterclaim advances other unliquidated claims for damages arising from intentional infliction of emotional distress, creation of a toxic workplace, aggravated and punitive damages. For the sake of convenience, I refer to these claims below as the “unliquidated damage claims”.

[84] While I am quite comfortable with concluding that the liability aspect of the counterclaim for constructive dismissal can be dealt by way of summary judgment having regard to the nature of the evidence and the admissions of the plaintiff/defendant by counterclaim using the enhanced fact finding powers in Rule 20.04(2.1) and especially having regard to the proportionality principle, the same cannot be said as regards the unliquidated damage claims.

[85] Having regard to Rule 20.04(2.1) and (3) as well as Rule 1.04(1.1), I find that the only genuine issue for trial arising from the claim of the plaintiff by counterclaim is the amount of damages, if any, attributable to the unliquidated damage claims described above. Accordingly, I direct that these matters ought to be referred to a trial of brief trial restricted to the question of damages in accordance with Rule 20.04(3) and (5) in the following manner:

a. Mr. Terry shall provide full particulars (including as to amounts) of any unliquidated damage claim (as described above) he intends to pursue within thirty days of the date of this order failing which his counterclaim shall be considered to have been withdrawn without costs;

b. Should Mr. Terry indicate his intention to proceed with a trial on the issue of damages, he shall serve upon the defendant by counterclaim the following documents prior to June 30, 2015:

i. any expert reports he intends to rely upon to substantiate emotional distress or similar unliquidated claims;

ii. a list of all witnesses intended to be called at the hearing of the matter and a gist of their intended evidence;

c. Mr. Terry shall make himself available for cross-examination upon his statement of particulars and damages claim prior to June 30, 2015 on a date to be agreed or fixed by me and no further or other discovery shall be conducted, no party being released from their obligations of continuing discovery.

d. Center Stage shall provide its witness list and a gist of the evidence of each intended witness by August 1, 2015 to counsel for Mr. Terry;

e. If Center Stage intends to file reply expert evidence, it shall notify the plaintiff by counterclaim within 15 days of receipt of the plaintiff’s expert report and deliver its report before the end of August, 2015;

f. No party shall be entitled to call any witness without leave of the court unless notified in a timely fashion in accordance with this procedure;

g. The matter shall be set down for a hearing before me for a maximum of TWO days on the first date that can be obtained from the trial office after September 15, 2015 upon which both counsel can be available.

h. Should either party consider that a third day is necessary or desirable, they shall bring a motion before me which may be heard by 15 minute telephone conference on a convenient date in August for which hearing the only materials I shall require will be the witness lists exchanged, the gists and the expert report(s). I would invite the parties to consider shortening the attendance of any required witnesses by having their testimony in chief delivered by way of affidavit which can be cross-examined upon at the hearing if the matter is contentious.

(iv) Disposition

[86] In accordance with the foregoing, I therefore find as follows:

a. The plaintiff’s claim as against both defendants is dismissed;

b. The court declares that the defendant/plaintiff by counterclaim Mr. Terry was constructively dismissed on October 25, 2013;

c. Mr. Terry’s claim for damages arising from his constructive dismissal is to be determined at a trial of that issue only to be conducted in the manner set forth in paragraph 85 hereof;

d. The moving parties have been successful on this motion and are entitled to their costs the amount of which I shall fix following receipt of written submissions absent agreement between the parties.

[87] I encourage the parties to seek to arrive at an agreed settlement of the amount of costs. Should they fail to agree, the parties shall provide Outlines and submissions as to costs (submissions not to exceed three pages excluding outline of costs) in accordance with the schedule that follows. The Moving Parties/Defendants shall deliver their materials within ten days of the date of release of these reasons; the plaintiff/responding party shall respond with their materials within ten days thereafter and reply, if any (restricted to ONE page) within five days thereafter. Costs submissions of all parties collected by the defendants/moving parties and shall

be delivered by them electronically to my assistant or by fax to Judges’ Reception at Room 107, 361 University Avenue with a copy to the plaintiff.

Sean F. Dunphy J.

Date: April 16, 2015

CITATION: 2261897 Ontario Inc. v. Quest Audio Visual Inc., 2015 ONSC 2428

COURT FILE NO.: CV-14-00502020

DATE: 20150416

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

2261897 Ontario Inc. O/A Center Stage Audio Visuals, Plaintiff

AND:

Quest Audio Visual Inc. and Kevin Terry, Defendants

AND:

Kevin Terry, Plaintiff by Counterclaim

AND:

2261897 Ontario Inc. O/A Center Stage Audio Visuals, Defendant by Counterclaim

REASONS FOR JUDGMENT

Sean F. Dunphy, J.

Released: April 16, 2015